Learn or go extinct

Being a learning organisation is mandatory for corporations operating in an environment where the pace of change is accelerating, fraught with ambiguity and where problems are complex. How well an organisation adapts through learning will be its only source of competitive advantage.

The management practices of the 20th century and the industrial age will no longer work for the 21st century. The power transfer from the corporation to the customer is now complete. The customer can no longer be manipulated and chanting the empty and meaningless slogan of "the customer is number one" whilst continuing to run the organisation in a bureaucratic and internally focused fashion interested in delivering value to shareholders is doomed to fail. Unfortunately for these companies, the power transfer to the customer has descended upon them like the thief that comes in the night and plundered the house whilst the owners laid fast asleep.

Customer centricity has changed. It is no longer about, and should never have been about, making something and then convincing the hell out of the customer to buy it. Being customer focused means being obsessed with delighting and delivering exceptional value to the customer. Companies at the forefront are raking in the profits and these include Amazon and Apple. Everything these companies do is aimed at continuously innovating to generate new value for customers whilst ruthlessly eliminating anything that doesn't., including all internal processes that stand in the way of value creation for the customer.

For an organisation to truly be customer focused, it is not enough to merely have employees trained and equipped with the tools and frameworks of agile or design thinking. There needs to be a profound shift in mindset and management practices. The most important mindset shift is to understand what it means by "the customer is number 1". Companies are claiming that they are "market back focus", focused on the "consumer experience", building a "platform business" or going through "digital transformation", but if they are all just a means to manipulating the customer to buy more of what it is producing - they have missed the point. Having a deep revelation of what it means to be truly customer focused in our modern age will determine the structures and culture of the organisation and the behaviour and actions of its people.

Being way ahead of his time, management guru Peter Drucker said:

There is only one valid definition of business purpose: to create a customer. It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or for a service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of first importance - especially not to the future of the business and to its success. What the customer thinks he is buying, what he considers 'value,' is decisive - it determines what a business is, what it produces and whether it will prosper.

Drucker goes on to say:

Because it is its purpose to create a customer, any business enterprise has two - and only these two - basic functions: marketing and innovation. They are the entrepreneurial functions.

Marketing is not convincing customers to buy what you already have - that's selling. Marketing begins with the questions "what does the other party want?" followed by "what does it value?", "what are its goals?" and "what does it consider results?". By having deep insights about customers, innovation translates these insights into creating products and services that delights them, that they assign value to and are willing to demonstrate value through the exchange of cash for the product or service.

Peter Drucker was way ahead of his time. His wisdom came at a time (1954) where the mainstream belief was that a business’s only purpose was for profit and to maximise it. Those who held on this belief have now found themselves caught wrong footed. It may seem like a prophetic declaration of the age we are in, but changes in the marketplace were already underway and these changes were given a boost of rocket fuel with deregulation, globalization, emergence of knowledge work and new technology, namely the age of the internet. 

Many organisations are still looking after number one. Unfortunately, that number one is not the customer, but the company’s self interest. If companies want to survive, they must quickly realise that it is the customer alone that determines the success and future of the organisation.

Are you a people first organisation, or a outcomes first organisation? The customer can tell.