In order to be healthy, you have to be effective. In order to be effective, the system works, the system produces what it needs to produce. But in order to be effective, you have to identify the clients you are serving. Who are the clients? Clients are not necessarily those who consume the product or the service. They are customers. Clients are the ones who decide to buy. Who decides? That is your client.
When my kids were young, I used to take them every Sunday for brunch. I liked to go to a restaurant called Love because they had baked beans, which I liked. Guess where we went? McDonald’s. Who decided? The kids. So who are the clients of McDonald’s? I was the one carrying the wallet. That’s why McDonald’s is very good at marketing. It is oriented to the kids. They promote to the kids. They have playgrounds for the kids in front of the restaurant. The menu focuses on the kids.
Who decides is the client.
If you are a real estate developer in a developed country like the United States, go to New York. Look at their apartments. The kitchens are very small. What’s going on? People eat out. Who is the client? The wife. That’s who decides what to buy. So, when you ask yourself, I want to be effective, I want my company to be effective, focus on who decides. In the B2B business, there are multiple people who decide. The finance people, any one of them can veto. Now you have to look at all the different needs and develop a separate pitch for each one of them.
What about the shareholders? Are they not the clients? They want to get a return on their investment. And that, by the way, is economic theory. For them, the client of the business is the shareholders. That’s why we aim how to produce profits for them. But what happens? We are forgetting the customers. We are forgetting the clients. Sometimes we undermine the needs of the clients to satisfy the needs of the shareholders. We end up selling clients food that is not healthy.
So what are the shareholders? For me they are stakeholders. There is a goal, we have to satisfy the needs of the stakeholders. There is no question about it. Why? So they continue to cooperate. So you can satisfy the needs of the clients. You have to satisfice. Herbert Simon called it satisficing: to do enough to satisfy. We have to satisfy the needs of the stakeholders so they give you the resources to satisfy the real needs of your customer. That is your focus. The clients.
Stakeholders should be happy enough, but with clients, more is better. For stakeholders, enough is good enough. For whom do you exist? For your clients. And how do you know if you are satisfying their needs?
Look at a restaurant. If you own a restaurant, and the clients, the customers, are not coming back, you’re going to run out of customers. Unless you are a tourist trap, because there are always tourists. The client in a tourist trap is the owner. And the customer is just a vessel to make money for the owner. That is why in tourist traps the food is so lousy.
Whom do you want to satisfy? Whom do you want to come back?
If your spouse is not coming back, there is a need you did not satisfy. If the children are not coming back, dispersed around the world, there is a reason.
Are you a client too? You have a need too, right? Yes, but watch it. You should not be a client. You should be a stakeholder. Satisfy your needs sufficiently, so you can serve that for which you exist – as a parent, as a leader, as a scientist, as an innovator – whatever it is. If you are the client, everything is to satisfy your needs, you are egocentric.
And by the way, it doesn’t have to be an external client. Every department, every unit inside the company has clients. They have to buy your services. Accounting has external clients for information but everybody inside also needs information. But they cannot decide because we have a monopoly over their needs .Accounting has to buy my services, they cannot go outside. In that case, be honest. Just honest.
Close your eyes and ask yourself, who needs my services? Next, what do they need? And would they buy outside if they had the choice to do so? Would my spouse stay with me if they had a choice not to stay with me? Be honest.
And now we have an exercise I would like you to do. Who are the clients of a hospital? Who are the clients of a prison? Who are the clients of a school? Who are the clients of the government? There is a lot of confusion that creates a lot of problems and inefficiencies and bureaucracies, so we’d better discuss it.