Customer-Driven Change: What Your Customers Know, Your Employees Think, Your Managers Overlook

By Bud Taylor

An accomplished change consultant offers valuable insight into using customer perspective to drive employee engagement and strategic innovation.

In the world of business, theories of change always agree on two essential ingredients: committed leaders and engaged employees. Most would say that if you have these, you will have successful change—but how do you get them in the first place? And how do you maintain them through reorganization, new strategies, or necessary cutbacks?

Change management expert Bud Taylor has a simple yet profoundly effective answer. In Customer Driven Change, he demonstrates the power of thinking about change from the customer’s point of view. By encouraging leaders and employees to adopt a cohesive perspective—that of your customers—you will create sustained commitment and engagement within your organization faster than with any other approach.

• Language: English
• Publisher: Open Road Integrated Media
• Release date: Nov 15, 2011
• ISBN: 9781612540061

Book preview

CUSTOMER DRIVEN

CHANGE

What Customers Know,

Employees Think,

and Managers Overlook

Bud Taylor

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Brown Books Publishing Group

Dallas, Texas

Customer-Driven Change

What Customers Know, Employees Think, and Managers Overlook

© 2009 Bud Taylor

www.customerdrivenchange.com

All rights reserved. No part of this publication may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews.

Manufactured in the United States of America.

For information, please contact:

Brown Books Publishing Group

16200 North Dallas Parkway, Suite 170

Dallas, Texas 75248

www.brownbooks.com

972-381-0009

A New Era in Publishing™

ISBN-13: 978-1-934812-40-2

ISBN-10: 1-934812-40-4

LCCN: 2009924147

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Acknowledgments

I thank Walter Puschner and Microsoft for the foreword to this book. I acknowledge the assistance of my clients, who have taught me my profession, and all of my wonderful consulting colleagues at Phillips, Watson Wyatt, Deloitte, and Synovate, who have stimulated and challenged me.

I also thank Milli Brown and the Brown Books staff, who led me through the publishing process.

My sons, Brad and Brent, have been in my thoughts throughout the writing process. I love them dearly and have the highest respect for their opinion. They are successful business people in their own right. Every word in this book has been written with them in mind. I trust that they will not find their father to be too far off the mark.

I could never forget my grandsons, Alex and Jack. If they are not filling my life with joy, they are filling it with excitement. Then there is Julia, who always delivers. She deserves my apology for rushing out when she was in labor—thanks for Catherine.

Most of all, I thank Sharon, my wife, for all her support—although often silent. Our thirty-ninth year of marriage was an unexpected test. Not surprising to me, she came through with her steady elegance. Sharon is a firsthand witness to the fact that change is possible.

Contents

Foreword

Preface

Chapter 1

Painting the Picture

Part I Vision: Discovering Our Customers

Chapter 2

Recognizing the Role of the Customer

Chapter 3

Organizational Readiness

Chapter 4

Building a Customer Strategy to Drive Change

Part II Innovation: Moving Toward Change

Chapter 5

The Source of Change

Chapter 6

Changing Course

Chapter 7

Going Deep

Part III Precision: Engaging the Organization

Chapter 8

The Secret for Committed Employees

Chapter 9

Low-Hanging Fruit

Chapter 10

Precision Every Day

Epilogue: Change or Atrophy

Sources and Further Reading

Foreword

Change! Customer! Are there two words used more often in business today? Unfortunately, they are rarely used together.

When we speak of change, we often have something transformational in mind: the movement of an organization from its current state to some new, visionary state. This is often presented as a calming place where managers and employees work in unison to further the interests of stakeholders. This type of change is usually focused internally on things we can control: the implementation of a new organizational structure, information platform, transactional process, or cost reduction.

When we speak of customer, we often think about marketing, merchandising, and sales. We think about pricing and branding and, most importantly, how we can segment the market to get people to buy more of our products or services. Thinking about customers is naturally focused outward because that’s where they are. But customers pose a problem. Their purchasing behaviors are often beyond our control.

But what if we combined these ideas? What if we deeply understood our customers, not just to sell them more, but also to use their insights to drive internal, transformational change? Rather than restructuring to improve internal accountability, what if we restructured only if it improved the relationship we have with our clients?

Several years ago, we tried this new paradigm with one of our customer segments in Microsoft Europe. We looked at what made them loyal and then defined strings of changes right down to the person on the front line. These customer-driven changes then defined our visionary, transformational state.

Bud Taylor and his team worked with us to connect our customers to the daily work of our employees. This experience inspired Bud to write this book. Bud understands change theories, but this is not a book about theory. This book tells you how to get to know your customers and then gives you a full toolbox to show you how to translate this knowledge into action.

I wish Bud success with his book and encourage you to consider what he has to say.

Walter Puschner

Vice President

World Wide Information Technology

Microsoft Corporation

PREFACE

If you stand still long enough, you will be in the lead.

-A Client

This book is about change. It is about how to see from the outside so you can make changes from the inside. That doesn’t mean doing what customers say they want you to do just because they say to. We all know the results of New Coke and the Edsel. What it does say is that you have to know your customers and understand how they can help you keep your organization relevant and healthy. To know your customers, you have to build a path to them that tells you three things:

What experiences are important to them

How these experiences affect their attitudes toward the efficiency of your business and the relationships they choose to have with you

How these experiences and attitudes influence their loyalty and cause them to refer others to you

This path to the customer will give the people in your organization a common way to think about what is important to customers and a common language in which to talk about them, to build a narrative about them. As this narrative becomes ingrained in the organization, it becomes ingrained in the rhythm of the business—the way the business makes decisions about resources. And resource decisions result in organizational change.

If You Stand Still Long Enough, You Will Be in the Lead.

This quote was my introduction to the passive-aggressive way that people resist change. The unfortunate reality is the truth in this statement. Early in my career, I worked with a client for almost a year to make some transformational changes in an organization. By the end of that year, the client was gone, I was gone, and the organization looked remarkably similar to when we started. What went wrong? Well, a lot, and I’ve spent the last thirty years learning from my experiences.

There is plenty of evidence to show that implementing change is a high-risk game. The story of mergers and acquisitions is proof enough. There is a long history of surveys, research, and anecdotes to show that many M&As don’t even recover the costs of the deals. If you haven’t seen these studies, then just ask a friend who has been through it from the inside. I’ve gone through this transition twice—with the same disastrous result both times; we were acquired, not merged. Within three years, the mother ship had erased all evidence of the transaction, as well as all hope of receiving the value it thought that it was buying.

Doing Something Right in the Change Business

There is also ample evidence to show that change, and even large-scale transformation, does take place. For example, did you know that Nokia started out in 1865 as a small pulp mill? It wasn’t until the mid-sixties that we began to see the start of today’s modern corporation, where electronics is listed among the other activities: rubber, cable, forestry, and electricity generation. By the mideighties, Nokia came out with its first portable phone, and then in 1994, it decided to leave the old businesses behind and focus on telecommunications.

Or when you hear of Goodrich, do you still think of tires? In 1961, BFGoodrich started getting into aerospace, and by 1988, it was completely out of the tire business. Following a few more acquisitions and divestitures, it became the Goodrich Corporation and today is the world’s largest pure play aerospace company. BFGoodrich still exists as one of those divestitures and it still makes quality tires, but the Goodrich Corporation is a far cry from the one started by Dr. Benjamin Franklin Goodrich in 1870.

Someone is doing something right in the change business, and I’ve always wanted to learn what that is. It’s been a long and rewarding journey.

I started my career in Canada, working on planning and budgeting systems for the federal government until the late 1970s. Then I went into information-systems consulting, which led me to working with executive teams and supporting their business strategies with better information. In 1994, I came to Dallas, Texas, to establish the organization-effectiveness practice for Watson Wyatt in the Southwest. Here I used my executive and organization experience as a backdrop and learned about integrating people into the change equation: human resource strategies, compensation, retirement, and group health. We got involved in the emerging area of mergers and acquisitions and the flip side, divestitures.

In the late nineties, I joined Deloitte as a partner to lead its change practice in the Southwest. Change management at Deloitte was largely driven from a base of technology implementation. We installed ERP (Enterprise Resource Planning) systems like SAP and Oracle, and my team had technical expertise with the HRIS (Human Resource Information Systems) modules.

All of this offered tremendous learning. We defined and designed lots of structured processes to implement change. We made these processes as granular as possible. We codified them and explored change management to its depths as we attempted to remove risk from it. In the end, I concluded that change management came down to engaging employees through the fundamentals of vision, planning, and communication. You can expand and qualify these elements, but eventually this is what change will reduce to.

In 2004, I accepted an opportunity to work with Synovate, a global research company focused on customer loyalty. It helped clients understand why customers stayed with them. The role of my team was to develop and implement consulting protocols to put the customer loyalty research to work. Essentially, we consulted on two efforts: the upstream pre-research to clarify customer strategy and ready the organization for change, and the downstream post-research, working with the organization to define change initiatives, get them funded, and get employees engaged in improving customer experiences.

By thinking about change, any change, from the customer’s point of view, you will get sustained commitment and engagement within your organization faster than through any other approach.

Looking at Change from the Outside In

This concentration on the customer perspective was an epiphany for me. Up to that point, most of my change work had been driven from the inside. We always said that we were thinking about the customer, and occasionally we even asked about how the change might affect the customer, but this certainly was not central to the work. There was something new and compelling when you looked at organizational change from the outside in. This was the power of customer-driven change, and I’d never experienced it before.

What was the difference? All change theories and approaches agree on two essential ingredients: committed leaders and engaged employees. It’s standard to say that if you have these, you will have a successful change. How do you get them? This is the point where change recipes often come up short. How do you get commitment and engagement for the acquisition of a hostile competitor, for a new ERP technology, a reorganization, a refreshed workforce strategy, a change to account management, or the belt-tightening when the business or the economy goes into a tailspin? How do you get people out of their silos and involved in something that is bigger than themselves or their function? Customers, that’s how!

By thinking about change, any change, from the customer’s point of view, you will get sustained commitment and engagement within your organization faster than through any other approach. You will get commitment from leaders because they cannot use siloed resistance to overlook the customer— the common business goal—and you will get engagement from employees because you are unlocking the world’s most powerful human resource strategy, something they care about and think about—their customers.

This book presents insights into this power of customer-driven change; however, there are some risks in how I go about this.

Caveats for the Reader

First, although I draw heavily on well-documented processes and provide lots of tools and templates, this is not a recipe book. It’s a book about insights and ideas. It’s about an approach, not a silver bullet. I have not found the answer, but I think I’ve found a way to soften or explain many of these paradoxes of change: incremental vs. fundamental; long term vs. short term; leadership vs. management; direction vs. consensus. In the end, we need models to help us understand the science of change, but we also need intuition to implement its art.

Second, since the book is centered on the customer, at times it might have a hug the customer tone. I understand that business has to do business to stay in business; however, I also believe that investing in the customer is a sure path to growth and profitability.

Third, although the book is meant to be provocative, some sections could offend some readers, or at least have them question my sanity. I know that many of my ideas about management, change, customers, research, and employees are not always conventional. But isn’t that the purpose of writing a book? I have tried to keep my ideas fresh, as well as acceptable.

The Art of Change: Vision, Innovation, Precision

The framework for this book comes from nineteenth-century French artists. They help us paint a picture of change. We start with Jean-Louis Meissonier, who shows us that change starts in the precision of the world we live in and try to control. To move from this precision into a new reality, we invoke a VIP cycle of VisionInnovation-Precision. Paul Cézanne inspires us with vision; Edouard Manet illustrates innovation; and then we return to Meissonier and the comfort of a new precision. I devote one part of the book to each of the ideas underlying this VIP cycle.

Part I, Discovering Our Customers, is about vision. We look at how to seat change within an organization’s DNA. We show that vision is myopic if it doesn’t recognize the reality of an organization’s implicit business strategy, its core values that create its default decision making, and its readiness to change. Finally, we build a customer strategy that starts with vision, as illustrated by the example of Southern California Edison.

Part II, Moving Toward Change, is about the need for innovation in change. This part is about linkage. It establishes the bridge between the customer strategy and its execution. The setting for Part II is the annual business planning cycle. We develop the tools and business case needed to get the resources to implement customer-centric change. Part II also broadens participation. We get more people involved, particularly the mavericks that are so important when organizations decide to change course. The Whirlpool Corporation is at the base of much of my learning in this part of the book.

Part III, Engaging the Organization, is about the precision needed to bring strategy to the front line. This part is about getting everyone engaged, everywhere, every day. We start by looking at how a customer focus can involve employees, even in today’s organizations where often we have broken our commitment to them. This is followed with discussion and practical examples of how to build the customer experience and how to use metrics to connect those on the ground to our starting point, the customer strategy. I thank my friends at Microsoft Europe for some new thinking in this part of the book.

As mentioned, whenever possible I use my client experience to illustrate my points. Most often such examples come from the following companies:

Canadian Pacific

Cardinal Health

Force Protection Industries

Microsoft Europe

Promotional Products Association International

Sony Electronics Limited

Southern California Edison

The National Commercial Bank of Saudi Arabia

The Overseas Chinese Banking Corporation

Toyota South Africa

Whirlpool Corporation

The examples do not break confidentiality with information I gained working with these clients. Either references are now contained in public information, or the information that is presented has been disguised—often to the point where the clients who worked with me may not recognize the specifics of an example.

There is one final point about the influence of my clients in the writing of this book: they introduce each of the chapters. Initially I looked to my heroes, such as Winston Churchill, to fulfill this task; however, they were preoccupied with pithy comments on other topics. When I turned to my customer file, they were completely on point. They did a great job.

Each chapter ends with five field manual questions. I want the book to be more than a nice read for business managers. I want the book to have a broad and deep readership in organizations. I want readers to think about how the ideas in the book apply, or don’t apply, to them. I’m not concerned if you don’t buy into my ideas, but I am concerned if you don’t consider them.

My last point on the structure of the book is a personal one. I am passionate about change, particularly when the customer powers it. As a result, I have been unable to take myself out of the book. When I use personal examples, I use the pronoun I; however, when I use team examples, I refer to we. But be assured that in these team examples I was a major player—this book is not a vicarious account of work done by others.

Now it’s time to change!

CHAPTER 1

Painting the Picture:

Breaking Molds and Moving Mountains

"Change management?

What ever happened to naked fear?"

-A Client

Change is inevitable. We all know it will happen, but it can still be scary; our choice is how to play. Will we engage, or will we resist? Will the experience be beneficial or painful?

Some changes are welcomed. If someone gives you a pay increase or an exotic vacation, the odds are that you will easily move from your current state to the changed future state.

When we’re talking about organizational change, that’s not the kind of change we’re talking about. We’re talking about the kind of change where the amorphous organization or someone in it comes and asks you to change the way you’ve been used to working. There’s someone in control of you who has come up with a good idea for you to embrace. Maybe your manager wants to reorganize the region, outsource the call center to Bangalore, launch or acquire a new business in an unfamiliar sector, or simply cut back on expenses to combat a business downturn. If you don’t immediately and passionately jump on board, then the game of change management begins. That’s the game of getting you to believe that the change is a good idea and that you want to participate in its implementation. That may sound cynical, but that’s the dance.

So, what’s going to happen? What does change imply? For me, change is about a cycle. We start from a point of precision, where we are comfortable and effective in our worlds, and we end up in a new precision, where we return to comfort and effectiveness. But to complete the cycle, we need to transform. This requires two ingredients: an inspirational vision that pulls us into the future and the discomfort of innovations that push us in uncomfortable directions. This is VIP. It starts at precision and changes us through Vision-Innovation-Precision.

PRECISION: A Comfortable World of Familiar Patterns

Let’s start the change cycle. First, you will have to move out of your very precise world where you know how to do things and you know the people who can help you get things done. You know how to do your job, and you’re comfortable with it. The change issue is how to move you through a process and return you to a world of new precisions, where you’re equally comfortable doing a new job. Sounds simple, but there are a few snags, and many of them are lodged in your brain.

PATTERNS AND THE BRAIN

An example I often use to show how the brain interacts with patterns is the familiar FedEx logo. You’ve seen it a million times. I’m sure that FedEx spent big dollars on it. But have you seen the arrowhead in the logo? It’s central to the design and central to the brand essence of FedEx. The arrowhead represents speed, direction, and delivery—all the things that FedEx is known for. But do you see it? Most people don’t because the logo is caught up in a background-foreground negative space within the presentation. Next time you see the logo, look closely at the white space that connects the capital E with the lowercase x. Yes, that’s it—an arrowhead.

So, what’s the point? Well, since the arrowhead has no meaning to you and no one has brought it to your attention, you have no reason to make it part of your thought pattern. You see it every day, but you don’t see it. You’re comfortable moving through your fast-paced life without making it part of your day. But I can guarantee that has just changed. From now on, every time you see that logo, you’ll immediately focus on the arrowhead.

What do neuroscientists know about the brain? They know that the brain likes patterns. It likes familiarity. If it doesn’t get what it wants, it gets frustrated, and that’s not good for you. You begin to feel all kinds of angst, and you misbehave until you can get back to your comfort zone.

In fact, we need patterns, or we couldn’t start our day. We’ve drilled electrical paths into our brains so we don’t have to tell ourselves how to get dressed in the morning. If you know someone who has suffered a stroke, just ask what the physical rehabilitation was all about. You will learn it was about having the brain tell the muscles how to pick up an affected arm or leg and doing this enough times for the limb to recognize the pattern without having to call on the expensive energy from the brain. Patterns are essential.

But patterns get in the way, too—they can blind. Ask courtroom attorneys whether they’d rather have physical evidence for a crime or an eyewitness. Most will refuse the eyewitness, knowing that magicians make a living by making people think something happened that really didn’t. Why do you think that you don’t see the blind spot that is in front of your eyes? That’s right, the brain fills it in with patterns that won’t disturb you. How does camouflage work? Well, vision neuroscientists play games with your brain. They know that in a jungle, your brain will work hard to see a bush rather than a soldier.

Precision and Meissonier’s Masterpiece

Let’s take the analogy one step further, to nineteenth-century French art, specifically to painter Jean-Louis Meissonier. He believed in the rules and precision of the romantic school of art that heralded past glories. His career was devoted to creating comfortable patterns called paintings. I encourage you to look him up on the Internet.

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Jean-Louis Meissonier, Napoleon on Campaign in 1814.

Google Meissonier’s painting of Napoleon on Campaign in 1814. The title is interesting because it actually depicts Napoleon leading his troops home from his failed campaign in Russia. To recognize such failure in the title would betray the roots of romantic painting, which in this case is the glorification of France and aggrandizement of Napoleon. In any case, this painting is a marvelous example of Meissonier’s precision. He follows all the rules of romantic painting and he produces a masterpiece.

In Napoleon on Campaign in 1814, you can see every detail and you can feel the pathos of the moment. The central figure is Napoleon on horseback. He is accompanied by generals and horses and men trailing into the distance. The grayish snow on the ground blends into a somber sky. The painting seems to move. This is created by the sight lines, composition, and exquisite detail of ruts in the snow, but most of all by the muscular detail of the horses—particularly Napoleon’s horse. This is not an accident. Ross King, in The Judgment of Paris, reveals that Meissonier actually had a small rail track in the backyard of his estate near Paris where he would ride on a car while his son rode a horse alongside. He would examine and sketch the muscles before returning to his studio to