Nadella Pushes Microsoft to Rediscover Its Soul

In a letter to all Microsoft employees called Starting FY15 – Bold Ambition & Our Core, CEO Satya Nadella established a mandate and vision for significant change across the technology behemoth.

Microsoft has great assets, but it has not kept up with changes in how people use technology. The Redmond giant was becoming increasingly less relevant in a world where digital technology is becoming more relevant.

Microsoft has needed to change for a while. There’s a saying that the best time to plant a tree is ten years ago and the second best time is right now. Nadella has made it clear that Microsoft’s time for change is right now.

My take: First of all, it’s hard to talk about any large-scale culture change without recommending that people review our model called Employee-Engaging Transformation, which is built on five practices: Vision Translation, Persistent LeadershipActivated Middle ManagementGrassroots Mobilization and Captivating Communications.

EET2

We work with many of the world’s leading technology companies, so I could go on and on about what changes are necessary at Microsoft. But I’d rather examine broader lessons from Nadella’s letter. Here are some excerpts that I thought were particularly valuable to discuss:

“...in order to accelerate our innovation, we must rediscover our soul – our unique core

Successful companies almost always start with a strong raison d’être, but it can get lost as the company grows and the world changes (see my post on Starbucks). Without a “soul,” companies drift along as employees across the organization start operating in a disconnected way. This is where the brand comes in. Companies need to constantly refresh their brands and make sure that the brand drives decisions across the organization (see my post on Walmart).

More recently, we have described ourselves as a “devices and services” company. .. At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

Our research shows that employees are more productive and engaged when they are inspired by their organization’s mission. Which one of these statements do you think is more inspiring: “We are the devices and service company” or “We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

“We will create more natural human-computing interfaces that empower all individuals.”

This is a comment about technology, but its also points to a broader commentary about making things easy to use. We have entered into a world where people have more options, more distraction, and less patience. Every organization needs to relentlessly focus on making their products, services, and processes easier for customers to use.

Obsessing over our customers is everybody’s job. I’m looking to the engineering teams to build the experiences our customers love.

What’s not to love about this excerpt. My customer experience manifesto (and Temkin Group, for that matter) is built on a fundamental belief that sustaining great customer experience is not about applying a veneer, but about building competencies across the entire organization that create great experiences for customers (see our four CX core competencies). Also, it’s interesting that Nadella used the word “love.” Experiences are made up of three component (functional, accessible, and emotional) and our Temkin Experience Ratings show that companies are weakest at driving the emotional component. To get people to “love” your company, I suggest applying what we call People-Centric Experience Design.

“I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work.”

One of the Six Laws of Customer Experience is that unengaged employees can’t create engaged customers. Any company looking to improve how it interacts with customers almost certainly needs to focus on its employees.

“We will be more effective in predicting and understanding what our customers need and more nimble in adjusting to information we get from the market.”

How companies use customer insights is changing rapidly. Technologies such as text analytics and predictive analytics are helping companies tap into more comprehensive and ongoing insights, rather than relying on periodic customer surveys. Ultimately, companies will need to reinvent their operating frameworks so that they can adjust more frequently to take advantage of these rapidly-flowing insights.

Nothing is off the table in how we think about shifting our culture to deliver on this core strategy.”

This type of statement only works if it’s backed up by clear actions that employees can observe. These “symbols” of change need to be clear departures from how the company operated in the past, and can include reorganizations, firings/hirings/promotions/demotions, killing projects, accelerating projects, etc.). Don’t just say change is coming, demonstrate it (see the 3 characteristics of transformational leaders).

“We must each have the courage to transform as individuals. We must ask ourselves, what idea can I bring to life? What insight can I illuminate? What individual life could I change? What customer can I delight? What new skill could I learn? What team could I help build? What orthodoxy should I question?”

The notion of a personal challenge is a great way to help employees think about how they can be (and must be) a part of the change. But the questions won’t be too powerful if they are just statements in a letter from the CEO. Use these questions as part of discussions across the organization and embed them into leadership training and competency models.

 The bottom line: Change isn’t easy, but Microsoft seems ready to give it a try.

Bezos Letter Describes Amazon’s Customer-Centric Blueprint

In his recent letter to shareholders, Amazon.com CEO Jeff Bezos provides insight into a truly customer-centric organization. The letter demonstrates how Amazon operates with a long-term view of customer value. Here are some of the most powerful components of the letter:

Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.

I frequently quote famed investor Benjamin Graham in our employee all-hands meetings – “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience. We aren’t 10% smarter when that happens and conversely aren’t 10% dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company.”

Bezos understands the value of Amazon’s most critical asset, customer loyalty, which I’ve defined as the willingness to consider, trust, and forgive. That focus is what put Amazon.com on the top of the retail sector in the 2013 Temkin Experience Ratings. Great leaders focus on building that customer loyalty asset with the knowledge that it will generate the best returns for all stakeholders in the long run.

Here are some other components of Bezos’ letter that I want to comment on…

As regular readers of this letter will know, our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors… One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to.”

My take: Too many companies overly focus on their competition, a process that leads to collective mediocrity. Great companies focus their energies, from learning to innovating, on three questions: who are our customers? what do they want and need? how can we provide them even more value?

We build automated systems that look for occasions when we’ve provided a customer experience that isn’t up to our standards, and those systems then proactively refund customers.

My take: This type of proactive approach is not only great for building trust with customers, but it also establishes pressure within Amazon to do the right thing all the time. It creates an environment where mistakes are proactively found, fixed, and prevented in the future.

Our business approach is to sell premium hardware at roughly breakeven prices. We want to make money when people use our devices – not when people buy our devices. We think this aligns us better with customers. For example, we don’t need our customers to be on the upgrade treadmill. We can be very happy to see people still using four-year-old Kindles!

My take: If you want to align your interests with your customers, then create pricing models where you only make money when customers gain value. This is an increasingly important concept as more products and services are connected online where usage and value can be more closely monitored.

As proud as I am of our progress and our inventions, I know that we will make mistakes along the way – some will be self-inflicted, some will be served up by smart and hard-working competitors. Our passion for pioneering will drive us to explore narrow passages, and, unavoidably, many will turn out to be blind alleys. But – with a bit of good fortune – there will also be a few that open up into broad avenues.”

My take: Every company makes mistakes, but companies that build loyalty with customers also earn their forgiveness. That’s why Amazon scores so high in the Temkin Forgiveness Ratings. It also allows employees to have the confidence to try new things.

The bottom line: Customer-centric organizations are purposefully built

GM’s New Formula: Quality + Customer Experience

This week General Motors announced that they were combining the leadership of the Product Quality and Customer Experience organizations into a single role, a first of its kind move for the auto industry. Alicia Boler-Davis will be GM’s Vice President for Global Quality and U.S. Customer Experience and her primary focus is on strengthening the experience in order to raise customer retention, which by GM’s calculation is worth $700 million for each percentage point increase. In addition to the merging of quality and customer experience, GM’s plan includes:

  • Dealership renovations so that the showroom enhances customer confidence and provides a strong first impression to car buyers
  • Support experts to handle the dealer and customer training required by the growing integration of technology into vehicles
  • A team to proactively handle social media monitoring and response
  • New programs to empower front-line sales and service personnel to resolve issues quickly

My take:  I applaud GM’s combination of quality and customer experience. In My Manifesto: Great Customer Experience is Free, I describe customer experience in terms of total quality.

Why does this combination make sense? Quality efforts tend to focus on removing waste and building more consistent processes, but they often lack the deep external perspective of customer needs and desires. The push for removing waste can also squeeze out some important design considerations and overly focus on short-term savings versus longer-term loyalty gains. Customer experience efforts can fill in those gaps and benefit from quality approaches for process redesign and control.

In the 2012 Temkin Experience Ratings, Chevrolet – the only GM brand in our ratings – lead the auto dealer segment and was the only one to receive a “good” customer experience rating. So the big auto maker has a solid base to work with. We’ll keep an eye on Boler-Davis’ progress.

The bottom line: Quality and CX are two great tastes that taste great together

Leadership Principles for Changing Corporate Culture

I just read a couple of articles about an important topic, corporate culture. The first one, The Rise of the Chief Culture Officer, describes how companies are appointing “Chief Culture Officers.” Here’s an interesting quote from one of those new execs, Maria Gendelman, from North Jersey Community Bank:

I’m there to make sure that every single piece of paper that we give to the customer all looks the same, that our processes are efficient and streamlined — all of those things touch culture.

The other article is an interview with John Taft, CEO of RBC Wealth Management. Here’s what Taft says about culture:

Culture is everything when it comes to responsible, long-term business success… A leader’s job is to discover, communicate and reinforce culture. If you don’t get culture right, nothing else matters.

My take: Company culture is an integral component of long-term success with customer experience. In our recent research The State of CX Management, 2012, we found that one of the most significant things that distinguishes companies that are CX leaders from their peers is a heightened focus on culture.

Executives may be able to mandate a few activities within a company, but corporate culture determines just about everything else in one way or another. Leadership guru Arthur Carmazzi does a great job of describing the value of corporate culture in this quote that I used in the post Management Imperative #1: Invest In Culture As A Corporate Asset:

“The ability to do more than expected does not come from influencing others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all.”

I talk about the intersection of culture and CX as Customer-Centric DNA, defined as:

“A strong, shared set of beliefs that guides how customers are treated.”

Here are some principles that execs should keep in mind about changing their corporate culture and building customer-centric DNA:

  • People generally conform to their environment (see 6 Laws of Customer Experience: Employees do what is measured, incented, and celebrated). So pay very close attention to the environment that you are creating.
  • Culture is very slow to move, because it often outlasts the senior executive team. Make sure you only attack the portions of the culture that you are truly committed to changing.
  • The first step of changing corporate culture is to fully understand the existing culture. It is important to frame the change in terms of explicit contrasts between the current behaviors and the desired future behaviors.
  • It’s likely that many of your existing leaders are reinforcing the current culture, in ways that they probably don’t even recognize. So changing your corporate culture will likely require some management turnover. As Pablo Picasso once said: “Every act of creation is first of all an act of destruction.”
  • Any leader who wants to transform her organization needs to adopt the three characteristics of transformational leaders: Communicate “why,” model desired behaviors, and reinforce change.
  • Use the 6 C’s of customer-centric culture as levers for change: Clear beliefs, constant communications, collective celebrations, compelling stories, commitment to employees, and consistent tradeoffs.
  • Finally, I’m not a big fan of the Chief Culture Officer position. I’d like to see Chief People Officers (heads of HR) step up to the plate and integrate culture as a core component of their organization’s work. Without culture in mind, how effective can an HR organization be at recruiting, hiring, on-boarding, reviewing, compensating, training, promoting, and outplacing employees?!?

The bottom line: Are you focusing enough on your corporate culture?

CX Reading List For Executives

Here’s a short list of posts that I’d recommend sharing with executives that want to get up to speed on customer experience:

  1. The Four Customer Experience Core Competencies. The path to customer-centricity requires mastering these four competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness. The report also has a self-assessment tool that execs can use to gauge their organization.
  2. The 6 Laws Of Customer Experience. Every executive should understand these fundamental drivers of how organizations deliver customer experience.
  3. My Manifesto: Great Customer Experience Is Free. Provides a perspective of how to think about customer experience management.
  4. 10 CX Mistakes to Avoid. Highlights common mistakes that inhibit customer experience efforts and provides advice for overcoming these obstacles.
  5. The Future of Customer Experience. Shows where customer experience is heading and identifies competencies and skills necessary to gain CX maturity.
  6. The ROI of Customer Experience. Shows the link between good customer experience and higher loyalty and revenues.
  7. Three Characteristics Of Transformational Leaders. Identifies what leaders need to do if they want to drive change in their organizations.
  8. Lessons in CX Excellence. Provides details of the customer experience efforts of 11 organizations that were finalists in Temkin Group’s 2012 Customer Experience Excellence Awards.
  9. 50 CX Tips: Simple Ideas, Powerful Results. A list of ideas that can make a dramatic improvement in your organization’s customer experience.

If your execs show interest in customer experience, then sign them up for the monthly CX Journal so they can continue on their CX learning journey.

The bottom line: An informed executive is a critical CX asset.

CX Mistake #1: Faking Executive Commitment

In this series of posts, we examine some of the top mistakes companies make in their customer experience management efforts. This post examines mistake #1: Faking Executive Commitment. It’s very easy for an executive to say that he or she is committed to customer experience, but it takes much more than words to drive sustainable change across an organization.

Without a strong level of executive commitment, companies can exert significant energy towards customer experience only to eventually fail. As a result, organizations revert back to their original behaviors without any sustained customer experience improvements, leaving behind a trail of unfinished efforts and frustrated, disheartened employees.

One of our 6 Laws Of Customer Experience is: You can’t fake it. Employees figure out what’s really important to their leaders and will eventually see through any veneer of commitment. Executives demonstrate their real priorities in their decisions and actions, the priorities they set, the trade-offs they make, and the way that they chose to spend their time.

Most organizations have a strong tendency to resist change. Since improving customer experience often requires changes across an organization, executive commitment is required to overcome the innate inertia.

Leaders, as it turns out, fall into one of five levels of commitment:

  • Opposers don’t believe in customer experience. These executives generally won’t support customer experience efforts no matter what ROI data they see, but can become passives when they see strong support from their peers.
  • Passives don’t really care about customer experience. These executives are willing to become toe-dippers if they see strong support from their peers.
  • Toe-dippers are willing to offer some time and resources for customer experience. These executives will increase their participation and can even become supporters if they see strong business opportunities.
  • Supporters are willing to give their resources to customer experience efforts and encourage their peers to do the same because they inherently understand the business value of these efforts. They use ROI results to strengthen their discussions across the company.
  • Advocates fight any battle to make sure that customer experience efforts are funded. They generally understand the impact that customer experience has to the long-term competitiveness of the company without any project-based ROI data.

How can you gauge the actual commitment of your executive team? We’ve created a checklist of eight signs of executive commitment that help identify the actual commitment of an executive. Advocates demonstrate most of these items.

Here are some tips for avoiding this mistake:

  • Communicate the four CX competencies. It’s easy for companies to think that they can make superficial changes and wind up with great customer experience. But it takes much more effort than that. Customer experience leaders can make sure that their senior execs understand the breadth of efforts required to build a customer-centric culture by explaining the four CX competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness.
  • Always refer to the journey. Customer experience change does not come overnight, so companies need to be prepared to hold their focus for several years. To help maintain this focus, try and frame your current customer experience efforts as part of a longer-term journey.
  • Teach execs how to transform their orgs.Many times I find execs looking for advice on how to drive the charge, so here’s some to share. The leaders that are most effective at leading transformation demonstrate three key characteristics, they: 1) Communicate “why” (making sure their people understand the rationale for change), 2) model the desired behaviors (showing commitment in their actions), and 3) reinforce change (continuously looking for ways to overcome inertia).
  • Locate a committed leader. While it will take the CEO and his/her staff to drive organization-wide change, individual operating units inside of organization can become more customer-centric. Look for a business unit leader who is truly committed and start the customer experience efforts in his/her organization. Success in that group can help to get other executives on board.
  • Make the business case. Some execs may be committed based on their belief that customer experience is a critical component of their organization’s success.But they need to continuously make trade-offs and convince others to focus on customer experience. To help these execs stay on course, it’s very helpful to provide them with compelling business cases and anecdotes about how customer experience is generating positive business results.
  • Appeal to the needs of senior execs.To fully engage senior execs, make sure to find ways to tap into their emotional needs. How do you do this? By focussing on two common areas: Their desire to be loved by customers (share direct negative feedback from customers) and their desire for greatness (paint a picture of how your efforts will help them make the company, and their legacy, great).
  • Match ambition with commitment. If senior execs aren’t true advocates for customer experience, then don’t try and make significant changes. While initiatives may start out okay, they will likely stall when changes are required across multiple internal organizations. It’s important to realize that not every company can or should focus on customer experience transformation.

The bottom line: You just can’t fake real commitment

Timeless Advice About Chief Customer Officers

It seems like there’s been a pickup of interest in the title of “Chief Customer Officer.” I’ve “studied” this role for a while and have worked with dozens of these execs (they often have a different “title”). Here’s my advice for companies that are considering this role that I published in 2007 in the post: Chief Customer Officer: To Do, Or Not To Do?

There’s a question that I’ve heard a lot that seems to stir up some debate: Do firms need a Chief Customer Officer? Well, I’ve run into zealots on both sides of the argument.

Those who say “absolutely yes” are convinced that companies can’t change without a senior executive who “owns” customer relationships, someone who can bring senior executive visibility to all of a company’s  customer-facing efforts. The argument is compelling — customers are certainly important enough to deserve a dedicated executive.

Those that say “absolutely not” are convinced that companies can’t just fix the problem by creating a new executive position.  They believe that this ends up being a superficial move — like putting lipstick on a pig. The argument is compelling — people often call for a new executive whenever they don’t know what else to do.

It’s an interesting dilemna when both sides of an argument are compelling. My position on this question is equally dogmatic: Absolutely yes and absolutely no.

To understand my position, let’s start by shifting the questin a bit. Instead of asking whether or not you need a person with the specific title of “Chief Customer Officer” let’s ask whether or not you need an executive in charge of a concerted effort to improve customer experience across the enterprise. If a company is truly committed to improving their customer experience, then an executive in charge of that change process will be very important. That person (who may or may not be called “Chief Customer Officer”) can lead a host of efforts like the establishing customer experience metrics and developing of a voice of the customer program.

But this type of position only makes sense if the CEO is truly committed to a significant change and will hold the entire executive team (not just the new executive) accountable for results. If the plan is to make the new executive responsible for “owning” the customer experience, then don’t create this position — it will only provide a handy scapegoat for executives who don’t make the required changes in their organizations.

While we’re on the topic of leading customer experience change, I’ll also point to a post from 2008: Corporate Customer Experience Groups; To Do Or Not To Do? Here’s what I discussed in that post:

Transformation isn’t easy. There’s a very strong need for a centralized group when companies are in a transformational mode, making changes that cut across the entire organization. This type of effort can’t be done without centralized support and facilitation. But companies that invest in centralized groups before the organization is committed to the journey are likely to either 1) completely offload responsibility for customer experience to these groups; or 2) stifle these groups through internal politics. In either case, they are likely to fail.

While these groups are important in some phases, they should never “take over” customer experience activities. Instead, they should facilitate and support transformational activities across the organization. In my research, I defined the following 8 categories of activities that these centralized customer experience organizations work on:

  • Customer insight management. Develop and support a voice of the customer program.
  • Customer experience measurement. Create and track key customer experience metrics and related management dashboards.
  • Employee communications. Make sure that employees are informed and engaged in the efforts.
  • Process improvement. Help the organization map interactions from the customer’s point of view and then redesign broken processes.
  • Customer advocacy. Make sure that customers’ needs are taken into account in all key decisions.
  • Culture and training. Actively work on cultural change and identify training required along the way.
  • Issue resolution management. Establish and support the process for solving customer issues that get escalated.
  • Cross-organizational coordination. Support the cross-functional teams and processes that govern the customer experience efforts.

The bottom line: Chief Customer Officers can be valuable in the right enviornments

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