We are currently living in volatile times, and only businesses with a strong foundation will survive the pandemic and the changes that have come with it. A strong foundation can only be determined by your ability to improve your customer-centricity and innovation skills.
According to the U.S. Bureau of Labor Statistics, approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.
So what determines whether a business will last for more than 15 years? BTW: businesses over 15 years can learn from this too.
In my interview with Dennis Geelen, the inspiration behind the best-selling book The Zero In Formula, we unpacked the reason why most businesses fail. The answer is three words, Customer-Centric Innovation. What is customer-centric innovation, and why is it vital for your business’s survival in these difficult times?
Why Businesses Fail Without Customer-Centricity and Innovation
Businesses fail mainly because of two challenges. The first being that they are too inward-focused. They focus on themselves, their product, their process, and their revenue. Everything about the business barely has anything to do with what the customer wants or needs but everything to do with what they think the customer wants.
While all the factors mentioned above are important aspects of a business, they are not the only important things to look at.
The second reason businesses fail is that they are too stubborn and too stuck to do things. Times are changing faster than before. You must be more nimble and agile to survive.
There are too many technological advancements and other advancements happening daily – there are new market entrants every day looking to highjack your customers – and customer needs are frequently changing.
The business environment is now about the survival of the fittest, and as Darwin determined – how fit your business is, is your ability to adapt.
Are you the Opposite of Customer-Centric?
It is important that, as a business, you are not too inward-focused. Those that excel go well beyond a balance between the amount of focus they put internally and externally. They are as customer-centric as possible, and they align that with their internal customers. For example, they create things like a “keep me on the road” warranty instead of a “powertrain warranty” for their customers.
What are customers looking for? What do customers need? This is how your product or service should be positioned in the minds of your people.
Do not be complacent, be as innovative as possible. If you get everyone’s mindset right, you end up with greater levels of customer-centric innovation. And this is what will make your business survive long term.
Systems and Formulars that Compliment Customer-Centricity and Innovation
As a leader, you have to ask yourself this question. How do we unintentionally put principles, practices, and policies in place that might be causing us to go down the road of shutting down? Build your business model around ensuring that you are focused on speeding things up for your customer.
Some might say, forming habits from the beginning of the business is much easier than forming habits ten or fifteen years later. Maybe, but businesses built to adjust are the ones that last during tough times because they are already in tune with the changing habits of the customer, new or old.
You have to understand that transformation of systems is not about transforming the company. It is about transforming the way you do business – and people do that. Understand and define where you are and what you are doing. How customer-centric are you, and what do you need to continue to be more customer-centric? How innovative are you, and what do you need to be more innovative?
Where Does Your Business Lie in the Customer-Centric Innovation Quadrant?
There are four types of businesses in the customer-centric innovation quadrant.
The first type of business is the business, which is both innovative and customer-centric. Businesses like these often survive over ten years because they are built to adjust according to the environment. They are innovative, and they address what the customer needs at that given time.
The second type of business is the business, which is innovative but not focused on customer-centricity. According to an article by Forbes, Customer-centric companies are 60% more profitable than companies that don’t focus on customers. This type of business normally does not survive past the first two years because it does not address its customer’s wants and needs.
The third type of business is the business, which is customer-centric but not innovative. While it is great to focus on the customer, it is also important to be innovative. McKinsey published a report in which they found that 80% of business executives believe that their current business models are at risk.
A further 84% think that innovation is a crucial factor of their growth strategy, and only 6% are satisfied with their innovation performance. A good customer experience alone is not enough. How creative are you with your product design? Does your product design and customer experience design complement each other?
The last type of business is not customer-centric, nor is it innovative. This type of business may fail right from the word go because they are not serving any market purpose.
It is vital to ensure that you are innovative and focus on customer-centricity if you intend to survive in this current business environment.
Customer experience design has a foundation, pillars, and other layers on top of that. It would help if you had customer experience aspects such as speed and accuracy, but delivering speed and accuracy is still not enough. It would be best to support pillars such as services, products, and atmosphere (including virtual atmosphere).
To get all these things right, you need to identify who your ideal customer is and build services, products, and an atmosphere that resonates with them.
You have to rework your processes, organizational structure, key performance indicators, goals, and metrics so that all these aspects are focusing on customer-centricity and innovativeness. Also, continue to check on performance, engagement, collaborative relationships, experience, and business acumen.
Watch My Interview With Dennis Geelen
- In which quadrant in the customer-centric innovation quadrant do you want your business to fall? What would it mean to you?
- How is your business customer-centric and innovative?
- Which of the two do you struggle with the most, customer centricity or innovation?
Jim Rembach is the Editor in Chief of the Customer Service Weekly and it’s Podcast host. He is President of CX Global Media and the creator of the Call Center Coach Virtual Leaders Academy. As the host of the Fast Leader Show Podcast, he has interviewed hundreds of experts, authors, academics, researchers, and practitioners on various angles, viewpoints, and perspectives for improving the customer experience. He has held positions in retail operations, contact centers, customer support, customer success, sales, and measured the customer experience. He is a certified Emotional Intelligence practitioner, Employee Retention Specialist, and recipient of numerous industry awards.