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Customers can teach the Board about their ethical obligations, you just got to get face to face.

November 14, 2019

Customers can teach the Board about their ethical obligations, you just got to get face to face.

As we continue to hear about customer failures from the Banking Royal Commission, those of us who work with customers every week and every month find it hard to understand how these problems could occur.

Yes, governance and policies are key to ensuring that companies have the structures in place to manage customers correctly but who is asking the questions when it comes to customer needs and wants?  Who is asking why?  How come?  What occurred to make this happen?  What did we do in the past when this issue arose?

For two years in a row Graham Bradley AM FAICD has presented at the AICD’s Essential Director Update and listed the 7 questions directors should ask in a board meeting.  Number 4, ‘Does the voice of the customer ring loudly at the board table?’ links in with his 2018 points around board expectations.

He says that the expectations on boards has been elevated in five new ways with boards needing to engage more fully with feedback from customers, understanding the substance and not just the numbers of customer complaints.

At the end of last year, I was asked to attend the South East Water Board strategy session where I presented the latest customer findings and insights.  It resulted in a lot of discussion.

But what was more exciting was the more meaningful debate that occurred after I took a group of their customers into the board meeting the next day and asked the customers themselves to explain to the Board what they thought and what they wanted.

John from Frankston was very clear with the Board that it was their responsibility to help their customers think of water as a precious resource. It was Nitha from Carnegie who told SEW that she did want to know more about their future plans for sustainability and what they meant for her and her son.  All seven customers told us about their life and how the SEW brand fits into the that.

What the SEW board saw immediately was the relevance their business plays in people’s lives, the context of the numbers they had seen the day before and unexpectedly and probably most importantly, the customers view of how the business should be conducting itself.

Lucia Cade, the Chair of the SEW Board says the experience was humbling and inspiring.

‘One of the most insightful take outs for our board was hearing our customers talk so knowledgeably about our business, about the broader environmental role water plays and their expectations of us to do the right thing on their behalf.  It was more than just how we are doing on a day to day basis. They knew more and cared more than I had appreciated, actually they cared just as much as we ourselves do.’

So how can you execute Graham Bradley’s recommendations and have a similar experience to Lucia Cade’s SEW Board.  There are three things we would recommend:

Demonstrating a customer first culture

There has been a lot written about the need for the Board to set the tone when it comes to Culture and Leadership.  Again, the Banking Royal Commission has been a forum for these discussions to continue.

But culture is not just about policies and rules, it is also about making sure that what is important is at the forefront of all decision making.  And ensuring key questions are always asked.  Are we, as a business and brand, living and breathing our values?  Are we thinking of the customer at all times when making strategic decisions?  Do we as a board and business know intuitively what our customers need and want?  Why is that customer number increasing now, when it was going down last time?  What seems to be driving that change in customer satisfaction?  Why is it that our complaints are focusing more on this product or service?

Understanding the effectiveness of small data vs focusing on big data

Since the digital boom, big data and dashboards have taken over in many businesses and have been confused as ‘customer insight’ as opposed to what they really are – data frameworks.    We also produce quantitative data but see it for what it is – the ability to understand what is going on and frame a discussion.    But it doesn’t help the Board understand why things are going on.  And the nature of small data is that it is more granular in nature and can open up opportunities that big data cannot.

The Board need to get into the habit of asking for the small data. The information that comes from the face to face conversations the people at all levels in the business need to be having on a regular basis.   Unless the Board (who sets the Cultural tone) knows the answers to these kinds of questions, then the organisation is not demonstrating its passion in customer first.

Bringing real customers into the board room

Bezos famously leaves one seat open at a conference table and informs all attendees that they should consider that seat occupied by their customer, ‘the most important person in the room.’  Although this is an interesting idea, we think, it would be better to fill that chair with a few of your customers.

Humanising the customer and thinking of them as real people makes a big difference to board dynamics.  For the Board to be able to talk about Amy, Steve, Frank or Nitha means the customer is not just a number but a real person.  And taking that a step further, by actually getting the customers in the same room as the Board means they get to hear the comments in their customer’s own words.

We talk a lot about the need for more customer intimacy and have proven case studies about those business people that have a close, more intimate relationship with the customers, delivering a more powerful and meaningful outcome.    Don’t you want to be part of a Board that feels that connected to their customer?

 


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