How CIOs Can Anticipate Customers’ Needs

Best Buy's CIO explains why delivering value through IT depends upon anticipating what customers want.

In the United Kingdom, where I'm from, there is a candy called Rock. Sold as a souvenir, Rock often has a town name permeating the entire piece-so with Brighton Rock, for example, you can see the letters spelling out Brighton through the candy, from edge to edge. The same way you see that name through a piece of Rock candy, a CIO can see through an organization from end to end. In fact, I can't think of any role other than that of the CIO that touches every single facet of the business. So it's logical and imperative that the CIO's perspective and touch extend to the organization's end customer.

I spend 80 percent of my time focused on issues that have the external customer at their heart. The days are not completely gone when the role of IT was primarily to execute projects, but IT organizations have to do more than that. We've got to look at everything through the lens of customers both internally and externally, and help them get where they need to go with the aid of technology.

STRATEGIC CIO

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Admittedly, I have a different background from many CIOs. I have been a general manager and a CEO at other companies, plus I am currently the CEO of our international business group. Some may say that because of my experience, it's natural-or easier-for me to focus on the customer. But I find it difficult to understand how a CIO can do his job unless he understands the mission of the business and shares in developing it, just as a surgeon can't do his job if he doesn't understand how the whole body works. CIOs who don't participate in and influence what the business is trying to do for its customers only will develop technology that feeds or at best incrementally improves the status quo. If you really understand your business, you can help it leapfrog competitors and create paradigm shifts that differentiate your company.

Geeks, Pricing and RFID

At Best Buy we have to understand how our staff, whether our Geek Squad of computer technicians who make house calls or the blue-shirt staff in our stores, face off with customers every day. By understanding customer needs, we were able to develop scheduling, routing and dispatch systems for the Geek Squad that made them 100 percent more productive.

Here's another example of how important it is to understand customer needs and behavior. One of the critical factors when you grow a company to 1,000-plus stores is your pricing strategy: The prices you set are what allows you to stay ahead and drive value. So we developed a price optimization capability that implements pricing strategies by store location, delivering tens of millions of dollars per year.

Finally there are emerging technologies such as Wimax and RFID that have the potential to fundamentally change retail operating models. It's up to us as CIOs to embrace these disruptive technologies and figure out how to use them to our customers' advantage. Imagine if customers could walk into a store, find everything they wanted, use a kiosk to select and pay for the items, and walk out of the store with their purchases without having to wait in a checkout line. That's the direction we're going in, and it will be enabled by RFID and WiMax.

However, it's not enough just for me to have a customer focus. Everyone on my IT team is embedded in the business, where they bring the lens of change through IT to bear on the customer value proposition. They participate in understanding consumer attitude surveys, spend time in the stores and work with our merchandise suppliers, who are trying to find ways of being more effective with consumers. When we introduce a new product to the stores, each store will have a different experience with that product. We encourage our people to post to an internal blog and share both the issue and the solution. This is the best way for 100,000-plus people to learn quickly.

Understanding the Global Customer

Our customer focus takes on complexity as we expand globally. Best Buy operates in China, Canada and Europe, and we'll expand to both Mexico and Turkey in the next 12 to 18 months. One mistake we don't want to make is to impose our U.S. operating model. You can't look at new countries through a U.S.-centric lens. You have to think like the local customer.

Best Buy carries out research, talks to other retailers about their customers and talks to customers about what they want. Among the differences we've learned: Customers in the U.S. are accustomed to touching everything-picking up telephones, switching things on. In China, everything is behind glass cases. The people in the stores in China are employed by manufacturers. These vendors typically hold the inventory and ship purchases directly to a customer's home, instead of having products in the store for customers to carry away. Thus, current systems in China have no capability of assessing stock availability on the sales floor, which has implications if we want to import the open display approach we have in the United States.

Knowledge transfer also works in reverse. For example, the Chinese expect much faster response to changes in technology. We change our telephones once or twice every 18 months, but in China, phones are a fashion item that customers change every quarter. Frequent phone changes mean we would have to encrypt and store customers' phone data so that they could go to the store and get all their information downloaded to their new phones. We can transfer such capabilities back to the United States, to improve our relationship with customers here. And so, going global isn't only about scale, it's about transferring skills and knowledge about customers across the enterprise.

The Chief Interconnectedness Officer

Strategic CIOs who focus on end customers have an opportunity to influence how their entire industry relates to them. Over the last 25 to 30 years, with help from IT, retail has shifted from mass marketing to personalized marketing. But I think we're moving into a different and even more exciting space that I am calling cocreation.

The journey for customers no longer ends at the store, it ends in the home. For example, consumers want to be able to link their PCs wirelessly with their TVs and audio systems. That's hard to do today. Best Buy's role as the ambassador of the customers is to represent their needs to vendors in order to cocreate solutions to this problem. It's my team's role to understand the issues customers have and to search for ways to improve their experience. The only way we can do that is to take the time to think like a customer.

Robert Willett is CIO of Best Buy, CEO of Best Buy International and a CIO Executive Council member.

Copyright © 2007 IDG Communications, Inc.

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