Growth remains a top priority for CEOs, with revenue growth and increasing market share outstripping lowering the cost base as strategic priorities. Because of this, enterprises are seeking to deepen their penetration in home markets and enter new markets.
Enterprises are looking to sharpen their customer focus as a way of attaining growth. To be able to focus on the right things, you have to know what your company’s customer-centric strategy is.
For help in figuring this out, check out the work of management gurus Michael Treacy, and Fred Wiersema, authors of The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market, HarperCollins Publishers Inc.
To grow, these authors describe the three strategies that exceptional enterprises follow:
Product leadership. Delivering products and services that push the performance boundaries.
Operational excellence. Delivering low price and hassle-free service.
Customer intimate. Delivering not what the market wants but what specific customers want.
“Most companies are organized for the convenience of their management and not for the convenience of the customer,” says Jay R. Galbraith, senior research scientist at the Center for Effective Organizations at the University of Southern California. Instead, an enterprise should be organized according to whether its customer strategy pursues product leadership, operational excellence or customer intimacy.
Each of these growth strategies requires the appropriate IS model to support it. For the product leadership and operational excellence models, the IS organization tends to be a support function focusing more strongly on internal customers. But for customer intimacy, the IS organization moves into the front office and focuses strongly on the external customer. This often leads to the most radical changes in the IS organizational model and in the skills needed to support it.
To be customer-centric, the IS organization must be flexible and agile and able to respond quickly and efficiently to customer needs. IS must evolve its capabilities and organize around the customer. For operational excellence and customer intimacy, customer needs must drive IS prioritization. This requires business executives, embedded staff and core IS groups to work closely together in a coordinated way.
In effect, becoming customer- centric requires building a new set of skills and/or capabilities inside IS. These skills centre on using a fact-based management approach to identify a customer need or opportunity and rapidly create and implement a high-quality solution – skills often found in management consultancies.
CONNECTING IT STRATEGY TO CUSTOMER NEEDS
Experience has shown that many customer relationship management implementations fail because they don’t clearly connect with customer needs. Before developing any system, get a clear statement of the customer strategy and the particular focus within it. Make sure you can connect each IT strategy element with a defined customer need and can see clearly how this will deliver business benefit.
The customer strategy your enterprise is following will provide a guide. Each of the three customer strategies – product leadership, operational excellence and customer intimacy – has clearly defined IT needs.
However, with the sponsorship of a senior executive, there are four things a CIO can do to sharpen the enterprise’s customer focus, whatever the customer strategy: synchronize the enterprise around customers; create a knowledge base to share information across the enterprise; provide customer metrics; present a unified face to the customer.
Customer-centricity is increasingly becoming the domain of the CIO, opening the door to a key role in enterprise growth.
Andrew Rowsell-Jones is vice president and research director for Gartner’s CIO Executive Programs.