Better Managerial Decision-Making For Customer Growth

Tim Calkins, a marketing professor at Northwestern’s Kellogg School of Management, wrote an article in early 2016 entitled “Nobody Asked For Uber.” I’m actually not a huge fan of Uber from a customer standpoint, and I’ll be blogging about that in the next week or so — but it is hard to argue with their unicorn status or growth model, even if you think it might not necessarily last because of some issues they’re having on the customer front. (Again, more on that in a separate blog post coming up later.)

Calkins makes a key point about companies pursuing growth here:

It’s not enough just to look for opportunities and innovations and new ideas, you’ve got to find the ones that are going to turn into profitable opportunities and, ultimately, into cash flow and growth coming from those. Growth is really about the customer. If you’re going to grow, you’ve got to find ways to get out there, connect with customer needs, to deliver against their needs and wants. In all the classes I teach, we circle around these points because they’re really the foundations, in a way, of a growth strategy.

Growth is really about the customer. Of course. I’ve been espousing this for years now!

The only way to pursue growth is to pursue customer-driven growth, but now an internal challenge is going to arise: how do you set up managerial decision-making so that customer-driven growth is possible?

The central challenge of managerial decision-making for customer-driven growth

The central challenge of managerial decision-making towards customer-driven growth is simple: silos. A CFO and a CMO and a CIO all have different metrics they’re evaluated on by their boss (logically the CEO), and as a result of this, each functional silo receives different information from their leader and is led to believe different aspects of the company’s operational plan matter more (usually the aspect related to that function, i.e. “Finance drives this company” or “Marketing is the backbone of what we do”).

In reality, the customer is the backbone of everything you do. The functional silos are important in terms of organizing expertise around particular topics and day-to-day tasks and responsibilities, but the silos cannot be a crucial aspect of managerial decision-making. If they are, the customer will never truly be the focus — there will be many different focal points, all based on each department head’s targets and goals for the quarter.

Effective managerial decision-making is about connecting silos

I call this one-company leadership. If interested in much more around this, check out Chief Customer Officer 2.0 or I Love You More Than My Dog. You have to connect silos and get to one-company leadership because unless you connect silos, the CCO role won’t even matter that much in your company — other decision-makers will assume “Oh, the CCO owns customer experience.” That’s actually the wrong approach. Everyone with decision-making authority needs to own customer experience — the CIO and CMO are huge in this process too, as they impact how technology and messaging hits the customer. If each silo is focused on their thing and their targets and their goals, you can’t achieve customer-driven growth — because the experience that the customer receives will be disjointed and confusing.

How to drive effective managerial decision-making for customer-driven growth

Your goal is to move towards one-company leadership. You have several pathways to that, including:

• The CEO must model collaborative and team-building best practices, and hold everyone accountable to the same customer-facing goals
• Quarterly (or even monthly) collaborative meetings where data is shared and collective decisions are reached
• Putting the managers in the shoes of the customers — making them go through a digital sales process, for example, or working in a warehouse filling orders; the goal here is to bring senior decision-makers closer to the customer level to flesh out potential pain points (which senior executives rarely get to see, but often hear about)

What does effective managerial decision-making look like towards customer-driven growth?

Patrick Pacious left a large consulting company to go work for Choice Hotels as EVP and COO with a strong eye towards customer-driven growth. His primary goal was to connect silos and make managerial decision-making even faster, so he focused on collaborative efforts for the senior leadership team around:

• Goals
• Roles
• Norms

Goals meant alignment of what everyone was trying to achieve — and it meant everyone, not just silo-by-silo.

Roles actually meant eliminating set roles — sure, there would still be a CFO, a CMO, etc. — but their primary “role” was actually just an executive focusing on customer growth and satisfaction.

Norms was about process, and notably sticking to a central, customer-focused agenda — as opposed to each silo driving their agenda when the executives meet.

Again: connect the silos.

It took about six months to establish these three ideas consistently, and about two quarters to see customer-driven growth start to tick up. Years later, his team has almost no turnover and customer-driven growth has skyrocketed. It all began with connecting silos, instead of letting each silo define and re-contextualize the organizational priorities.