Strategy is the Voice of the Customer

Emerging from the Cascade 2021 Strategy Fest, one of the most interesting discussions that still rings true is a fundamental one. What is ‘strategy’ really?  You can read all the various textbook definitions about traditional business tropes, but when it comes down to it – strategy means something different to everyone that you ask.

This isn’t necessarily a bad thing, it just points to how nuanced and complex this field can be. If it were easy to define and easy to execute – then we wouldn’t need any of this fuss. It’s the fact that it is so fundamental for good business, and yet so challenging to get right – making the knowledge from this festival worth its weight in gold.

One of the great answers for this question came from Matt Ryan, who worked in executive strategy and marketing roles at both Disney and Starbucks, and it really resonated with us here at Cascade.

The idea was simple. Strategy is the voice of the customer.

The Temptations of “Ivory Tower” Strategy

Before we dig into Matt’s thesis on this, it’s worth considering one of the more common traps that organizations can often fall into without realizing it. As Matt calls it “Ivory Tower” strategy.

This is when the executive team and/or decision-makers who are responsible for creating the strategy do so from a position in an ivory tower. It’s just a fact that the bigger your business gets and the more it scales, the further away the executives shift from the reality on the ground. They become detached and disconnected from what’s happening day-to-day because there simply isn’t the time or resources to manage in the way they used to do when the business was smaller.

The ivory tower does have its pros, it gives a bird’s eye perspective on how the business is operating and it can be very valuable to escape the weeds and see the bigger picture. But the weakness is that in this position, you can be dragged off the path by a number of competing incentives, to a point where you lose sight of what you’re actually trying to be doing.

For example, a common thing that happens is that these executive teams naturally self-select for finance-minded people, the type who might pick up prestigious MBAs or consider themselves well versed in textbook management. And naturally – these people want to leverage the knowledge and skills that they have. So, you’ll see incredibly compelling presentations talking about the market size, growth potential, leverage opportunities, and more – all of which are backed up by complicated financial models.

And before you know it, your strategy is built for quarterly results, investment presentations, and consulting best practice – because that’s the language these people speak.

Matt makes a great illustration of this when he talks about big M&A deals within corporations. The literature very clearly shows that the vast majority of mergers and acquisitions do not unlock the value that they purport to and often are classed as failures. But we still see them happening all the time. One of the causes for this is that the corporate development function wants to do deals. That’s what they’re there for and to validate that function, it makes sense to chase deals.

So, with strategy and corporate development married to one another, it’s easy to err on the side of doing M&A deals that you shouldn’t be doing. Spreadsheets are massaged, assumptions are made, and from the Ivory Tower – it doesn’t actually speak to the real-life situation on the ground. They don’t actually make the lives of customers easier. They just pander to the egos of those who are involved in putting the deals together.

If you just focus on customer and brand, without the pressure of a corporate development function looking to do deals, it’s much more effective for long-term strategy. The customer comes first and when a merger can actually improve that experience – then you can do that deal.

It’s a narrowing of focus that helps to keep an organization on course.

The Voice of the Customer

Matt’s proposition is that you forget all of that fancy stuff for the moment, and you focus on one thing – the customer. At the end of the day, your business must exist to serve your customers’ needs. And the bigger your organization gets, the more you need to focus on it.

A good strategist in Matt's experience is someone that starts by understanding the customer deeply and leveraging that knowledge to make all the decisions as to where the business must go. From this foundation, you can build a mission, promise, and plan that puts you in good stead for long-term success.

The reason this is such a powerful mindset shift is that no matter which way you look at it, top-line growth is make or break for any business. If you get the revenue growth right and have a decent operating margin, everything else falls into place. And that comes from delighting customers in a way that other organizations can’t.

“The truth of the matter is revenue growth doesn’t come from spreadsheets or even from long-range plans.  It comes from customers.” - Matt Ryan

This might seem obvious, but its simplicity hides a much greater truth that can unlock a lot of potential for any organization. It’s the diffusing of focus that gets companies into trouble. By letting your customers speak and having those insights inform your strategy, you align the bigger picture.

This is not to say that you ignore traditional financial strategic methodologies altogether of course. You need a partnership between finance and strategy so that they feed each other and leverage each other’s insights. We’re trying to avoid blindly falling into the conventions of traditional fundraising and shareholder reporting which can push us into a place where strategy is driven by aspirational spreadsheets, rather than the reality of what’s happening on the ground.

The customer’s voice grounds us. And it drives where we go as a business.

We are working for the customers, remember?

Customer Knowledge at an Enterprise Level

Of course, this is all for nothing if you are unable to identify with and relate to the customer needs themselves. You would be surprised by how many organizations (large and small) don’t actually have a deep understanding and comprehension of why their customers buy from them. It’s one of those things that actually require a lot of work, and you have to be able to push past your preconceived assumptions.

And it also needs to come from everyone.

“Customer knowledge is really, really important and something that you really need to get focused on at an enterprise level.” - Matt Ryan

For whatever reason, most of what we consider as customer knowledge or research tends to sit within the marketing function of an organization. This is understandable because the marketing team is trying to build buyer personas to which they can target their campaigns. However, what tends to happen is that this knowledge gets siloed in this department and none of the insights gained ever makes it out to other teams in the business.

And it’s a shame! Even though it’s true that marketing has typically been a reliable source of top-line growth historically, there is so much potential that is missed out on when it doesn’t escape that context. That knowledge is valuable to a lot more people than just inside of marketing.

Customer knowledge really needs to be an enterprise-level endeavor that feeds into every nook and cranny of an organization.  It needs to be integrated into product development, customer service, leadership, operations, compliance, and of course – strategy, just to name a few. The voice of the customer should always be ringing throughout the organization because that’s what we’re all here for.

We cannot relegate this to our marketing team. This is a company-wide cultural choice that we have to make, where our customer is the driving force behind the way we work.

Everything that goes into that plan needs to be based on customer reality and brand reality. Prompts like these should be commonplace around meeting room tables, regardless of function:

• Who is it going to appeal to?
• How many of those customers are there?
• What is the sort of premium that the brand will command in the marketplace versus other choices?
• What are the brand attributes that relate to our customers?
• What are the things we need to invest in to enhance the appeal of that brand for customers?

When this becomes your norm, you ensure that you are fully aligned throughout the organization and your strategy truly becomes the voice of the customer, both in planning and in execution.

Leveraging Data

The natural next question here is to ask how do we do this well? What does it look like when an organization puts this into practice?

Matt has an answer for this as well – and it’s to leverage data more effectively.

When you’re trying to nurture and develop customer knowledge at an enterprise-level, you have to have something that can scale and be codified in a way that can be applicable across contexts. It’s too simplistic to imagine that this only requires those typical buyer personas to be fleshed out and shared more widely. Or even that a few qualitative interviews are going to give you the depth that you need to influence the right behavior and decisions across teams.

While those are important, it’s much more effective to get really good at data.

In this modern age, you have to be good at data in order to compete – it really is as simple as that. And when it comes to customer knowledge, this is definitely the case. Here are some key principles that you should be paying attention to in this regard:

• Collecting Customer Data Everywhere. In everything that you do as a company, there is information to be gleaned if you can set the right processes and structures in place to collect it. At every single customer touchpoint, those customers are telling you things about what matters to them in direct and indirect ways. A company that is able to maximize the collection of this data is going to have a huge advantage because they don’t have to rely only on anecdotal evidence that comes from customer interactions.
  
  In its simplest form, every customer action should have financials attached to it. That’s how a good strategist can make good decisions about what to invest in and what not to invest in – because they are collecting the data to be analyzed.
  
  
• Centralized Data Warehousing. In order to truly scale the impact that customer knowledge can have across your organization, you want everyone to be singing from the same hymn sheet. The way you do this with your data is by centralizing things as much as possible so that you have a single source of truth that everyone can leverage. When you get this right, you avoid information silos and duplicated work – and instead give everyone the full picture to work from. It’s magical when you get it right because you can see your customers holistically, pulling information from every part of the value chain and letting that complete picture drive how the organization shifts and moves. 

“Having all that data in one place, organized, and importantly democratized so that everybody can use it makes the change management of bringing people along much more effective.” - Matt Ryan

• Good Data Analytics. It’s all very well to have all this data in a well-structured system, but you actually need to be able to act on it. And that’s where the analytics piece comes in. The better your analytical capability in-house, the more powerful this can be. This is because patterns and trends can emerge from analysis, that points to customer quirks and opportunities that aren’t showing up in individual customer conversations.
  
  In some instances, you can understand your customers more than they understand themselves because you can incorporate objective data at scale that talks to actual behavior when no one else is looking. But none of that nuance is available to you if you don’t have the right personnel and technology to do this well.
  
  
• Strong Communication. Once you have pulled the insights from your customer data and have codified it into customer knowledge – you need to have strong pipelines for communication that brings that knowledge to everyone in the organization. You’ve got to figure out the best ways to get that information into the hands of decision-makers. Every company is going to be different here because this is an innately human thing – so you’ve got to take the time to identify the best ways to make this information practically usable for those who need it. Many organizations fail at this final step and just don’t understand why all their hard work is not yielding results. It comes down to the execution of this information sharing – which is difficult at an enterprise level. 

“Strategy is really an internal communications department.” - Matt Ryan

When you can combine this data-driven approach with qualitative, anecdotal customer feedback – you are in a very strong position to let the voice of the customer drive your business forward. It’s simply non-negotiable in today’s business landscape.

Recap

The way that Matt spoke about this was so refreshing for us here at Cascade, because it brings us back to the reason that we all got into this in the first place. At the core of every good business idea is a customer whose life is made better thanks to the value proposition of that idea. And in the early days, it’s easy to get this right – because you’re still trying to find your feet and get product-market fit.

As things expand though, we get pulled away from that simple truth because there are so many other competing interests and incentives. Our strategy becomes mired by our own ego, our preconceived ideas, and assumptions that we haven’t tested in the market.

Matt’s call is for a strategic mindset that listens actively to customers alone and lets them drive where the business needs to go in the future. When you do that, you create customers for life because you continue to align your offering with what they need.  It grounds business strategy in truth, rather than aspiration. And that’s what is required to succeed over the long term.

We hope that this acts as a reminder for you to re-examine what drives your strategy and whether it actually is customer-focused in the way that it should be. This requires some honest reflection and perhaps some difficult conversations – but by steering the ship in this direction, you’re setting yourself up for success.