Will consumers be admitted to the Drucker Forum? CEM and management transformation
As I write this I’m on the way to the Global Drucker Forum in Vienna. In honor of Peter Drucker, this fifth annual gathering brings together the bigs and the wigs of management consulting and practice, including Clayton Christensen, Gary Hamel, Rita McGrath, and John Hagel III.
Can management manage its own Great Transformation?
The theme this year is “The Great Transformation.” In the conference abstract, the organizers state bluntly, “We have arrived at a turning point. Either the world will embark on a route to long term growth and prosperity, or we will manage our way to economic decline.”
That’s a remarkable sentence. It takes some courage for people who earning a living advising managers to rhetorically chain the discipline of management to inevitable decline – and sign up instead to “embark” on an uncertain adventure via uncharted “routes.”
But then, the thought leaders are getting restless. As Steve Denning points out, there are many good reasons to be pessimistic about the outcome of this meeting. Not so much because it’s mostly been said before (the truth bears repeating), but because saying it has consistently achieved next to nothing in the past. The gurus have named and shamed the specter haunting capitalism for nearly a decade. They stab it with the steely knives of their lectures, books, and advisories, but they just can’t kill the beast.
The gurus have named and shamed the specter haunting capitalism for nearly a decade. They stab it with the steely knives of their lectures, books, and advisories, but they just can’t kill the beast.
This enemy has many facets and factors, but by wide agreement it comes down to the ideology (or religion) of “shareholder value,” the notion that the primary purpose (and responsibility) of a company (and its managers) is to maximize the return to shareholders – this quarter, and every quarter. The primary symptom of this disease is short-term thinking, which finds expression in resource misallocation, risk aversion, inability to innovate (or, worse, ala Christensen’s analysis, investing in “sustaining innovations” rather than the necessary long-term, market-making “disruptive innovations”), and the general habit of treating strategic programs as “initiatives” that can and will be sacrificed to the Gods of the quarterly number at the first sign of stormy weather.
The “zombie idea” of shareholder primacy
Jack Welch called the religion of shareholder value “the dumbest idea in the world.” (But, um, only after he stopped preaching and practicing it at GE.) Steve Denning ends his pre-Forum “Has Capitalism Reached a Turning Point?” by citing Simon Calukin, “The fact that this is a zombie idea does nothing to weaken its hold on the corporate psyche, particularly in the US. . . . [T]he renaissance will not flourish unless a stake is driven through the heart of the shareholder-primacy zombie first.” (Ok, true, you can’t kill zombies by driving a stake through the heart. I guess some thought leaders are too busy to watch The Walking Dead.)
Stake! Has anyone got a stake? What can we drive into the heart of shareholder-primacy that will drive meaningful change in the way companies are organized and managed? Policy changes seem utopian, if they require political agreement among the antagonistic parties in the US, or the self-serving members of the EU. Curriculum change at business schools is too long-term and remote. And cajoling, imploring, outright begging the managers themselves to Just Say No is a seed that finds no purchase in the moral wasteland of stock-driven compensation.
Cajoling, imploring, outright begging the managers themselves to Just Say No to shareholder value is a seed that finds no purchase in the moral wasteland of stock-driven compensation.
My working hypothesis: Only consumers can save us now
Here’s my working hypothesis going into the Drucker Forum on Thursday. There is a stake-in-the heart (or shovel-to-the-head) that will kill the shareholder zombie. We – we consultants, advisors, academics, and practicing mangers – do not control this weapon, but we are intimately familiar with it, because we deploy it everyday in our parallel lives as demanding, and frequently frustrated, consumers.
The stake is the recent dramatic and unforeseen empowerment of consumers by the forces of digital disruption. In the few years since the introduction of the smartphone in 2007, mobile computing and social platforms have inverted the balance of power between buyers and brands and fundamentally transformed the source of business value and competitive advantage. Every business today is indeed at the crossroads of a “great transformation” – either they will rapidly learn and practice customer experience management (CEM), or they will expire.
We call this the CEM Imperative, because attracting and retaining customers with superior experiences has become the fundamental requirement for success.
The CEM Imperative will kill zombie capitalism because short-term obsession with the numbers is incompatible with consistent customer satisfaction. This isn’t a controversial position. I doubt that any of the Forum participants or other management thought leaders would dispute that we live in a/the “customer-centric era.”
And yet . . . then I did a quick search across seven texts about the need to rethink management, either directly or indirectly associated with the Forum, including pieces by Gary Hamel, Rita McGrath, Dan Pontefract, Tom Peters (twice), Eric Beinhocker and Nick Hanauer, and Clayton Christensen (an interview). The result? “Customer(s)” appears about ten times – in pretty innocuous formulations. “Consumer(s)” appears once. (I purposefully excluded the ever-insightful articles by Steve Denning, who emphasizes the need to “delight customers” and counts the digital empowerment of consumers as a historical shift.)
Peter Drucker, the Godfather of customer experience management
That’s odd, first of all, because Peter Drucker famously said that the purpose of a business is to create and keep a customer – he is, arguably, the Godfather of customer experience management. And it’s odd, secondly, because if we (at the Forum and beyond) are looking for an effective driver for transformative change, we ought to embrace consumer empowerment, and bring the arguments and evidence to bear that demonstrate that and how 1) consumer-centricity is a winning proposition for shareholders, stakeholders, and customers alike and 2) it takes fundamental changes in organizational structure, business practices, and management philosophy to get it right.
My view is that we can and should and must stop thinking of customer experience management (only) in terms of the practical challenges of orchestrating assets and resources to create and deliver delightful customer interactions and start thinking about it in terms of customer experience-centric management practices and managers. That’s the only way CEM will be operationalized as a consistent corporate competency. And it’s perhaps the only way that the zombie will be stopped. After all, if you’re looking to incentivize capitalists, market forces beat moral sermons every time.
The Global Drucker Forum is available on live stream. The preferred hashtag seems to be #GPDF14.