Do Business Well

Spotting a new market leader is no more complicated than walking a company’s hallways or observing its managers asthey work: Do they know who their priority customers are? Are they aware of what this group really wants? Do they stay focused on offering these customers the best value, year after year? And from top to bottom of the company, is the desire and determination to be the company that sets the standards in the marketplace palpable? Ultimately, what proves a market leader is the preoccupation with the fact that the business rests firmly on two pillars— customers and focus. Diminish either and the business flounders.

Of course, customer focus is hardly a novel idea. It lies at the core of such concepts as total quality management and customer satisfaction, as well as their offspring, the seminal Malcolm Baldrige National Quality Award. In fact, all of this could have been said five or more years ago—and was, in The Discipline of Market Leaders. That book built on the premise that no company can be all things to all people and exhorted managers to “choose your customers, narrow your focus, dominate your market.” What has changed since then is the fervor with which these strategies are being applied. In response to customer scarcity, new market leaders have intensified their attacks on both the customer and the focus sides of the equation.

In the not so distant past when Sam Walton was Wal-Mart’s chief executive, it was worthy of mention in the press if a CEO spent substantial amounts of his or her time in direct contact with customers. Now it is news if a chief executive is not doing so. These days, too, executives can access a vast trove of knowledge about their customers, much of which transcends market segments and zeroes in on individual customers. Combined with operational and financial data, this permits sophisticated analysis and much more precise interactions with customers. In turn, that sophistication makes it possible to orchestrate the supply chain from the customer to the company’s suppliers, and down the chain to their suppliers.

And when managers pay attention to customers and this much information is available, the entire organization is infused with the customers‘ perspective. Customers are no longer the responsibility only of the people in sales, marketing, and field service. They have become, literally, everyone’s business, and staffers from operations to research and development to finance are acutely aware that their company’s success depends upon customer satisfaction—and that they, too, will be held accountable for that.

Take a look at Solectron, a contract manufacturer of personal computers and other electronics, based in Milpitas, California. From the chief executive to the warehouse packers, every employee knows precisely what the company’s customers want and how their jobs fit into serving those customers.

Each Solectron customer is assigned to a cross-functional customer-focus team, composed not just of salespeople but engineers, program managers, buyers, and quality representatives. Their responsibilities are to ensure that the job flows quickly and smoothly, and toward that end, they actually are in daily contact with each customer regarding scheduling, engineering changes, and any other issue that may arise.

For their part, customers fill out a weekly report card on Solectron’s performance, rating it A through D on communication, delivery, quality, service, and overall performance. A grade of B— is enough to prompt a quality-improvement program for the team responsible. A grade of C triggers something like a civilized inquisition: The program manager must respond within twenty- four hours and design a formal plan to resolve the complaint within seventy-two. On average, Solectron reports its grades areA- or better. It is no surprise that this organization won theBaldrige Award, not just once but twice.

Or take a newer market leader, Siebel Systems, a maker of customer relationship management software in San Mateo, California. Here, too, exists a profound concentration on the customer. Thomas M. Siebel, the company’s founder, chairman, and chief executive officer, says he spends 60 percent of his time meeting customers. Meaningfully, all of the art decorating the company’s halls comes from customers—a poster, a letter of compliment, the cover of an annual report. Every quarter, Siebel’s customers are asked to rate the company’s service, and its salespeople are compensated on customer satisfaction as well as by the deals they close.

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