Employees First, Customers Second: Turning Conventional Management Upside Down [Hardcover]

 

 

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As I began to read this book, I recalled again the comments of Southwest Airlines' then chairman and CEO, Herb Kelleher, when asked to explain his company's competitive advantage: "Our people. We take good care of them, they take good care of our customers, and our customers take good care of our shareholders." Vineet Nayar's concept of Employers First, Customers Second (EFCS) could be misunderstood to mean that an organization's customers have secondary importance. In fact, as Nayar explains, customers are the ultimate beneficiaries of EFCS. Kelleher makes the same point in the remarks quoted earlier.

Here's the challenge for C-level leaders: How to establish and then sustain am employee-centric organization? Nayar write this book in response to that question but I think he has accomplished much more than he may have originally intended. With all due respect to the importance of crating what Ben McConnell and Jackie Huba characterize as "customer evangelists" in a book that bears that title, I think Nayar is advocating an even more important role for employees' relations with customers: as co-creators. He advocates "inverting the management pyramid," beginning with front-line employees, and fulfill aspiration needs, notably the need to give everyone a sense of purpose, to address the need for what Dave and Wendy Ulrich call "gthe why of work."

I agree with Nayar that customers should be among those who are centrally involved in an inside-out transformational process by which to adopt, implement, and then strengthen an organization, guided and informed by an open business model such as the one Henry Chesbrough describes: "A business model performs two important functions: it creates value and it captures a portion of that value. It creates value by defining a series of activities from raw materials through to the final consumer that will yield a new product or service with value being added throughout the various activities. The business model captures value by establishing a unique resource, asset, or position within that series of activities, where the firm enjoys a competitive advantage."

In this instance, Nayar insists, that advantage is provided by employees who are actively and productively engaged because (a) they feel that they and their efforts are appreciated, (b) they perceive their organization is committed to "trust, transparency, and management accountability" because there is an active and (yes) open "engagement platform" to expedite communication, cooperation, and collaboration, and finally (c) they are confident that they will play an active role throughout what is certain to be a long-0term process of cultural transformation.

Chesbrough could well have had Nayar's company, Hindustan Computers Limited (HCL), in mind when observing, "An open business model uses this new division of innovation labor - both in the creation of value and in the capture of a portion of that value. Open models create value by leveraging many more ideas, due to their inclusion of a variety of external concepts. Open models can also enable greater value capture, by using a key asset, resource, or position not only in the company's own business model but also in other companies businesses."

In the fifth and final chapter, Nayar caught me by surprise with the approach he takes. I expected the usual summary of "key takeaways," reassurances, caveats, call to action, etc. Instead, Nayar explains "what EFCS really is and what it isn't" as well as what it can and cannot do for the business leader who reads it, and what it can and cannot do for the reader's organization and associates. Why does he take this approach? Because he acknowledges that, perhaps, it is easier to misunderstand EFCS than it is to understand it. With surgical skill, he corrects five (presumably common) misunderstandings. By taking this approach, Vineet Nayar achieves two very important objectives: he clarifies whatever his reader may have misunderstood, and, he thereby strengthens the preparation of his reader to discuss EFCS with others.

Bravo!

Great simple instructions on how a focus on employees and the value zone that they create for customers was implemented at HCL. Not too heavy on IT details, which is good, focuses instead on the interventions and things they did differently. Written simply with good examples of objections at each of the interventions that were implemented, as well as the basic framework of what they did.
Worth reading if you are interested in leadership, human resources, employee engagement and the future of management.

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