The Delivery Gap

Close-the-GapA while back I wrote a piece titled The Strategy Disconnect where I wrote:

Millions can be spent on the ‘perfect’ strategy, but if that strategy isn’t understood and accepted by the people within the organization (and its customers), that strategy is worthless.   If that strategy isn’t grounded in reality, it is worthless.

I stand by that statement wholeheartedly. Strategy is worthless unless the people associated with your company accept it. That includes the customers of your business. If they don’t buy into your strategy, you don’t have a viable strategy.

In 2005, Bain & Company released a study titled “Closing the delivery gap: How to achieve true customer-led growth” which reported on a survey of 362 companies to try to understand how these organizations are delivering to their customers.  In that survey, Bain & Company found that “80% [of companies] believe they deliver a “superior experience” to customers. But when we asked customers, they say only 8% are really delivering.”

That’s a huge gap.

There are plenty of reasons for this gap. Bain & Company identified two main drivers for the gap:

The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth-a loyal customer franchise. To increase revenue and profits, businesses do things like raising transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core.

The second is that good relationships are hard to build. It’s extremely difficult to understand what people really want, keep your promises and maintain a dialogue to ensure you meet customers’ changing needs. Even initiatives to “better understand” customers can backfire, drowning firms in a sea of data.

I won’t (and can’t) argue with those two reasons. Relationships are extremely important.  Without trust between customer and vendor, there’s very little business long-term. That trust can be eroded very quickly when companies continue to find ways to ‘nickel and dime’ a client as seen in the first driver.

There’s another driver that Bain & Company missed. That driver? Strategy.

When an organization has the right strategy in place and the right operational systems and people in place and everyone has bought into and understands the strategy, your organization will be much closer to closing the delivery gap.