Prioritize Strategic Projects that Drive Customer Value for Sustained Growth
Author’s Note: This post is the first of three that digs into how AI can positively impact an organization’s growth and profitability, but first companies have to make a shift in how they think and act with regards to evaluating investment opportunities. The answer is to prioritize longterm customer value over immediate shareholder value.
This first post explores how the current, common way of prioritizing shareholder value over customer value is short-sighted and actually impedes the company’s ability to deliver longterm shareholder, employee, and customer value.
The second post explores the importance of customer value and how it’s created—which is in the minds, hearts, and ultimately wallets of customers. It is not created in a marketing or product strategy, cool ad campaign, or by a savvy salesperson.
The final post is about how AI can create longterm realizable gains in revenue, profitability, and productivity—but, only for those companies who have changed how they think about their investments and who choose to invest in AI—in the right way, with the right purpose, for the right end result—which is customer-centric.
So, let’s jump into how corporations have been shortchanging their ability to create longterm growth in revenue and profitability by focusing on short-term investments.
How Corporate Decision Making Creates Decreasing Returns
Every year, company leaders evaluate opportunities that have been raised to them for investing money into new projects. These projects largely fall into one of 2 categories: long-term, costly, strategic investments and short-term projects that can deliver value within a year. Now, I could go into the “mid-sized” projects, but let’s not kid ourselves: Those are either stripped down versions of larger projects or beefed up versions of small projects they thought they could extend out to more users—effectively getting “more bang for their buck.” So, let’s stick to large or small for the sake of quickly getting to the point.
But, for most companies, across the enterprise, there is a love for the smaller, “low-hanging fruit” business cases because they demonstrate quick, realizable value to the business and to shareholders, making the company look like they’re managing capital wisely and making them seem more innovative & productive than they really are—and could be in bringing new products and experiences to market.
What they’re sacrificing in this short-term, shareholder-focused view is the ability to effectively, and organically grow marketshare—which requires rethinking how they evaluate projects and even rethinking how they think about their business. It’s about rethinking the relationship between a company, its shareholders, its employees, and its customers.
And, it’s about putting the customer—FIRST.
Because as a company focuses on shareholders, they lose customers, and they lose employees. Their focus is on delivering shareholder value, protecting stock price, protecting all the leadership bonuses and stock-based compensation, and protecting their executive jobs. And those are things that customers don’t care about. Customers care about the value companies are delivering to them—not to shareholders.
Unfortunately, so many companies look to how they can cut costs within the customer experience, actually delivering LESS than customers were expecting—but it’s more profit—more value—than what shareholders were expecting. So, it looks great in a quarterly or annual report, and especially on an investor call.
It also looks good internally because it makes teams, particularly technology teams, look successful as they demonstrate how many projects they’ve delivered. Which is great for IT, but it’s terrible for people on the front lines of serving customers who are pissed off and want better products and experiences.
Customers who are taking their money elsewhere.
To make a long-term positive impact with customers, company leaders have to do the opposite of what shareholders want. They have to put the customer first by investing in R&D (which can cause their stock to drop because it’s a long-term commitment of resources that is far riskier than a short-term project). They have to invest in more employees to deliver high-touch relationships and experiences that customers want and need. But, doing so will cause their costs to go up, and their profitability to go down which has a direct relationship on their stock price.
They have to make the conscious decision to forego short-term popularity with analysts, board members, and shareholders, which could cost them their jobs, but they must change how they think, change how they prioritize, and change how they discuss their company’s mission to focus on the customer.
Think about this for a moment: If you surveyed the entirety of an enterprise-sized organization, what will employees say, when asked, “Who is your priority to support, so they are successful, happy, and love this company?” Some will say each other. Some may even say their direct reports. Some will say the customer.
How many do you think will say the shareholders?
Only the few at the top, but those few are the ones making decisions of what to fund, what to defund, what to prioritize and de-prioritize. Those are the ones thinking the most about how to keep shareholders and board members happy, and those are the ones who won’t be leading their organization through long-term, sustained growth, and innovation. Which is why there is so much turnover at the top. Because no matter who you have as your new CEO, CIO, CTO, CMO, C-whatever, it only takes a couple of years (maybe less) before investors and board members realize what they’re getting is the same damn thing they’ve been getting for years: Continued customer attrition. Continued employee attrition. Continued churn of prospects and lost opportunities. Lowered contract value and lowered contract periods. Less customer stickiness. Less market share. Less organic growth.
Because these are the symptoms of a company doing exactly what shareholders demand of them: Focus on short-term profitability at the sake of all else.
Focus on the “low-hanging fruit.”
But, the innovators, the new market entrants—those are the companies who are focused on the customer and focused on delivering the best products they can—because if they aren’t better than the the incumbent providers & similar competitors, people aren’t going to take a chance on someone new.
So, if you’re at a company that’s been around for decades, and you’re seeing more competitors entering your market and cutting into your customer share, it’s because your company has their priorities WRONG. And, the market is just reflecting it.
It's hard for us to change how we think and how we operate. It takes courage. It takes vision. It takes belief that change is possible and the willingness to surround yourself with the people capable of helping you through that change—people you will need to help you change your organization for the better longterm.
To be clear, I’m not saying that companies shouldn’t invest in any short-term projects. What I’m saying is to rethink the investment and give greater priority to those which are:
Customer-centric and will deliver REAL value to the customer—not a project that is only meant to cut costs of the customer experience because it’s more profitable.
Those which will help employees better serve the customer—at a time and in the way the customer wants.
These are hard discussions and even harder decisions because no group of investors is going to be thrilled about hearing that a company has reprioritized their spending, allocating a majority of their investments toward longer-term, customer-centric projects which may take years to payoff.
But, when that organization’s marketshare goes up, when their revenue goes up, and when their margins go up, investors will see that this is a company worth putting their money behind.
And, employees will see this is a company worth working for, a company who has their priorities straight—particularly when, in this age of layoffs for a better bottom line which has been going on for two decades, employees will find a company worth investing their future in. This is all long-term corporate strategy: Take care of the customer, and make it easier and more personally rewarding for employees to take care of the customer.
And, the customers and employees will take care of the profits.
Now, if you’ve made it this far, I encourage you to read the next post, “Rethink Value for Long-term Customer Success.”
Thank you for reading!