The Fallacy Of the Internal Customer

It dawned on me recently that the concept of the "internal customer" is a fallacy. For years I would ask people, "Who is your internal customer?" Then we would discuss their boss or another department or a function within their organization that they needed to serve. A few months ago I realized that all of this focus on "internal customers" was really damaging businesses all over the country. People were investing enormous amounts of time, talent and energy focusing on servicing each other rather than on the only customer that really counts: the one who pays the bills!

The only customer is the one who buys the product or service or experience that your organization sells. Period. End of story. Your customer is not your boss or your direct reports or the president of your organization or the front-line associates or your suppliers or your shareholders. All of those people are your teammates, your partners, your comrades, but definitely not your customers.

Should you do your best to serve your partners? Yes, of course, but keep in mind that in working together with your various partners your ultimate goal is to provide more value to your customers. Too many organizations concentrated so hard on their internal issues that they forgot about the real customers. This happened at Ford. Jacques Nasser focused so hard on buzzwords like "change agent" and trends like GE's obsession with removing the bottom 10% and with diversification like getting into e-commerce that he forgot what the customer wanted: a good car that wouldn't break down! Carly Fiorina at Hewlett-Packard is on the verge of making the same massive mistake. She is so focused on realigning internal departments and on merging with Compaq that I just don't see any fanatical focus on the one true customer: the person who buys H-P's equipment.

I have a great friend, Alan Weiss, who says that the greatest companies in the world focus 90% of their time, talent, energy and resources on external issues and 10% on internal issues. I call this the "90-10 Distribution Formula." 90% of your organization's time, talent, and energy needs to be focused on adding greater value to your customers. Again, your customer is only the person who buys your organization's product, service or experience. Peter Drucker said, "All business is on the outside." As usual, he was absolutely right.

So how do you achieve "The 90-10 Distribution"?

First, identify your customer.

Second, identify the highest priority outcomes your customer wants to achieve. (Of course, you might have different customer segments with different wants. That's fine. Repeat this process for the different customer groups. Just make sure they are truly customers and not some partners whm you think are your customers.)

Third, identify what your organization can do to help this customer achieve his or her desired outcome.

Fourth, examine your schedule and your activities. Make sure that 90% of your conversations, meetings, decisions, and activities are aimed directly at adding value to your real customers in helping them achieve what they really want.

This approach actually increases the camaraderie in an organization because now all of the teammates have a common cause to work toward. This happens when there is a crisis. There is a common enemy and people pull together. By staying focused on the customer, everyone inside the organization (including executives, staff, suppliers and investors) has a common focus which pulls them together even better.

Question For The Month

Take out your calendar. Look at the past 30 days. Examine your decisions, meeting agendas, and activities. Clarify what percentage of your time and attention was directed toward your organization's customer and what percentage was directed toward internal issues. Now here's the question I encourage you to ask yourself, "What can I do to increase the percentage of my time and efforts toward impacting our organization's real customer? What activities or discussion topics are focused currently on internal topics that I can let go of?" Clarify your answers and then begin to make the shift.

Recommended Resource For Top Performers:

This month I recommend "Jack: Straight From The Gut" by Jack Welch. He is one of the most successful managers of all time. In this book, he explains very clearly his ideas on a variety of important issues relevant to improving the effectiveness of an organization. I agree with about 95% of his philosophy. His obsession with removing the bottom 10% in every group has a lot of problems with it, but I do like his focus on performance and results, particularly regarding customers. (The external ones, not the internal ones.)

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