May 03, 2022
May 03, 2022
Contributor: Mark P. McDonald
Too often internal issues prevail — and that’s a problem.
What is the last and most important consideration your organization uses to make tough decisions? This is indicative of where it focuses.
In a prior post, I outlined the various options or centricities an organization can use — customer, product, competitive and internal — all of which describe how organizations see themselves and act. Ideally an organization has one center, but too often they are situationally selective, meaning they pick and choose centricity when it suits them. Understanding your centricity, even if at only a given moment in time, is important.
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Given a choice, most companies want to say that they exist to understand and meet customer needs. Gartner defines customer centricity as “the ability of people in an organization to understand customers’ situations, perceptions and expectations.” When an organization sees itself this way, it feels good about itself and its role in society. After all, where would you be if you did not attract, retain and grow customer relationships?
While most companies would like to start with customer centricity, many become customer-centric only after addressing other concerns — product, competitive, financial, internal, etc. Consider customer-centric retailers with adversarial relationships with their suppliers and employees. Amazon justified the fuel-inflation surcharges it placed on its resellers as a customer-centric move. It is not; it is a pure power play, a form of competitive centricity. When asked why they are hard on suppliers, Amazon responds by citing the need to offer the lowest price to their customers. Lowest price does not mean lowest profit for Amazon or any other company.
If your organization is customer-centric, the following rings true:
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You are situationally customer-centric when you drag out the voice of the customer as rationale for a decision in your favor. Customers become a smokescreen or proxy for internal power struggles. This turns customer centricity into customer cynicism.
Customer centricity is what organizations publicly profess; internal centricity is what most persistently practice. These two are opposites. You’re internally centric and caught in an internal battle for priorities, plans and resources if:
Financial centricity is a form of internal centricity. Organizations that run themselves “by the numbers” use finance and budget as the language of internal competition and centricity. The CFO is the ultimate decision maker, and the organization makes choices based solely on metrics, not on intentions, customer needs or strategies.
Organizations with large corporate staffs, high walls between groups, or paternalistic relationships between executives and the rest of the organization tend to be internally focused. Great companies that become internally focused fail as bureaucracy builds faster than revenues or profits, greater control becomes the only answer, and success rests with who you know or likes you more than with what you do. When this is the case, an organization is internally centered — no matter what their marketing says.
Mark McDonald, Ph.D., is a Distinguished Vice President and a Gartner Fellow within the Gartner for General Managers team. He is responsible for the research focused on the application of technology to business, its products and services.
A version of this story was originally published on the Gartner Blog Network.
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Recommended resources for Gartner clients*:
Ask 11 Questions to Measure an Organization’s Customer Centricity
Hack Your Way to Customer Centricity With Rogue Thinking
3 Approaches to Drive a Customer-Centric Culture in Your Organization
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