Yale Curriculum: The Customer

Common sense dictates that to be successful, a company needs customers. The difficult part is figuring out how to attract and then hold onto them. Even for a company with a great product, an organization must be created around it that understands customer behavior and can integrate this knowledge throughout all levels so that it can adapt to changes in customer needs better than its competitors.

The intention of the Customer, one of the eight Organizational Perspective courses for first-year students, is to study how an executive can build a truly customer-focused and market-driven organization that reacts swiftly. The semester is broken down into two main parts. During the first, students learn how to understand customers and create a strong value proposition for their enterprise. This is accomplished through in-depth market analysis and a breakdown of market-feedback and control metrics. Students also learn how to integrate the resulting data into decision making and strategy. The second part of the course looks at how to create — and maintain — an organization aligned with the shifting needs of the customer.

It’s in this second half of the semester that the Customer moves beyond the traditional marketing course. The aim of the Yale Management Integrated Curriculum is to train future leaders in the ways business actually operates. Today’s problems cut across sectors and disciplines — and nations. An average marketing course would focus on developing a strong value proposition and implementing a marketing strategy built around it. But according to K. Sudhir, a marketing professor who is the lead teacher in the course, such an approach can often lead to failure in the real world. One of the biggest problems facing companies trying to align themselves with customers, he said, is getting the entire organization behind the effort. “Being a customer-oriented company requires much more than a good marketing strategy,” he said. “Every part of an organization must be on board, including the guys in accounting and finance. And then the organization must be designed to execute the strategy. It’s the job of all functions to make it work.”

The course uses case studies to bring together concepts from a range of disciplines — marketing, strategy, organizational behavior, finance, and accounting — in ways that make them concrete for students. Each case touches on one or more major lessons in the course, building towards the final case, which studies how retirement investment firm TIAA-CREF completely redesigned itself in order to keep from losing its best customers. Other cases look at how Starbucks, which has grown into the world’s largest specialty coffee company, could reverse a decline in its customer satisfaction and loyalty; and how new accounting methods for collecting and analyzing customer information could have an impact on the core business of the Royal Bank of Canada. The course also discusses customers in emerging markets such as India and China, and delves into the social marketing strategies used by Population Services International to market birth control in Bangladesh.

As with the other courses that comprise the core curriculum, the Customer taps the expertise of faculty across the school. On Nov. 26, for instance, Dean Joel Podolny explained to students how the second part of the class — organizational design — has become a major focus within companies in recent years. “The formal organizational structure is not ever going to solve problems,” he told the class. “But it can trip you up if you get it wrong.” On the same day, the class looked at a case on Sapient, a consulting firm that decided to reorganize its approach to customers in order to grow, but found itself unable to articulate this new approach to customers.

Introducing the Sapient case, Podolny asked the class a simple question, “Why are people coming to Sapient?” For the first decade of its existence, Sapient thrived by offering customers a “fixed time/fixed price” value proposition, which dove-tailed with the needs of its growing customer base. As the company continued to grow and the market changed, the old system began to strain. The fixed time/fixed price template proved too restrictive for growth because it was focused on isolated projects. The company decided to shift to a model with ongoing projects that focused on solving the evolving needs of clients. “But the minute Sapient moves away from the fixed time/fixed price model, it becomes hard to distinguish itself from its competitors,” Podolny said. “The competitors are all going to be able to say they’re customer-focused and they can all point to a glowing list of references.”

With that, Podolny introduced Stuart Moore, Sapient’s co-founder, who came to SOM to discuss the case. As the company evolved, it struggled to articulate its new value proposition, according to Moore. “We have to be able to convey what we do in a way a client gets it and will remember,” he said. “When we were the fixed time/fixed price people, they got that. But now, a month after we meet a client they’re not going to jump up and say, ‘They’re the client-success people!’”

According to Moore, the company is doing very well, with recent growth rates of about 30 percent per year. Sapient, he said, is the kind of firm a company hires when it’s looking for radical change. “We consider Sapient the perfect brand if someone wants to swing for the fences,” he said. But he came back again to the issue of how to define the company. “But it is also very dangerous to define ourselves by the type of work we do,” he continued. “Client success is not tangible.”

Sudhir said the Sapient case works well for the Customer course because it highlights how sometimes there is no simple solution to a positioning problem. “You have to pick something that endures, yet changes when the market changes,” he said. “But changing consumer perceptions about a company is very difficult. For example, the Volvo is a safe car; you’ll never convince people it’s a sports car even if you redesign it to be a sports car.”

Even though Sapient is searching for an answer to what is a marketing problem, Sudhir stressed how the case is beneficial to more than just future marketers. “This can help students going into professional services like consulting or investment banking take the customer perspective,” he said. “The case is ultimately about the importance of building individual relationships with clients as their needs evolve.”