Enshittification is a thing to avoid
Most people agree that focusing on customers is crucial for lasting growth. However, only a few believe they are doing it well, if at all. Intentional repeat customer businesses (think: subscription, membership, loyalty) are more connected to their customers by default, but not necessarily by design.
We’ve found there are common barriers to overcome, continuing with this series we’ll dig into the fifth item below and tackle the rest in future newsletters…
Building a Common Understanding - Clarify what real customer centricity entails across the organization. (prior newsletter)
Incorporating Employee Experience - Your people create your customer experiences, make it good for them to make it better for customers. (prior newsletter)
Breaking Down Silos - Enable collaboration on customer journeys across teams. Share insights cross-functionally. (prior newsletter)
Rethinking Metrics - Incentives and KPIs need to align to customer retention and lifetime value, not just short-term revenue. (prior newsletter)
Long(er)-Term Mindsets - Resist pressure to over-optimize for immediate revenue at the cost of CX.
Closing the Feedback Loop - Act on robust voice of customer programs and inform strategy discussions.
Accountability and Consistency - Set customer-centric goals and track them. Audit practices across the organization.
Cory Doctorow, coined the term “Enshittification” that became the word of the year in 2023, and it may resonate with your experience as a consumer if not as a product or marketing professional:
Enshittification adds sensation to describe platform decay, the moment a digital platform reaches a critical mass of users and loses the incentive to offer exceptional value. Opting instead, to increasing profits. To cut a long story short, the digital user experience turns to…
Growth gets harder as products mature and markets evolve, the playbooks that got the business to where it is are no longer the playbooks that will unlock the next phase of growth. Enshittification is that moment when the next playbook is centered on the organization and not on the customer, because profits extracted from cutting costs are easier than continuing to create value.
Therein lies the connection between customer centricity and the planning horizon. When the long-term plan of creating value to build a customer base becomes a short-sighted pursuit of profit through extracting value.
Most businesses vacillate between these perspectives, swinging from a perceived over-investment in the product and customer experience to an over-zealous profit-taking, and back again. Long term plans fail to stick because short term needs get the priority.
“Long-term planning is what you thought. Short-term planning is what you think.” Jason Fried
As organizations grow, they begin to prioritize process over product. That impedes real innovation. When organizations realize this, they typically respond in three ways: By hiring consultants to do a reorg (that’s “organizational theater”), adopt new processes such as hackathons to spur innovation (that’s “innovation theater”), or take steps to try to reform their bureaucratic behaviors (that’s “process theater”). HBR
The middle ground gaining board-level acceptance is finding the balance derived from long(er)-term planning that opens the door to being adaptable.
“I always say that we learned in 2020. That organizations, families, individuals like you, we have a tendency to plan too much. When you plan too much, what happens my friends? That things usually never go as you plan them. And if you don’t teach your teams to embrace complexity and to be good on adaptation, they fail miserably. So, our motto is plan less, adapt more.” Jose Andres
Sustainable competitive advantage no longer arises exclusively from position, scale, and first-order capabilities in producing or delivering an offering. All those are essentially static. So where does it come from? Increasingly, managers are finding that it stems from the “second-order” organizational capabilities that foster rapid adaptation. Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things. HBR
The unspoken, between-the-lines message here, and a strong contributor to sustainability, is an obsession with customer experience equal to the business priorities, creating everlasting value.
Enshittification is the result of the decision to center plans on the organization and not on the customer, because profits extracted from cutting costs are easier than continuing to create value.
Low retention is the result of over-emphasis on business goals
Low margin is the result of over-delivering on customer goals
Skillful businesses proactively manage the volatility that surrounds them with longer-term planing in labor, supply chains, overheads and more. They make corresponding longer-term commitments when there is an opportunity to mitigate the risks of that volatility. And yet, by their own admission, most companies can do this better within the customer marketplace, with greater a customer-centricity. Expectations for ROI and payback periods in customer experience are too short.
Here’s how to overcome that roadblock to build a culture of customer experience optimization that supports sustained growth.
Those of you familiar with our Growth Framework will find this new worksheet helpful for a quick reference. You can use it to represent your most recent Framework Review and stay focused on the priority areas of optimization that make up your longer-term plan. We’re thinking of putting it on a whiteboard for that purpose, let us know if you’d be interested in one.
If you’re not yet familiar with our Growth Framework, this is a simple intro. Download the worksheet and use it to bring the customer perspective into your growth plans, looking beyond just the next thing, to those important things thereafter. You can download it here.
This approach helps organizations prioritize the customer goals and ensure alignment between the customer and the business. It provides a repeat-customer-centric perspective to transition from organization-centric silos to valuable customer-centric outcomes.
We go through all of this in detail during our workshops, use it in our diagnostics and our ongoing collaborations. This worksheet literally puts everyone on the same page with the repeat-customer/subscriber at the center of focus. The result is more sustainable growth through changing or challenging markets.
