Business Leaders: More Power to the Customer

Photograph by Thomas Barwick

Those of us who do more consuming than producing may think it’s about time, but senior business leaders say they want to work more closely with customers to shape business models and strategies.

Nine out of 10 C-suite executives say they expect to have “extensive collaboration” with customers within the next five years. That revelation is from an IBM study, The Customer-Activated Enterprise, based on face-to-face conversations with 4,183 C-suite execs across 70 countries and 20 industries worldwide. (The C-suite execs interviewed include chief executives, chief financial officers, chief information officers, etc.—basically anyone in a senior post with “Chief” in his or her title.)

What the survey reveals is a realization that the old “customer-centric” mantra we are used to hearing from business leaders just won’t do. In the era of social media and digital commerce, where disappointment goes global in a nanosecond and switching suppliers is equally swift, consumers have tremendous sway over companies. A growing number of CEOs say they want to open their organizations to work more closely with customers beyond such traditional activities as product development to bring them into previously sacrosanct realms, such as strategy development and pricing as well as social and environmental policies.

In fact, according to the CEOs interviewed, customers have more influence on business strategy than the board or the people in corporate strategy. After the C-suite, customers wield the most influence: C-suite, 79 percent; customers, 55 percent; board of directors, 53 percent; and corporate strategy, 44 percent.

IBM says there are compelling reasons to work more closely with customers. High-performing companies are 54 percent more likely than underperforming enterprises to work closely with their customers.

IBM has been conducting this survey for 10 years, but this is the first time the company has called on Watson, it’s supersmart cognitive system and Jeopardy! Champ, to draw additional conclusions from the data. One of the tidbits Watson sussed out is that customers have rising expectations that companies will innovate but less tolerance when they fail to innovate.

Another interesting finding: One-third of “CEOs worry that rest of the the C-suite is out of touch with customers,” according to Saul Berman, an IBM vice-president of Global Business Services.

No need for Watson on this one. Here’s some advice cribbed from Lou Gerstner, the former IBM chairman and CEO, who pulled the company out of a death spiral in the 1990s. Gerstner kept in his office a quotation from a novel by John le Carré: “A desk is a dangerous place from which to view the world.”

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