Customer vs Product Centric

I am currently conducting a series of interviews with product leaders and have begun to form the view that the prevailing opinions about customer and product centricity are flawed.

The current wisdom

The many definitions of product centricity suggest it is about the company focusing “attention on the product regardless of the customers and demand in the market”. Others argue that a company ‘must make a choice between product and customer centricity’. I think there is also confusion between being product centric versus product led.

Customer centricity on the other hand, is positioned as placing “the customer at the core of every business decision”. Some argue that customer centric companies perform better than their product centric rivals with “higher retention rates, lower churn and higher customer satisfaction”. Another source I found suggested customer centric companies had a more fluid product development process.

Seemingly, as people attempt to define them both, they expand the meaning as they argue that they cannot coexist and that companies must make a choice. In one article I read someone even suggested customer centricity meant a bigger focus on customer service. I think these all miss the point.

Setting customer and product centricity against each other seems entirely flawed to me. I don’t think companies have to make a decision between them because they are not mutually exclusive. The two forms of centricity address different needs.

What is product centricity then?

From my interviews with product leaders, what has come across strongly is that product centricity is about how a company is organized. In my latest interview, KP Frahm talked about Apple being the first product centric organization. Steve Jobs gathered a team around him that was fully autonomous: “you build it, you run it, you sell it”. Does this mean Apple is not customer centric? No, in most peoples opinions, they have mastered it.

If companies become product centric, what it should mean, and I think it does mean, is that the way they are organized becomes product centric. The organizational structure is defined by the portfolio of products, which is managed from the top down. Product teams, that are self-organizing, ensure the link between product strategy and execution. Horizontal functions like design, development, research, business intelligence are organized into product teams with dedicated product strategy and management.

That doesn’t mean that the products developed by product centric companies ignore the needs of customers. This is about the mindset of the company. And underpinning that, the choice of organization structure, financial structure and measurement of the company performance. It isn’t about culture, that’s where customer centricity fits in.

A culture of customer centricity

We don’t live and work in eutopia, so to my mind, we have to take a pragmatic approach to customer centricity. Can we really put customers at the core of every business decision? I don’t think so, it’s neither practical nor possible. Pretty soon we would have to deviate from the plan and like a house of cards the whole thing collapses.

What companies can do, and in my view should do, is two-fold:

1. Create a customer centric culture

2. [where products are concerned] Execute this through the product development process

A customer centric culture is important. It will ensure everyone in the company understands that from the top to the bottom of the organization, customers are a priority. We call this customer centric DNA, and it doesn’t happen by osmosis or magic, it is hard earned.

Adopting a customer centric culture makes sure that customers are always in our thoughts. It doesn’t have to mean that every decision is made based on what we think or know customers needs are. When we are making decisions, it makes us ask the question do we understand the needs of the customer, and have we taken those into account?

Every area of the business will be considerate to the needs of the customer and think about the experience delivered. Whether that is the legal team when writing contracts, the courier delivering products, the buyer when choosing a supplier, or the designer when creating the experience. Customer centricity shouldn’t stifle innovation or create bureaucracy it should facilitate decision making around the customer experience.

Not just peaceful coexistence

Organizing around product teams doesn’t mean you can’t be customer centric. A company can have a product centric mindset and organize around products and have a culture of customer centricity. Deloitte argues that to be product centric the culture across the organization should “recognize and continuously seek to understand and respect its customers, both external and internal”.

In many of the interviews I have conducted, whether the language was the same or not, people described a product centric organization and a customer centric culture. I heard about product owners who look at customer data on a daily basis. That by involving the customer they are “learning, not gambling”. That the key accountability of product owners and managers is managing the triumvirate of business, technology and user.

This isn’t about peaceful co-existence. Being customer centric gives the companies a north star for the way they want to behave as a business. Whist being product centric, facilitates a product development process that is effective and efficient across the enterprise. Get both right, working in tandem and companies can develop high performing products and services, efficiently and effectively.