If you were on a sinking ship and there was room left in the lifeboat for one person, who would you save, your company owner, or your firm's best customer?
If you answered, “Neither, I'd save myself,” then report to your human resources department immediately for employee retraining. Bring a toothbrush and pillow, because you're going to be there a long time.
Seriously, though, let's consider the question: Who is No. 1 at your company, customers or owners? Business experts like to debate the topic, and it has sort of a chicken-and-egg quality. First ask yourself, where would your company be without shareholders? But then consider, what would your company be worth to shareholders if it had no customers?
Fortune magazine tackled the topic last week with a cover feature, “Tearing up the Jack Welch playbook.” Betsy Morris, the reporter, feels that Corporate America needs new rules, and that the strategy espoused just a few years ago by Welch, General Electric's former star CEO, needs to change. It's an interesting premise, which she sums up here: “The volatility of the markets is so unpredictable, the pressure from hedge funds and private-equity investors so relentless, the competition from China and India so intense, that the edicts of the past are starting to feel out of date.”
She then picks apart the much-praised, and highly successful, business strategy that Welch has espoused — you know, that stuff about being No. 1 or No. 2 in all your markets, staying lean and mean, and ranking your players and going with the A's. Morris proposes replacing them with new rules, like “find a niche and make something new,” and “hire passionate people.”
Like all business books and self-help articles, this stuff sounds like a Dilbert cartoon after awhile. How can you argue against any of these cliched points, old or new? But we have to take this seriously, because a lot of CEOs and managers are go-by-the-book types, and they live to find rules that help guide them in their daily dealings.
The “who comes first” question seems central to this debate. According to Morris, the old-school attitude was that shareholders rule. The new rule should be that the customer is king. She backs it up with a fact that rings true: CEOs all talk a good game when it comes to satisfying customers, but the reality is that a lot of companies really offer lousy service.
Welch, for his part, said companies need to serve both customers and shareholders to be successful. “No one is out saying, 'Let's screw this customer today, and if we do, our share price might go up 20 cents.' They're just not doing it,” he said. Which makes perfect sense.
So who is more important, your shareholders or your customers? Let's call it a tie, and perhaps use a bit of common sense to decide who is the priority at the moment, depending on the circumstance.
And keep in mind that if you're in charge, and you think your company is committed to providing great customer service, you might want to get out and talk to customers to see how you're doing. After all, the shareholders will find a way to let you know how they feel — but an angry customer is more likely to walk away without bothering to tell you what you did wrong.