People Make CRM Succeed

A client recently shared a story with me that represents an important lesson in understanding technological change.

General Norman Schwarzkopf Jr., who acted as commander of the allied forces during Operation Desert Storm, tells the story of teaching one of his promising lieutenants about leadership. The lieutenant, a recent graduate of West Point Academy, was talking about the advanced technology of the United States military when General Schwarzkopf invited him to accompany him outside. Not knowing what to expect or where they were going, the lieutenant followed his leader. Schwarzkopf and the young man walked up to one of the newest Air Force fighter jets and told the young man to command the jet to fly. Of course, nothing happened. Schwarzkopf and the young man then walked over to a tank and Schwarzkopf told the young man to command the tank to “move.” When nothing happened, General Schwarzkopf commanded the young man to give the order again.

Schwarzkopf asked his half-astonished and half-amused companion, “What did you learn?”

The lieutenant gulped, “I don’t know sir.”

Schwarzkopf stated, “It doesn’t matter how sophisticated our weaponry, people fly planes and people drive tanks.”

The lesson to CRM is obvious. It doesn’t matter how sophisticated our CRM technology, it is people who make it work. Putting customers at the heart of your business has less to do with technology than with people. It is people who deliver a service, decide how work gets done, interface with the customer, ensure quality standards, etc. CRM technology has provided us with better tools, but it is still people who do the work of an organization and are ultimately responsible for its success.

Unfortunately, most organizations are designed in ways that inhibit rather than promote a customer point of view. For example:

People don’t receive information to really understand their customers.
Management, rather than the front line, is responsible for solving problems when things go wrong.
Production ships bad parts in order to meet their quotas.
Workflow is designed to meet the needs of functional silos more than the customer.
Organization members are rewarded for covering up rather than identifying and solving customer problems.
People over identify with their own function rather than the whole process or customer outcome.

Jay Curry, in his book The Customer Marketing Method, page 58, illustrates the flaws inherent in the design of organizations:

“Buy this product,” suggests sales. The customer agrees.
“What you bought this machine? I could have kept the old one going or another year,” cries service.
“It’ll take three months to make,” says production.
“What order for what machine?” asks logistics.
“We love you, we love you!” is the message on the brochure sent by marketing.
“Pay or die!” is the message from accounting with the invoice that arrives in the same batch of mail with marketing’s love letter.

Successful implementation of CRM means fixing our organizations. That encompasses two parts. First, all members of the organization must understand a new philosophy; a new way of thinking about customers, the organization and their role. And second, the organization must be designed to support that philosophy.

A Shift in Mindset

CRM has to do with changing the mindset, attitudes and habits of all members of the organization. Those who try to implement CRM without understanding the importance of the social/cultural component do so at the peril of the initiative. What is this change in mindset? It begins with educating every member of the organization in the customer point of view. Who is the customer? What do they need or expect? Why have they come to their organization? What are the unique benefits they offer that will make their lives better? How is what they offer different from what their competitors can offer? How does each person contribute, personally, to that mission?

The change of mindset has to do with helping people grasp a “holistic” point of view of the organization. They need to appreciate their interdependence rather than thinking of their work in an isolated way. What unites people is greater than what divides them. Everyone contributes to a single mission and works together to solve the same problems. Each person needs to see themselves as part of a larger whole rather than fragmented and unrelated parts.

The change of mindset also means that organization members know that they have the resources and authority to do their jobs. Customer centric companies value their employees as partners in the business. They recognize that people bring enormous intelligence, passion and creativity to their jobs. This is not simple a “feel good” philosophy but the honest recognition that everyone, most of all front-line employees, are in a position to make a difference to customers each and every day. Tactics of command and control don’t work. People need to be given information, resources and authority to make a meaningful difference.

A New Design

In addition to a new mindset, leaders of many companies need to evaluate the design of their organizations to know where and how they are misaligned with the mission of maximizing their relationship with their customers. All organizations are perfectly designed to get the results they get. Results don’t happen by accident. They are a function of the way we have designed our processes, structures and systems. Customer centricity can only be accomplished by evaluating the design of the organization against the criteria of total customer service.

As shared earlier, department boundaries often stifle collaboration. Compensation rewards an immediate transaction rather than long-term customer loyalty. Metrics reinforce production over quality. Vital information resides at the top, or within the walls of a single department. Decision making flows upward and away from the point of customer contact. And so on. If organizations are to become customer centric they must alter these elements that prohibit the accomplishment of their mission.

Examples

There are excellent examples and case studies of companies that have gone through serious design changes in order to become more customer centric. Robert Rodin, in his book Free, Perfect, and Now describes the total transformation of his company, Marshall Industries, into a customer responsive company. They grew from a $500 million business to a $1.7 billion business and leader in their industry by throwing out their old motivational tools and redesigning all of their operating systems.

Ralph Stayer, (How I Learned to Let My Workers Lead, Harvard Business Review, Nov-Dec, 1990) also describes how he changed the vision and attitudes of his employees and redesigned many of the systems of his company so that people could focus on the customer and assume full responsibility for their success.

A few years back I worked with a company within the aluminum industry. The company recognized they were becoming bureaucratic and unresponsive to their customers needs. Following a period of assessment of the strengths and weaknesses of the existing organization, they went through a process of organizational redesign in which they organized their front office functions to become more collaborative and customer focused. The diagrams below illustrate, at a high level, this change.

Predesign Workflow

Post-design Workflow

The first chart illustrates the tendency of most people within organizations to think in terms of silos and organize people according to the similarity of their functions.

The second chart illustrates how the company redefined structural boundaries to become much more cross-functional on the front end of their business. They combined people from a number from a number of departments into teams that took full responsibility for managing customer orders. The company was able to improve their total billings of a major product line by 50% and increase their margins by 25%.

Of course, there is no design that fits all organizations. However, most organizations could benefit from evaluating their design against the criterion of impact on the customer.

Summary

In summary, companies that focus only on the technical side of customer relationship management will either fail or achieve only partial success. If an organization is to truly become customer centric it is essential to put at least as much effort into managing the human and organizational sides of change. All of us will do well to remember the lesson from General Schwarzkopf Jr.: It is ultimately human beings and not technology that make organizations succeed.

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  1. […] “CRM technology has provided us with better tools, but it is still people who do the work of an organization and are ultimately responsible for its success,” states The Centre for Organizational Design. […]

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