Michael D. Moberly February 8, 2012
I recently re-read Ranjay Gulati’s book ‘Reorganize For Resilience: Putting Customers At The Center Of Your Business’. It is not, in my judgment, just another of the myriad of books who’s author tweaks or critiques an existing standard or presents a highly nuanced alternative about the re-emerged importance of customer centricity.
Instead, it’s a book about recognizing a company’s customer relationships are intangible assets which can produce ‘relationship capital’. Gulati however, takes this important perspective several steps further. He suggests that in order for customer relationships to be as effective and profitable as possible, there needs to be (a.) consistent engagement, and (b.) high level inquiry with customers. These components, he adds, must collectively extend well beyond the often times siloed boundaries of a company’s products and/or services.
This important perspective prompts me to draw an analogy comparable to conducting intangible asset assessments for companies. A frequent revelation flowing from an assessment is that company management teams may not recognize or they may even be dismissive about the contributory value, competitive advantages, and efficiencies delivered by intangible assets that are routinely embedded in (their company’s) processes, practices, know how, and culture.
Intangible assets as we all know, and customer centricity I might add, lack a conventional sense of physicality. As such, neither is reported on company balance sheets or financial statements. This notable absence from conventional forms of performance measurement contributes no doubt, to the tendency for both to be neglected, overlooked, and often conceived as distanced abstractions, rather than the ‘in your face’ realities they really are!
In response Gulati suggests, if customers’ real needs continue to be unrecognized and unmet, this may influence them (customers-clients) to commence ‘commoditizing’ that company’s products and services. In other words, customers-clients may begin making (their) purchase decisions based primarily on price rather than having developed a personal connection to a particular company’s products and/or services.
In a similar vein, management teams and boards that assume their company’s brand (another form of intangible asset) standing alone, will serve as the perpetual or proverbial life saver, is an assumption Gulati points out, that no longer reflects the realities of a globalized market place that is filled with competing options, products and services. I would add to that, it’s a global marketplace that is aggressive, predatorial, and winner-take-all.
Thus, to compete more effectively, Gulati points out, companies must define themselves well beyond the characteristics of a single intangible asset, i.e., a brand, etc. Thus, being first to identify and address customer – client ’problem spaces’ represents a powerful and strategic intangible asset, offensive weapon if you will, that can produce value, create sources of revenue, and serve as distinctive and long lasting foundations for growth.
(Dr. Ranjay Gulati is a professor at the Harvard Business School with expertise in leadership, strategy, and organizational issues. His book, Reorganize for Resilience: Putting Customers at the Center of Your Organization (Harvard Business Press, 2009) explores how “resilient” companies—those that prosper both in good times and bad—drive growth and increase profitability by immersing themselves in the lives of their customers.)