On the Myth of the Customer-Centric Corporation

[The following is a point-counterpoint exchange between me and my boss. I wrote the first part as we were flying back from a business trip this week, showed it to him, and he (as is his tendency) disagreed with me a bit. I asked if he’d like his comments included, and so here you go.]

These days no manager, director or top executive of any company in the world can speak for more than about four seconds without using some variant of the phrase “customer-focused.” Customer service this, customer-centric that, and my favorite – “delight our customers.”

And most of these folks probably believe it. In fact, you do see a lot of companies and a lot of managers devoting lots of time to figuring out how to better serve those of us on whom their professional lives ultimately depend.

But the emperor is buck nekkid, folks, and worse, he’s not especially well endowed. The fact is that no publically-traded company you’re likely to encounter is customer-focused. Zero. Nada. Zip.

They’re investor-focused. Stay with me for a second.

Public corporations are legally obliged to act in the best interest of shareholders. Not customers, not communities, and certainly not employees – shareholders. Over time, the “best interest of shareholders” has been operationalized as best short-term interest – in other words, this quarter. Not next year, and sure as hell not 10 years from now.

We’ve seen it countless times – it’s nearing the end of the quarter, a corp is in danger of missing its numbers, and gods, the Street hates it when companies miss their numbers. So since you can’t make people buy more product (if you could, you wouldn’t be in danger of missing your numbers, now would you?) the only way to salvage the quarter is to cut costs.

Of course, “costs” in this context is a euphemism for “human beings.” So here comes another round of layoffs. Get those salaries and benefits packages off the books and all of a sudden those quarterly numbers look a little better.

Mr. Lip Service, meet Mr. Reality.

Because, all horsewax about “streamlining” the organization to “better align” with customer demand notwithstanding, you can’t provide better customer service with less people unless those people sucked to start with, in which case they should have been fired a long time ago and replaced with people who could do the job. I’ve worked corp PR, and trust me when I tell you that the people writing that drivel can barely stand themselves when it hits PR Newswire. Well, most of them, anyway. Some of them don’t have souls, and in these cases mainly they just try to stifle the laughter.

Better customer service is innately people-intensive, and therefore resides on the red side of the ledger, where it inherently collides with the need to satisfy the investors. And the investors always win. That’s what I mean by “investor-centrism,” and in today’s economic climate it’s usually at odds with a genuine concern with customer service.

But wait, you say – doesn’t it all go together? Doesn’t the ability to satisfy investors depend on satisfying customers? Aren’t customer-centric and investor-centric two faces of the same coin?

In theory, maybe, but in practice, no. See, a term like “customer-centric” means the customer comes first – top priority, job one, the most important factor, etc. It has to mean that, because if it just means that we think customers are important (along with a host of other things that are “-centric”) then it’s pretty much like the Pointy-Haired Boss telling Dilbert that everything is his top priority. And from experience, again, I can tell you that the people using this language mean it just that way – they think the customer is #1.

But it’s simply not true. The institutional fund manager sitting on a few million shares – he’s #1.

Here’s what I’d kill to see someday. It’s the end of the quarter and Acme Widgets, Inc. is going to fall short of its earning projections (and don’t even get me started on where earnings projections come from). But in the widget market these days, customer service is a major differentiator. So instead of canning half the work force in an attempt to hotshot the quarterly earnings results, John Bravery, the CEO, announces that Acme will be adding customer service reps and investing more in training them, effective later this afternoon. He acknowledges that this will actually hurt the quarterly numbers, but makes clear that Acme’s money-where-our-mouth-is commitment to customer service is a strategy that will, in due time, lead the company to the Promised Land.

Of course, the next morning at the opening bell Acme stock will tank as short-sighted earnings junkies jump ship faster than an Arthur Andersen junior partner with a job offer over at KPMG, which is fine, because at around 2:00 pm I’m going to place a nice little buy order (assuming the Acme board isn’t parading Mr. Bravery’s head around on a pole by then). I won’t be rich in three months, but I’ll take my chances over the next three years.

And if I’m in the market for some widgets, Acme’s phone is about to ring.


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