Purpose and permission

Becoming a more customer-centric organisation requires two crucial elements: a clear purpose that everyone can understand, and permission from two major audiences — your customers and your shareholders

What’s stopping you?

One thing we hear a lot, from many clients and other businesses, is a desire to be more ‘customer centric’.

Often as part of this desire, organisations embark on large transformation programs with the objective of becoming more adaptable, more agile and more innovative.

However, I’m amazed at how few truly customer-centric products and services get released by these organisations despite the rhetoric, the effort and the investment. Usually the desire is there and the intent is honest, but something systemic prevents organisations from changing to become true customer advocates and behaving in ways that are actually in the interests of their customers.

Over many years, I’ve developed a personal thesis about why so many companies fail this transformative change in a meaningful way in the eyes of their customers, and it boils down to two words: “Purpose” and “Permission”.

Purpose

Some of the few organisations that have managed to truly disrupt industries and deliver new products or services that customers love have one thing in common — They are deeply driven by their purpose, and they’re not afraid to talk about it.

Take Tesla: over ten years ago, when Elon Musk first started pitching his electric cars to the world, he wrote a manifesto — his ‘Master Plan’ — which outlined not just the ‘what’, but they ‘why’ Tesla existed.

“The goal of Tesla is to accelerate sustainable energy, so we’re going to take a step back and think about what’s most likely to achieve that goal.” Elon Musk, CEO — Tesla

Tesla customers understand Elon’s intent, and they chose to buy his cars not just because they are well designed and high performance, but because they can align their own values with those of Tesla. They drive those cars like the bonnet badge is a personal badge of honour.

Another great example of a purpose-driven business is Amazon. Way back in 1997, Jeff Bezos wrote his first letter to his shareholders describing in detail how Amazon would behave in the future. He has gone on to refer back to that letter in every shareholder communication since. In it, he describes his philosophy of maximising investment in growth over investor returns, and clearly made his case that investors in Amazon need to take the long-term view.

His belief that if Amazon delivers what’s best for customers, that will be in the investors interest also has been proven true.

“In the long term, the interests of customers and shareholders are aligned.” Jeff Bezos, CEO — Amazon

Both these organisations, and many more, with brave and charismatic leaders boldly pronounce to the world that they are driven by their purpose, and it’s these very pronouncements that give them their biggest competitive advantage — Permission to behave differently.

Permission

Permission, in this case, is two-fold:

Firstly, customers are increasingly choosing to align themselves with those companies that they can see share their values. If they see that a company acts in their best interest, through product and service design, then customers will stick and stay.

But potentially more importantly, purpose-driven organisations gain permission from another important audience — the investment market.

Organisations like Amazon and Tesla have signalled clearly to the market that they will invest in their growth over returns to the market, and in so doing they have bought themselves the permission to be truly customer centric.

Compare the investment market’s expectations of these two poster-children of customer centricity, with more traditional businesses: your bank, your power company, your insurer.

All of these organisations will proclaim they are ‘customer-centered’, they will have launched major transformations designed to be more agile and nimble, but very, very rarely will they be prepared to change their underlying product — Products which at their heart are often adversarial to customer interests.

Product

One question to ask of companies who wish to become customer centric is whether they would be prepared to tell their investors that they are planning to potentially make less money in the short-term in order to deliver better customer outcomes in the long-run.

This could equate to reduced earnings, reduced margins, or increased cost to serve, but the core idea is the same — Would their shareholders let them get away with actually becoming more customer centric, not just talking about it?

Very often the answer is an emphatic ‘No’ — the profit imperative rules.

Companies simply don’t have permission from their investors to change their behaviour — even if the writing is on the wall that customers are expecting and demanding them to be more purposeful, to be more transparent and to just do the right thing by their customers.

There’s nothing at all wrong with designing products for maximum profitability. It’s just that this very often runs counter to delivering better customer outcomes.

If the core products and services that drive profitability are ‘out of bounds’ when it comes to transformation, then behaving as a truly purposeful customer-centric business may be impossible.

Companies that truly want to grow by providing a better customer experience need to start by declaring loudly, publicly and honestly what their purpose for being is.

Only by doing this will they be able to gain the permission from their critical stakeholders — both their customers and their shareholders .