George S. Day and Christine Moorman

Empowered employees = Customer insights

Friday Oct 29, 2010

It’s exciting to see outside-in ideas in the business press, so I leapt at John Baldoni’s article called “Teaching Employees About Value.” John makes some great points about involving all employees in the conversation about value, and about considering all the possibilities for growth, echoing some of the themes in our earlier post about innovation. He gives concrete advice on how to begin the value conversation.

Baldoni writes “The purpose […] is not an exercise in finance; it is a lesson in how to value what you and your employees do to add value to the organization.” I agree and challenge John and all of you to expand the horizon even further. Here is my worry. Focusing on “adding value to the organization” may have the unintended consequence of allowing the company to slip into inside-out thinking, which means they emphasize the company over the customer. To ensure this doesn’t happen, it’s important for companies to help employees understand that company value comes from serving customers better. The path has to be customer value -> company value, not company value -> customer value. Simply, the horse must come before the cart.

Employees who are interfacing directly with customers (typically sales and customer service) can offer useful contributions to capturing the voice of the customer. Here is a really powerful example that shows what employees can contribute if their view points are given attention. At drug maker Organon (part of Akzo Nobel), a secretary noticed that volunteers in clinical trials of a new antihistamine seemed particularly cheerful at check-ins. She shared her observation with managers, who listened and investigated her observations. It turned out that the drug, despite failing as an antihistamine, proved to be an effective depression remedy, which they ultimately marketed as Tolvon.[1]

It helps immensely if there are organizational capabilities for gathering such intelligence. Procter & Gamble sends employees to work at small stores to get first-hand experience with customers. The top management of Tesco does all the mundane tasks that interface directly with customers during their “Week in Store” activities. Tesco also holds focus groups with employees to collect ideas. The former CEO of Vanguard, Jack Brennan, would take customer service calls when wait times got long.

Employees are the firm’s most valuable source of customer insights to create value, whether it is reducing costs for customers or providing innovation or customized solutions. However, this won’t occur by happenstance, and companies must establish the culture and processes to capture and leverage human resources as an engine for outside-in strategies.

[1] George S. Day and Paul J.H. Schoemaker (2006), Peripheral Vision, Boston: Harvard Business School Press.

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