In Search Of Excellent Theory Refinements

 

There can really be little doubt that customer relations management (or CRM, ProjectManagement.com’s February theme) was given a huge boost in recognition and acceptance with the publishing of In Search of Excellence, in 1982. In it, Tom Peters and Robert Waterman Jr. took the refreshingly novel and more scientific approach of seeking out organizations that were successful in their fields, and evaluate which business model aspects they had in common. The notion that, in order to be successful, companies had to focus on their customers to a greater extent than was common at the time was by no means new. Indeed, I would argue that the Project Management Institute did the seminal work here, since PM is focused on the customers’ parameters of scope, cost, and schedule. But, while much of the early work focused on first identifying optimal management approaches and then asserting that greater customer focus was essential, Peters and Waterman took the opposite approach, and found that a significant common thread among the high-performers was an escalated – if not maniacal – orientation towards customer service and satisfaction.

But It Wasn’t All Unicorns and Glitter

However, (there’s always an “however,” isn’t there?) in some aspects Peters and Waterman went too far, and in other ways they did not go far enough. Where I would argue they did not go far enough lies in the fact that there does not seem to be any limiting boundary to how far the manager that wishes to follow their advice should go when seeking to enhance customer relations. In a PMNetwork column (“The Business Wisdom of Bob Skeeters,”) I actually mocked this lack of a limit by condensing In Search of Excellence’s advice down to (paraphrase) “enthusiastically hand over all of your company’s assets to anyone who identifies as a customer.” While Peters and Waterman were certainly insightful in pointing out that the corporate zeitgeist at the time didn’t emphasize customer satisfaction sufficiently, they failed to provide any kind of an analysis that would indicate that a business model had moved too far in the customer-satisfaction direction, or if such an excessive move was even possible.

Still, I owe their work a debt of gratitude. It was only after reading In Search of Excellence that I began to realize that project management and asset management were different critters altogether, with different goals, methods, and information streams needed to make informed decisions. It was along these lines that subsequent lectures from Tom Peters would point to how the pursuit of greater efficiency or higher return on investment aspects of common business models were actually working against those organizations becoming (or staying) successful. So, what is the nominal limit to devoting resources towards customer relations, as opposed to, say, training personnel, or purchasing advertising?

And The Solution Is…

This is where the Corner Cube model comes in. As I have referenced previously, it’s based on the notion that asset, project, and strategic management are all different by type, not degree, having different goals, techniques, and information streams. The asset managers’ narrative had so permeated virtually all aspects of management science that to challenge its basic precepts was considered ipso facto evidence of ignorance. My favorite such narrative to ridicule, that the nature of all management is to maximize shareholder wealth, was only tangentially contradicted by In Search of Excellence, even that particular notion is both (a) widespread and (b) self-evidently false.

In the Corner Cube model, a single metric for asset management (e.g., return on investment), project management (e.g., Cost Performance Index, or CPI) and strategic management (market share) would be placed on a line-scale, with the target at the center, evidence of significant success towards the right, and the level considered failure to the left extreme. Assemble these three lines into a three-dimensional model, and you have a cube, with eight subdivisions representing the performance of all three management types. The typical path to success through the model does indeed begin with project management, i.e. performing well for the organizations’ customers, to the exclusion of asset or strategic performance. After a client base is established, the organization still doesn’t “maximize shareholder wealth,” since this stage indicates a strategy to acquire more market share. Only after the happy customer base is established AND a satisfactory amount of market share has been captured does the savvy portfolio manager seek efficiencies, or greater return on investment. The Corner Cube model is completely scalable and adaptable, meaning that some specific parameters would need to be plugged in before an analysis of the precise point that customer relations management can be safely throttled back can be performed.

In short, Peters and Waterman’s work was good, but the Corner Cube theory made it better. I elaborate on this (and other) concepts in my second book, just by the way.