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Steve Denning on Customer Delight at Agile 2011

by Shane Hastie on Sep 03, 2011 |

Author and management consultant Steve Denning gave two talks at the Agile 2011 conference:
Making the Entire Organization Agile  
Creating Customer Delight  

In the first talk he started by examining why so many good ideas fail in large organisations – he looked at initiatives such as knowledge management, lean manufacturing, great marketing ideas, innovations and of course Agile in many “20th Century management” corporations.
He stated that traditional management rests on five interlocking principles:

  1. The purpose of a firm is to produce outputs that make money
  2. Managers act as controllers of individuals
  3. Work is coordinated by hierarchy and bureaucracy
  4. “The main thing is efficiency”
  5. Communicate by directives

He described these five principles as being ineffective for organisations in the 21st century, and in fact they are toxic, leading to the eventual failure of organisations that continue to embrace them.


His headline statement was a clear and simple: Traditional Management is Broken!

  • He went on to cite evidence to support his statements about the failure of traditional management:
  • The rate of return on assets has fallen by 75% since 1965
  • The life expectancy of Fortune 500 firms down to 15 years, and is heading towards 5 years.
  • Only 1 in 5 workers fully engaged

Source: Deloitte’s Center for the Edge: The Shift Index, 2009


He then offered a new set of five imperatives and goals for management in the 21st century.

  1. New goal for the organization
  2. New role for managers
  3. New coordination mechanisms
  4. Shift from value to values
  5. New way to communicate

Expanding on these imperatives he explained:
The new goal for the organisation must be to Delight the Customer. It’s no longer good enough just to meet customer’s needs, everyone in the organisation needs to focus on ways to delight and excite them by showing that “we want to understand and help you solve your problems”. This goes beyond adopting new practices (which can help), and beyond new marketing approaches (which can help) and beyond efficiencies (which might help, but often get in the way) to an organisation wide focus on delighting customers in every interaction they might have with the organisation.
He pointed out that:

The goal is: delighting the customer
“Making money” is not the goal
“Being agile” is not the goal.
Working software” is not the goal.
Agile & Scrum & working software are means to achieving the goal.
Everyone must focus on the goal

 

He cited examples from a number of organisations of how a focus on customer delight results in fierce customer loyalty and increased profit. One example he used is Zappos – a shoe company that sells online.

He says:

  • Zappos runs its warehouse 24/7
  • This is not an efficient way to run a warehouse.
  • Customers are happy to get free shipping.
  • They are delighted when a customer orders by midnight EST, and gets the delivery eight hours later.

Another approach is to simplify products and services rather than falling prey to feature bloat (the iPod with its simple controls vs a DVD controller with 107 buttons that no-one in the family can use properly). Solve the right problem, rather than create confusion by trying to solve too many problems at once.

Deliver sooner is another important principle – customer delight often results from getting a slimmer solution to the market sooner rather than waiting longer for the “full” product.

Read customers minds, anticipate their needs rather than relying on focus groups and surveys. “No one asked Apple for an iPod, iPhone or iPad”.

Evaluate what customers DO not what they SAY. Here he discussed “New Coke” – focus groups reported that it tasted better and would sell well, but the reality was a clamour to bring back the old taste.

Let your customers become co-creators. Customisation and product configurations focused on the market of one create customer delight. Computer technology today can be leveraged to deliver this very effectively.

Stop doing things that don’t add value – eliminate the waste and focus on what delights your customers.

Measure – customer delight is measurable. Here he spoke about the “Net Promoter Score” a concept from Fred Reichheld in his book “The Ultimate Question” and how important it is for organisations to measure their customer's feelings about them.

To sum up Customer Delight he describes is as ““Providing a continuous stream of additional value to customers and delivering it sooner”.

Agile techniques enable customer delight, and organisations that focus on delivering customer delight are making the most money today. He used Amazon.com, Apple Computer and Salesforce.com as three organisations that have focused on customer delight and are making massive profits as a result.

A focus on customer delight needs the other four principle to be in place, as they entail a completely different way of running the organisation:

New role for managers

From Controller of peoples actions to Enabler of self-organizing teams

New coordination mechanisms

From Hierarchical bureaucracy to Dynamic Linking – client driven responsive activities with short cycle times

Shift from value to values

From a Single minded profit focus to Continuous improvement and radical transparency

New way to communicate

From Command-and-control to Adult-to-adult/peer-to-peer conversations

 

He maintains that these shifts are interlocking and self-reinforcing, it’s not enough to make minor changes and adopt one of these changes at a time – truly successful organisations today are adopting them all at once.

He states that the adoption of Agile practices has tackled three of the five transitions – the agile movement has done well, but needs to do more in terms of tackling the transition to a focus on Delighting Customers and moving from Command to Conversations.

He ended his talk with a call to action by Agile advocates:

Lead the revolution!
• Embody the change
• Be the strategy (not support the strategy)
• Master leadership storytelling
• Challenge management to join the future
• Encourage others who share the vision
• Take charge of the future

The PDF of his first session can be found here

His second talk was an hour-long workshop with 12 exercises in which participants were challenged to identify approaches to delighting their customers, building on a set of principles and tools he explained in the session. The pdf from the second session can be found here



Can we adopt Customer Delight as an organisations single-minded focus? Has your organisation done so, and what is the result?
 

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I don't agree with Steve by Nathan Gloyn

I read Steve's multiple blog posts on this and responded myself in a blog post nrg.im/qtYFKU

The short version is: we should aim to delight customers but I personally believe Steve is wrong in a lot of the ideas he has in how to do it.

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