Customer centricity is a mindset and a way of doing business that focuses on creating positive experiences for the customer through the full set of products and services that the enterprise offers. Customers are the ultimate beneficiaries of the value of the business solutions created and maintained by the portfolio value streams.
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Customer centricity is a mindset: Whenever a customer-centric enterprise makes a decision, it deeply considers the effect it will have on its end users. This motivates us to:
- Focus on the customer – Customer-centric enterprises use segmentation to align and focus the enterprise on specific, targeted user segments
- Understand the customer’s needs – Customer-centric enterprises move beyond merely listening to customers who ask for features. Instead, they invest the time to identify underlying and ongoing customer needs
- Think and feel like the customer – Customer-centric enterprises try to see the world from their customer’s point of view
- Build whole product solutions – Customer-centric enterprises design a complete solution for the user’s needs, ensuring that the initial and long-term experience of the customer is always ideal and evolving as needed
- Know customer lifetime value – Customer-centric enterprises move beyond a transactional mentality and instead focus on creating longer term relationships based on a clear and accurate understanding of how the customer derives value from the solution
Research Driven
The foundation of the customer-centric enterprise is market and user research that creates actionable insights into the problems customers face, the solution requirements, and the solution context. Market research tends to drive strategy; user research tends to drive design, as highlighted in Figure 1 below.
Research activities occur continuously and are directly supported through Continuous Exploration in the Continuous Delivery Pipeline, automated data collection, and the feedback loops between the solution and its solution context.
Design with Empathy
Customer-centric enterprises apply empathic design throughout the design process. Empathic design refers to our ability to put aside our preconceived ideas and develop solutions from the perspective of our customers.
Empathic design motivates teams to understand and experience the world from the customer’s perspective, learning and appreciating the difficulties they face, their roles, and their work context. It emphasizes user research, including activities such as Gemba walks (visiting the place where the customer work is done). Gemba builds empathy by helping agile teams to gain a deeper understanding of the user’s emotional and physical needs—the way they see, understand and interact with the world around them.
Empathic design guides the development of solutions that move beyond functional needs, also addressing:
– Aesthetic and emotional needs
– Ergonomic needs, such as the placement of physical features
– Product attributes that may not be explicitly requested by users, such as performance, security and compliance, but which are essential for viability
– An understanding of how the solution may impact the solution context
– The impact of the solution on related or affected groups – That the architecture of the solution ensures that operations, maintenance, and support account for the needs of the customer
Degrees of Customer Engagement
Market research helps us determine the nature of the relationship we create with our customers. This is largely determined by whether the solution is a:
- General solution – intended to be used by a significant number of customers
- Custom-built solution – built and designed for an individual customer
Figure 2 illustrates the relative level of indirect or direct customer engagement in each case
General Solutions
General solutions must address the needs of a broader market or segment in which no single customer adequately represents the whole market. In this case, Product and Solution Management become the indirect customer proxy; they have authority over solution content. It’s their responsibility to facilitate external interaction and make sure that the “voice of the customer” will be heard, and that the organization will continuously validate new ideas. Scope, schedule, and budget for development are generally at the discretion of the internal Business Owners.
Since it’s unlikely that any customer will participate regularly in planning and system demo sessions, customer interaction is typically based on requirements workshops, focus groups, usability testing, and limited beta releases. To validate various hypotheses, the solution evolves through feedback from user behavior analysis, metrics, and business intelligence.
Custom-Built Solutions
For custom-built solutions, external customers collaborate with Product and Solution Management in joint design efforts. While the customer is leading the effort, deliverables, sequencing, and timing are negotiated. This promotes incremental learning and creates opportunities to adjust plans based on the best available data.
SAFe’s focus on cadence-based development directly supports the collaborations that create the best outcomes in custom-built solutions. For example, PI Planning provides the time and space to align all stakeholders around the next set of deliverables. The successful completion of the Program Increment establishes a high degree of trust in the joint development process and generates data that improves forecasting and economic modeling.
Deep and Narrow Solutions
In the zone between general solutions and custom solutions are deep and narrow solutions. A deep and narrow solution has a small number of customers that will often pay a significant amount of money for these products and services. For example, a solution to manage logistics for stadiums of more than 50,000 seats will serve a total potential market of less than 400 total customers.
While maintaining the discipline of creating a single solution that answers a target’s market needs, these Product and Solution Managers must leverage their familiarity with the small number of customers they’re serving.
Multi-Segment Solutions
Some solutions serve different markets, each using the solution slightly differently. In this situation, customer-centricity requires understanding the unique needs of each segment. The following examples highlight the need for multi-segment solutions:
- B2C – A B2C software company serving hundreds of thousands to millions of indirect customers via a website may also offer a set of developer APIs to partners
- B2B – Members of a B2B partner segment may act more like customers of custom-built solutions, each making specific requests of the software provider to adjust, extend, or improve the API to meet their unique needs better
Whole Product Thinking
Just as Systems Thinking takes a holistic approach to solution development, whole product thinking involves viewing a product as more than just a sum of its features, but rather as everything involved with the experience customers have with the purchase, use, and support of the product.
Companies must deliver the core product at a minimum. However, customers will not be delighted if it’s missing critical aspects of the ownership experience. For example, suppose you buy a smartphone that doesn’t have a headphone jack (or Bluetooth), or you must buy a separate charger, battery, or SIM card to operate the phone, customers will not be happy. Similarly, your customers will be dissatisfied if you have an excellent phone with no warranty or customer support or if it doesn’t connect to wifi. “You can have the most amazing product in the world, but if you don’t pay attention to the Whole Product Concept, it may fail.”
Developing a complete product requires starting with an understanding of the real benefits that customers can expect to receive or experience from the product. After that, consider all aspects of the customer’s experience, from purchase, first use, ongoing user experience, maintenance, add-ons, and accessories—even to how the product may be upgraded and supported. Understand all the touchpoints the customer will have with the product, such as setting up the phone with the preferred cellular carrier or the home wifi. Customers are only satisfied if the product’s actual value is the same or exceeds their perceived value. Kotler, Levitt, and Moore devised variations of a whole product model that recognizes the levels of customer needs. Figure 3 provides a version of this model that has been adapted for SAFe, followed by a brief description of each level.
MVP – is an early and minimal version of a new product used to prove or disprove the benefit hypothesis. The MVP helps answer the question: do customers and users want the solution, and can it be built? The SAFe MVP is an actual product that real customers can use and allows the enterprise to generate validated learning to determine the core product features and beyond. As indicated in Figure 3. the MVP is not a whole product but rather a starting point that proves the hypothesis.
Core product –addresses the basic functional needs of the customer. It’s adequate to accomplish the jobs to be done minimally but lacks certain features or attributes of a product that the customer would expect.
Expected product – provides the attributes buyers usually expect and agree to when purchasing a product. The expected product includes the core product and other benefits the customer expects when purchasing it. For example, the product has online help, documentation, customer support during the warranty period, and so on.
Augmented product – provides the additional features, benefits, attributes, or related services that differentiate the product from its competitors to delight customers. For example, a laptop comes with free third-party add-ons, such as a password manager, VPN, touch screen, and more.
Potential product – envisions the features and other attributes necessary to attract and retain customers indefinitely. Informed by market and user research, the potential product fuels longer-term strategic planning and creates opportunities for sustainable product advantages.
Leveraging Market Rhythms and Events
The Lean-Agile Mindset that drives the continuous and sustainable flow of value to customers motivates the customer-centric organization to understand how timing of specific releases influences their perceived value. Simply put, the value of a release can vary significantly based on when it is released.
To create the highest value for all stakeholders, customer-centric organizations leverage market rhythms and market events: [3]
– A market rhythm is a set of events that occur repeatedly on a predictable cadence. For example, retailers routinely prepare for the holiday shopping season by upgrading their systems to gain a competitive edge to support significantly higher transaction volumes.
– A market event is a one-time future event, which has a high probability of materially affecting one or more solutions. They can be external, such as the launch of government regulations, or they can be internally created, such as a company’s annual user conference.
Understanding Market Rhythms
Market rhythms help companies recognize and capitalize on opportunities that are predictable and require longer-term planning.
Figure 4 illustrates an example of the market rhythms of three different companies. The vertical axis shows the value delivered to a market, while the horizontal axis depicts the value over time, usually a calendar or fiscal year. The green line in Figure 4 represents a social media company where the value over time is relatively constant, which suggests it is less affected by market rhythms [3].
The next two examples in Figure 4 show more typical market rhythms for companies that must get their products ready for release responding to a well-known rhythm. A B2B software provider who markets real-time pricing software updates must issue important alerts well in advance of the shopping season. (Imagine updating every point of sale terminal in 400 different stores – and training all employees on the new capabilities!) Similarly, the “hot new toy” of the Holiday shopping season won’t seem so hot or new in January!
Capturing Market Events
With an understanding of market rhythms, customer-centric road-mapping activities typically focus on the impact of market events. Figure 5 illustrates three market events, highlighted by the diamond-shaped milestones:
- Known changes to regulations
- Expected release by a competitor
- Potential technology change
Market events are typically represented as milestones, and they strongly impact the timing for releasing solutions. They may also inform the content and timing of features or solution development activities identified during Program Increment (PI) planning.
Understanding the Solution Context
Insights gained from the Gemba walks and other research activities define the functional and operational requirements of the solution’s operating environment. In SAFe, this is known as the Solution Context, which captures environmental, installation, operation, and support requirements.
Understanding Solution Context is crucial to value delivery. It identifies constraints outside the organization’s control. As examples, consider the icy roads that a self-driving vehicle must navigate, or the regulations with which it must comply. Solution Context also describes the negotiated constraints, such as when the organization uses principles of set-based design and collaborates with one or more Suppliers to optimize the total system’s space, power requirements, and weight.
Accordingly, some aspects of Solution Context are fixed, and some are negotiable; this creates a level of coupling between the Solution, Suppliers, and the Solution Context. The mandate of Business Agility motivates Product and Solution Managers to seek optimal solutions, including changing the Solution Context to encourage innovation.
Understanding Customer Value
Creating viable and sustainable offerings requires a deep understanding of the customer’s perception of value. Consider a for-profit enterprise that has identified a customer problem that will cost them $800K to solve. If the customer perceives less than $800K in value from the solution, the organization will be unable to sell it a price that creates a viable offering. And even if the customer perceives more than $800K in value, suggesting the enterprise can make a profit, the solution may not be sustainable if the revenue is insufficient to fund new and ongoing work.
There are two primary means by which a customer derives value from products and solutions, 1) reducing their costs and 2) increasing their revenue (Figure 6).
There are a number of other aspects of value as well. Secondary aspects of value derivation include such things as brand value, and the alignment of values between the customer and the enterprise.
©Scaled Agile, Inc.
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