Not too long ago, operational excellence was all it took to lead an industry. The likes of Wal-Mart, GE, and GM were built on the principles of operational excellence. This old school approach is being replaced by the value disciplines of product leadership and customer intimacy. This updated route to success is changing the magic, leading companies into new territory while operational excellence, still critical, becomes just a part of the equation.
The Value Disciplines
Commonly cited as the three paths to market leadership, the 3 value disciplines model was created by Michael Treacy and Fred Wiersema via the Harvard Business Review in a 1993 article titled Customer Intimacy and Other Value Disciplines. These 3 value disciplines are:
Operational Excellence (OE)
Customer Intimacy (CI)
Product Leadership (PL)
Sara Blakely gives us a great example of the value principles in her founding of Spanx, a $250 million American intimate apparel company that caught the hosiery and intimate apparel industry by surprise. Sara illustrated what a company can do when it excels at 2 of the 3 disciplines as she did with CI and PL. Understanding exactly what her customers needed and then creating the product propelled Spanx beyond conventional competitors.
The Customer Led Economy
Operational excellence is when you make a product to fill a need efficiently. This approach is now being overwhelmed by a focus on customer needs that drive innovation. According to a comprehensive survey, The Rise of the Customer-Led Economy by the Economist Intelligence Unit (EIU), Customer Intimacy is on its way to eclipse operational excellence as a primary value discipline organizations most wish to excel in.
The customer-led economy is evolving rapidly. The best-performing companies are responding today. Nearly nine in ten are investing already. The rest risk being left behind.”
-Economist Intelligence Unit (EIU)
The chart below is from an EIU study performed in 2013. You can see the forecast at the time was for a major shift: it went from websites being most important, to real-time collaborating with them in the form of social media and mobile apps. Keep in mind, the “next 3 years” the chart refers to is 2016, which is now. And it’s true. While companies founded on operational excellence may stay in the game, they will be passed by those excelling in customer intimacy.
How Customer Intimacy is Changing the Game
The days of the masses consuming whatever is placed in front of them have passed. One does not need to look too deep and recall names that were at one point practically unbeatable yet have quietly taken a back seat–or even have disappeared entirely–to other, more customer-centric competitors:
These companies, and others like them, would have rated highly in their ability to execute and the completeness of vision, yet they lacked the vital customer intimacy component. To survive, you need a business strategy around service, feedback, and honest transparency with direct communications between customer and company.
The Updated Magic Quadrant?
How will the value discipline of customer intimacy figure into future magic quadrant updates?
How Customer Intimacy is Transforming Enterprise IT
Our clients understand the importance of customer intimacy. That’s why they are driving this innovating approach by asking us to leverage technology to accomplish this transformation. Here’s what I’m seeing in the marketplace that are the game changers for business:
- ServiceNow is a Platform-as-a-Service provider for enterprise service management software. ServiceNow is changing the way people work by placing a service-oriented lens on the activities, tasks, and processes that make up daily work flows. At V-Soft we’re implementing ServiceNow for various teams by automating processes: HR, Finance, Talent Acquisition, and Contract Management to name a few. These initiatives are resulting in being more responsive to our employees and customers. We have experienced similar spikes in demand from our clients for solutions that they can benefit within their own organizations by using ServiceNow.
- Mobile Apps are not just games like “Angry Birds” anymore, but rather they connect customers and their vendors in real time. Our VP of Business Solutions, Ron Reeves, has assembled an amazing team of enterprise level mobile app professionals to drive transformational technology for our clients. Note this wasn’t some amazing foresight on our part, but our response to a transformation in how business is getting done.
- Social Media is not just about marketing for many of our clients. Social media can be a strong component of customer service on numerous levels and must be the part of any customer intimacy discussion in today’s environment. More on social media for the enterprise here.
- MuleSoft has emerged quickly since being founded in 2006 by visionaries Ross Mason and Dave Rosenberg. As the leading API aggregator for cloud- and premised-based systems, connecting real time communications are a reality across the system that run the enterprise. With the push of SaaS in the last 10 years, MuleSoft’s capabilities are a requirement for the enterprise versus building custom integration across 10 or more platforms which is no longer cost effective or practical.
How V-Soft is Adapting with the Shift to Customer Intimacy
Engaging and bringing real-time communications and feedback that allows business to understand what customers are saying is as critical as the ability to implement these solutions. The challenge in being adaptable enough to fulfill these customer desires is the key to future success in any enterprise.
I’ve experienced this transformation with my own company. When I started V-Soft in 1997–and for most of the last 19 years–we’ve excelled at helping our clients pursue operational excellence. Our growth has amazed me through a unique methodology of IT recruiting in bringing the best in IT talent to our clients with superior value propositions. It has accelerated these last few years as we’ve expanded beyond IT staffing, now delving deeper into IT service offerings for the enterprise.
In 2013, this prompted our leadership to begin our Business Solutions team led by Ron Reeves as a result of client feedback. This area of our business is growing exponentially as we uncover so many businesses seeking quality business IT solutions partners to support and guide their innovation.
As a team, V-Soft leaders gather each month to challenge one another and uncover better ways to engage building customer intimacy with our clients and employees. One simple success we’ve had with our employee customers is an addition of an anonymous suggestion box. The key we’ve found is to acknowledge a suggestion and take action whenever possible.
These are the challenges we all face and V-Soft is not immune. Technology is a key component in building this intimacy, and it is a tool for innovating past competitors who practice outdated strategies. At V-Soft we’re developing platforms for improving the service and engagement of our employee customers. V-Soft is streamlining the services we provide for our clients through full transparency, agile methodologies, and soliciting feedback as a part of our process.
We bring more to the equation than our clients expect with these tactics when combined with staying current on the tech trends that drive agility for the enterprise including platforms like ServiceNow, MuleSoft, and forward-thinking mobile apps.
How is your company managing this shift to customer intimacy?
About the Author – Purna Veer
Purna Veer is a nationally recognized entrepreneur and technology thought leader. As the founder and President of V-Soft Consulting, Purna has led the company from its humble beginnings to over 700 global employees and is recognized as a leader in the field of IT services. Learn more in his President’s Corner here or connect with Purna on LinkedIn.