By Eze Nwagbaraji
The global market collapse precipitated by the implosion of the American mortgage and housing markets between 1997 and 1998 have created one of the most enduring lessons for business leaders. Global business leaders are still smarting from the harsh realities of what may indeed be the first real worldwide business disruption over the past 100 years.
World War I and II left their business disruptions, including the American great depression. Business disruptions caused by the harsh economic effects of the World Wars were mainly to European economies. African countries were mostly colonies of these European countries and did not suffer as much. But the first global market implosion of the 21st Century is all embracing. Economies, businesses, and markets on the African continent took as much pain as the countries of Europe and North America. Further, the latest recession is on the heels of a global market place that have continued to shrink pursuant to the penetrating impact of technology.
To be successful, businesses on the African continent must now compete with businesses in some of the most advanced and well organized economies of Europe and North America. The global market place of the 21st Century has made customers across sovereign borders available to numerous businesses. With this comes the painful reality of adopting best practices as a business and operating in markets with efficient or near efficient regulatory systems, an attribute that is significantly lacking in most African economies.
In both telecommunications and banking, for example, African market regulatory regimes have not hesitate to invite European, American, and Asian private corporations to become participants in local markets. While these acts portend well for effective service delivery to consumers, what these regimes have not articulated well is how to better create and sustain regulatory regimes capable of ushering in businesses that are consumer friendly, less exploitative, and fair to local and indigenous market participants.
The telecommunications market in countries such as Nigeria and Ghana, for example, have been deregulated and liberalized for more than a decade now, however, Nigerian cell phone subscribers pay one of the most expensive telecommunication rates in the world. More than seventy-five percent of Nigerian telecommunications consumers are forced into pre-paid schemes that have turned the telecommunications companies into one of the largest receivers of customer funds deposited for future use of their services.
These pre-paid customers by default have become the financiers of these telecommunication companies. Customer services at these telecommunications companies are poorly manned and geared towards deterring any meaningful resolution of consumer issues. Agencies that are supposed to supervise these outfits lack the capacity to engage in any serious consumer oriented market regulatory activities.
The commercial banks are not an exception. Several of the banks do not provide monthly detailed statements to their customers. Banks such as Zenith charge their customers for the use of Automated Teller Machines (ATMs) owned and domiciled in their branch offices. UBA for example refuse to issue teller checks to its current account customers who either approach the bank for such services. They would rather have the customer order new set of checks at higher costs.
Over the past two months, all commercial banking outfits in Nigeria now require those who approach them to redeem or claim funds wired via Western Union and Moneygram to open accounts with them before they would allow redemption of such funds, irrespective of the amounts of the funds. Ironically, Western Union, an American company, does not even require customers wiring or receiving funds less than one thousand US Dollars to produce any identifications and no commercial bank in the United States accepts or redeems any funds through Western Union. Western Union and Moneygram are services provided at mom and pop convenience stores and at numerous petrol stations. Every bank in such Nigerian cities as Abuja and Lagos now display the Western Union and Moneygram logo, but do not redeem such services. Customers are either redirected to other branches of the banks or advised that the system is down.
Every commercial bank branch in Nigeria displays its exchange rates (buying and selling rates) for such foreign currencies as the US Dollar, the British Pound Sterling, the Euro, etc. However, these banks do not engage in these transactions, and if they do, the rates quoted are not the rates they operate with. When questioned, several will tell you that it is a directive from the Central Bank of Nigeria that such notices and rates be conspicuously displayed.
Customer-Driven Business Alignment
The core responsibility of a manager or a management team in any corporate or business setting is to enhance shareholders’ assets, i.e. create profits for those who invested their private funds through various investment vehicles into the corporation. Empirical evidence have shown that companies that withstood the tests of time and the rough and tumble seasons of all business cycles are those that have mastered and followed the concept of effective customer service delivery. Sam Walton, the legendary American founder of Wal_Mart Stores, put it best _ “There is only one boss _ ‘the customer.’”
Organising a corporation vision and operational strategy around what customers want sounds easy, but it is perhaps the most difficult to carry out consistently well. It is the most dominant trait found in every successful global brand. Coca Cola, Pepsi, Honda, etc., are some of the greatest adapters of customer driven business alignments. Even in the world of entertainment, such names a Michael Jackson, Madonna, Obey, etc. have become national and global brands, based on their adaptive responses to customer needs. Toyota Motor Corporation for example, followed this doctrine for several years and emerged as one of the dominant automobile manufacturing outfits.
However, as soon as the Corporation shifted its focus from customer interests to pursuing General Motors in attempts to supplant General Motors as the world’s largest manufacturer of automobiles, Toyota created a series of quality based snafues in some of its largest markets in North American and Europe and to date is still fighting to rectify quality missteps in its line of products.
Customer driven value business leaders understand that they cannot be all things to all market segments. These companies are focussed and through tough strategies choose their customer segments, offer a value proposition that is distinct from competitors’, and deliver this value with a business model that is optimized for their market. They are careful in their choices and vigilant in their outlook as they seek to profit from customer business value leadership.
Winning the battle for current customers is not enough. Companies must relentlessly drive growth by innovating new value for current customers and attracting new customers. Customer value innovation is not restricted to technology advances. Customer value innovators see opportunities for growth along every dimension of a competitive strategy. They pursue new market geographies and new customer segments, create new and enriched customer experiences, rethink the profile of features in ways that competitors can’t match, and reconfigure the way they create and capture value.
Corporations and Companies that have mastered the customer driven market imperative have found a way to consistently turn customer value into valuable customers. These customers are assets that lead to consistent profit for the corporation. They purchase more in a category, purchase across categories, purchase new products, respond faster to company marketing activities, they defect at lower rates to the competition, investing in the relationship, and promoting the company more by word of mouth.
A strong brand makes a credible promise to deliver a meaningful benefit. However, companies that master this imperative go further to turn their strong brands into profits.
These brand asset managers devote sustained attention to building the brand by adopting a long-run investment perspective, protecting the customers interests with the full understanding that a satisfied customer remains the most lucrative return a corporation can achieve.
A corporation that stands in the customer’s shoe will most likely create a strategic business model focused on the customer. The corporation assesses what it is good at, given its resources, product lines, and capabilities. Efficiency sets in when the corporation attempts to use its resources to meet the customer needs.
After the recent global recession and contractions in the global markets, customer driven approach to business strategy acquired added importance. To compete effectively in the global market, businesses must now respond to customer needs in more organized and time sensitive manners, bearing in mind that the increased complexities of competitive markets have weakened the barriers to entry in several industries and markets. For market regulatory regimes and institutions, the importance of efficient surveillance of customer services and prevention of sharp practices have emerged as the most significant areas of regulatory oversight.
Lessons from 5 Modern Influential Business Leaders
Sam Walton’s principle is simple: “A single person can make a huge difference in an industry. It does not happen overnight, especially in retail, but it can happen over a period of years.”
Along with his belief of delivering great values at low prices to his customers, Sam Walton turned a one store retail outfit he found in 1945 in Bentonville, Arkansas, United States into a mega corporation with market capitalisation of US$200 billion and annual sales in excess of US$300 billion.
To date, the Wal-Mart retail machine operates 803 discounts stores, 2,747 supercenters, 158 neighborhood markets, and 596 Sam’s Clubs in the United States, 43 units in Argentina, 434 in Brazil, 317 in Canada, 252 in Chile, 170 in Costa Rica, 77 in El Salvador, 164 in Guatemala, 53 in Honduras, one in India, 371 in Japan, 1,469 in Mexico, 55 in Nicaragua, 56 in Puerto Rico, 371 in the United Kingdom, and 279 in the Peoples Republic of China. Wal-Mart is the largest employer of non-military labor in the United States. At the entrance to each Wal-Mart Store is a smiling and friendly face that greets each customer, extending pleasantries and suggesting the day’s daily deals or discounted products. As the customer exits the store, another smiling face is at the exit, asking whether the customer purchased all they had come to the store to buy.
Andy Grove, co-founder of Intel Corporation was another contemporary business leader, who understood the value of a satisfied customer. Grove is not your run on the mill kind of business leader.
He earned his Ph.D. in 1963 from University of California at Berkeley (UC_Berkeley). Rather than take an earth shattering job with the leading technology companies of his time such as Bell Labs, he joined an upstart company, Fairchild Semiconductor. Half a decade later, along with his boss, Gordon Moore, he left Fairchild to co_found Intel Corporation. In 1987, he took over from Moore as CEO of Intel Corporation.
In 1987, Intel Corporation was supplying more than 80 percent of the microprocessors that powered the world’s computers, but the company was hardly known beyond and outside a handful of industry insiders.
The recognized brands in the technology game then were IBM and Microsoft. Grove was determined to change the narrow perception. He led his company into a branding campaign and by 1990, Intel was a household name across the world.
As an unconventional thinker with unparalleled imagination and integrity, Grove pursued a policy of customer satisfaction, even though no consumer of personal computers ever bought an Intel chip on his own. The product is embedded into the computer. In a world stitched together with technology and the near total reliance of individuals and businesses on computer, Intel has become the world’s top technology company with market capitalisation of US$120 billion and annual sales of US$100 billion.
Warren Buffett, (the Oracle of Omaha, Nebraska, United States) by every standard is the most successful investor of all time. A shrewd manager of investment portfolios, who had powered his investment beautique, Berkshire Hathaway, into one of the most priced stock holdings on Wall Street. His investment philosophy is simple. Understand the company that you are investing in, understand its customers, buy when the price is low, remain loyal to the company, and in the long run, you will be ahead of the crowd.
Like Andy Grove of Intel, Buffet maintains his moral stature and integrity in all his dealings. A decade ago when Salomon Brothers, one of Wall Street’s leading investment bankers had internal crisis driven by greed, Buffet was brought in as a CEO to restore confidence in the corporation. His hands on, no nonsense approach helped the then Wall Street behemoth regain customer confidence. Buffet consistently emphasizes ethics in all his business dealings and corporate leadership.
In the aftermath of the most recent market implosions in the United States, Buffet was the go to man in all matters dealing with rating agencies, such as Moody’s and such investment banking giants, Goldman Sachs, who had been engrossed in sharp practices in the market. Though his company invested in some of these companies, he never hesitated to castigate and or praise the management teams at these corporations where such blames and or praises are merited.
Microsoft’s Bill Gates approach to customer value creation is born out of his conviction that team_building in corporate settings assures market penetration and enhanced investors’ value. Like Andy Grove at Intel, Gates saw the potential of the personal computer as a transformational instrument in the lives of individuals and corporations. He diligently pursued a strategy that established Microsoft as a software powerhouse.
Gates has the vision and the skills to bring people of diverse backgrounds together under one corporate umbrella and let them serve the customer interests.
The story of Microsoft is one built on a determined effort to transform the world. The software giant at the outset set up its toll booth at the entry and exit points of the technology highways. It is customer driven and user friendly. Bill Gates abilities expanded as his corporation expanded, a rare entrepreneurial feat in the world of big business. Former General Electric (GE) CEO, Jack Welch, is another business leader whose leadership abilities surround understanding the customer. When he mounted the leadership position at GE in 1981, the corporation was a US$13 billion corporation. In 2001, the corporation had a market capitalization of US$550 billion under the leadership of Mr. Welch. Under his tenure, GE stock price saw a 40 fold increase, creating enormous wealth for the company’s shareholders.
Welch has an unparalleled ability to spot other leaders and various market segments. During his tenure at GE, the corporation became the go to place for other leading corporations searching for top corporate leaders. Divisional leaders at GE were sought out by leading corporations for appointments as CEOs. During his era at GE, the corporation became the world’s largest manufacturer of aircraft engines, a formidable broadcaster, through its NBC Television arm, a major global generator of electricity and renewable energy, etc. Jack Welch once said that he does not know how to broadcast on television and how to repair or fix aircrafts, but he definitely knew how to attract the best talents to run these segments of the GE.
The most common traits among the above business leaders and some of the world’s best business and brand creators are the tenacity to stay the cause, serve customers, and make their businesses people driven. These qualities are also driven by grounded ethics and moral certainty.