Customer experience and the company life cycle

April 03, 2012 By Mark Hurst 7 Comments

Readers of a certain age may remember the late-80s college-rock hit “Birth, School, Work, Death” – a memorable, if stark, rumination on the stages of life. It’s actually helpful in the business world, too: the customer experience a company offers is often related to its life cycle – specifically, where it is in the continuum of birth, growth, maturity, and decline.

Used correctly, it can grant you a kind of superpower: You can often understand a company by its customer experience; and sometimes you can understand why a customer experience is bad, or good, by considering the life cycle of the company. 

Here I’ll quote the excellent book Good Strategy/Bad Strategy, by Richard Rumelt, describing a hypothetical company that has experienced early success with a customer-oriented product:

Relying on the profits accruing to accumulated resources, they will lose the discipline of tight integration, allowing independent fiefdoms to flourish and adding so many products and projects that integration becomes impossible. Faced with the natural slowing of growth over time, they will try to create an appearance of youthful vigor with bolt-on acquisitions. Then, when their resource base eventually becomes obsolete, they, too, will become pery to another generation of upstarts.

Sound familiar? A company with a previously good customer experience that gradually becomes cluttered with products and projects? I can think of some examples. But it’s helpful to see it described as a normal (if unfortunate) pattern shared by many organizations.

Once you are aware of the effect of life cycle on the customer experience, you’ll start spotting examples everywhere. Just a few weeks ago Forbes ran a column called Why Best Buy is Going out of Business…Gradually:

First comes the strategic bankruptcy, well in progress at Best Buy, where management’s sole focus is improving some arbitrary metric from last quarter, even when doing so actually interferes with customers trying to buy something else. The financial collapse comes later. But if history is any guide, the second part, once it starts, will be quick.

As with many large retailers unable to cope with new channels and new consumer expectations, the company will continue to sputter on fumes, slowing down bit by bit until one day it just stops moving. Think of Elek-Tek, Virgin Megastores, or KB Toys.

Notice the similarity between the two quotes? An aging company is focused on something other than the customer experience – a short-term metric, or a short-term boost from an acquisition – and will inevitably pay the price.

The obvious question is how companies like this can change their direction before it’s too late. 

The first step is to recognize that customer experience is a strategic issue – not primarily a tactical issue of interface elements. If the CEO and other top stakeholders take customer experience seriously, the company has a chance of a turnaround. If not, the smart and well-intentioned employees elsewhere in the firm can make some tactical improvements but the long-term outcome will not measurably change.

I’d argue that customer experience the single most important issue for many companies today. So tweet this, share this, forward this to your favorite top exec!

COMMENTS

  1. Brett April 03, 2012 12:14 pm

    Just a comment on Forbes mention of KB Toys — their demise was complicated by the position of the buyout specialists.
    The distraction from Customer Experience may have many causes.

    Comment >
    • Mark Hurst April 03, 2012 12:18 pm

      Very true. *Regardless of the cause*, though, any company that ignores the customer experience will pay the price in the long run. That’s the point of the piece – whatever the reason for the malformed strategy, it’s dangerous to ignore the customer experience.

  2. Kevin Horne April 03, 2012 3:18 pm

    Re: Best Buy. I think they need to get their “Product” and “Place” house in order first (in last week’s announcement, mgt promised a better “employee experience” by year end).

    Anyway, one I think might be coming over the hill soon vis-a-vis your thesis is Starbucks. As it pushes way beyond the “coffee house” into smoothies, beer & wine, single pods for home, etc.. what becomes of its storied “customer experience”? Funny how the folks in Paris can’t (never could) stand going into a Starbucks (very recent NYTimes article). Will Starbucks take its eye off this ball in the U.S.?

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  3. Mark Hurst April 03, 2012 3:28 pm

    Good point, Kevin. Here’s the NYT article: In Europe, Starbucks Adjusts to a Cafe Culture.

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  4. Jim Carrington April 03, 2012 6:19 pm

    Great Forbes article. Too bad I had to read it on the multipage, ad bloated, slow loading, page jumping around website. To top it off, it had one of those ForeSee 28 question surveys that doesn’t have a place to write comments, which meant I could rate them but not tell them why. Forbes should read the articles it publishes.

    Comment >
    • Phil April 08, 2012 6:50 pm

      Jim – Gotcha. I’m going to forward your comments to the team over there at Forbes.

      - Phil

  5. Tracey April 04, 2012 3:57 pm

    Hi Mark!

    Your latest email reminded me of the eco-cycle model of change and renewal.

    Business school teaches the birth, growth, maturity part of the cycle, and the market prefers that growth and maturity keep following the upward trajectory, with any decline a cause for shareholder dissatisfaction.

    The eco-cycle proposes a more sustainable view of an organization as a living system, with natural destruction and renewal cycles. Leaders and managers learned how to navigate only the first part of the S curve in business school. The reverse S curve requires humanity skills that are the opposite of what was learned in business school: how to let go and let natural forces take over, how to get curious about what is happening, rather than trying to control.

    Thought you might want to read more here: http://www.plexusinstitute.com/edgeware/archive/think/main_aides9.html

    Cheerio,
    tracey

    Comment >

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