The most important single thing is to focus obsessively on the customer. Our goal is to be earth’s most customer-centric company.

—Jeff Bezos

Customer Centricity

Definition: Customers are the ultimate beneficiaries of the value of the solutions created and maintained by a portfolio’s value streams.

Definition: Customer Centricity is a mindset that focuses on creating positive experiences for the customer through the full set of products and services that the enterprise offers.

Customer-centric organizations deliver whole-product solutions designed with a deep understanding of customer needs. This results in greater profits, increased employee engagement, and more satisfied customers in the private sector. Nonprofits and the public sector (governments) can achieve the resiliency, sustainability, and alignment needed to fulfill their mission.

Note: This article describes the mindset and impact of customer centricity. The related Design Thinking article provides the tools and practices to support creating desirable products that are profitable and sustainable over their lifecycle. Therefore, it’s recommended that these two articles are read together.

Details

Customer centricity is a mindset that helps organizations make decisions that are based on a deep understanding of its effect on customers and end-users that motivates the following behaviors:

Focusing on the customer – aligning and focusing the organization on specific, targeted user segments
Understanding the customer’s needs – moving beyond merely listening to customers who ask for features and investing the time to identify the customer’s fundamental and ongoing needs
Thinking and feeling like the customer – striving to see the world from their customer’s point of view
Building whole product solutions – designing a complete solution for the user’s needs, and ensuring that the initial and long-term customer experience is continually evolving toward the ideal solution
Knowing customer lifetime value – moving beyond a transactional mentality, and focusing on creating longer-term relationships based on a clear understanding of how the customer gains value

Driving Research

The foundation of the customer-centric enterprise is market and user research that creates actionable insights into the problems customers face, the Solution Context, and requirements. Market research helps drive strategy, while user research drives design, as shown in Figure 1.

Figure 1. Market and user research explore different aspects of the problem and solution space

Ongoing research activities are supported through Continuous Exploration, automated data collection, and the feedback loops between the solution and its solution context.

Designing with Empathy

Designing with empathy puts aside preconceived ideas and helps create solutions from the customers’ perspective. [1] It motivates teams to understand and experience the world from the customer’s viewpoint, learning and appreciating the difficulties they face, their roles, and their context. It emphasizes user research, including activities such as Gemba walks (for example, going to the customer’s workplace). Gemba helps Agile Teams build empathy better to understand the user’s emotional and physical needs. The way they see, understand and interact with the world around them.

Customer-centric enterprises apply empathic design throughout the product lifecycle, guiding the development of solutions that move beyond functional needs and address:

Aesthetic and emotional needs
Ergonomic requirements, such as the placement of physical features
Product attributes that users may not explicitly request, such as performance, security, and compliance, but which are essential for viability
An understanding of how the solution may impact the solution context
The impact of the solution on related or affected groups
The solution’s architecture ensures operations, maintenance, and support of customer needs

Understanding Customer Engagement

Market research helps determine the nature of customer relationships, which is largely determined by the type of solution:

General solutions – intended for a broad segment of customers
Custom-built solutions – built and designed for a specific customer

Figure 2 illustrates the level of indirect or direct customer engagement in each case

Figure 2. Customer engagement models in general and custom-built solutions

General Solutions

General solutions must address the needs of a broader market or segment in which no single customer adequately represents the whole market. In this case, Product and Solution Management become the indirect customer proxy; they have authority over solution content. It’s their responsibility to facilitate external interaction and ensure teams will hear the ‘voice of the customer’ and that the organization will continuously validate new ideas. Scope, schedule, and budget for development are generally at the discretion of the internal Business Owners.

Since customers are unlikely to regularly participate in planning and System Demo events, their interaction is often based on requirements workshops, focus groups, usability testing, and limited beta releases. The solution evolves through feedback from user behavior analysis, metrics, and business intelligence to validate various hypotheses.

Custom-Built Solutions

External customers collaborate with Product and Solution Management for custom-built solutions in joint design efforts. While the customer is responsible for what gets built, implementation is the responsibility of the solution builder. Deliverables, sequencing, timing, and other development aspects require cooperation, coordination, and negotiation. This collaboration promotes incremental learning and creates opportunities to adjust plans based on the best available data.

SAFe’s focus on cadence-based development directly supports the collaborations that create the best outcomes in custom-built solutions. For example, PI Planning provides the time and space to align all stakeholders around the next set of deliverables. The successful completion of PI Objectives establishes a high degree of trust in the collaborative development process and generates data that improves forecasting and economic modeling.

Deep and Narrow Solutions

Deep and narrow solutions are the middle ground between general and custom solutions. These solutions have a small number of customers who will often pay a significant amount of money for these products and services. For example, a solution to manage logistics for NFL stadiums with more than 50,000 people will serve a potential market of fewer than 32 customers. While maintaining the discipline of creating a single solution that answers a target market’s needs, Product and Solution Management must leverage their familiarity with the small number of customers they’re serving.

Multi-Segment Solutions

Some solutions serve different markets, each using the solution slightly differently. In this situation, customer-centricity requires understanding the unique needs of each segment. The following examples highlight the need for multi-segment solutions:

B2C – A B2C software company serving hundreds of thousands to millions of indirect customers via a website may also offer a set of developer APIs to partners
B2B – Members of a B2B partner segment may act more like customers of custom-built solutions, each making specific requests of the software provider to adjust, extend, or improve the API to meet their unique needs better

Whole Product Thinking

Just as Systems Thinking takes a holistic approach to solution development, whole product thinking involves viewing a product as more than just a sum of its features, but rather as everything involved with the experience customers have with the purchase, use, and support of the product.

Companies must deliver the core product at a minimum. However, customers will not be delighted if it’s missing critical aspects of the ownership experience. For example, suppose you buy a smartphone that doesn’t have a headphone jack (or Bluetooth), or you must buy a separate charger, battery, or SIM card to operate the phone, customers will not be happy. Similarly, your customers will be dissatisfied if you have an excellent phone with no warranty or customer support or if it doesn’t connect to wifi. “You can have the most amazing product in the world, but if you don’t pay attention to the Whole Product Concept, it may fail.” [1]

Developing a complete product requires starting with an understanding of the real benefits that customers can expect to receive or experience from the product. After that, consider all aspects of the customer’s experience, from purchase, first use, ongoing user experience, maintenance, add-ons, and accessories—even to how the product may be upgraded and supported. Understand all the touchpoints the customer will have with the product, such as setting up the phone with the preferred cellular carrier or the home wifi.

Customers are only satisfied if the product’s actual value is the same or exceeds their perceived value. Kotler, Levitt, and Moore devised variations of a whole product model that recognizes the levels of customer needs. Figure 3 provides a version of this model that has been adapted for SAFe, followed by a brief description of each level.

Figure 3. Whole Product Model [2]

MVP – is an early and minimal version of a new product used to prove or disprove the benefit hypothesis. The MVP helps answer the question: do customers and users want the solution, and can it be built? The SAFe MVP is an actual product that real customers can use and allows the enterprise to generate validated learning to determine the core product features and beyond. As indicated in Figure 3. the MVP is not a whole product but rather a starting point that proves the hypothesis.
Core product –addresses the basic functional needs of the customer. It’s adequate to accomplish the jobs to be done minimally but lacks certain features or attributes of a product that the customer would expect.
Expected product – provides the attributes buyers usually expect and agree to when purchasing a product. The expected product includes the core product and other benefits the customer expects when purchasing it. For example, the product has online help, documentation, customer support during the warranty period, and so on.
Augmented product – provides the additional features, benefits, attributes, or related services that differentiate the product from its competitors to delight customers. For example, a laptop comes with free third-party add-ons, such as a password manager, VPN, touch screen, and more.
Potential product – envisions the features and other attributes necessary to attract and retain customers indefinitely. Informed by market and user research, the potential product fuels longer-term strategic planning and creates opportunities for sustainable product advantages.

Leveraging Market Rhythms and Events

The Lean-Agile Mindset drives the continuous and sustainable flow of value to customers, motivating organizations to understand how the timing of specific releases influences their perceived value. In other words, the value of a product to customers and the organization can vary significantly based on the timing of its release. To create the highest value for all stakeholders, customer-centric organizations leverage market rhythms and market events: [3]

A market rhythm is a set of events repeatedly occurring on a predictable cadence. For example, retailers routinely prepare for the holiday shopping season by upgrading their systems to gain a competitive edge to support significantly higher transaction volumes.
A market event is a one-time future event with a high probability of materially affecting one or more solutions. They can be external, such as the launch of government regulations, or internally created, such as a company’s annual user conference.

Market Rhythms

Market rhythms help companies recognize and capitalize on opportunities that are predictable and require longer-term planning. Figure 4 illustrates an example of the market rhythms of three different companies.

A B2B retail software company that offers real-time pricing updates must issue important alerts well before the shopping season. It must also update every point of sale terminal in 400 different stores and train all employees on the software’s new capabilities.
A B2C social media company where the value over time is relatively constant suggests it is less affected by market rhythms [3].
A toy maker must deliver a ‘hot new toy’ in time for the holiday shopping season, or its price and value will drop significantly!

Figure 4. An example of market rhythms for three different types of companies

Market Events

With an understanding of market rhythms, customer-centric road-mapping activities typically focus on the impact of market events. Figure 5 illustrates three market events, highlighted by the diamond-shaped milestones:

Known changes to regulations
Expected release by a competitor
Potential technology change

Figure 5. An example of market events

Market events are typically represented as milestones and strongly impact the timing for releasing solutions. They may also inform the content and timing of features or solution development activities identified during PI planning.

Understanding the Solution Context

Insights gained from the Gemba walks and other research activities define the functional and operational requirements of the solution’s operating environment. In SAFe, this is known as the Solution Context, which captures environmental, installation, operation, and support needs.

Understanding the solution context is critical to value delivery. It identifies constraints outside the organization’s control. For example, a self-driving vehicle must drive and navigate icy roads while complying with motorist regulations. In another situation, the solution context may describe negotiated constraints, such as when the organization uses principles of set-based design and collaborates with one or more Suppliers to optimize the total system’s space, power requirements, and weight.

Accordingly, some aspects of the Solution Context are fixed, and some are negotiable; this creates a level of coupling between the Solution, Suppliers, and the Solution Context. The mandate of Business Agility motivates Product and Solution Managers to seek optimal solutions, including changing the Solution Context to encourage innovation.

Understanding Customer Value

Creating viable and sustainable offerings requires a deep understanding of the customer’s perception of value. Consider a for-profit enterprise that has identified a customer problem that will cost 800K. If the customer perceives less than 800K of value from the solution, the organization will be unable to sell it at a price that creates a viable offering. And even if the customer perceives more than 800K of value, suggesting the enterprise can make a profit, the solution may not be sustainable if the revenue is insufficient to fund new and ongoing work.

Figure 6 illustrates two primary ways customers derive value from products and solutions:

Figure 6. Elements of customer value

There are several other aspects of value—for example, brand value and aligning the organization’s values and beliefs with customers [3].

Understanding Internal vs. External Customers

Customers determine the value of every solution and are, thus, an integral part of the Lean-Agile development process.

SAFe defines two types of customers:

Internal customers are part of the enterprise. They receive solutions from one or more development value streams and leverage them in one or more operational value streams. For example, a team of underwriting managers at a bank may be internal customers of a credit scoring solution created by the IT department (Figure 7).

Figure 7. Product Management supports internal and external customers

External customers are outside the enterprise. They purchase, license, or use solutions for their own benefit. Figure 3 depicts external customers that use solutions in the operational value stream to submit loan applications and repay loans. The relationship between the enterprise and external customers can take the form of business-to-business (B2B), business-to-consumer (B2C), or business-to-professional (B2P) interactions.

It is common for product managers throughout the organization to work together in developing a final solution that is composed of several integrated solutions (Figure 8).

Figure 8. Teams of Product Managers working together to create a solution

In this example, a mobile banking solution is delivered to external customers by a Mobile Banking Product Manager. The mobile banking app is built on a secure, compliant e-banking platform provided by a Digital Platform Product Manager. The core banking platform is built on scalable cloud infrastructure delivered by a Cloud Product Manager. Each oversees a solution that delivers a valuable product or service that is either consumed or further enhanced by the immediate customer. This scenario is especially common in the development of Large Solutions.

Learn More

[1] Leonard, Dorothy, and Jeffrey F. Rayport. Spark Innovation Through Empathic Design. Harvard Business Review, December 1997.

[2] Kotler, Philip, and Kevin Keller. Marketing Management 15th Edition.

[3] Hohmann, Luke. Beyond Software Architecture: Creating and Sustaining Winning Solutions. Addison-Wesley Professional, 2003.

[4] Moore, Geoffrey. Escape Velocity: Free Your Company’s Future from the Pull of the Past. Harper Business, 2011.

[5] Levitt, Theodore. Marketing Success Through Differentiation—of Anything. Harvard Business Review, January 1980.

[6] https://expertprogrammanagement.com/2017/10/five-product-levels/

Last update: 15 October 2024