I wholeheartedly agree with Andrew that now, more than ever (and increasingly so), technology is enabling companies to better incorporate inputs and feedbacks from their customers. For context, I must say we have come a long way since Deming’s TQM movement toward understanding the holistic and complex systems that comprise ‘the firm’. Peter Senge wrote about the importance of systems thinking in his book The Fifth Disclipline: The Art and Practice of the Learning Organization (1990), highlighting the various feedbacks that enable or undermine sustainable long-term growth, not the least of which stem from customers. Deming himself, in the forward to Senge’s book, acknowledges the importance of these feedbacks.
Now 20 years later (and following much discussion of the success of Dell’s customer centricity, Southwest Airline’s unconventional approach to market research, the crowdsourcing revolution in open source software development, and Steven Spear’s new look at Toyota’s culture of “dynamic discovery”), pretentious management consulting “thought leaders” are now pointing to the Power of Pull as the new frontier for value creation (the Economist published an excellent book review just last month).
But let’s just hang on a sec and recognize that every individual I’ve mentioned here is American, and that fact carries some big implications. Setting the high-tech aside (as Andrew does as well, as he acknowledges the revolution in open source software development) and focusing on manufacturing, retail and consumer goods, many American firms have notoriously lagged behind their Japanese counterparts in their ability to understand the customer and anticpate demand trends. Just look at Toyota’s Prius, 7-Eleven Japan’s innovative point-of-sale customer feedback system, and Kikkoman Corporation’s incredible 407-year survival (making it the oldest company in the world). What’s with these Japanese? Could it be that Japanese firms are learning more from their customers than American firms are learning? Could it be that Japanese customers are just plain smarter and have more to say than American customers? Well, on average, they’re certainly older, and the aging of their population may make them even wiser still.
Back to the U.S., here we have a population whose fertility rate was stagnant for a while, but is actually increasing again. Now I’m not saying we’re going to get dumber (fingers crossed), but let’s just acknowledge that crowdsourcing is only productive insofar as the crowd is wise. In part that’s what Southwest Airlines figured out (see Blue Ocean Strategy by Kim and Mauborgne) when they started seeking the valuable feedback of point-to-point bus and rail commuters instead of frequent flyers.