Companies are accustomed and even comfortable keeping internal process opaque to customers―and often to co-workers as well. “Lack of cost-effective technology” has served as a convenient excuse for shutting out customers and blocking communication across silo boundaries – although we know “technology” is just an excuse.

All that’s about to change. A new technology named CBPA (communication-based process automation) is about to tear away the fig-leaf excuses. CBPA will track typically opaque internal processes including: mortgage and loan processing; insurance claim processing; technology support beyond one-call resolution; special orders; back orders; custom fabrication; incident research; and a host of other high-frequency events – each of which generates high volumes of expensive-to-handle customer calls and e-mail, not to mention endless internal e-mail and even face-to-face conversations.

Because it’s all IP-based and outside corporate firewalls, companies will now be able to let customers access CBPA for self-service – and let internal folks track progress across silo walls as well. Gazillions of dollars could be saved, IF individual companies are ready to “bare their process.”

In his great new Book, “Reorganize for Resilience,” Harvard B-School Professor Ranjay Gulati describes how and why companies should be moving from inside-out to Outside-In (he uses Outside-In as a surrogate term for customer-centricity). From his organizational dynamics perspective, he describes four “stages” of this transition. But most marketers aren’t trying to reach the end stage or even the third, but instead are content with stages one or two. Why?

[I’m excerpting from Gulani’s descriptions]

Stage one: “(Companies) view the world entirely through the lens of their own goods and services.”

Stage two: “Though they (companies) understand customer needs, they still focus on their products, viewing the customer through the lens of the company’s offerings, focusing on customers’ experience with their purchase while ignoring the larger problems customers may be trying to solve.”

Stage three: Think they’re customer-centric and they are, but not all the way: “They focus first on the problems their customers are trying to solve, only then turn to their products, configuring their offerings to address those problems.”

Calling corporate customer-centric planning deficient is paying it a big compliment. From Fortune companies to entrepreneurial businesses, and our practice spans both, well under 10% of companies understand even the most rudimentary techniques for letting customers drive the strategic equation, and the true number may be less than 5%. Senior managements at the remaining 90 – 95% plus:

a.) Want to become more customer-centric, but can’t find their way out of traditional, company-centric planning approaches
b.) Are still playing the we-them power game
c.) Let financial planning drive their companies
d.) Are content to spout lots of “customer-this, customer that” bromides
e.) Believe letting middle management implement CRM or CEM or Social CRM or whatever new fad is out there will get them close enough to customers?

The Harvard Business Schools “Working Knowledge” newsletter just published an intervieww with faculty member, researcher and pundit Ranja Guloti. The piece is titled, “The Outside-In Aprroach to Customer Service,” with “customer service” referring to all customer interactions (http://hbswk.hbs.edu/item/6201.html). It’s a five-minute read that imparts exceptional wisdom about achieving customer-centricity based on Guloti’s years of tracking both Outside-In and inside-out companies. Everyone concerned about customer-centricity should read and absorb this.

Gulotti makes many incisive points, including levels of customer-centricity achieved along the long journey there. But the two that struck me most are: 1.)  his differentiating between the constraints of nearly ubiquitous  inside-out thinking about customer needs - and how Outside-In lifts these constraints, creating opportunities for truly innovative thinking; and 2.) how organizational silos prevent understanding of problems from converting to action. To the latter point he says:

“As I delved deeper into companies seeking to become more customer-centric, the biggest gap I discovered was the one between awareness and action.”

Of course, management always thinks process is for those “beneath them.” It’s hard to imagine anyone of “Director” rank or higher (never mind the VP level) submitting to having their own work and decision-making influenced by process guidance, except with respect to production quality principles.

But Outside-In is process of a different color. It can and sometimes does provide management guidance for decision-making affecting customers. On more than several occasions C-level execs have adopted our O-I mantra – “Adding value to customers in ways that add value back to the company.” And when they start saying it, they start thinking it – especially when we’ve managed to involve them in a strategic planning process designed to produce customer-centric outcomes.

Driving this question is Toyota – which would have a much brighter near to mid-term future had a pervasive, customers-first process culture guided strategic planning and strategic decision-making, both of which became progressively more customer-insensitive over the past 10 years (at least). And despite those saying Toyota has only to straighten out production to rebound, I don’t think they’ll get much bounce without changing a culture that supports hiding known mechanical problems from customers (and regulators), which resulted in destruction of life and property.

Toyota might have been a customer-centric company for parts of the 80s and 90s, or it may never have been customer-centric, which I now suspect.  Toyota thought that understanding what customers wanted to drive; converting that understanding to car design; and then superbly manufacturing cars that fit customers tastes; made it customer-centric – and bulletproof. But two fundamentally flawed assumption have stripped Toyota of its body armor.  

First, Toyota got caught breathing its own fumes – believing its vaunted Toyota Production System was so scalable the company could grow at will. As stuck accelerator pedals and failing brake systems demonstrate, bad assumption. And these maladies follow a string of other problems that had already stripped Toyota of its top quality ranking.

But second, and I believe much more important long-term, Toyota failed to realize there’s more to customer-centricity than excellent products (which it can no longer claim). Research that David Mangen Ph.D. and I conducted several years ago identifies that customers now consider product excellence and service excellence two halves of the same coin. Without one, companies have neither. And even if it grasped this fundamental truth, Toyota failed to realize that “service” was about far more than fixing cars.

I believe social media can contribute to business success. We ourselves have attracted clients through Linkedin. Organizations are generating web traffic off Twitter. A few silly videos on You Tube have helped fill company coffers. Great.

But that's not good enough to justify abandoning rationality for dreamy visions of social media leaping over tall buildings, taking us to Mars, and yes, helping companies catapult over competitors to the wonderment of business fans everywhere.

Let's get real

People are ignoring business fundamentals while guzzling the social media "kool-aid."

People are ignoring business fundamentals while guzzling the social media "kool-aid." And worse yet, the fundamentals are rapidly changing, but rather than worrying about how marketing, sales, service and many customer-affecting back-office functions are going to adapt―it's like, "Take two long social media sips and you won't feel a thing." For a while. But sooner or later, the buzz will wear off and a reality hangover begins.

If you’re a marketing person, you’re probably saying something like, “Look, brand is an emotional bond, not a rational reaction to process mechanics or hit or miss direct contact.” If you’re a sales or service person, you might be saying, “We deliver the customer experience.” If you’re a process person, you’re probably shaking your head saying, “It’s all about what’s delivered to customers, not what’s promised or apologized for.”

I’ll give you my take. Brand and promotional communication are steadily losing effect, diminishing marketing’s impact. The days of implanting experiences and impressions in customer brains are fast fading. Likewise, sales’ influence is fading. Increasingly, prospects do their research on the web, and don’t call sales until they need a quote. Service plays an important role, but the quality of band-aids applied matters far less than eliminating the need to fix stuff after the fact.

“Everyone,” you say? Then what you’re really saying is “no one.” 

Here’s an interesting exercise to prove the point. Build a simple grid with all customer MOTs  listed vertically in likely order of occurrence. (MOTs or “moments of truth” identify customer interactions with sellers that significantly affect customer experience). Next, horizontally list all the functions interacting with customers either directly or indirectly. Finally, in the grid portion identify which internal functions control process and policy at each MOT. 

What does the grid tell you? In 90% + organizations, you have a range of functions, each largely responsible for its own process and policy―without strong central oversight. Inevitably, each unit will have a somewhat different view of what customers should experience and how much to “give” to please customers. And some will have very different perceptions. A classic example is sales wanting quick shipment of orders to meet customer expectations and Inventory Management cutting stocks to the bone to reduce cost. 

Companies presenting multiple faces and voices to customers in this manner or even more subtle ways rarely create sufficiently positive customer experience to minimize churn―and suffering churn in low-demand economic times just multiplies negative effects. 

Acceptance is growing for the need to fuse customer-centric planning with subsequent process design to assure complete alignment. Plus, acceptance is already widespread for the importance of melding process and systems design (both systems architecture and application selection and configuration) to assure seamless process-technology alignment.

 Does this imply that senior customer strategists should be cross-trained in customer as well as technology planning to create complete alignment around customers? I believe it does, and in a very strong way.

If you step back and look at the failure of CRM to become “the road to customer-centricity,” inability to align strategy, process and technology around customers – or disinterest in doing so – was probably the second most important factor, after technology addiction.