The Customer Copernicus - Preview

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4

INTRODUC TION

the latter has, with rare exceptions, driven managerial decision-making and shareholder short-termism. 4 The Business Roundtable (which represents 181 CEOs of some of the largest companies in the US) had been a prominent and explicit advo- cate of the shareholder-frst approach. However, in 2019, in calling for a more inclusive approach, it acknowledged the negative societal impact of shareholder-frst thinking and to considerable fanfare advocated a multi- stakeholder approach: deliver value to customers, invest in employees, deal fairly and ethically with suppliers, support the community and generate long-term value for shareholders. Each of our stakeholders is essential. We commit to delivering value for them, for the future success of our companies, our communities and our country. 5 While all stakeholders are self-evidently essential and committing to delivering value for all of them is laudable, this is rather ambiguous and, therefore, problematic guidance. Being customer-led is about putting customers frst – not frst among equals. It’s not a new idea – Drucker argued for it in 1954. Roger Martin similarly pointed out the futility of seeking multiple objectives simultaneously and argued persuasively for the primacy of customers among other stakeholders. His elegant recommendation: … companies should seek to maximize customer satisfaction while ensuring that shareholders earn an acceptable risk-adjusted return on their equity. 6 Notwithstanding the prominent and credible advocacy of the Business Roundtable, its collective belief in a multi-stakeholder approach is likely to take time to become the norm, if indeed it gains traction at all. Drucker and Martin’s ideas have had plenty of time – since 1954 in Drucker’s case – so greater advocacy and something to trigger a breakthrough are likely to be needed for such beliefs to become mainstream. Everyday hor- ror stories of poor customer experiences, as well as too many examples of some managers’ downright unacceptable means of prioritising share- holder returns over delivering on customer commitments, means they have yet to catch on.