Of recent months, i have been a fascinated reader of books written by Stephen Denning aka Steve Denning. In this article, I want to share some few ideas from his book called “The Leader’s Guide to Radical Management” for the business leaders to focus on. The idea is called customer capitalism achieved through robust focus on customer delight!
Steve says “Delighting clients is the primary goal- a means to competitive advantage and profitability. It takes precedence over profits, turnover and market share. That is because unless the firm is delighting clients and turning its customer into authentic advocates and promoters of its products and services, those financial indicators are emblems of temporary success that won’t endure. Following several decades in which many firms aimed at maximizing shareholders value, we are now entering the era of customer capitalism, in which the purpose of the firm is to save client. Delighting clients becomes the primary goal of work. One of the management functions is to give everyone a clear line of sight as to how their work is -or isn’t-leading to client delight.”
In my opinion, Jeff Bezos is one of the leaders who have understood well and have geared Amazon towards customer delights. In his very recent book “Invent and Wander: Collected writings of Jeff Bezos”, Jeff is very clear as to where the focus is. He says “We intend to build the world’s most customer-centric company…I constantly remind our employees to be afraid, to wake up every morning terrified. Not of our competition but of our customers.” for Jeff, it is customer obsession that matters rather than the competition.
Whereas we can draw examples from wide range of industries on the need to move to customer delight, I shall limit my focus on the Islamic financial industry which is dear to me due to its massive potentials to be inclusive and empowering. When Islamic financial institutions started, much focus of the founders had been to alleviate people from the interest based financial instruments, with more just and fair instruments to meet their financial needs. Hence a lot of work then and now continue to be on providing customers with alternative structures which are shari’ah compliant, for their personal needs and business needs.
More than fifty years of the industry growth, Shari’ah compliance still stands relevant to customers, however it becomes not enough to turn customers into advocates and promoters of Islamic financial institutions products and services. In the context of Kenya, tendency to see Islamic financial institutions just like conventional counterparts is well known due to many factors but when dissatisfied and angry voices are heard from the customers, we should be bold enough to ask, what is wrong and why?
Could it be our failure to become customer obsessed or failure to realize that what might have been good yesterday might not be good enough for today and tomorrow or our failure to attract right talent of leaders who are multipliers and weed out the diminishers or our failure to create value to many of our customers and focus on creating short term financial indicators of upward trajectory to please shareholders and some few clients? We need to look for answers.
After the Covid-19 pandemic hit, most firms and individuals became dissatisfied. In this difficult times, I tried to find out which Islamic bank in Kenya created more value for her customers in 2019 and 2020? So I picked one parameters which is total income paid to depositors out of total operating income generated by the bank during the period. The findings was that out of three banks analyzed, only one Islamic bank was able to pay above 50% of what it made from its operating income. The rest were below 20%! Perhaps this situation is not just for Islamic banks, but for the banking industry as whole in many parts of the globe. Can banks reward her customers more in consideration of the fact that they are their main source of financial strength? What needs to be done to achieve it?
While we can spend weeks to attempt to answer this important question, let me leave you with some ideas, one from Prof. Paul Collier in his book “The Future of Capitalism” and the other one from Steve. Prof. Paul, asks us to start with interrogation of what is purpose of the business? He says we need to shift from Friedman argument “the sole purpose of business is to make profit to owners” to Prof Colin Mayer reset that “the purpose of business is to meet its obligations to its customers and its workforce.” On what CEO needs to do, Prof. Paul says “Build the company with good and trusting relationships between the firm and its workers, its suppliers and its customers. This pays off handsomely in the end, but it takes long time.” For the the rest of us, the advise is “the people who understand the proper purpose of the firm should be on watch on corporate misconduct to make it too risk to entertain.”
Steve suggests that “it is about fundamentally restructuring work and generating a true partnership. It is about draining the swamp of nontransparency in which most managers and employees currently swim and exposing the rocks for what they are, so that firms can get rid of them and become more productive. It is about what it takes to continuously deliver client delight. It speaks to the goals, behaviors, economics and ethical principles that must govern the workplace for this century.”
With all that has been said, are Islamic financial institutions ready to embrace customer capitalism?