Plans Are Decided By Customers

Who really runs a business, the CEO or the customer? Time was when the answer was easy: the CEO. Companies decided what to make, a process devoid of customer input. As Henry Ford famously put it, "Customers can have [a car of] any colour as long as it is black." From the time of James Watt taming the steam engine until early-middle last century, customers bought what companies made, period.

Then General Motors ate Ford's lunch by offering cars in a rainbow of colors, the visible start of companies paying attention to customer tastes. Yet this was still CEO-driven: customers could only choose from among the offerings previously decided on by the CEO. It was the illusion of choice, not the real deal.

Prahalad and Krishnan in their new book, The New Age Of Innovation: Driving Co-Created Value Through Global Networks, make a clear case for the next paradigm shift, where CEOs strive to offer what customers want, what each customer wants! Not the check-list customaization now available, customers selecting from a CEO-chosen set of choices (like buying an new car and selecting color and options), but full-blown, customer-driven choices.

Whoa. What does "customer-driven choice" actually mean? Consider shoes. The authors describe a Finnish firm, Pomarfin, who offer totally customized shoes, going Nike one better by not just letting customers choose design, color and such, but also offering sizes customized exactly to the customer's feet! You go to the store, get your feet scanned, choose design, style and color, and voila, in ten days you have the best-fitting shoes of your life. No need for scans for your next pair(s) either. Neat.

Neat and unique. A company's production totally customer-demand driven. CEOs now work to build and manage a company that can do what the cusomer wants, period.

Straight line extropolation--assuming the future will be basically like the present, only with fancier clothes, a common boomer conceit--will kill you in business. Trends don't come from middle aged fatties, but from lean and hungry youth. Prahalad and Krishnan posit that those formed and inculcated by Facebook, My Space and instant gratification, will

grow up expecting to be treated as unique individuals, and they will have the skills and the propensity to engage in a marketplace defined by N=1.

What's N=1 you ask. The principle/rule/postulate that "each person is treated as unique." It is half of what drives their thesis, that after deciding what market areas you want to play in, your job, from CEO to clerk, is creating business processes and relationships that allow customers to get what they ask for.

Through my daughter (and coaching her fastball team) I spend a fair bit of time with the new-teen generation. Weaned by Google simplicity--answers and information are there for the typing--and Things Just Being Like This, methinks the youth of 2008 are going to demand more from businesses than my hippie generation did. At least nicer shoes.

What does this mean for Dick and Acme? I'll explore that as I continue reading about what global supply chains, outsourcing, high speed internet, search engines, and Web 2.0 youth all using global resources to buy/sell in a global market all means. For now I'd say that knowing is half of solving.

Dick knows (as far as anyone does: flee from those who say they know) that his customers will increasingly demand N=1 services. Building resources, relationships and strong but flexible business processes must be with N=1 in mind. It's a start.

I'll follow up on that soon.