Sam Walton

This post is a bit ‘tongue in cheek’ (so if you don’t agree 100% then please don’t take it too much to heart 🙂 ) but it expresses what I’ve thought for years now.

A business fashion started back in, oooh, probably the 1980s – talking about ‘internal customers’ within organisations. The idea being that you are the customer for the person upstream from you – they are producing for you – and, in turn, the person downstream from you is your customer…and on and on…in a long chain from the start to the finish of a value stream. Lots of lovely internal customers.

But here’s the thing: They aren’t your customer – they are a part of (i.e. colleagues within) your system!

Yes, yes, I know that you are reliant on them and then the next lot are in turn reliant on you…but that’s just because of the design of the (current) method.

And, yes, yes, I know that it would be jolly nice if you all worked together in really efficient and effective ways – but that doesn’t make for a customer relationship. Further, it can be harmful to think in this way.

What is a customer?

I’ll draw on a set of related quotes to assist me here:

“The purpose of a business is to create a customer.”¹ (Peter Drucker)

“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” (Henry Ford)

“There is only one boss. The customer. And he can fire everybody in the company from the chairman down simply by spending his money somewhere else.” (Sam Walton)

The point being that a customer is, by definition, external to the system. Everyone and everything within the system is (or should be) there for them.

Without the (true) customer, there is nothing.

Why does this ‘internal customer’ label bother me so?

Such ‘internal customer’ logic causes us to think that we must do what they ask, and not question them too much, along the lines of the ‘customer is always right’ and ‘give the customer what they want’ mantras.

It presents a suboptimal ‘them’ and ‘us’ situation rather than a collaborative horizontal (across the system) ‘we’.

Once you think in terms of internal customers, it’s only a short and painful step towards the dreaded ‘Service Level Agreement’ (SLA) game show. Grrrr.

A massive risk within the ‘internal customer’ logic is the creation of a static system, one in which the method (and targets) becomes defined in quick drying cement.

If I think of you as my customer, then there’s unlikely to be much challenge from me as to whether your role should change, or even exist…and you sure as hell aren’t going to appreciate any such line of reasoning from me – who the hell am I to suggest this – you are my customer, I am merely your supplier!

Further, as my customer, you may consider that you know best, that your wish should be my command and that I should be grateful to be of service to you. Indeed, you may even score me on how well I treat you. Ouch!

How many of you reading this post have been asked to do something by your ‘internal customer’ and thought that what they were asking for was nuts…and how many of you didn’t get the chance to meaningfully discuss this with them, and had to carry it out anyway?

Even worse, how many of you have switched off from even thinking about whether your internal customer’s request makes sense and have merely become ‘order takers’.

What a load of nonsense. Let’s just throw the ‘internal customer‘ language in the bin.

“But what about treating all our colleagues with respect?!”

I can almost hear some HR departments chiding my thinking as being disrespectful to my fellow employees. No, it’s not!

In fact, it’s the opposite. I think it’s disingenuous for me to pretend that my work colleagues are my customer. They are far far more than that – we are reliant on each other, to keep our jobs, to grow ourselves, to stimulate each other, to want to come to work…to spend our working lives delivering something meaningful to this world. This is soooo much more than being merely thought of as ‘internal customers’.

As colleagues, we need a robust relationship, not one of diffidence and servitude. We need to respectfully challenge each other, work hard to listen to and understand each other’s worldviews…and become better, closer and wiser for this.

We are not ‘internal customers’, we are colleagues.

Addendum:

I always pick a trusted colleague (from an ever widening group of ‘pioneers’) to have a read of my posts before I press publish. I was particularly nervous about this one as I felt that it could just be me ranting about an ‘issue I have with the world’ (again 🙂 ).

…but I got a great response back, with the following gem (thanks A):

“Are the All Blacks ‘customers’ to one another, or are they a team with a shared purpose? By using the term ‘customer’ where it doesn’t belong… it distracts us from understanding who our real customers are.”

This made me giggle. Turning to the wonderful game of rugby, I had visions of the ‘backs’ telling the ‘forwards’ that they are their customers…I don’t think that this would go down too well.

How about the following, even dafter rugby situations:

the jumper in the line-out considering themselves as the customer of the hooker throwing the ball in;
the winger considering themselves as the customer of the no. 10, who is kicking the ball through for them to get on the end of; or, at its simplest
the potential receiver considering themselves as the customer of the possible passer of the ball.

What a load of guff! They’re a team that have to work together, as equals; that have to understand, and swiftly react, to what’s around them; that have to make the selfless pass or tackle; and that have to pick each other up and genuinely offer words of support when perhaps it doesn’t go quite as desired.

They are not ‘internal customers’, they are team mates.

And so, to complete the title of this post: There’s no such thing as ‘internal customers’

Footnote:

1. I’m not a massive fan of this particular Peter Drucker quote, but it fits for this post.

Why so? Unfortunately, businesses have become far too adept at creating customers and, as a result, we have rampant consumerism.

I reflect on Professor Tim Jackson (author of ‘Prosperity without Growth’) clearly calling out THE problem for humanity, and what we* might do about it (* requiring brilliant political leadership).

His take-away quote “The story about us – people being persuaded to spend money we don’t have on things we don’t need to create impressions that won’t last on people we don’t care about.” Prof. Tim Jackson TED talk.

I often hear people talking about the need for profit and that my thinking must address this fact. I respond that it does, but not as they might think. This post tries to explain.

There are two types of ‘for profit’ organisational thinking, both of which consider that profit is necessary…and there the similarity ends.

Type 1: Considers profit as the overall goal and purpose of the organisation ‘at any cost’;

Type 2: Perceives profit as necessary for the organisation’s survival, but not its reason for existence. Profit to such an organisation “will be seen as breathing is to a human organism, but not what life is about.” (H. Thomas Johnson)

The difference in management systems and outcomes for these two types of thinking will be profound.

Below are a number of convergent viewpoints from key thinkers backing a ‘Type 2’ view on profit:

________________________________________________________________

Aaron Dignan, in his talk on the operating model that is eating the world, explains the over-riding importance of purpose. He uses the examples of Facebook, Apple, Amazon, Tesla (and many other highly successful organisations operating beyond traditional 20^th century western management thinking) to explain that:

It’s not about the money, it’s about the mission [purpose]. The idea of putting values above revenues is really important and defines how powerful that purpose can be!
- Put another way, placing profit above your stated purpose means that it usurps this purpose.

The leaders of these organisations, such as Amazon’s Jeff Bezos, make this very clear to the market: “This is our mission, it’s long term, if you don’t like it, get out of our stock”.
- This message is very useful for the company and potential investors – it provides transparency; allows the company to focus on what it is actually trying to do; and it allows prospective and existing investors to make clear investment decisions…it also provides them with a high degree of confidence in the organisation.

Playing a long game is a really good sign that an organisation has its purpose screwed on tight. They’re not playing to the (financial reporting) quarter or to ‘the man in the street’, they are playing to the purpose…and that means that they might have to make long term bets and let things play out and then cash out over time.

Cause and effect: If you truly focus on purpose, the effect will be a highly successful organisation (and happy investors).

________________________________________________________________

Sir Richard Branson has a very clear philosophy on priorities : “put your staff first, customers second and your shareholders third”. This is the complete opposite of the traditional view, but there is a simple yet profound logic within which Branson says “should go without saying and it’s surprising that it still doesn’t in many organisations”.

Put simply, if the people working at your company are 100% proud of the job they are doing, are given the tools to do a good job, are treated well and (consequently) are proud of the brand then they are going to truly look after the customer.

Cause and effect: The shareholders do well because the customers do better because your staff are (truly) happy.

A caveat: Don’t think that you can hoodwink your staff (i.e. with words, ‘canned fun’ and/or bribes) into thinking that they are ‘first’ if this is not so…they will see right through such a facade.

A reality check: If your people aren’t proud of what they do/ where they work then you have a problem with your priorities.

________________________________________________________________

Mike Rother, in his book ‘Toyota Kata’, sets out an interesting historical perspective of how we arrived at the traditional 20^thcentury (Western) management approach. In it he quotes Alfred P Sloan (President and then Chief Exec. and Chairman of General Motors between 1923 – 56) as saying:

“We are not in the business of making cars, we are in the business of making money.” *

You might come back at me and say, “well he’s right isn’t he? We might ‘say’ our purpose is ‘xyz’ but it’s actually about the money.”

To this, I would say that we need to recognise that customer, employee and investor make up necessary components of an organisation’s system and, going back to harmony or cacophony, we should understand that we can’t put one component (e.g. investors) above the others and expect it to be good for the system. In fact, to do so will cause unknown and unknowable harm to the system.

We need to understand the system and its purpose and then act in such a way as to derive a win/win/win scenario….which goes back to Dignan’s point about purpose and Branson’s point about priorities.

Cause and effect: Optimising the system will be good for all of its components over the long term.

A caveat: If you ‘say’ it’s all about purpose but underneath it all it isn’t then don’t be surprised at your inability to move towards it. This is a classic case of POSIWID.

* Note: General Motors made a 2007 financial loss of US$38.7 Billion and, after running out of cash soon after, entered ‘Chapter 11’ bankruptcy in 2009. After selling off or discontinuing many brands, it emerged as a new company with new management and financial bailouts from both the US and Europe, with a net cost to US taxpayers (to date) of US$12 Billion.

________________________________________________________________

Thomas (Tom) Johnson, Professor of Accounting and author of the book ‘Profit beyond measure’ wrote in an article on the excellent ‘Lean Edge’ site that “financial results such as revenues, costs and profits are by-products of well-run human-focused processes”.

He goes on to make the following comparison:

“…the Toyota people in Japan who founded and grew the company down to the 1990s saw the company as a disciplined organization of ’employee/suppliers’ whose purpose is to serve ‘customers’ in a way that earns sufficient profit to ensure the long-term survival of the organization.

…those of us from the West, on the other hand, for the past 30 to 40 years have viewed the purpose of business as making profit, by any means considered legal.

…the contrasting view held by Toyota people who founded and built that company from the 1950s to 2000 considers that a business exists to provide opportunity for humans to exercise their inherent creativity in gainful employment serving needs of other humans. The people who held that view saw the purpose of the business to be continuous improvement of a system designed to enable humans to serve other humans gainfully and sustainably”

It’s interesting to note that there are plenty of organisations around the world (Dignan refers to some in his video above) that have understood the ’cause and effect’ of Toyota’s view i.e. that everyone (including investors) does well if an organisation sets out and truly pursues its purpose, with its long term success being the outcome.

________________________________________________________________

And finally, if we go back to Simon Sinek’s ‘start with why’, he makes some things very clear:

‘Why’ is not about profit…that’s just an outcome:

“By why, I don’t mean to make a profit, that’s a result. By why, I mean what’s your purpose, your cause, your belief? Why does your organisation exist? Why do you get out of bed in the morning and why should anyone care?”

You can’t just state your ‘why’ (your purpose). It actually has to be what you believe! If your actions are about profit over your stated purpose then this evidence will be seen, taken on board and acted upon accordingly:

“…what you do serves as the proof of what you believe.”

People ultimately follow leaders for themselves. If the actions of those leaders do not align with the beliefs of the workers then don’t expect them to follow:

“We follow those who lead, not because we have to but because we want to. We follow, not for them but for ourselves.”

Finally, there’s a really important point implied but not explicitly stated by Simon Sinek: The leaders of an organisation need to provide the environment, through an appropriate management system, that enables the purpose and does not frustrate it.

________________________________________________________________

In summary:

You can state a purpose….but you’ve got to actually live it to move towards it;
An organisation’s purpose should NOT be ‘profit’, even though this outcome is necessary for the system and those that finance it;
If you think it’s the other way around i.e. that you need to state a purpose so as to chase profit, then you are likely to fall a long way short of what you could achieve…and will put your long term survival at serious risk;
A focus on short term profits and results for the market will likely destroy unknown and unknowable value.

For those of you who think “what a load of hippy liberal rubbish, of course it’s all about the shareholder”, here’s a really nice quote to consider from Sam Walton (founder of Wal-Mart):

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

…how would those shareholders feel if their investment became worthless?

Note: The above raises a ‘big hairy question’ – There are many corporate forms…but which ones help and which ones hinder an organisation’s ability to truly live its stated purpose? This is something that the world’s politicians and financial markets are currently grappling with. Here’s an interesting ‘Economist.com’ article about this.