Management: Safety in the Customer-Economy

Feb. 18, 2003
The equation for success in this new economy is just as applicable to you in your safety and occupational health program as it is to any business.

I was catching up on a missed year or two with an old safety friend via e-mail the other day. He accounted that he had become a real "Six-Sigma" convert and conveyed how these new quality improvement tools had "lifted" him out of his all too often boring "lockout/tagout" world. I could sense his elevated enthusiasm by the descriptive words he chose. "How's your safety program going?" I queried. "Oddly enough, it is doing better and better. I don't know why," he added. It was no mystery to me. I knew exactly why.

No. It didn't have anything to do with Six-Sigma implementation. It had everything to do with the process aspects that a program such as Six-Sigma embodies and the change in the economic environment.

My passion has always been aimed not at what works but why. Too often, we are seduced from one "fix" to another when we chase the elusive "what works" mantra. If we widen our focus and seek out why processes (programs) interface successfully (and unsuccessfully) given environmental/organizational dynamics, we strip the fad from the fact, get a whole lot smarter, allow ourselves to adjust our personal approaches, have greater impacts in our organizations and become much more successful.

The New Economy

Many currently hot business gurus have recognized a new business economy that hallmarks the increasing power of the customer (1-3). Often labeled as the "Customer-Economy," perhaps Chuck Roth and Roy Alexander detailed it best in their business best seller, Secrets of Closing Sales. Because their book is sales-oriented, I doubt if it got much reading in our safety and occupational health world. In their book, they went farther describing this new economy than other authors, even to the point of defining nine different types of customers and explaining the different approaches necessary to close the sale with each. But what is this new economy? Is it just something that business-types and sales people need to worry about?

In past economies, business only recognized "consumers." In brief, the business belief was, "if you build it, they will come," a near-Pavlovian consumer response to the availability of products and services. The driving business paradigm was that as the supply increased, the demand would follow. But then came increased choice followed by more features, better quality and then by price deflation. The business paradigm changed as a result. Demand was disassociated from supply. In supply's place sprang new dynamics such as product aesthetics and "coolness." To a lesser extent, price also played a role, but if the product or service was "ultra cool" or "super aesthetic," price became a secondary driver. During this business economic change, consumers changed to become customers. This change did not translate to a level of customer-reverence. It only stepped up to a level of customer-respect rather than consumer-disrespect.

In today's world, the Internet and a customer expectation of speed, both in acquisition and product development, have rewritten the business paradigm again. Together with the customer's increasing dependence on and demand for convenience and ease, the new business paradigm recognizes the true "power" of the customer. Today in the "Customer-Economy," businesses must develop a profound reverence for the customer if they are to succeed.

So what? Does this Customer-Economy impact us in our safety and occupational health programs? Why is this important to us? In reality, we deal with "customers" every day. We train or talk to employees. We work with engineers and contractors. We work through supervisors and front line management. More importantly, we try to sell our ideas and provide options to management. Are any of these not part of the Customer-Economy? Are any independent of the current customer expectations and behaviors? The answers are no. The inescapable conclusion is that anyone who wants to be successful in an organization, in their job, in safety, needs to understand how to be successful in this Customer-Economy.

The Equation for Success

Unless you are into a pattern of rather diverse business readings, there are a couple more books that probably weren't on your reading list. In an epic business best seller The Agenda: What Every Business Must Do to Dominate the Decade, Dr. Michael Hammer, who was included in Time magazine's first list of America's 25 most influential individuals, described nine key ideas on which businesses needed to focus for success in the Customer-Economy. They were:

  • Make your company "easy to do business with."
  • Add more value for your customers.
  • Obsess about your processes.
  • Turn creative work into process work.
  • Use measurement for improving, not accounting.
  • Loosen up your organizational structure.
  • Focus on the final customer.
  • Knock down your outer walls by collaborating wherever you can.
  • Integrate virtually, not vertically.

The key element in Hammer's list of ideas that needs to be understood with great clarity concerns the word "value." It is key because more than 99 percent of the time, it is not understood at all. Even with this confusion, the concept of value lies at the foundation of today's business success and customer passion. It also lies as the key element for us if we are to find the "why" in this new economy that impacts us everyday at work, in our jobs, at home, in our community, and in our personal lives.

There are two more key value concepts that we must understand together with how they relate to each other. Those concepts are value creation and value driver.

Dr. Anjan Thakor of the prestigious University of Michigan Business School, probably did best discussing this link between value and success in his book, Becoming a Better Value Cretor: How to Improve the Company's Bottom Line and Your Own. He coined the term "value creation" and he suggested five secrets to becoming a better "value creator."

A. Understand the meaning of value, both to individuals and to the organization.

B. Develop a deep understanding of the multiple, and sometimes conflicting, perspectives on value creation that exist in any company.

C. Understand the business strategy for success and develop a personal success strategy that supports it.

D. Develop the appropriate measures of success.

E. Master speed.

What do these two equations for success have to do with safety? How do they correlate with each other? After all, the first focuses on businesses and customers and the second on individuals in companies. In fact, both equations relate to being successful with customers in this new economy the first with external and the second with internal customers. Knowing this, both equations become parallels, given the same driving environment or economy. Factually, the Customer-Economy exists in both realms, internal and external to any organization.

There is a reinforcing power that comes when different creative minds offer ideas that lie on top of each other, although they are derived from different directions and with different approaches. Such is the case with the Hammer and Thakor success equations. Clearly, Thakor's secrets A & B align with Hammer's idea #2, C provides the "how" of #7, D dovetails with #5, and E complements #3. In many ways these equations are dead ringers. Because of this, we can use Thakor to help us understand what value is and Hammer to explain how we can be more successful in the Customer-Economy.

Value and Its Creation

Every company, every organization, every job and every individual exists to create value. If it doesn't create value, it ceases to exist or becomes carrion upon which others feed. Likewise, every company, every organization, every job, and in a philosophical sense, every individual exists for a purpose. By definition, the created value increases the measure of the purpose.

Here is where major confusion exists. It is common to confuse reductionistic purpose (purpose of our part or piece) with holistic purpose (purpose of the organization, company or system) and thereby, misassign value. For example, our perceived purpose in occupational safety and health is often stated to be "decrease workplace injuries and illnesses." Once we focus on this perceived purpose, we assign value to injury rates, days without lost time injuries, safety incentives, behavior scorecarding, etc. While it may cause some distress to state, this is not our purpose. This is reductionistic thinking. We are a part of our organizational system, as Peter Scholtes points out in The Leader's Handbook: A Guide to Inspiring Your People and Managing the Daily Workflow. Our job has a purpose and that purpose must complement and advance the purpose of our company or organization.

Do you ever wonder, as Thakor did, why some managers get ahead faster than others of similar abilities? Why do some companies consistently outperform their peers in the same industry? The answers to both questions are closely linked. The individuals who get ahead the fastest are those who are the best at value creation and the companies that consistently surpass their competitors are those with the most effective value-creating individuals. As Jack Welch, the retired CEO of General Electric, put it, "If you're not thinking all the time about making every person more valuable, you don't have a chance."

In organizations, value creation must be understood at two complementary levels organizational and individual. At this point, if you (and your organization for that matter) don't really know what value and value creation is, you're in the vast majority because in fact, it is rarely understood. For example, most managers commonly confuse value creation with the price of stock or earnings per share. They err because value creation is a dynamic, not a result. They also fail to understand that value creation is a sustained dynamic and is therefore gauged best in the long-term, not the short-term (e.g.: the next quarter's financial results).

As an individual value creator, you need to understand the value-creation context of your organization, and your specific role in it. As a manager or executive who bears responsibility for increasing value in the organization, you need to know the factors that create and destroy value at the organizational level.

However, our understanding can't stop there. Because value creation is a dynamic, we must understand how we personally create value in what we do and in the decisions we make. We create value via the "value drivers" we control. Keep in mind that value drivers are not outcomes. Instead, they determine outcomes. A value driver is simply a decision variable that affects the creation of value.

For example, a manufacturing executive might have key value drivers that include: the quality of employee training, the talent and skills of employees, the clarity of leadership vision, the efficiency of the manufacturing processes, and the design and product flow in the factory.

If you are responsible for a safety program, your key value drivers might include: how you interface with upper management, how your skills and attitude complement getting things done, the complexity (or simplicity) of your safety program, your approachability, and the reverence you place on members of upper management as your customers.

The key questions are:

  • What are the value drivers you control?
  • How do these value drivers affect some measure of value that is relevant at levels above your own in the organization?
  • What innovations and improvements in the management of these value drivers can you introduce?

Creating Success

Can we use Hammer's and Thakor's equations to create success for us and for our safety and occupational health programs? Thankfully, as my old safety friend unknowingly found out, yes, we can. Both equations can be "word-smithed" to focus on any area of value creation. To add clarity in this application, let's provide these ideas and secrets in our context.

1. Make both yourself and your program "easy to do business with." In fact, you need to be "first choice" when the question is asked, "Who is best to work with in this organization?"

2. Add more value for your customers, all your customers. Accomplish this by knowing what value you create and what value drivers you control. Understand that sometimes, conflicting perspectives on value creation will exist in any company. When this occurs, focus on the first key idea.

3. Obsess about your processes. Simplify, do not complicate. Streamline, do not compound. Increase visibility and access, do not hide or protect. Give away power, do not hoard it. Master speed of delivery!

4. Turn creative work into process work. Creativity is essential to innovation and improvement, but often it can resemble chaos by its free form and lack of organization. Apply the organization of a process to your creativity that might resemble the four-phase new product innovation process successfully used by Caterpillar that includes strategy, concept, development, production and support.

5. Use dynamic and objective measurement for improving. Measure the key values you control or for which you are responsible. You have to measure what really matters, nothing more and certainly nothing less. Remember, the purpose of measuring is not to know how a business, program or process is performing, but to enable it to perform better.

6. Loosen up your "structure." Do not think "more structure" or that "more complex structures" are better. Success is not in kingdom-building! Think "anti-structure" or "fluid structure." Structure must complement your efforts toward the third key idea... obsess about your processes.

7. Focus on the final customer. Too often, we get completely focused on our immediate "customer" and forget who ultimately is the recipient of our value and is accountable for accomplishing the organization's purpose. In the final analysis, "you can't serve two masters" and when conflicts in "customer expectations" develop (as they will in any organization), focus on the final customer is essential for best deployment of your value drivers. Sell through your immediate "customers" to your final "customer." This requires that you understand the organization's strategy for success and develop a personal success strategy that supports it.

8. Knock down your "outer walls" by collaborating whenever and wherever you can. Do not build walls around your turf. Do not flatter yourself into thinking that your way is the only way. Never offer only one option or one opinion. Fences may make good neighbors, according to Robert Frost, but they kill value creation in organizations. Increase access. Ask for help and opinions. Be open to new ideas. When bridge-building opportunities are encountered, be the first to place a span beam. Be boundary-less in your pursuit of efficiency and value creation.

9. Integrate virtually with other value creators. Get past the idea that your purpose is self-contained. Recognize that you don't (nor can you) do everything as well as others. Pool your strengths and become stronger than any of you could be separately. Systems flourish and improve only when all component parts and subsystems form a single system identity and purpose. Lose your individual "identity" in the extended system identity.

Understanding the "Why"

Each of us live and work in the Customer-Economy. In fact, we are customers and have evolved along with this new economy. We've been part of its creation. As customers, we like it. It is certainly nice to have the level of customer power that no one before us has ever enjoyed. We won't give it up or go back. If this is so obvious to us, why do we not immediately see that all of us, including our management and upper management teams, hold onto these same expectations and perceptions. We are all delighted recipients of and active participants in the Customer-Economy.

In your search for the "why," place yourself in the customer role. Rather than looking at each of the nine key ideas from the left side of the equation (the "How do I do this?" side), look again at each from the right side (the "How would I like it?" side). In other words, take a look at each as your customer would.

1. Do you want it easy or hard? (Easy, of course!)

2. Do you want more value for what you get or less? (No contest... More value!)

3. Do you want what you get coming from an efficient and fast process or one that is flawed and slow? (Are you crazy? Give me fast and efficient every time!)

4. Do you want efficient, fast-stream innovation or ideas that never become reality? (Wow me with innovation... right?)

5. Do you want to know that next time, what you get will be better or worse? (We always expect and demand improvement!)

6. Do you want it "your way" or "the only way they will give it to you?" (Burger King was right!)

7. Do you want to have your needs and wants to be Number 1, or behind someone or anyone else? (Second place is the first loser!)

8. Do you want barriers and hurdles or a greased path? (Are you serious?)

9. Do you want the strength of an army or a single warrior with one weapon? (You've got to be kidding?)

Okay. Here is the "no brainer" question. Why do you think this equation for succeeding in the Customer-Economy works?

Safety ... ????

There has been a lot of bantering about correctly categorizing those you work with as being customers, stakeholders, etc. I've got to admit, I've never had much patience with this meaningless banter because, frankly, it doesn't matter. But fortunately for us, the new Customer-Economy has emerged and that renders this recurring discussion moot. In this new economy, we are all customers, perhaps not in a relationship orientation, but in the ways we think. If we understand that we all think like customers, we can better empathize with the needs and wants of those who we work with, through, from their authority, and in spite of.

Since the inception of safety programs, those who have been responsible for safety have struggled with one dominant question, "How do I get others to think the way I do?" We've thought that if they did, they would see that certain behaviors were unsafe, that safety improvements were obviously needed, that money needed to be spent on making hazards go away and that safety needed to be a driving value of the organization. Well, now they do think the way you do. We all think like customers.

Do you hear opportunity knocking? Translated, it means that in the Customer-Economy, we have a common thought process that determines the way we want "suppliers" to meet our needs. Safety programs and people supply an important service to others in the organization and an important product to the organization.

One of the most successful businesses of the past 10 years has been Domino's Pizzas. Starting from nothing, just a concept of meeting customer expectations, this company is now a multimillion-dollar nationwide presence. If you want a hot pizza delivered to your home in 30 minutes, whom do you think of? Domino's saw the Customer-Economy coming and took full advantage of it. Domino's crystallized this customer-focus in a simple slogan, "Domino's Delivers!" This simple slogan says convenient, fast, dependable, easy. It says it all. You can actually feel the successful contact with the customer. What most don't know was that this slogan was developed with an important secondary purpose in mind. The purpose was to get all of Domino's employees locked into the importance of meeting the customer's expectations.

Where's the focus of your safety program? Does it take into account this new Customer-Economy? If you were to develop a slogan for your safety program, would it be, "Safety... this is the only way it comes," or would it be "Safety Delivers?"

About the Author: F. David Pierce is co-founder and vice-president of Leadership Solution Consultants, Inc. a Salt Lake City-based safety and management consulting firm. He has written four books on safety and over 100 articles. He can be reached at (801) 523-0986 or at [email protected].


1. Ettenberg, Elliott, The Next Economy: Will You Know Where Your Customers Are?, McGraw-Hill, New York, NY, 2002.

2. Underwood, Paco, Why We Buy: The Science of Shopping, Simon & Schuster, New York, NY, 1999.

3. Walther, George R., Upside-Down Marketing: Turning Your Ex-Customers into Your Best Customers, George R. Walther, Newcastle, WA, 1994.

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