“Listen to your customers.”

Of all the tried-and-true management principles that I’ve attempted to debunk, this might strike you as the most formidable.

As you may recall, in other installments of myUnconventional (mis)management wisdom” series of posts, I’ve found those who argue in favor of micromanaging your employees on occasion (Bob Sutton), someone who thinks you should avoid hiring all “superstars” (Margaret Heffernan), and a CEO who harbors misgivings about the use of stock options as incentives (Phil Knight of Nike).

I’ve furthermore identified management “experts”/advice-givers/scholars/gurus who have cast doubt on what would seem to be infallible management dogma, including the notions of teamwork, sticking to a budget, and goal setting.[1]

But ignore your customers? That could never, ever be a good idea…

Right?

 

The innovator’s dilemma

Well, not so fast, according to Harvard Business School professor and author Clayton Christensen. In his best-selling business book, The Innovator’s Dilemma (1997), he asserts precisely that:

The popular slogan ‘stay close to your customers’ appears not always to be robust advice.[2]

As Christensen explains, successful, well-managed companies often miss important, industry-altering developments by listening to their customers:

Precisely because these [successful] firms listened to their customers, invested aggressively in new technologies that would provide their customers more and better products of the sort they wanted, and because they carefully studied market trends and systematically allocated investment capital to innovations that promised the best returns, they lost their positions of leadership.[3]

As evidence, Christensen offers a number of real-life examples, including one from the tech industry: In the 1970s, 80s, and 90s, established manufacturers of disk drives repeatedly lost out to initially less profitable, but more innovative start-ups because they focused on increasing the storage capacity and lowering the price of their drives—improvements that their current customers were telling them they wanted—instead of making those drives smaller, which is where the industry eventually headed. Once those smaller drives became competitive in terms of performance and price, however, those same customers then abandoned the drives these manufacturers were making, forcing them to play catch up – often unsuccessfully.[4]

Paradoxically then, paying attention to your customers may leave you vulnerable to being overtaken by smaller, but more innovative competitors. Or, as Christensen sums it up, in certain circumstances:

“Doing the right thing is the wrong thing.”[5]

 

It depends

Now to be absolutely clear, I am not suggesting that ignoring your customers is a good idea. Far from it. A business that doesn’t respond to the wants, desires, and needs of its customers is sure to fail.

But nor do I disagree with Mr. Christensen. He offers ample evidence to back up his claim that listening to your customers can, on occasion, lead to organizational demise.

Instead, the broader point I’m attempting to make with this, and all of the posts in this series is simply the following:

For each and every pearl of management “wisdom” that you might come across, or have otherwise come to believe, there exists an equally convincing counter-argument, or equally sincere observation that advocates for behaving in precisely the opposite way.

So the question isn’t whether you should, or should not listen to your customers. (The answer to both is a definite “yes.”) The better question is: When should you listen to your customers? And when might that be a mistake? Or, to put it more generally, when is it appropriate to follow a certain management “principle,” or act in a certain way, as opposed to doing the exact opposite? This is the critical issue, I’d argue – and as I have also argued in the past.

Nor is this a realization lost on Mr. Christensen:

What this implies at a deeper level is that many of what are now widely accepted principles of good management are, in fact, only situationally appropriate.[6]

 

Inherently unpredictable?

To his credit, Mr. Christensen makes it part of his book’s aim to get to the bottom of this question. Specifically, when is it appropriate to listen to your customers, and when might doing so blind you to what he calls “disruptive innovations.” (Like the development of smaller disk drives, to use the previous example.) His stated goal is to eventually help entrepreneurs and companies predict when and where new, industry altering innovations are likely to occur “at a rate that wasn’t possible in the past.”[7]

But is this realistic? Or will disruptive innovations continue to frustrate companies because they are “inherently unpredictable”? As Christensen himself concedes, he and his colleagues were “still honing in on” on this goal even some 13+ years after his text was first published.[8]

I can only hope that they are eventually successful.

In the meantime, however, it is interesting to hear some of Christensen’s thoughts on how established companies might address disruptive innovations in the marketplace, and/or successfully encourage the development of their own innovative products and strategies. Spin off an independent organization, Christensen “strongly” advises in one instance[9] – one that has its own resources, and furthermore isn’t beholden to outside pressures or “efficiency analysts.” This sort of independence is important, he writes, so that the market can do its work. As he explains:

I want my organization’s customers to answer the question of whether we should be in the business.[10]

Presuming, of course, he’s willing to listen.

 

 

See you next Friday.

 

Endnotes

[1] Please see my post “Is nothing sacred?

[2] The Innovator’s Dilemma by Clayton Christensen. 1997. Boston, MA: Harvard Business Press, p. 54. (All cited page numbers refer to the 2011 paperback edition published by Harper Business.)

[3] Ibid., p. xv.

[4] Ibid., Chapter 1.

[5] Ibid., p. xxxiv.

[6] Ibid., p. xv.

[7] Ibid., p. xxxv.

[8] Ibid., p. xxxiii.

[9] Ibid., p. 249.

[10] Ibid., p. 250.