Why centricity matters
Updated: Feb 27, 2019
In this final post on centricity (for now at least), we look into WHY it matters: On a business model level; in relation to customer service and when implementing new technology.
Technology has always been a force to be reckoned with. But those who harness it, will be able to use it to an advantage. The driving force in technology these days is digitization. Disruptive, exponential technology.
Most people never think about it, but they carry a piece of exponential technology with them at all times – a smartphone. It too follows Moore's law: Twice as fast by next model in roughly 18 months' time. With it comes hundreds of digitized services – now available at the touch of your finger. With constant, free updates of the related applications. Every aspect of your life fully digitized.
VIDEO DIDN'T KILL THE RADIO STAR You might be familiar with the following quote by Alberto Brea, former Executive Director and Head of Engagement Strategy at Ogilvy & Mather:
"Amazon did not kill the retail industry. They did it to themselves with bad customer service. Netflix did not kill Blockbuster. They did it to themselves, with their ridiculous late payment fees. Uber did not kill the taxi business. They did it to themselves, with their limited number and fare control. Apple did not kill the music industry. They did it to themselves by forcing people to buy full-length albums. Airbnb did not kill the hotel industry. They did it to themselves with limited availability and pricing options. Technology by itself is not the real disruptor. Being non-customer centric is the biggest threat to any business."
What Brea touches on, is that being customer centric will help you avoid the negative consequences of digitization by exponential technology.
This is true because as services becomes fully digitized, they are being "commoditized". They can be traded for free, a flat rate and always a much lower price than "usual". This is true for – say – phone services; insurance; and banking services and all kinds of content (movies, papers, magazines, music).
The internet in itself is a major commoditizing factor. And what exponential technologies does, is that they DE-MONETIZE. Digitization reduces transactional costs to zero or close to zero. So, if your business is based on a purely transactional customer relation, you will die. Because there is no service – just a price tag. A price tag going towards zero. This is why you buy on the internet instead of at the retail store. It's easier, cheaper and more convenient. But it is also why you still go to the specialized store for expert advice and a more personal shopping experience. The service experience becomes a differentiating factor.
B2B TRADING AND CENTRICITY
B2B trading at its heart is a transactional business model. Being a middle-man becomes increasingly difficult as digitization makes it easy to establish a direct link between producers and end-users.
Still, B2B lags behind in its digitization efforts. This is covered in length in e.g. McKinsey Quarterly (first quarter 2017). The main differences between winners and laggards in the digital race can be seen here:
Note the PITFALLS:
SILOED mindsets and behavior
Lack of common CULTURE across business units
Lack of common view of the CUSTOMER across the organization
This is – EXACTLY and TO THE POINT – the main difference between the geo-centric system (LACK of common mindset, culture and customer approach) and the helio-centric system (WITH a common mindset, culture and customer view).
Hence, being CUSTOMER-CENTRIC – being a helio-centric organization – not only defines your resilience in the face of full-on digitization. Between providing a customer-centric service experience and maintaining a 100% transactional customer relationship. It ALSO defines whether or not you will be able to cope with digitizing your business, your services and your operations.
Any which way you go, CENTRICITY is important inside the organization and when the organization meets the outside – the customers.
At Acumex, we understand that digitization is not just about systems and features. It's just as much about the shifts in mindset, in culture and in organizational change management. It's about business re-framing and about facing, challenging and CHANGING deeply entrenched convictions.