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Curtis on...CCO Authority: 3. Earned Authority

Friday, May 04, 2012

In this third of three videos on CCO Authority, I discuss what earned authority is and how CCOs can gain and increase it.

 

 

 

Video Transcript

In this segment, we're going to talk earned authority. The most effective chief customer officers and those with the longest tenure in the world quickly earned their own authority.

Earned authority occurs as CCO-led initiatives are seen as successful both internally and externally. This type of earned authority is earned as the chief customer officer leads his or her peers, executives, and other employees to understand how customer centricity can be a very valuable part of their own jobs—everybody learning how they impact the customers and the impact that they can have on the revenue and profits of the company by focusing on the customers.

Earned authority of this type surpasses all of the other types of authority that a chief customer officer can have—the borrowed authority and the positional authority. It's the strongest and the most sustainable type of authority. The more the earned authority that you gain, it also enhances the positional and borrowed authority in this virtuous cycle.

So, how can you go about earning greater authority within your organization?

There are three things that are most important for you to start focusing on right now.

The first is to own actionable customer insight within your company. The more that you are able to draw customer insight from the customers, from the marketplace, and turn that into actions that can be taken throughout your company, the more authority that you're going to have, the more respect that you will have, and the more authority that you'll earn.

The second thing to focus on is developing very strong relationships with management, with your CEO, other members of the C-suite, your peers, employees, and customers. It's through these relationships that you begin to be able to exert influence over the organization.

We're not talking about the testosterone-laden, beat-the-drum or thump-your-chest type of authority. We're talking about the authority that enables you to say, “Hey, we have a customer who’s having a problem,” or “We're not treating our customers as well as we could. We need to fix this. Let's everybody work together to make sure that this happens.”

The third thing that you need to focus on is to demonstrate quantifiable results for every action that you do. It's no longer good enough to just do something because it's the right thing to do. We have to be focused on doing those things that are the right things to do and proving that it's the right thing to do for the company as well as the customers. So, we need to make sure that our results are tied to revenue and profitability.

We'll be talking more about how to go about earning this type of authority in coming segments. In the meantime, think about it in your own environment. What else can you do to increase your own earned authority?

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Categories: Chief Customer Officer

Curtis on...CCO Authority: 2. Borrowed Authority

Friday, May 04, 2012

In this video, I explain the authority that a CCO derives from the extent to which the CEO champions customer centricity.

 

 

 

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Video Transcript

Here's a question for you. Who is your greatest champion in your company? Who opens doors and paves the way for you? If that person were to leave tomorrow, what would happen to your job or your role within the company?

If you think your job might be at risk, then, you have significant borrowed authority, which is the topic for this segment. Many CCOs find themselves (as they've come into a new position) with the positional authority that we talked about previously or the influential authority based on title or their position in the organizational hierarchy. This is valuable but it's static, as we talked about previously.

Borrowed authority, on the other hand, is the strong, vocal, and very visible support of the CEO. Let's face it. When the CCO speaks, everyone pays attention. If the CEO champions customer centricity, it creates a halo effect over the CCO and enables that chief customer officer to have much greater influence over the rest of the organization. If the chief customer officer is known to speak for the CEO when it comes to matters of the customer, everybody is going to listen.

Borrowed authority is especially strong and especially necessary in the early days of the appointment of the CCO. It's almost imperative. One of the key success criteria for a chief customer officer is to have the significant borrowed authority; part of the reason for this is that any culture naturally resists change.

The need for this borrowed authority is huge to overcome the organizational inertia that exists that many times must be changed in order to become more customer-centric and put the customers at the center of the organization.

Despite starting strong, sometimes, the borrowed authority wanes over time. In the early days of the CCO appointment, the CEO and everybody else is jumping on the bandwagon, beating the drum of customer centricity.

However, as time goes on, another flavor of the month may crop up. The CEO’s interest may wane or he or she may be overwhelmed with other priorities, and the amount of air time that customer centricity gets may wane; and with that comes, sometimes, a very significant drop-off in the borrowed authority that a CCO may have.

It's very critical to heavily leverage borrowed authority in the early days of the chief customer officer’s tenure. It's important to use this halo effect, if you will, to gain momentum very quickly to make culture change as quickly and rapidly as you can, and to burn some of the bridges behind you so that there's no way to go back to the way that things were before this new focus on customer centricity.

One of the biggest things to focus on is using this borrowed authority to help gain earned authority which, by far, is the most powerful and longest-lasting form of authority that we'll talk about next.

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Categories: Chief Customer Officer

Curtis on...CCO Authority: 1. Positional Authority

Friday, May 04, 2012

In this first of a three-part series, I explain the authority that comes from the CCO's title and his or her position within the organizational hierarchy.

 

 

 

Video Transcript

Let's face it! Authority is the currency of the C-suite.  Most chief customer officers don't own all of the resources within a company. In fact, many of them own very few of the resources. Regardless of how much of the organization reports in to you, the CCO needs to lead by influence.

How do you resolve customer issues and improve customer experience if you can't influence the rest of the organization?

Let's talk about influence for a moment. There are three types of authority that a chief customer officer or other senior loyalty executives might be able to exhibit within the organization.

The first is positional authority. When the chief customer officer is named, the chief customer officer or EVP of customer success or customer advocate, whatever the title may be, have some degree of authority in the hierarchy, in the organizational structure. They may have some direct control over some of the customer-facing resources such as service, support, consulting or maybe even marketing.

Some of these CCOs have very broad line authority and others have much broader process or authority and very limited line authority.

The positional authority that somebody may have typically has a bump in the initial influence at its conception. So, when the chief customer officer is first appointed, everybody is drawn to this person. It's a new and shiny thing within the organization. Everybody looks at it. Everybody is interested in how this new position or new person in the organization is going to influence them or affect them.

And so, they oftentimes, receive a lot more attention and are allowed to have more influence over the organization.

But this positional authority is fixed. After this initial bump, it's fixed; and it may even wane. It doesn't grow beyond this certain level throughout the organization unless something else happens.

Therefore, for chief customer officers or senior loyalty executives, it's very important to ensure that you have a recognizable title and a very senior position in the organization. Because it's fixed, it's not going to change unless some of the other types of influence come into play here that we'll talk about in a little bit.

Ideally, based on the research that I've done over the last decade, the CCO or the senior loyalty executive should report to the CEO directly or possibly one level down. This positional authority here, as we'll see in the next segment here, is not quite as effective as other forms of influence; and, yet, it is still very effective; and it's the constant effectiveness of the positional authority a CCO has that makes it so effective and that can make or break a chief customer officer.

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Categories: Chief Customer Officer

The Sad State of Sears: Proof that Customers Cannot be Removed From Business Strategy

Wednesday, May 02, 2012

A couple of weeks ago there was an article in the Wall Street Journal that describes Sears’ attempt to sell Lands End and other assets in an effort to improve the company’s liquidity. On the surface this might seem like yet another corporate divestiture, but let’s rewind a bit for context.

Sears Chairman Eddie Lampert purchased via his ESL Investments a controlling stake in Sears in 2005 and embarked on a strategy that was lambasted widely in the financial press. At the time, Sears had a very strong brand, valuation, and stock price. Lampert’s strategy was to slash expenditures and focus solely on superior financial returns. Lampert dismissed industry best practices and experts saying in a NY Times article, “[W]e do not subscribe to the view that more is better, or that there is a certain amount that must be spent on cap ex every year. The question we ask at Sears (and I believe every business should ask) is: ‘What is the most productive way to allocate the capital that we have on hand and the cash flow the company generates?’”

For all the hubris, Sears stores now stand out as worn-out. The company has lost touch with younger customers, and dilapidated stores where lights flicker, carpet is worn, and traffic is nonexistent are the norm. Sears lost $3 billion in 2011, and despite buybacks of nearly $6 billion, share price is less than half what it was when Lampert took over.

What happened?

Three things:

  1. Hubris: Eddie Lampert decided to stand the industry on its head and ignore best practices, convinced that he knew better than anyone else how to maximize profitability. Some rules are made to be broken, and the real innovators are those who break more than others. However, innovation that ignores customers simply isn’t sustainable.
  2. Wrong Metrics: Eddie Lampert focused solely on financial returns at the expense of customer returns. When customers are removed from the value equations of business, the precipitous slide to ruin begins. One of the greatest challenges facing business today is that businesses are following the wrong metrics and driving themselves off the cliff and out of business. Executives are measured nearly exclusively on financial metrics, yet as Drucker said, “The purpose of business is to create and keep a customer.” Where is the impact on the customer considered in strategic decisions?
  3. The CFO Running the Show: There are too many Eddie Lamperts in the CEO or CFO position in the company and they have entirely too much power. The stereotypical CFO is trying to minimize risk and maximize (short-term) financial gain. But adding the customer into the strategy is messy and sometimes wreaks havoc on carefully laid plans. Think recalls, or credits for lousy service. More importantly, changing customer needs, competitive threats, and other strategies to grow customer base or penetrate markets are less easily quantified, but imperative. You simply cannot shrink your way to growth.

In modern business, any technology- or service-based competitive advantage can be copied or stolen in less than six months. The only sustainable competitive advantage is the company’s ability to deeply understand and profitably satisfy customer needs and desires. To expand, you cannot shrink your way to growth. As Sears has shown, that strategy precludes deeply understanding customers and certainly doesn’t enable profitably satisfying customer needs and desires.

To be successful, every company must ask at every major decision point, “What is the impact of this decision on our customers?” If it is a positive impact, then leverage it. If it is negative, then find a way to mitigate or lessen the impact. Only by incorporating the impact on customers into strategic decision-making can companies avoid the near-certain demise currently faced by one of America’s household brands.

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Categories: Customer Centricity | Customer Retention