Outsized Profits Follow from Customer-focused Strategy

Top managers of businesses have an obligation to the owners/shareholders to grow the firm and generate profits. If this becomes the primary focus of their activity, however, the management and the workforce can focus on the wrong things.  Instead, the primary focus should be on the customer – as Peter Drucker said back in 1973, “The goal of a company is to create customers”.

Setting a clear strategic intent that is customer focused, will give the organization the proper target to aim at.

Starting the engine of innovation in pursuit of this intent, will then result in creating customer delight that leads to market leadership. By keeping the managers’ and employees’ eyes on the strategy that puts the customer first, they do the right things to make this happen.

The best example of outsized profits that result from delighting the customer and providing disruptive, first to market innovations is Apple who owns 90% of all of the profits in the mobile phone market, even as a late entrant and even while Samsung is the market share leader in terms of units produced.

If however, you start at the other end with strategy and eyes on the stock price (shareholder value), many decisions can be made that ultimately hurt the ability of the company to produce the innovation needed to generate customer delight, by prioritizing the short term result over the long term market leadership that could have been obtained.

When the company can enjoy a stream of continuous innovations focused on delighting the customer and realize a steady, managed march to market leadership, that is what will generate the growth and profits that exceeds the competition.

See also the article on the Content page titled”The Path to Outsized Profits – Focus on the Customer in Your Strategy” and the video posted on our YouTube channel at: https://www.youtube.com/watch?v=IcIgYdVuRTU

 

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