The World’s Best-Managed Companies Have the Same CEO: Their Customers
By Kelly Sarabyn
The Wall Street Journal recently released their Management Top 250: a ranking of the world’s best-managed companies across five vital metrics: customer satisfaction, employee engagement, innovation, social responsibility, and financial strength. It’s no surprise that the across all metrics share one feature: an exceptional customer-centric focus.
This validates what has become almost a business cliché companies that are driven to make their customers happy are more successful. The ubiquity of that wisdom glosses over a profound difficulty: while satisfying customers is an easy principle to espouse, actually aligning an entire organization behind satisfying customers can be extraordinarily difficult.
Without an animating brand story that makes the customer the hero of the brand it is easy for organizations to lose focus, and chase objectives that ultimately don’t meet the needs of their customers.
It is But for the top 75 companies on the Management 250 list, there is a very weak correlation between employee engagement and satisfaction:: it is only .06. (A strong correlation is close to 1 so .06 reflects an almost non-existent relationship.)
Facebook, for example, rates 5 (out of 5) stars for employee engagement and 2 stars for customer satisfaction, while Oracle, IBM, and PepsiCo have 3 stars on employee engagement and 5 stars for customer satisfaction.
The lack of relationship between customer satisfaction and employee engagement in these companies demonstrates that employees can be engaged and purposeful about their work, even if that work isn’t benefiting the customer. Facebook has low customer satisfaction, but it has 5 stars on innovation, a huge source of professional satisfaction for many technology workers. Unfortunately, innovation for innovation’s sake does not drive customer happiness.
Salesforce, in contrast, has 5 stars in both customer satisfaction and employee engagement, and only 3 stars in innovation. Salesforce employees are happy and engaged at the company, and customers are pleased, despite being a technology company who is not on the cutting-edge in innovation.
The difference between Salesforce and Facebook? Salesforce’s employees are engaged by a customer-centric brand story that unites the company, and drives the company forward not to meet the needs of customers. Roger Martin, a strategist for the Fortune 500, points out Salesforce CEO Mark Benioff created the company after working in sales, explaining that “those closest to the customer” are often the ones who can best shape a company’s core mission, as they are well-attuned to the desires of the heroes of their brand story.
Common Ways Companies Lose Customer Focus
The majority of the Management Top 250 companies excel at satisfying their customers, which helps to define their success. Those who are not might be financially sound for the short-term, but ultimately they risk their own success by not focusing on those who keep them in business. Those long-term missteps fall into three common categories.
For many companies, it is natural instinct to broadcast their own strengths and the incredible features of their products and services. However, positioning the company as the hero of its own story — rather than a story of how great the company can make their customer — can easily pull brands off-track, and lead to innovations that matter more to an internal audience than to customers.
Facebook has been defined and driven by Mark Zuckerberg’s technologically savvy vision for the platform, and the company remains firmly under his control. Zuckerberg has overseen the development of many innovative features, including incredibly tailored advertising, extensive tracking, data sharing, and a long list of products that were abandoned, such as a Facebook currency, location-sharing, and Facebook email, and many other features many customers simply don’t use. Without a clear understanding of who their customers are and what value they are seeing in the platform, Facebook’s product offerings have easily become unmoored from customer satisfaction.
In contrast, companies like Apple and Amazon, who unlike Facebook rank highly in both technological innovators and customer satisfaction, understand that their innovations are guided by a commitment to their customers.
Contrast this disconnected imposition of a CEO’s values on the customer experience to Salesforce, a company that clearly espouses values of family, inclusiveness, and equality, but does so in a way that connects these values with their brand story of empowering “trailblazers” of all sorts to do their best in business. Salesforce humanizes themselves as a trusted mentor by adopting a supportive, collaborative, and respectful personality. For Salesforce, posing a clear connection between company values and the customer delivers a satisfying customer experience, garnering them 5 stars in customer satisfaction, according to the WSJ’s Management Top 250 analysis.
Focusing on the Short-term Balance Sheet
All companies must flourish financially, but understanding and delivering a customer experience that exceeds expectations can often cost more in the short-term. Customer centricity pays off over time through customer retention and referrals, but requires upfront investment.
Walmart is one of the top 25 companies on the Journal list, but lags behind their peers in that cohort on customer satisfaction, receiving only 3 stars. Walmart also has the lowest employee engagement in the top 25: 2 stars. Walmart has received volumes of negative press for how it treats employees, including accusations of sexism, punishing sick employees, and poor pay for employees while the corporation and shareholders see immense profits.
Walmart’s treatment of their employees seems best explained by the company valuing their short-term bottom line over employee retention, training, and engagement.
An intense focus on the short-term financial performance of a company can often result in a company losing sight of what their customers want and expect from the brand’s product and experience. This might be temporarily lucrative, but it makes the company vulnerable to competition from others who better meet the needs of their customers.
Even though it is commonplace business advice to focus on the customer first, some of the best managed companies in the world still struggle with satisfying their customers. The data suggests that customer centricity does ultimately pay off, but many companies get derailed by putting themselves, their products, or their CEO at the center of their brand stories, while others are derailed by overweighing the importance of short-term financial gains. To truly build a lasting brand, companies must move beyond espousing customer centricity to understanding who their customer is, how the company empowers their customer, and find a way to align the entire organization behind this ethos.
Kelly Sarabyn is a partner at Woden. Whatever your storytelling needs may be, Woden can help. Read our extensive guide on how to craft your organization’s narrative, or send us an email at email@example.com to discuss how we can help tell your story.