Jeff Bezos, founder and CEO of Amazon, once said, “If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.”3 But businesses did not always have to be customer focused. Rewind 100 years and a lack of competition meant that there was little incentive to innovate or to delight customers. There was a widespread mentality of “We make it, you take it.” If customers did not like one business’s product, their options for seeking out a better one were limited. Thus, power lay in the hands of whoever was making the product. The customer had no choice but to revolve around the organization.
Today, the picture looks very different. With lower barriers to entry, deregulation, widely accessible new technology, and lower switching costs, new entrants have sprung up in every market to challenge the thrones of the established players. This has driven up competition, and the battle for customers is a fierce one that must be fought on a daily basis. A dissatisfied customer can easily find another place with which to do business. Innovation and providing great service have, therefore, become vital tools in keeping hold of customers. In 1954, Peter Drucker said, “There is only one valid definition of business purpose: to create a customer.”4 Thus, organizations now have no choice but to revolve around the customer. In his book The Age of Agile, Steve Denning calls this shift the Copernican Revolution in Management,5 after the original Copernican Revolution, which saw humans’ view of the universe shift from the geocentric model, in which the earth is at the center of the universe, to the heliocentric model, in which the sun is at the center of the solar system, with planets revolving around it. Denning’s revolution represents a fundamental shift in the relationship between business and customer, with power having flowed away from organizations and into the hands of customers.
While we undertake creative work and search for new products and services, there is no substitute for understanding the customer. When innovating, design and construction are so tightly interwoven that they are almost indistinguishable from each other. When moving away from traditional bureaucratic management practices, there must be a clear understanding of which problems are being solved, and for whom. Only then will it be possible for teams at the coal face to make the best decisions. People are not inspired or motivated by being mere cogs in a machine, and the “cog effect” is exacerbated when there is no clear sense of that machine’s end product.
Few would argue against focusing on the customer, and many organizations profess to espouse it. And yet, take a look at most organization charts and what you will see is a hierarchical pyramid with no obvious way to map to the customer. Jack Welch once defined hierarchical organizations as those in which “everyone has their face toward the CEO and their ass toward the customer.”8 Often, all but a few people are completely abstracted away from the purpose of the organization and the problems it seeks to solve for the customer.