Saturday, December 15, 2007

Strategic Planning Analogy #139: Learn Your Love

Once, there was a young man who loved a beautiful young woman. Since he loved the woman so much, he wanted her to have great riches. Therefore, he devised a plan to give her great riches.

He left the United States to go work in a rapidly developing Asian country. The young man figured that he could become richer faster in one of these countries. He was right.

While living in Asia, the young man did well. On a regular basis, he would send money back to the United States to the woman he loved. He would also send her expensive pieces of Asian art.

After many years, he finally had become sufficiently wealthy that he could now fulfill his dream of supplying the woman he loved with great riches. Therefore, he came back to the United States to be with her.

When he returned, the young man expected the woman he loved to be happy to see him. Instead, she was very angry. He asked why she was so upset. She said,

“I never wanted great riches. I never wanted expensive Asian art. I don’t even like Asian art. All I ever wanted was to spend time with you.

“But instead of giving me what I wanted, you ran off half way around the world where I couldn’t spend time with you. You were so busy trying to become rich that you would not come back to visit me or even answer my calls.”

The young man replied, “But I did it for you. I love you so much that I want you to have all the riches you could desire.”

To this, the young girl said, “If you had really loved me, you would have done a better job of learning what was truly important to me. Spending time is what was most important to me. I found someone else who understood this. We recently got married. I saved all your money and your art. You can have it back.”

Many companies talk about how important the consumer is to them. They use terms like being “consumer centric” or “customer first.” They may even talk about a goal of “delighting the customer.”

This professed “love” of the consumer is similar to the love that the young man had for the young woman. Just as this young man devised a plan to please the woman he loved, many businesses devise strategic plans with the aim of pleasing their customers.

Unfortunately, the young man discovered that having great love and having a great plan were not enough. Because he did not take the time to truly understand the woman of his affections, his plan was a failure. Rather than making her happy, he made her so unhappy that she left him for another man.

This also happens all the time in the business world. Companies may profess their love of the customer, but spend so little time trying to understand them that their well-laid plans fail. Instead of giving the customer what he or she really desires, they give the consumer what they think the customer wants. Often times they guess wrong. As a result, the customer leaves them and marries-up their loyalties to another company.

The principle here is that customer love without customer intimacy leads to failure. Good intentions and well thought out plans are not good enough. One needs the intimate knowledge of the customer to truly satisfy them.

Although this has always been true, it is even more critical in today’s marketplace. Thanks to web 2.0 technology, consumers have more control of how business works. If you are out of touch, they can use their power to quickly punish you and abandon you.

Facebook’s recent failure with their Beacon technology is a great example. Facebook thought its customers enjoyed sharing all of their information. So, in order to help monetize this fact, they used Beacon to post where Facebook members were shopping (along with some shopping-related ads). They did this without asking permission.

Consumers hated this new intrusion into their lives and made a big stink about it all over the web. Facebook quickly relented and pulled Beacon.

Now you would think that a big consumer products company like Kraft would have figured this out a long time ago. But they have stumbled as well. About a year and ahalf ago, Irene Rosenfeld came back to Kraft to become their CEO (after spending a couple of years at Frito-Lay). What she found when she came back was a company focused almost exclusively on lower costs. Quality suffered. Innovation suffered. And profitability suffered.

As it turns out, customers were willing to spend more, if the product was right. Lower, put still premium prices on mediocre quality weren’t worth much. At that point, one may as well pay a little less and get the store brand rather than Kraft (which is what people did). Being out of touch with the customer was hurting the corporation.

With Maxwell House coffee, Kraft was so focused on beating Folgers that they failed to realize that the customers had abandoned both for Starbucks. Starbucks was more in tune with what the customer was looking for. Kroger pretty much missed the boat on healthy and organic as well.

Finally, Kraft is waking up to what the customer wants in coffee, but it may be too late. Like in the story, customers are only willing to wait so long before they abandon you for another love.

It is very easy for a strategic planning process to get focused on non-consumer issues such as raising margins, lowering costs, improving efficiency, improving supply chain relations, beating up the competition and so on. Although these are important issues, they can blind us to the impact our strategy has on the consumer (the one we profess to love).

In the strategic planning process, we need to continually keep asking ourselves two questions:

1) Do I truly, intimately understand what the customer I love wants from me? and

2) Do I truly understand how my strategic action will impact my ability to please the customer I love?

In business, what we do tends to fall into two categories: things the customer can see (like products, services, and prices) and things the customer is unaware of or doesn’t care about (like how you run your finance department or where you buy your office supplies). You may have a little flexibility on how you approach things in the second category, but never make a strategic decision in the first category without keeping the customer in the forefront of your minds.

Sometimes things which used to fall in the second category move up to the first. For example, most customers used to not know or care where their toys were manufactured. However, after all of the recalls of dangerous toys made in China, country of origin has become an important consumer issue. Therefore, consumer knowledge needs to be continually updated.

Saying you love your customer is not enough. Well-meaning plans that misunderstand the customer are not enough. Strategic plans need to incorporate knowledge gained through customer intimacy in order to succeed.

Today’s customer is less likely to put up with phoniness and hypocrisy than any prior generation. They are smarter and have more access to knowledge and power. Giving mere lip service to “customer centricity” is more perilous than ever before. There is no place to hide. It’s either authenticity or rejection. Don’t just say you love the customer. Show them you love them by some tangible action which resonates to their core.

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