To Be Customer-Obsessed, Firms Must Also Be Technology-Obsessed

There is much talk about being customer-obsessed. What does it take to be customer-obsessed?

Recently, in The New Yorker, Mary Powell, CEO of Green Mountain Power, a small energy company in Vermont, told a story of customer-obsession. Her customer-obsession starts simply: Help customers reduce their energy footprint at no net cost. Green Mountain accomplishes this by investing hugely in the latest and best technology, to pull electricity from the sun, insulate the bejesus out of the house, run massively efficient heat pumps, and micro-manage the draw on the power grid draw. Yes, the capital expenses and labor costs are immense. But when you reduce a home's energy footprint by 85%, you reduce the $250 electric bill by 85% -- or more than $25,000 over 10 years.

Green Mountain Power has a customer-obsessed culture and a customer-obsessed operating model. But it also has become expert in using technology to win, serve, and retain customers. The company is technology-obsessed, often out ahead of even the pundits when it comes to the latest technology. Green Mountain Power unites all three forces to be customer-obsessed: culture, operating model, technology.

The same is true for every company and government. Igniting a culture of customer experience is important. Relentlessly improving the operating model to put customers first is also important. But without the right customer-serving business technology in place, customers will be stuck with ancient web sites, cranky mobile apps, pathetic call centers, and disempowered employees.

None of these problems is insurmountable. Frank Blake, CEO of The Home Depot, announced that the company would spend $300 million upgrading its technology and supply chain foundations because customers went mobile faster than they thought. While $300 million might sound like a lot of money to a beleagured CIO, it's only 4% of The Home Depot's sales. It's chump change to an customer-obsessed board of directors.

To be customer-obsessed, you will also have to be technology-obsessed and be prepated to invest heavily in technology systems, processes, and people. If that daunts you but you believe it, then find someone in your company that can handle that truth. If you can't find anybody, then maybe it's time for you to think about changing jobs.

I have spent my career helping companies build the confidence and passion to invest wisely in technology. It began when I was a coder: developing reusable software in whatever software language I had. And I've continued it at Forrester, helping companies spend now both to save later and create options for future growth.

To frame the opportunity, frame your business techology agenda in four systems -- each of which demands a different investment strategy:

1. Systems of engagement: the technology that customers and customer-facing employees touch every day, including web and mobile digital experience platforms. This includes the entire digital infrastructure for marketing, commerce, service. It's time to refresh and re-architect these systems. This will cost hundreds of millions of dollars over the next five years. And you must invest based on a belief as Blake Frank did rather than based on return on investment (ROI).
2. Systems of insight: the business discipline and technology to harness insights to consistently turn data into effective action. Systems of insight marry big data, customer insights, and insights-to-execution in software and better engagement. It's a new team, a new operating model, and an enhanced technology portfolio. Expect to spend tens of millions of dollars, but tie that spending to more immediate returns like optimized digital marketing and sales conversions, more efficient customer self-service, optimized pricing, higher loyalty, better upsell and cross sell, and lower risk.
3. Systems of automation and the Internet of Things: the technology to manage the connected products in your portfolio. Think about managing the software on a connected car, or filtering relevant data from thousands of sensors in a smart building, or automating repairs on a connected commercial refrigerator or pipeline or shipping container. Those are systems of automation. Learn now to scale later. Expect to spend tens of millions of dollars getting started. Fund this with service cost savings.
4. Systems of record: the traditional technology that you operate the company on: finance, manufacturing, customer databases, transaction systems. Use the cloud, consolidate and refactor redundant systems, and relentlessly optimize the cost of operating these systems. Save hundreds of millions of dollars here over the next five years so you can afford to spend it on systems of engagement, insight, and automation.

CIOs must lead CEOs and the entire operating committee to understand that treating technology as a cost center will emasculate your company's ability to find and serve customers in the channels and engagement they desire most: through digital technology.

SOURCE: Forrester