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Thursday, September 19, 2019

C-Suite Advisory

Is Your Chief Operating Officer Helping You Win Customers?

Customers drive disruption. If your products or services don’t address their needs, they will buy from your competitor. This is more true now than at any other time, because customers are increasingly knowledgeable about their choices through peer reviews and social media. And with generational changes, customer needs are changing rapidly.

Not only are customers demanding quality – they want increased service, personalization, and speed. Companies can only deliver these effectively if they create the right strategies and then have the operations and organization to deliver on them.  Take a look at Blue Apron. Blue Apron introduced meal kits, and customers loved the idea. To reduce high prices, leaders tried to restructure the company’s supply chain by automating their warehouse. But mix-ups and missed ingredients problems increased, and customers complained. Blue Apron has been struggling ever since – because the company did not realize how crucial operations were to their success.

They are not alone. At most companies, Chief Operating Officers (COOs) are second in command and are responsible for running operations, whether it’s manufacturing companies, internet giants, or even startups. However, one area that is typically kept out of the COO’s purview is that of selling to customers.

In light of changing customer needs, the role and importance of Chief Operating Officers and the operations team has to change. Operating organizations play a critical role in the customer experience. Take for example, Chick-Fil-A. While McDonald’s growth has stalled, Chick-Fil-A is on its way to becoming the third-largest food chain in the U.S. by 2020. How did this happen? Chick-Fil-A focuses on the kind of quality today’s customers care about.  They buy small birds that yield more juicy meat and have perfected its seasoning, hand-breading, and pressure cooking in 100% refined peanut oil. Their birds are raised in barns not cages, on U.S. farms. Most of their produce is freshly delivered to their locations. An average location earns $4.4 million in revenue versus McDonald’s $2.5 million — even though Chick-Fil-A is closed on Sundays.

It’s not sleek marketing or toys that bring customers to Chick-Fil-A but their focus on quality. It’s no surprise McDonald struggles with growth and Chick-Fil-A continues to grow rapidly. And it’s Chick-Fil-A’s COO and operating organization that makes all this happen.

What’s Needed from Today’s Operating Organization?

More than ever before, operating organizations must play a critical role in addressing customer needs. In the world of peer reviews, if products and services don’t perform, customers won’t buy. Customers may never see or smell Chick-Fil-A’s clean barns, or the way its employees handle the birds,but those things contribute as much as the cooking to what customers love about Chick-Fil-A. The whole organization needs to be reoriented towards customers.  Specifically, operations need to be aligned with customer strategy. This means:

Step 1: Rethink operations: In most companies, operations are still run on industrial age philosophies – scale and standardization, in particular. It’s time to introduce capabilities that address customer needs. A few of these are —

  • Flexible operations: As demand for customization and personalization increases, a standardized and centralized operation will be a barrier to meeting customer needs. Instead, flexibility is needed throughout the supply chain. This involves rethinking manufacturing from centralized to distributed; creating different supply chains for different demands; reducing lead time; and eliminating waste.
  • Creating different service models: Companies typically stick to the same model for servicing customers, even when demand has shifted. Discount airlines disrupted full-service airlines by offering point to point service for price-conscious tourists. Finding new ways of servicing customer needs is critical as the industry matures or customer needs change.
  • Speeding up the supply chain:  A company can’t react to changing customer preferences quickly unless its supply chain can also respond rapidly – but, too often, the supply chain becomes the bottleneck. To speed it up, companies must remove/reduce non-moving inventory, simplify ordering, simplify the supply chain network, simplify delivery, and simplify supplier interactions.

Step 2: Develop Organization Capabilities: Creating new strategies and developing new operations is not sufficient. The organization has to create new capabilities.  A couple of critical elements are –

  • Empowering teams:  A crucial, but often overlooked, part of delighting customers is the role of employees. Employees must play a significant part in assessing needs, coming up with strategies, implementing them, and bringing the new strategies to life. Most organizations pay lip service to employee empowerment, but a truly empowered organization gives employees the power to make decisions on the spot — the kinds of decisions that an owner of a small business could make. Only employees who are trusted and allowed to make mistakes can satisfy customers. Unless an organization’s culture supports frontline employees, employee empowerment is a pipe dream and customer engagement is nonexistent.
  • Paying attention to detail:  All great leaders and organizations pay attention to details. Walt Disney rode the rides in his park himself to ensure they provided the best experience for customers. And the tradition of paying attention to every detail at Disneyland continues.  From the placement of trash cans to the food and service in the cafeteria, everything is continuously perfected for the best customer experience. Attention to detail starts at the top — and it can be encouraged and taught to everyone in the organization by developing good managers, encouraging employees to take pride in their work, and recognizing work well done. This may sound elementary, but too many organizations fail to pay attention to details and their customers notice.

The time has come to recognize the COO role and the operating team for what it is – an organization that’s responsible for retaining current customers and attracting new ones. Unless your operations support customer needs with an organization that can deliver on them, it will be difficult to be successful — even if you are a pioneer in your industry. The COO and his/her organization is truly your lifeline against disruption.


Written by Suman Sarkar.

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Suman Sarkar
Suman Sarkar is a partner with Three S Consulting and an international consultant who has advised more than forty Fortune 500 companies in strategy and operations. His new book, Customer-Driven Disruption (Berrett-Koehler, 2019), is a blueprint for showing how companies must adapt to ever-changing global demographics and markets. It draws on the author’s extensive experience and features case studies from companies around the world that have thrived in volatile, highly competitive marketplaces. He has published numerous articles in business journals and his first book, The Supply Chain Revolution, is an Amazon top-seller in its genre. Suman is an opinion columnist for the CEOWORLD magazine.
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