Strive For The Customer-centered Ecosystem
When you see excellence in quality and service, you likely are witnessing the outcome of a well understood and well managed ecosystem. That is because value creation is maximized when strategic planning addresses the fullspectrum of internal and external components comprising the ecosystem. In last week’s article, the discussion dealt with how strategic planning must be balanced between the internal workings of the organization and the external world in which organization resides and operates. This week’s discussion focuses on how the ecosystem should be at the heart of the planning process, and it why it should be customer-centered.
For strategy to be successfully implemented, the correct internal and external attributes of the business ecosystem must be analyzed and planned for in a balanced manner. The previous article discussed one major component of the external ecosystem that often gets too little attention during planning – competitive rivalry. Building on that theme, the enterprise ecosystem can be viewed as a system of interworking components that surrounds the organization’s customers. When planning accounts for the organization’s internal dimension (e.g. people, process, structure, etc.) in balance with addressing the external attribution of the ecosystem (which includes, suppliers, partners, customers) – the resulting state of equilibrium produces the operational excellence of a well-oiled machine.
Explaining the Delicacy of The Ecosystem
Perhaps it is best to explain the ecosystem a bit first, then look at a real life example of a successful business ecosystem model. The ecosystem is comprised all of the functional areas that are involved in developing and delivering an offering to the marketplace. All components of this system are interconnected, so from a planning standpoint, it is important to assess how the business ecosystem operates.
Additionally, it is critical to know how decisions within one segment of the ecosystem can impact (or have consequences on) the enterprise as a whole. Intended reactions can go awry if consequences are not thought through carefully and fully understood. For example, changes in organizational structure will likely impact culture. Changes to culture impact human capital, which in turn might damage morale and affect service.
Look at IKEA as an example of an organization with a well-balanced and customer-centered ecosystem. IKEA is a privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories. The firm is known for the attention it gives to cost control, operational details and continuous product development, allowing it to lower its prices by an of average 2 to 3% over the decade to 2010, while continuing its global expansion in the next decade.
Regardless of what you may think about IKEA’s furniture or their sense of style, the company has achieved a level of operational excellence that places the customer at the center of their ecosystem while tuning all aspects of their operations to work in harmonious synchronization. From the moment you walk into IKEA, you sense the attention to detail paid to the customer experience. Childcare facilities are provided to make the shopping experience more enjoyable for parents. A strategically located restaurant in the center of their stores provide a nice break for lunch amidst the trek through the vast network of aisles lined with models of fully-assembled kitchens, bedrooms and living areas. Even the checkout experience caters to weary shoppers who can get a sugar high off cinnamon rolls while paying out.
The IKEA example demonstrates how the overall customer experience can be improved by orienting the business ecosystem around the customer. They have tuned the ecosystem’s “behind the scenes” operations to provide cost savings to their customers without sacrificing on quality. Likewise, their culture is tuned into satisfying the customer’s needs while visiting the store. Their in-store processes ensure you will stay longer and not have to leave to eat, take a break or entertain the kids.
Ecosystem analysis must be at the heart of the planning process. During planning, the business ecosystem must be addressed holistically to have realistic hopes of improving business performance and planning effectively to accomplish the execution of the organization’s strategy. The goal is to achieve a customer- centered ecosystem with proper balance in place between the internal and external components. When your ecosystem alignment is off, the focus on the customer is skewed and out of alignment – which can ultimately affect profitability in a negative way.