Some organizations are guided solely by the needs and desires of top management. In such cases, leadership merely communicates the objectives to be pursued so that all company levels take action, adopting practices and measures to achieve the desired performance. In this type of corporate culture, each hierarchical level responds exclusively to the needs of the one above, and performance is measured solely in financial terms.
If we imagine a pyramid visually representing this type of system, we find the organization’s owners or shareholders at the very top—outside the structure—followed by top management, middle management, back-office employees, frontline staff interacting with customers, and, at the very base but external to the pyramid, the customers. With such a structure, it becomes evident why performance measurement is solely financial, as the priority is to satisfy those at the top of the pyramid, who are typically focused exclusively on economic returns.
The principle underpinning this type of organization is that by satisfying shareholder needs, the entire organization will benefit. However, many scholars argue that this premise is flawed because it is based on a fundamentally incorrect concept. Each given variable can only be optimized as it is constrained by other factors. There may be situations, for instance, where maximizing both the added value provided to customers and the value reserved for shareholders is impossible. In such cases, it is necessary to define a primary objective and accept that the other dependent variables will adjust accordingly.
Every organization, sooner or later, faces a fundamental choice between the two options below:
- Prioritizing the total satisfaction of shareholders and owners; or
- Focusing on processes that create added value for customers and making this journey the core objective of the business.
Organizations that choose the second option always place the customer and their needs first. Roles within the company are also perceived through this lens: for example, top management considers itself at the service of middle management, which in turn supports its clients—namely, the employees who directly interact with customers.
This customer-centric structure differs significantly from the previous one as it resembles an inverted pyramid. At the top (the broad base of the pyramid), outside the structure, are the customers. Directly below them, in the first layer of the pyramid, are the frontline employees who interact with them, followed by back-office staff, middle management, and top management, with shareholders positioned at the very bottom—outside the pyramid. In this setup, owners and shareholders are the first to respond to customers, followed by leadership, management, and so on. A customer-focused organization continuously aligns its employees, processes, products, and services with customer needs and expectations.
The fundamental idea behind this approach is that prioritizing customer satisfaction leads to long-term loyalty and, ultimately, economic success. While financial gain is a secondary objective, it naturally follows from this approach. The best way to embrace this mindset is to ask, whenever a decision needs to be made: “Will this decision make my customers happy and positively impact the employees who serve them?” This fosters a cause-and-effect relationship typical of the best-performing companies.
Since only one variable can be fully optimized, the choice should be to maintain a satisfied customer base and a healthy bottom line by doing the right things. Everything else, including financial returns, will follow naturally. The key tool for aligning the organization with customer needs and expectations is the quality policy, which must place the customer at its core and promote a customer-focused corporate culture.