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Is Your Company a Pusher or a Partner?

Companies – even the better performers–need to get away from product pushing to understand the deeper needs of their customers. Only the CEO can set the tone to achieve this.

Goldman Sachs CEO Lloyd Blankfein sounded more like a drug dealer than the chief executive of an investment banking giant when he recently told the Financial Crisis Inquiry Commission that his firm was just selling toxic-mortgage-assets addicts what they wanted. But America is – or used to be before TARP, etc.- the Caveat Emptor Nation, and this junk appears to be entirely (or mostly) legal.

But let’s not confuse honesty with “best practices,” and let’s not duck the larger question posed by Blankfein’s testimony. How should corporations and CEOs see their role in society? Is it enough to “pile ‘em high and let ‘em fly,” to seal the transaction and not worry about what is being transacted? Or should CEOs be more empathetic and considerate of their customers?

One school of thought suggests that the role of corporations and their leaders should be to produce and sell products and services for which there is a market. Period. While this may be enough for some, others are beginning to conceive of their role more broadly and believe that their role is to peer over the wall that separates them from their customers and turn those transactions into relationships. The underpinnings of that connection are mutual empathy, trust, and open communication. It is not viewed as a zero-sum situation but one where if the provider benefits the customer in a meaningful way, he is likely to share in the rewards that come from that benefit. Success is measured here not only by how much you sell and how much you make, but rather also by how much of a positive impact you have on your customer which in turn is likely to a positive outcome for both parties. Means are as important as ends.

Such positive sum interactions between producers and consumers can obviate moral dilemmas such as the one confronting Blankfein and Goldman Sachs. It can also have strategic benefits for firms as well. In an increasingly commoditized marketplace for goods and services, many firms are discovering that building connections with customers and turning mere products or services offerings into customer solutions that address tangible problems can have rich payoffs for both sides. Take lettuce, for instance. Most people have an aversion to wash and chop it to make a salad. The problem has been solved by premade bagged salads that is now a multimillion dollar business. Corporations like General Electric are also emulating this by trying to shift away from selling turbines and CT scanners to bundles of services and products that together are a solution that helps their customers achieve their goals in a seamless manner.

Lofty goals like being connected to your customers have become a platitude that few CEOs will publicly disagree with. After all, will Lloyd Blankfein tell you that Goldman Sachs is a product pushing company that operates more like a hedge fund today and doesn’t really care about its customers because it has no fiduciary responsibilities to them! Most major enterprises have a well-staffed department devoted to this cause. Surveys abound. Numbers fly around. But CEOs who actually take the trouble to delve into the texture of their customers’ lives as opposed to skating over the surface of their needs and trying to embed those ideas into their corporations are the black swans of the business world. If the CEO doesn’t set the tone and believe in redefining the role of their enterprise away from product-push to one that is based on deep customer engagement, there are enough inertial elements in most organizations that this idea will remain just a corporate slogan that no one really embraces

One might think that the advantages of customer-closeness are so great that CEOs would be lined up at every Joe Sixpack’s door, number in hand, waiting to be summoned inside. But listening – really listening – to customers requires two qualities often in short supply at the top of the jobs pyramid: curiosity and humility. Understanding customer problems well enough to become their solution takes time that is only taken when there is an inherent curiosity driving it. CEOs who are always convinced they are most important person in the room (sound familiar?) might listen to what customers are saying, but they will never hear what’s going on beneath the words themselves.

Most important, the CEO must make customers partners in, not victims of, the business’s transactions. Goldman Sach’s own first business principle is indicative of this: “Our clients’ interests always come first. Our experience shows that if we serve our clients well, our own success will follow.” That, after all, is the golden rule of business – and a lesson that Lloyd Blankfein forgot. The rest of us need to do better than that.

Ranjay Gulati is the Jaime and Josefina Chua Tiampo professor of business administration at Harvard Business School and author of the recently published “Reorganize for Resilience: Putting Customers at the Center of Your Business” (Harvard Business Press).

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