Management Imperative #2: Make Listening An Enterprisewide Skill

Companies need to operate in environments that are more dynamic than ever before. What’s causing all of the changes?

  • Shifting consumer needs: Increasingly, Baby Boomers are getting closer to retirement while Gen Y are becoming a more important segment of customers and employees. The combination of these demographic shifts and the unique needs of both aging consumers and younger consumers creates a shifting set of demands on companies.
  • Increasing competition: Across most industries, competition is becoming brutal, thanks in part to the transparency and reach of the Internet which provides instant access to information and alternatives. Even historical monopolies and near monopolies like telephony, TV service providers, and banks are seeing more heated competition.
  • New capabilities: Technology is enabling new offerings and business models. For instance, Service-oriented architectures and business process management applications allow companies to make faster and broader changes to how they operate. At the same time, Web and mobile applications dramatically increase the opportunity for interacting with both larger and more targeted groups of people.

These changes generate an onslaught of new opportunities and threats that challenge firms’ drawn-out planning processes and hierarchical command-and-control structures. To succeed in this fast-paced environment, firms must master a new skill that I’m calling “Enterprise Listening” which is defined as:

The continuous processing of feedback from key constituents

Here are some ways that executives can cultivate Enterprise Listening:

  • Listen in a variety of ways. Companies need to listen to customers in a lot of different ways. To start, execs should identify opportunities across these five areas: Relationship tracking, interaction monitoring, continuous listening, project infusion, and periodic immersion.
  • Listen by example. Senior executives can’t expect their organizations to care about listening if they don’t practice it on their own. That’s why senior execs need to actively listen themselves. The executive team at Alaska Airlines, for instance, takes turns calling back key customers who have had a service problem.
  • Listen to employees. In many cases, key insights about the market can come from front-line employees. So companies need to make it easy and rewarding for employees to share their insights. A key reason for Zara becoming the largest clothing retailer in the world is the insight that salespeople provide about shifting fashion demand. 
  • Listen for soft voices. Not all important insights come from volumes of customers or prospects. Sometimes, feedback from a few people represents an important emerging trend. So companies need to examine isolated responses with an open mind.
  • Listen to online communities. The Internet enables fast, dynamic interactions across groups of people. That’s why companies should develop online communities of their key constituents. Kraft, for instance, tapped into an online community to define and launch its successful South Beach Diet product line.
  • Actively encourage listening. To keep everyone across the company focused on listening to customers, get in the habit of talking about customer feedback. Execs should consider asking these three questions about any project: Who are the target customers? What are their goals? How are we helping them achieve those goals?

The bottom line: Enterprise Listening allows firms to embrace change.

P.S. Here’s a link to all 6 New Management Imperatives

Gen Y Brands Gain, Financial Brands Lose

Interbrand just published its annual ranking of the 100 best global brands. Here are the top 10 brands on the list:

  1. Coca Cola
  2. IBM
  3. Microsoft
  4. GE
  5. Nokia
  6. Totota
  7. Intel
  8. McDonald’s
  9. Disney
  10. Google

Here’s some of the other interesting details from the rankings:

  • Google is the only new entry to the top 10; it was 20th last year. Which company dropped out? Mercedes-Benz was 10th last year and is 11th this year.
  • The listing also provides the change in value of the brands since last year. Here are the biggest changes in brand value:
    • Top gainers: Google (+43%), Apple (+24%), Amazon (+19%), ZARA (+15%), SAP (+13%), and Nintendo (+13%)
    • Top losers: Merrill Lynch (-21%), Gap (-20%), Morgan Stanley (-16%), Citi (-15%), Ford (-12%), and UBS (-11%).
    • The top gainers are what I call “Gen Y brands,” they came to age during the early adulthood of 20 year-olds, while the losers are dominated by large financial institutions.
  • There were 7 new brands on the top 100 list this year: H&M (#22), Blackberry (#73), Ferrari (#93), Giorgio Armani (#94), Marriott (#96), FedEx (#99), and Visa (#100).
  • The highest ranked company on last year’s list that did not make this year’s top 100 was Kodak (#82 in 2007).
  • For fun, I went back and looked at the top 10 brands from 2001. Here they are:
    1. Coca Cola
    2. Microsoft
    3. IBM
    4. GE
    5. Nokia
    6. Intel
    7. Disney
    8. Ford
    9. McDonald’s
    10. AT&T

The bottom line: Just about everyone recognizes this: 

Zara Bypasses The Gap; It’s All About Customers

The Spanish retail chain Zara has overtaken The Gap as the world’s largest clothing retailer. That’s amazing since many people outside of Europe probably don’t know much, if anything, about Zara. So what can we learn from Zara’s ascension to the top spot?

First of all, Zara is a division of Inditex, which is a vertically integrated apparel juggernaut. Unlike other large apparel corporations, the company owns all of its retailing, designing and manufacturing operations. This structural difference allows Zara to break some norms in the apparel industry.

Zara offers “instant fashions:” cheap, trendy clothing. In Zara shops, there are two new collections every week, and the company manages to design, produce, distribute and sell each of its collections in just four weeks. Here’s what Professor Isabel Díez Vial from the Complutense University of Madrid, who has studied Inditex, has said about the company:

The customer doesn’t go to the store at the beginning of summer or winter, and see what they want, and think about it and decide later what to buy. Instead, the customer has to go to the shop every 15 days because the collection is refreshed so frequently… This approach leads to a complete change in the production process. Instead of offering products that take a year to plan and sell, you now have a product that the customer demands.

In addition, Zara relies heavily on its front-line employees. Rather than squeezing costs out of its personnel costs, it sees them as a key to its advantage. By analyzing sales data, the retailer increases staff during the periods when there is heavy traffic in the store. Employees are also expected to provide feedback on any fashion trends they see or hear about — including what’s hot, what’s cold, or what’s missing from the current collection.

My take: Zara represents a great case study in how to change the paradigm by focusing on customers. Here are few lessons that others can learn from Zara’s approach:

  • Break supplier-driven paradigms. In many industries you’ll find approaches that are based on some limitation of the companies. These supplier-driven paradigms, like very discrete seasons in apparel, aren’t optimizing customer experience. So there are opportunities to expand your business by challenging the status-quo.
  • Disrupt with service amplification. Many firms view front-line employees as costs; which they try to minimize. That’s why there’s an opportunity for companies to differentiate themselves by investing in their people, like Zara. This approach, called service amplification, is one of the five disruptive customer experience strategies that I’ve mentioned before.
  • Shorten cycle times. If it takes six months to define, design, and manufacture something, then you need to make decisions six months too early. Zara’s ability to cut the cycle times for getting products to market provides it with the ability to respond more effectively to changes in the market. So firms should find ways to cut down the time it takes to make changes in their offerings. 
  • Look to customers for innovation. As I discussed in the post Customer Experience Innovation: As Simple As 1-2-3, companies need to focus their innovation efforts around the needs of customers. Zara’s growth shows that there’s a lot of opportunity to find new and better ways to meet their needs.

The bottom line: The path to the top is always fueled by customers.

%d bloggers like this: