I was thinking how do I begin the story of a customer centric organisation and then I came across an article in  a book by Chris Denove and James D Power IV titled "Satisfaction". Let me run through the story that I think embodies  a Customer Centric organisation
 
Lexus has been winning one or the other JD Power Automotive Satisfaction Study since 1989 and that was not by accident. In 1983 the then Toyota chairman decided to get into the luxury market with the mission "It is time to build a car that is better than the best in the world".  Toyota till then manufactured low-cost vehicles and it was but obvious that their mission statement was met with a lot of sniggers from the then luxury car makers in Europe. However, since it launched its first model the LS 400, it has outsold every luxury brand including BMW and Mercedes-Benz to become the best-selling luxury auto maker in US history. The key to the success of the Lexus is the visceral understanding of the critical relationship between manufacturer, dealership and the customer.
 
Toyota defined luxury as "Total Ownership Experience" that included a defect free vehicle and great dealer service. The following example exemplifies this belief - the LS 400 (launched in 1989) sold well though at about half the price of competing European luxury brands. A couple of months into the programme, Lexus faced a problem they were dreading and competition was hoping would happen. Two customer complaints about a faulty cruise control glitch left Lexus in a quandary - do they just fix these 2 cars and wait to see whether others surface with a similar problem or issue a recall and let the world know that Lexus engineers were human after all. The decision was simple and they set an example that is still talked about among automotive insiders today.
 
Lexus recalled every one of the 400 vehicles it sold. While they knew their decision would be a PR nightmare what with competition ready to pounce on every miscue, Lexus realised that this recall provided them with an opportunity to show the world that they were dealing with an entirely new kind of car company, a company that didn't just talk customer satisfaction, but lived it. Lexus owners did not just receive a recall notice, but were also advised that their dealer would pick up the cars from their homes and leave them a loaner car free of charge while the repairs were being made. Every car was returned to the owner washed, detailed and with a full tank of gas. There was also a gift sitting on the driver's seat as thanks for their patience.
 
This was actually the day Lexus was born and not when it sold its first car.
 
That to me embodies an organisation that "walks the talk" and eschews inexpensive short-term solutions to a problem in favour of a more costly but permanent fix.
 

Over the last 2-3 years we at Systech sector of the Mahindra Group have created the 5th largest global forgings company. During this period we have acquired four companies and maybe analysed scores of companies. I have often been asked as to what was the most important ingredient in the inorganic growth strategy we have pursued. My answer to the question is one word "trust", one needs to develop trust with all stakeholders of the M&A process - owners, management, customers, suppliers, consultants, other investors.

While reflecting upon the notion of trust with stakeholders, I came across an article written by two Harvard professors which lays down some insights on trust building - "Uncoventional Insights for Managing Stakeholder Trust" by Michael Pirson & Deepak Malhotra. As I went through the article, I realized that some of the things we have tried to do and sometimes failed were in line with what the article talked about. I am summarizing the same for everyone to think about along with some of our experiences. 

(1) Transparency is overrated - being transparent is not enough, the quality of what one discloses is paramount for all stakeholders. As part of the Mahindra group, this has been our greatest strength during M&As. All stakeholders during an M&A have believed that our actions will be guided by the traditions of the group which emphasizes ethics & honesty as its core values. We even invited the managements of the companies we acquired in Germany to our integration summit even before the acquisition process was complete. This really reinforced our emphasis on transparency.

(2) Integrity is not enough - one needs to be perceived to have empathy with the needs of the stakeholders. We were especially careful on this one, winning the trust of the existing management of the companies we wanted to acquire. We explained our vision to them and most of them were convinced enough to push our case with the existing managements. We can proudly say that because of this approach we were able to avoid auctions in all cases

(3) The right kind of competence matters - Companies are expected to have technical competence - the ability to manufacture high quality products and managerial competence - the competence to make these products profitably. We were very particular in ensuring that the competence of the management teams we had inherited stayed with us. We acquired most of the companies because they had strong managements and we retained them. In fact, we are using managers from the European operations we acquired to beef up our India operations. The COO of our Indian operations is a key member of the management team from the forging company in the UK.

(4) Building trust with one group can destroy trust with others - One of the companies we bought has been struggling for sometime. In order to turn it around, we have had to embark on a cost reduction exercise which involved reducing the no. of people. This was a sensitive issue given our Group's commitment to employee welfare. But the rationale was explained to all concerned and the initiative undertaken only after we had exhausted all other means to reduce costs. In this case, we had to choose between the interests of our employees and shareholders and proceed very carefully

(5) Value congruence matters - It is necessary to ensure that most stakeholders achieve congruence around an agreed goal. During our second integration meet, all our forging companies agreed to a goal of collectively reaching the global best EBITDA margins within 3 years. This goal has been adopted by all employees of the forgings business in the form of an oath that was then presented to our Group Vice Chairman & MD, Mr. Anand Mahindra, as proof of our collective commitment.

Our journey so far has been very eventful. We would like to continually grow even as we pursue our theme of building trust with all stakeholders.

"Our planet Earth is at the centre of the Universe and all the stars revolve around it."  No, I am not a Rip Van Winkle, just woken up from a deep slumber from the time of the Greek astronomer Ptolemy, who propounded that the Earth was at the centre of the Universe.  I'm just stating what was the reality for all those who lived during that era.  This changed when the Polish astronomer Copernicus came up with his theory that it was in fact the Sun at the centre, with all the planets including the Earth revolving around it; and theory became accepted reality when Galileo invented the telescope.

Why this lesson in cosmology, you may well ask when what I am writing about is customer-centricity.  Well, it was what first came to mind when I looked at the changing realities of the market place, and how the customer is now treated as nothing short of a celestial being.   

Before the business world became smaller, or as some management experts prefer to say, flatter, dissolving territorial boundaries, and increased competition, organizations laid all emphasis on products and product selling.  The product ruled, and the customer was constrained to choose from whatever was on offer.  Today, it is the customer who is at the centre, whose needs and satisfaction are borne in mind right from the stage of idea inception to production, through advertising, marketing, and after-sales.  Customers are now seen to help co-create value jointly with the organization.

This reality itself is in a state of flux.  Customers, exposed to the torrential rain of information on various products and services, find their aspirations and expectations constantly shifting.  Understanding customer's latent needs, or unmet needs, and finding appropriate solutions is the way forward to establish competitiveness for organizations.  This process is akin to looking at the multi-coloured, ever-changing patterns created by the subtle movement of a kaleidoscope.  With every subtle rotation of the kaleidoscope, the patterns of the designs change.  Each static point highlights a pattern which is valid for that particular moment and segment.  The potential opportunities for organizations for identifying different segments and successfully catering to these, hence, are endless.

It is easy for organizations which are not in sync with these changing realities, to go out of orbit and add to the debris of unsuccessful companies in organizational space.  How does one stay competitive? One way I can think of is to go back to school, and brush up on our ABCs.

A. Align the organization towards Customer Focus, and develop a means of measurement 

This is familiar territory for all of us across the various companies in the Mahindra Group, where the customer is expected to be our focal point.  Our focus is to enhance customer satisfaction by providing superior products and services, and by responding to the changing needs and expectations of our customers speedily, courteously and effectively.  How does one measure the success of such an initiative?  A concept known as CaPS (Customer As Promoter Score) was introduced about two years ago in the Mahindra Group.  Its main aim is to measure the emotional connect of the customer with the organization.  It seeks to measure whether the customer feels valued, important, cared for and respected.  It's a very powerful and effective concept, and helps align the organization towards delivering superior value proposition to customers. 

General Electric is another organization that utilizes something similar - Net Promoter Score (NPS).  In fact, when Jeff Immelt took over as the Chairman and CEO of GE in 2001, he kept NPS on top of his agenda for bringing focus towards customer-centricity within the organization.  CaPS or NPS measures in a simple-to-understand score, the customer's overall experience with the product or service, and with all the customer touch-points in the organization.  It also provides an insight on the customer's keenness to actively "promote" the organization to friends and colleagues, thereby acting as a brand ambassador for the organization, garnering new customers.  In addition, the benefits of a delighted customer likely to become a repeat customer cannot be overemphasized.  The quest for imparting a memorable customer experience always has room for improvement and CaPS measures the direction of such progress.

B. Build a culture of teamwork and empowerment

To provide a memorable experience to the customer is not just the responsibility of the field force, or those in Sales.  It is the collective responsibility of the entire organization.  The organization needs to ensure that there is a high level of cooperation and teamwork across the various functions like Sales, Marketing, Accounts, Manufacturing, Supply Chain, etc.  The inter-connectedness between these various departments makes such cooperation critical.  Imagine a scenario, where a customer needs to urgently have fixed a critical machine sold by your organization that has had a break-down at night.  If the machine is not fixed in time, the customer is likely to suffer huge financial losses, and even potential loss of reputation and future orders.  The customer dials the toll-free Customer Service number to lodge a complaint, and finds out that there is no response.  The customer then dials the Sales Officer, who initially made the sale of that machine to the customer.  The Sales Officer understands the seriousness of the matter, speaks with the various people from relevant departments, and personally ensures that a Servicing team is sent out to the customer's premises to resolve the matter.  Should the Customer Servicing department send their team to the customer's place for fixing the machine when there is no written approval?  Would it mean non-compliance of some of the internal processes set up by the organization?  Would there be a trade-off between customer satisfaction and compliance?  Does the culture of the organization support such actions?  The moot question is:  Do organizations consciously plan to build such a culture of teamwork and empowerment to facilitate customer-centricity?

C. Communicate customer-centricity messages across the organization

Every member of the organization needs to understand the importance of customer-centricity if they are to make a meaningful contribution in executing their roles effectively.  Communication, and the regularity of it, plays an instrumental role in energizing the batteries of the employees.  When employees are able to see the "connect" between their individual roles and how they, in their own way, help in providing a memorable customer experience for their organizations, they tend to constantly keep putting in their best. 

I've written on the ABCs of working towards customer centricity.  Time and space restrict me from an in-depth analysis, but I hope I have provided a starting point for further thoughts on the subject.  The D - Zs can be worked out by each one of us, so that we add our individuality to an endeavour that will surely take us zooming to new horizons.