By Te-Ping Chen
There are companies that do one thing well. There are companies
that do a few things well.
Then there are the companies that do everything well.
This year, seven companies stand apart for scoring well beyond
most of the pack in every one of the five categories that go into
the Management Top 250, a ranking compiled by the Drucker Institute
of the most effectively run major U.S. companies.
Those seven companies: Apple Inc., Intel Corp., Accenture PLC,
Procter & Gamble Co., 3M Co., Nike Inc. and Edwards
Lifesciences Corp. As a group they aren't the seven highest-ranked
companies overall, but they are the only ones that scored one
standard deviation or more above the mean in all five categories --
customer satisfaction, employee engagement and development,
innovation, social responsibility and financial strength -- among
the hundreds of companies examined by the Drucker Institute.
It's impossible to tell exactly why these companies scored so
well in all of the categories. But there is a clue: Of the five
categories, it was customer satisfaction where these management
all-stars most differentiated themselves as a group in comparison
with the scores of the top 20 companies overall, according to an
analysis by the Drucker Institute.
Ranjay Gulati, a Harvard Business School professor, says it
isn't surprising that all-around strong performers are particularly
proficient in customer satisfaction. Companies that are more
customer-centric innovate in more powerful ways, leading to more
engaged employees and strong financial performance, he says. Unlike
a firm's financial status, which reflects recent profit and sales
performance, customer satisfaction is an especially telling
indicator "if you're looking for a crystal ball for the future," he
says.
Meet the customer
At a number of these highly consumer-focused firms, employees
are encouraged to shadow their customers to better understand their
needs. At 3M, for instance, that led one scientist embedded in a
hospital to notice that nurses frequently removed bandages to
inspect wounds. The observation prompted 3M to develop transparent
medical dressings.
P&G -- whose former Chief Executive A.G. Lafley considered
Mr. Drucker a confidant and often repeated that "the consumer is
boss" -- similarly has a long tradition of sending employees to
visit customers' homes. Damon Jones, who worked in the
consumer-goods giant's shaving division from 2009 to 2013, recalls
making dozens of home visits to watch customers shave, a process he
says helps P&G better serve "unarticulated consumer needs" that
wouldn't be captured in regular focus groups. (That process, he
says, allowed the company to observe that while men self-reported
using about 30 strokes to shave, the real figure was closer to
100.)
Medical-device maker Edwards Lifesciences, meanwhile, has tried
to build a patient-centered culture by finding opportunities to
remind employees of their work's purpose, including by inviting
patients to meet the teams that produced their implants. "Knowing
the impact you have on a specific patient's life -- that's an
incredible motivator," says CEO Mike Mussallem.
At Intel, Chief Strategy Officer Aicha Evans says a more
customer-oriented approach has helped the chip maker pivot strategy
after decades of selling PC-centric products. "We were stagnating,"
she says.
Now, she says, the firm is doing more to engage in a dialogue
with customers to try to figure out how to better analyze and store
their data. A few years ago, for example, Intel began having
technical experts participate in early client meetings, in addition
to more-traditional sales representatives.
Such customer-focused mechanisms, she says, are key. "Otherwise
you'll build the wrong thing -- or maybe at a minimum you'll copy
others, which means you're not a differentiator."
Other tactics these all-star companies have adopted include
bringing clients onto company premises for brainstorming sessions,
as in the case of professional-services firm Accenture, which holds
in-house design-thinking workshops for clients. The key to customer
satisfaction, says North American CEO Julie Sweet, is to "treat
clients like it's a relationship."
Consumers' influence grows
In an era in which online reviews can influence millions, Jiekun
Huang, associate finance professor at the University of Illinois's
Gies College of Business, says customer satisfaction can pay
especially big dividends. His research finds, for example, that
higher customer-satisfaction ratings on Amazon.com lead to better
stock performance.
Roger Martin, who advises Fortune 500 CEOs on strategy, says
more companies are waking up to that fact. During corporate
expansion in the 1980s and 1990s, companies "got really big and
full of themselves," says Mr. Martin, who is the director of the
Martin Prosperity Institute at the University of Toronto's Rotman
School of Management. More recently, he says, companies have paid
greater attention to the customer experience, inspired by the
success of firms such as Nike and Apple, both known for an
obsession with customers. Both firms have ranked among the
all-around top performers on the Drucker Institute's list for the
past three years, as have 3M and P&G.
Mr. Martin says it's no accident that many particularly
entrepreneurial firms were started by people who had previously
worked in the same industry. He cites the example of Salesforce.com
Inc., whose founder Marc Benioff pushed the software-as-a-service
model after working in sales for Oracle Corp. and hearing
complaints about having to pay big upfront licensing fees.
"Innovation flows most naturally from those closest to the
customer," Mr. Martin says.
Ms. Chen is a Wall Street Journal reporter in Philadelphia. She
can be reached at te-ping.chen@wsj.com.
(END) Dow Jones Newswires
November 30, 2018 08:43 ET (13:43 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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