Engaging Customers in a Digital Age

In a recent survey of businesses in the UK, mainland Europe, and the U.S., 62% of respondents agreed that differentiating their value proposition by customer service rather than by product was essential or very important (click here for the article). In fact, as customers, 74% said they were likely or very likely to buy more from a company as a result of service excellence that goes beyond expectations.

The Baldrige Criteria ask how you engage customers to serve their needs and build relationships. Engaged customers are loyal, do more business with you, and recommend your products and services to others, which is why more and more companies are taking steps to develop “very satisfied”—as opposed to merely “satisfied”—customers.

One obstacle to engaging customers, according to Pegasystems, which commissioned the survey, is the constraints imposed by legacy Customer Relationship Management (CRM) platforms. Only 43% of respondents can provide a consistent customer experience across all delivery channels. Part of the problem can be traced to the digital divide: legacy CRM systems don’t have the flexibility to adapt to differing requirements and can’t deliver a high-quality customer response to all customers.

I’m reminded of a story Michael Dell tells in Behind the Cloud by Marc Benioff and Carlye Adler. Benioff had told Dell about an internal networking technology they were using at salesforce.com to create a feedback loop with their customers. Dell adapted the technology to create IdeaStorm, an online community forum that Dell uses to engage customers and elicit and act on their ideas. To date, Dell…

Harvard Business Review’s Most Influential Management Ideas of the Decade

Everybody has a Top 10 list and HBR is no different. Well, they’re a little different: Their editors came up with the Top 12 most influential management ideas since 2000 (“The Decade in Management Ideas,” Julia Kirby, January 1, 2010):

1. Shareholder Value as a Strategy. And not a good one. Even the guy who popularized it concurs. “Shareholder value is a result, not a strategy,” said Jack Welch. “Your main constituencies are your employees, your customers, and your products.”

2. IT as a Utility. Cloud computing is the latest step toward buying computing capabilities as services.

3. The Customer Chorus. Technical and social developments have given customers a stronger and more pervasive voice—and companies are finding ways to listen.

4. Enterprise Risk Management. Chief risk officers hold the new umbrella over pockets of risk that had been scattered, and addressed separately, throughout the organization.

5. The Creative Organization. The ability to produce creative output was seen as a competitive advantage to encourage through collaboration and diverse perspectives.

6. Open Source. Wikipedia, which represents the power of open source, was born in 2001.

7. Going Private. According to the article, “As the decade wore on, private equity’s playbook for turning around businesses was increasingly held up as best-practice management,” especially in the areas of strategic focus and governance.

8. Behavioral Economics. Rational thought alone does not explain human decision-making. Yup, that’s the 2000’s in a nutshell.

9. High Potentials. Some managers are more equal than others and you would be smart to develop them.

10. Competing on Analytics. The data you collect…

Toyota’s Strategic Challenge

The automotive industry is a great example of what happens when a few competitors gain a strategic advantage by setting a high standard in a critical area. Toyota and Honda have been the quality leaders for more than two decades, attracting car buyers who had been Ford, General Motors, and Chrysler customers but who wanted better reliability in their vehicles. Toyota rode its quality wave to worldwide leadership in car sales, only to slip at the same time competitors’ quality matched and even surpassed it.

The Economist recently described the problems Toyota faces and how it is addressing them (“Losing Its Shine,” December 10, 2009). While the company seems to have fixed its quality issues—Toyota had 18 of the 48 leading vehicles in the recent Consumer Reports reliability study—quality is no longer a big differentiator in the automobile industry. Instead, Toyota’s “vehicles will inevitably be judged increasingly on more emotional criteria, such as styling, ride, handling, and cabin design.”

Akio Toyoda, grandson of the company’s founder and its president since June, recognizes the need for innovative design. He recently said, “I want to see Toyota build cars that are fun and exciting to drive.”

That may be a challenge. Toyota’s value proposition has been built upon quality and reliability. Its culture, defined by the Toyota Production System, completely supports that value proposition. Steering in a new direction using a system developed for a different purpose will prove difficult.

That’s the strategic challenge Toyota faces. It has set the standard for quality and reliability in its industry and…

What Happened to Business Books?

If you’re looking for the latest book to help you run your business better, you might as well call off the search. What passes for bestselling “business books” these days has nothing to do with improving performance.

Just look at the top ten on the latest New York Times hardcover business bestseller list. Superfreakonimics leads the list (it’s about economic thinking applied to everything, like economic thinking has served us so well) followed by Outliers, which I really enjoyed but which is more about the expectations we have of people than a business book. Three books focus on the financial crisis and two address personal finances. Of the remaining three, one covers Israel’s economy, another traces Google’s short history, and the last one tells you how you can use the Web to create a business.

Okay, maybe that last one has something to do with how to run a business—if you’re an entrepreneur on the Internet.

BusinessWeek recently regaled us with a story of the year’s best business books and, you guessed it, the first four chronicle the financial meltdown. None of the other books mentioned in the article comes any closer to providing business wisdom.

The business book category has long been a catch-all for anything businesses and business personalities do—more than what they should be doing to build great companies—and a reflection of Corporate America’s fascination with all things financial. It’s not the best way to learn how to run a better business.

That’s why Web sites like Baldrige.com are so valuable. Where else are you going…