Isn’t it strange that most CEOs/Founders very rarely interact directly with the most important part of their business – their customer? A 2018 Harvard Business Review study found that on average CEOs spent just 3% of their time with customers.1
Of course, I suspect most will rebut this claim by citing methods along the lines of ‘voice of the customer’ reports from marketing or customer teams (a combination of advocacy statistics, like NPS and CSAT, and verbatims), or digests from semi-regular customer advisory boards, focus groups or even ratings and review bodies, such as Trustpilot or G2. I’ve worked in organisations that indulge in all of these.
No doubt, this is helpful. In fact, I believe it’s good enough to be good enough. I don’t think it’s enough, however, to be excellent.
I believe that the leaders of the best companies in the world – those with the strongest long-term competitive advantage and sustainable growth profile – maintain more direct, more continuous and more uncomfortable relationships with their customers. And not experiencing the customer in an abstract dialogue but at the live intersection of real customers, the product and the service delivery. Or as it’s been termed: ‘dogfooding’.
Let’s take a closer look at the mechanisms referenced earlier. All are indirect and point-in-time customer touchpoints. All are from customers that elect to participate in a feedback event. All are mediated and synthesised. And all are in a format that can be digested in email format from the comfort of a desk chair.
The problem with these is that they do not provide access to the real-life experience customers have with their products and their staff, day-in, day-out. In other words, it is artificial.
What do I mean by that exactly? Let’s look at some examples we’ve come across recently to help explain:
Guzman y Gomez
GYG is quick-service restaurant chain serving fast, fresh and healthy Mexican food in over 200 restaurants around the globe to over 800,000 guests a week. As part of GYG’s onboarding process into Hola Central (Head Office) every employee – from the new co-CEO to the facilities manager – must spend at least 3 days of their first week in a restaurant alongside their restaurant-based team members. For senior operations leadership roles, this can be as long as three months. Furthermore, Hola Central employees are continuously encouraged to get out to the restaurants and work a shift as often as possible. For the senior leadership team, there is a minimum expectation that they spend at least one day per month in a restaurant. Those visiting restaurants start every shift by ‘walking the line’. This means tasting every ingredient that makes up GYG’s menu items, ensuring it is prepared to a standard that is ready for service – literally ‘eating their own cooking’! This serves as a practical reminder that GYG’s number one value is “it’s all about the food”.
DoorDash
Since it was founded in 2013, DoorDash, one of the world’s leading delivery marketplaces, has always required employees to fulfil deliveries and compile insights from their own experiences. This was because “all employees, including our co-founders, needed to know the three sides of our Marketplace inside and out in order to operate at the lowest level of detail and continue improving every aspect of our offerings.“2 In 2015, this was formalised into a program called WeDash, in which salaried employees are required to do at least four deliveries a year. The three co-founders of the $10 billion revenue business – Tony, Andy and Stanley – all regularly make deliveries. As Andy said in 2023: “We just want to make sure that people who are working here, who are supporting our audiences, are understanding what people are going through.”3 They’ve since added a program called WeSupport, in which employees shadow Customer Experience agents.
Wise
Wise is a global cross-border money transfer financial services organisation. Kristo, CEO and co-founder, started the business because he was a frustrated customer of the traditional banks, fed up with being ripped off by hidden fees and paying for a sub-par experience when trying to move money overseas. Thirteen years later Wise now moves approximately £120 billion annually for its 13 million customers and employees over 5,000 people. Even at this scale, Kristo regularly logs in as a customer support agent, dealing directly with whatever customer queries come his way. They also organise for whole non-customer-facing teams to do the same. Wise’s commitment to engaging customers is evident in their culture handbook (Our Culture Compass) which describes core culture tenets like Value #3 “Customers > team > ego”, a way-of-working principle called “Start with customers by talking to them”, and the statement, “How we think about success? Two words: happy customers.” Wise also publicises its product roadmap so that customers can provide feedback on planned product initiatives (see it here for yourself).
Kristo Käärmann, CEO & Co-Founder of Wise, tweeting about customer support activity in 2024
Tegus
I recently caught up with Michael Elnick, co-founder and co-CEO of Tegus. Tegus, now part of Alphasense, is a world-leading provider of primary research for investment professionals. Mike and I got onto discussing a spectrum of CEO sensibilities regarding organisational detail or control orientation – with one being a micro-level of coverage and ten being the 50,000-foot CEO. Using himself as an example, Mike described how even to this day, with thousands of institutional customers and many thousands of active users, he remains on the customer support email inbox. This means he receives countless unfiltered inbound customer-support requests all day, seven days a week. When I expressed surprise at the undoubted noise this creates, Mike countered that not only does he love it but that he felt it necessary to do his job. To help explain, Mike said that a while back he took himself off the inbox. He described how this started to create an uncomfortable distance between himself and the “blunt truth” of customers and their interaction with the product that often happen at the micro level. He quickly reversed the decision. Mike added that being on the inbox was equally important for the cultural signal it sent: “It shows that I obsess over the customer. I will respond directly to support emails and our team sees how much I care about the smallest details of the customer experience.”
Airbnb
In 2022, Brian Chesky, CEO and co-founder of Airbnb, decided to live in Airbnbs for an entire year. He did something similar back in 2010, stating: “I am either a homeless entrepreneur, or a guy with 650 homes in San Francisco. Depends on your perspective.” In an interview following his 2022 experience, Brian started noticing variability in his guest experiences – such as excessive cleaning fees, unnecessary rental agreements and lists of chores. This led to Airbnb launching 50 new features and improvements. Speaking about the experience Brian remarked: “To make a change, you have to touch the product, the policies, the service across all these different touch points…A lot of this came from my firsthand experience and just looking at the product and booking with fresh eyes. It’s building a product for the person you were when you started the company.” More recently, Brian has also started offering a room in his own home for rent on the platform.
Home Depot
Arthur Blank, co-founder of The Home Depot, described the ‘store walk’ as one of the most effective management tools they have at the company. Managers, executives and the board of directors were all required to do them – often surreptitiously.
“We will walk around and talk to the associates if there are no customers around,
but when somebody needs help, the chairman of the board and president will
provide that help. We have to set the example for the store people. There is
nothing more important. We are not more important than the customer. Neither is
anything we are trying to communicate on the floor of the store, because if we
don’t have that customer, it doesn’t mean anything anyway.”
Arthur explained that the number one reason for doing the walks is to “keep them from getting disconnected”. This is a disconnection from the merchandise, the customers and the store associates. In keeping with this, the company has recently formally institutionalised the practice of requiring corporate employees to be present in store. In October, they announced that all employees, including senior management and remote workers, will have to complete an eight-hour shift in store every quarter, beginning in the fourth quarter of this year.4
The company values the interface with the customer so highly that one of their fourteen management concepts is called the ‘inverted pyramid’. This concept represents Home Depot’s decision to flip the traditional organisational chart on its head, meaning that in Home Depot’s case management are at the bottom (least important) and store associates – “because they interface with the customer” – are at the top (most important). Symbolically, they even call their headquarters the “Store Support Center”.
What attributes do these examples share?
First, the experiences are as direct as possible, with as many layers removed between the customer and the leader as possible. It isn’t a monthly summary of the themes emerging from customer support transcripts – it is the actual customer in front of you in real-time. And it is whichever customer happens to be engaging with your experience at that time – no curation whatsoever.
Second, there is a level of continuousness. Even in the cases where the impracticality of a CEO’s day job intervenes, the experiences are in continuous blocks – an entire month in a restaurant; a whole day in the customer support queue; every single customer support email; or, an entire evening delivering food.
Third, the engagement unquestionably causes a certain level of discomfort. It is easy to read a CSAT dashboard in between emails and meetings. It is within the same context that you are used to. Imagine the contrast to getting on your bicycle one rainy evening to collect hamburgers and drop them off to your neighbours. Or trying to help an irate shopper process a refund for a faulty drill-bit on a sunny Saturday in your local hardware store. Or renting out a room in your own home to strangers…
Why do we think this form of customer-product-leader interaction leads to long-term competitive advantage?
- It narrows the feedback loop between the customer and the product strategy. Inherently, it removes any possibility of strategy being set in ivory tower board rooms.
- It builds a richer real-time understanding of your customer and their experience with your products. There can’t be a much more literal example of ‘having your finger on the pulse’ of your customer when Tony Xu is cycling up a hill late at night to drop-off some Teriyaki chicken, or Bernie Marcus is up the top of a stepladder handing down some two-by-four to an impatient customer.
- It establishes greater empathy with your frontline staff. What better way to share experiences and understand grievances with restaurant workers than by standing shoulder-to-shoulder with them at the grill. It should hardly be surprising that CEOs that are customer-obsessed are usually also people-obsessed.
Sidebar for investors: It usually illuminates those leaders that are actually obsessed with their customer. Nearly every single organisation we encounter has a company value that is in some form or another: “we are customer-first”. This makes sense as an aspiration, yet very few truly practice what they preach at scale. Whilst I’ve labelled a characteristic of these more direct methods as ‘discomfort’ – nearly all leaders that really put them into practice describe the experience as their favourite part of their job.
To summarise it in TDM’s language: we find that CEOs/Founders in this mould usually run high-performance, customer-obsessed teams and cultures, which leads to greater and more sustained product vitality (see our recent post on Vitality here). This in turn results in higher growth and a wider competitive moat.
These engagements are relatively easy to implement: no fancy software required, no additional expense, no extra team members – simply a prioritisation decision. Remember, founding leadership teams had no choice but to live and breathe this level of customer engagement when they were starting up. Toast Co-Founder and CEO, Aman Narang, recently described how in the early days he was selling their POS system to a customer and the restaurant manager questioned the claim that there was 24×7 customer support and so dialled the number on the website. Lo and behold, Aman’s phone started to audibly ring in his pocket.
Should we not expect our CEOs/Founders to dedicate more of their time to these types of engagements?
It’s probably fair to assume that the growing daylight between a leader and their customer is one factor in the all-too-common drift from nimble start-up to mature corporate. I used to work for a telecommunications company. I always found it beguiling why all senior executives were given a special number to call to bypass the standard customer support queue when requiring technical assistance. Likewise, how often do you imagine the CEO of an airline stands in the normal security queue, eats outside of the lounge or flies in economy (coach)? If you know of one, please let us know!
Ask yourself or your portfolio leaders – what real-life customer engagement methods do we have in place today? If you have more examples, I would love to hear about them – please comment and/or email hello@tdmgrowth.com.
Footnotes
