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Friday, October 4, 2013

How Can They All Be Our Customers?

By Howard Rohm

Twenty-three people were waiting for the workshop to begin. The job at hand was to facilitate key managers, analysts, and program advisors through a strategic thinking process and formulate a new strategy. The organization was a four-hundred employee health care non-profit. It was 20 years old and was created around a single purpose: saving lives by processing tissue and organs for transplantation.

Strengths, Weaknesses, Opportunities and Threats were summarized into two major categories--Enablers and Challenges. I told the group that the enablers and challenges are important inputs to the strategy formulation process and critical to the next step--deciding who the organization’s customers were.

I took a quick survey. “I’m going to name different individuals and groups, and I want you to raise your hand when I mention a customer. First, I named organ donors--almost every hand went up. Transplant recipients--same thing, almost every hand. Doctors, about three quarters of the hands went up. Hospitals, same thing. Family members of a donor, same. Family of a recipient, the same.

I then asked a question: “If everyone is your customer, how can you create a business strategy that is actionable and focused?--How can you provide world-class services to so many different customers?”

The answer is--you can’t. You need to figure out who the primary customer is and how your organization can serve customer needs efficiently and effectively. Here’s how to do it.

Define customers as the direct beneficiaries of your products and services. Define others as stakeholders--those individuals or groups with an interest in your organization’s success (or failure if they are a business competitor!). And yes, customers are a subset of the larger group called stakeholders.

Separating customers from stakeholders allows you to focus on doing a few things well and not trying to do everything for almost everybody--a common failing that I have observed over the years in many organizations.

So who are the customers and who are the stakeholders in the example above? There are only three customers who are direct beneficiaries of the organizations products and services: a doctor who receives a live tissue or organ product for transplantation, a hospital who receives a product from the organization for delivery to a doctor who performs the surgery, or a dentist who performs an implant. That’s it, just three--value given and value received (in the form of a payment for a product). Are others in the example important? Of course they are, but they are very invested stakeholders, not primary customers.

How did this workshop help the organization? By identifying the three primary customers, new strategies were developed that aligned directly to the mission and vision. These strategies provided strategic direction that could be made actionable with a budget and an operating plan. Then several strategic initiatives were identified that would directly improve customer-facing processes and services affecting the three primary customers. And strategic performance measures were identified, to ensure that progress was being made on the organization’s goals.

Building a strategy focused organization is about defining and connecting organization strategic elements. Identifying customers and their needs is a critical step. You can learn more about how to identify your customers and improve customer value in our new book, The Institute Way: Simplify Strategic Planning and Management. You can order it here or on Amazon.

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Author: Howard Rohm
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Howard Rohm

Howard RohmHoward Rohm

Howard Rohm is President and CEO of the Balanced Scorecard Institute and Founder of the Strategy Management Group, Inc., the Institute's parent company. He is a performance management trainer, consultant, and technologist with over 40 years' experience.

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Contact author Full biography

Full biography

Howard Rohm is President and CEO of the Balanced Scorecard Institute and Founder of the Strategy Management Group, Inc., the Institute's parent company. He is a performance management trainer, consultant, and technologist with over 40 years' experience. Howard has helped dozens of organizations worldwide build balanced scorecard and other performance planning and management systems.

Howard developed the Institute's Nine Steps to Success scorecard methodology, and his award-winning balanced scorecard and performance management systems have been adopted by the U.S. House of Representatives (Chief Administrative Officer), several offices of the United Nations, the American Public Gas Association, Centex Construction, Susan G. Komen for the Cure, Spectrum Partners, Greenville Utility Commission, LifeNet, the U.S. Marine Corps, the U.S. Army, the U.S. Air Force, Household Mortgage Services, the Joint Interagency Task Force-East, Amiri Flight (United Arab Emirates), Mecklenburg County (NC), the Canada Passport Office, the U.S. Department of Commerce Commercial Service, and many other organizations. He developed the Institute's Nine Steps to Success framework, and has trained over 3000 people in 20 countries.

Howard has experience as an operations research analyst, a strategic planner, and a management consultant. He held senior positions with several companies, including Booz, Allen & Hamilton, Highland Technologies, and Vitro Laboratories, and at several Federal agencies, including several years as the Executive Director of the Advanced Nuclear Reactor Research and Development Program at the U.S. Department of Energy. Howard was one of the authors of the first National energy plan, in 1976, and worked on several White House nuclear non-proliferation studies in the 1970's and 1980's.

He has taught and lectured at five colleges and universities, including the Federal Executive Institute. Howard has undergraduate and graduate engineering and management degrees from Iowa State University and George Washington University, respectively, and he is listed in Who's Who Worldwide.

Howard is a Certified Performance Technologist (CPT), a Certified Strategic Management Professional (SMP) Pioneer, and an e-learning certified instructor. He co-wrote, with three others, the Strategy Professional Resource Center's Association for Strategic Planning SMP/SPP/SPA Certification Exam Study Guide. He is a winner of a team Hammer Award for his work on government performance reform (given by Vice-President Al Gore's National Partnership for Reinventing Government), and received a Presidential "1000 Points of Light" award for community service from First Lady Barbara Bush at a White House ceremony. He recently was awarded a Triangle (Raleigh, NC) Top 50 Entrepreneur award by Business Leader magazine. Howard helped create the Association for Strategic Planning's Body of Knowledge for professional strategic planning and management certification.

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