Why is it important to prioritize customer needs? What information is required to satisfy customers?
In The Age of Agile, Stephen Denning argues that the customer should be the company’s highest priority, not shareholders. Additionally, firms should focus on delivering value that excites their users.
Continue reading to learn more about the benefits of putting the customer first.
Prioritize the Customer
Prioritizing customer needs challenges traditional management practices that prioritize profit leading to investor return over customer satisfaction. He stresses that profit is a by-product of thrilling the customer, not a separate or conflicting goal.
Denning explains that this shift requires companies to change their goals, structures, and processes to be customer-centric. Additionally, top management must cultivate company-wide enthusiasm for bringing joy to customers by exceeding their expectations.
Knowing how to bring joy to customers requires precise information about the needs they want met. Denning recommends constantly interacting with customers to gain feedback that will inform how you tailor products and services to their preferences. This process not only improves the final product but also motivates team members, who may find it rewarding to provide real value to others.
For example, online shoe retailer Zappos re-aligned their business to optimize customer service. To do so, they moved their headquarters to a city where they could afford their own in-house call center, rather than outsourcing. They removed time limits on service calls, staffed the call center 24 hours, and empowered representatives to make decisions to please the customer, even if they resulted in a financial loss for the company. This commitment to customer satisfaction, and customers’ many positive experiences with the company, has earned Zappos a loyal following.
| Who Comes First: Customers, Employees, or Shareholders? In arguing that companies need to put their customers first, Denning is wading into a long-standing debate over which stakeholders a company should prioritize: their customers, their employees, or their shareholders. Here, we’ll take a look at the other two perspectives in this debate, employee first and shareholder first. Employee first: The position that companies should put their employees first has gained traction recently with endorsements from prominent CEOs such as Richard Branson of Virgin Group and Craig Jelinek of Costco. The theory is simple: Whatever value your company produces—whether for customers or shareholders—will be produced by the work of your employees. Therefore, cultivating a staff of highly motivated, loyal, engaged, and hardworking employees will generate the most value in the long run. Furthermore, loyal employees who take pride in their work can become ambassadors of your brand. Employee-first companies tend to focus on job-security, high compensation, and company culture. Shareholder first: The default position for much of corporate America over the last half-century has been that companies should prioritize shareholders. The economist Milton Friedman popularized the idea in the 1970s, arguing that shareholders are the owners of the company and CEOs are their employees. Therefore, the CEO’s first responsibility is to their employer, the shareholder. Proponents of this position also argue that shareholder value is easier to measure than customer satisfaction or employee loyalty and thus provides clearer metrics as to how the company is doing. Shareholder-first companies tend to prioritize efficiency and cost-cutting. |
