As the Australian Banking Royal Commission has shown, the disconnect between many banks and their customers has seldom looked more jarring. For months during the rounds of hearing we were stuck in a repeat cycle, listening to endless stories of staff putting sales targets ahead of customer interests.
The final report, published on 1 February 2019 has made clear that this behaviour was driven from the top, with senior executives prioritising profit over customer experience. Almost all the major banks in Australia were caught in the spotlight during the enquiry, with a rogue’s gallery of executives publicly attesting to their shortcomings.
There are many things these organisations have in common, but one in particular stands out: They all spend millions on developing their leaders. They have comprehensive leadership programs, armies of executive coaches, and annual reports referencing their commitment to building world-class leaders.
This begs the obvious question: is this wasted money? And perhaps more broadly, is leadership development broken and ineffectual? It certainly implies that simply investing more in leadership development is not the solution.
But should the activity stop? No, leadership development is essential. Instead of stopping it, HR leader should consider making a simple – not easy – adjustment: let your customers teach you how to lead.
Almost all organisations will claim that they are customer-focused. But what does that actually mean for your leadership development strategy? Here are four suggestions, in order of increasing impact and difficulty, that will give your leadership development much better results.
1. Talk about the customer
How often do you reference the customer in your leadership programs? Are executives challenged to visualise their clients’ experience and perspective? This is straightforward to do. It requires little effort or spend, and often minimal external input, to encourage leaders to think and talk about the customer.
As Stephen Denning puts it in The Leader’s Guide to Storytelling, telling stories is a proven way to “spark action, transmit value…or lead people into the future”. It’s an innovation technique used at IDEO, where they recognise the power storytelling has to generate strong emotions, bond teams and clarify a sense of purpose. Creating structured space for your leaders to talk about your customer, or their experience as customers of your organisation is simple yet powerful.
2. Listen to the customer
However, just thinking and talking about them doesn’t always work. Consider actuallylistening to the customer. Incorporate video of them describing their experience of your company. Better still, bring them into the room or have leaders visit them, quiz and hear them. This requires more effort – careful engagement with your customers and considered design of the activity, but the impact can be huge.
Interviewing clients and asking them how they see your company relative to the competition, what you’re good at and what you’re not, learning about their frustrations and delight, can be revelatory.
3. Let your customers write your leadership strategy
If you really want customer-focused leaders then start with the customer. Engage with your key customers – and this can include shareholders and regulators – and ask them: what do you want from us? What do our competitors do better? Why do you use us? Where do we excel and what must change?
This is the basis for your leadership strategy: genuinely understand your customer needs, and then use this to define your required leadership capability. Not a cookie-cutter set of leadership models or an off-the-shelf program, but an authentic customer-first strategy that is tailor-made to you.
This is an extension of listening to your customers. But instead of single event dedicated to listening, your overall leadership strategy is designed in response to customer needs. Most learning activity starts with a structured needs analysis; simply extend the scope of that to include input from your customers.
The resultant insights can provide a framework for a leadership development model uniquely tailored to the needs of your organisation at this point in time.
The challenges and benefits
This is not easy to do; it requires organisational bravery and humility. Persuading senior executives that you want to ask your customers or your regulator about how they can be better leaders is not always straightforward.
But the benefits are huge. You have a leadership strategy that differentiates you. Your leaders gain genuine, invaluable insights into their customers. And the customer-centric mindset can be extended further; many organisations have adopted reverse mentoring as a way for leaders to gain insights into other groups. Why not experiment with client mentoring?
Why not have your customers literally teach your leaders? As relationships between your leaders and your clients strengthens do the latter have a role to play in upskilling your executives – by not simply sharing their experiences, but teaching your leaders how to do better?
And don’t forget the external impact: how do your customers feel if you ask them to define what they want from you? How much more confident will institutional investors be in your leadership if they have been invited first-hand to help build the capability?
Lastly, think back to the last year of Royal Commission hearings. Perception and optics are secondary considerations, but recall the endless stories of clients going unheard, executives far removed from their customers’ experience. Now imagine the headlines had customers instead described how their bank had invited them to participate in leadership development, or if a CEO talked about their client mentor and the insights that relationship had given them.
Putting your customers at the heart of your leadership development is not easy, but it is a powerful way to create a strategy that is unique to your organisation and can drive significant competitive advantage.