It's the Customer, Stoopid

I had a boss once who had a single catch phrase. He was a Belgian, recruited from outside into Shell during a period of chaotic mismanagement. He was comically incompetent, a fact that was obvious to everyone he came across. He was a kind and well-meaning man, but in the end he contributed to the destruction of many careers and the ill health of many of the victims, including me. I can’t blame him, he did his best, but I still harbour resentment for those who recruited him.

His catchphrase was the customer. Whatever anyone said or argued, his riposte, when forced to comment, was something like “but what does it do for the customer”, or “I miss a focus on the customer” or something like that. It reminded me of Peter Sellers in Being There, one of my favourite films of all time, in which an uneducated gardener rose to be US president by spouting homely gardening wisdom.

How we laughed. How we mocked. How we suffered. But now I have come to see how he was somehow right. Jean-Claude, I apologise. For, at a deep level, it really is all about the customer.

You can imagine our frustration. We would have an excellent plan to select better locations, or streamline a supply chain, or motivate station operators. These were important, even critical, and had great commercial justification. We argued until the ends of the earth that they really were about the customer – we were giving customers more convenient places to buy, or lower prices when we passed on cost savings, or stronger service. But actually the customer benefits really were by-products at best.

This truth was obscure to me, and to most of our leaders. But the writing was on the wall. Our customer offer was fundamentally weaker than that of a supermarket or unmanned station, and gradually more and more competitors in more and more markets exposed that and customers defected. We could have matched or beaten these offers, we had the assets and the opportunity, but the customer was not sufficiently at the centre of our thinking. The same is true of 99% of businesses.

The exceptions shine like a beacon. Ingvar Kamprad, founder of Ikea, died last month. Apple in its early days brought joy and value to customers – how sad to see the recent scandals, including the shameful one of deliberately weakening batteries: Apple is now like everyone else, a cash cow waiting to be one day usurped. Uber is another example with flawed execution. Facebook and Google both started centred on the customer, but both have now become greedy and lazy – how can maximising advertising revenue really be in the interest of a customer?

Amazon still has the magic, to the great credit of Jeff Bezos. The markets sort of understand it. Last year, when Amazon bought Whole Foods, the stock price of other supermarket chains tanked. Last week Amazon announced a tie up that could lead it to entering health care, and the incumbent stock prices fell. All the incumbents are putting other priorities ahead of the customer, and are vulnerable.

Monopolists and protected businesses rarely truly focus on customers. Visit any bank, or hospital, or government office, and despair. The maxim follows at micro as well as macro level. My dentist, and local branches of Trader Joe’s and Panera are great places to visit. An individual manager can make a difference.

Why do we not see this clearly? It is because the truth only emerges in the very long term, and there are plenty of ruses and distractions along the way. Customers can be ill informed or biased and tend to be averse to switching. Regulators and investors can protect incumbents. Customer-led innovation requires genius to identify and execute – the Blue Ocean strategy model is one small enabler. Incumbents can keep things ticking along with promotions and other distractions. As an incumbent, it is almost impossible to change culture and cannibalise a cash cow, so a milking and blocking strategy actually makes sense.

Now let us extend the brilliance of Jean-Claude to the ways of running society. Autocracy and theocracy protect cronies. Communism mistakes workers for customers so it ran out of steam. Capitalist democracy should be for its customers so it is the best choice. But just as most corporations forget or ignore this, and get away with it for a long time, the same is true of capitalist democracy.

The distractions and ruses are similar. Parties think they are working for citizens, but more often the citizen is in reality a secondary concern. Citizens are certainly ill informed and biased and averse to switching, and prone to lapping up promotional short-term offers of dubious lasting value. Regulators and investors certainly protect incumbents, and are tools that leaders use to work against citizens, often under some cloud of misinformation. And, just like in business, it is hard to innovate and stand out from the pack and have a blue ocean appeal to citizens and execute so that is heard. For most incumbent parties, milking and blocking seems to make sense.

Just like in business, some customer leaders break through, others are not too bad, and some positively hurt their customers. Thatcher in 1979 started something disastrous, but her initial appeal, to free citizens from the tyranny of Scargill and winters of discontent, was customer based. There is a long way to go, but Trudeau and Macron appear to have an authentic interest in citizens and some ideas to sustain support. Blair first won power through focusing on public services. An interesting article in The Economist this week suggests that this approach is gaining ground again in many countries, after years of being blunted by the chorus against any taxation. In a less democratic context, Lee Kuan Yew’s manifesto was customer centred, and its benefits sustain. Arguably, much of China’s policy in the last 30 years has been designed to benefit citizens.

Then, at the other extreme, are neo-liberals. In the great wrong turning of 1980, Thatcher and Reagan used the need to disempower the unions to launch a regime that mistook financial markets, firms and their bosses for customers. That regime persists today. Citizens do need jobs, economies need innovative firms, and booming financial markets support pensions, but this is not a customer led approach. If it was, it would value quality of life along with GDP, it would address equality of opportunity and redress for losers, it would adequately fund public services, and it would regulate firms to avoid financial crises and abuse of employees.

Among its many sins, the Trump administration in the US takes this to a new level. And also in common with other sins, the greater villain may be the Republican Party, which uses the incompetence of the administration as cover for pro corporate, pro wealthy, anti citizen policy.

The tax bill small print and the retreat from regulating firms are the obvious examples, together with the lack of any policy promoting competition (indeed, the opposite, for example via trade policy). But smaller examples are everywhere. The consumer financial protection bureau has been gutted – how can that benefit the citizen? A bill to require airlines to highlight luggage charges before the last screens of their purchasing websites was removed “because there were not enough benefits”. Maybe I’m missing something, but I can see only benefits. Of course, a root cause is that politicians fear their donors more than their voters. The money from the donors allows them to dupe the voters, at least for a while.

So let us pray for the Amazon party, a group than can open the eyes of citizens with some blue ocean. I don’t actually think this is impossible. Most current centrist parties are just like we were at Shell, supporting our own vested interests and tolerating policies that work against most citizens. But it does not have to be like that. Some mayors are showing the way – on balance I though Bloomberg did a good job, balancing policies offering immediate gains to citizens with others that were more courageous because the benefits would come more slowly.

I wish I had listened to Jean Claude, flawed oracle that he was. It really is that simple. In a generation or two, humanity will learn that too.