Moorhouse: Tech giants should put the consumer first

13 November 2014 Consultancy.uk

Are Apple, Google and others too big to govern effectively? As technology companies face growing regulatory pressures, only those that put the consumer first will survive, says Richard Goold, Partner at consultancy firm Moorhouse

Technology giants have suddenly found their activities firmly in the sights of governments and regulators from around the world. Apple is facing investigations into its Irish tax arrangements, German officials have floated breaking up Google, and they are also facing criticism from News Corp about copyright and anti-competitiveness. Barely a day goes by without some fresh attack on these now household names, and some interesting questions have been raised whether they are simply too big to govern effectively.

These firms are also dealing with serious concerns from consumers around privacy issues and how private data may be used for commercial activities. This is likely to be a point of debate in the forthcoming general election. And as they move into new markets previously dominated by financial services companies, such as mobile payments and SME lending, the level of scrutiny from regulators is only going to go in one direction.

Apple And Google

The next financial services industry?
If the tech sector is to avoid becoming the next financial services industry, with widespread public vilification and a legislative tidal wave, they need to put the consumer firmly at the centre of their activities. If they do not, they will find that they will have to devote ever-increasing resource to dealing with regulations, rather than on producing innovative services and products for their customers. And, in an increasingly competitive and fast moving environment, failing to keep pace with consumers would be fatal.

For now, big technology companies will undoubtedly continue to grow in response to an increasing dependency on technology from both consumers and other large corporates. But consumers have become progressively more transient when it comes to technology. This capricious nature means building goodwill with customers is more important than ever. While people will always look for better products and services, they are also looking at the ethics and values of organisations. When it takes legislation to improve an organisation’s behaviour it is probably already too late. Witness again the mis-selling of products and the subsequent fallout in terms of huge fines, risk aversion, loss of key staff, the inability or reluctance to innovate and significantly compromised relationships with the customer in the financial services industry.

Creating customer focus and a culture of doing the right thing has to come from the very top of the organisation and has to manifest itself through its strategy and how it interacts with staff, shareholders and customers. Incentivising and rewarding the right behaviours within the organisation will genuinely keep the customer at the forefront of everything it does, and help avoid the very public kind of fallout seen elsewhere.

TECHNOLOGY COMPANIES

Organisations must constantly ask themselves whether their customers will understand why they are taking a particular action, whether decisions are building or compromising consumer goodwill, and if there is alignment between their intention, execution and delivery.

The tech industry moves phenomenally quickly. Companies no longer have the luxury of spending as long as they want on developing products. Being first to market can be the difference between a resounding success and a flop. Rather than ‘ready, aim, fire’ we are increasingly seeing companies ‘ready, fire, aim’; launching a product and then using real-time customer feedback to refine the offer. Apple is the master of this. They have huge amounts of consumer goodwill and developers queue up to get their hands on new versions of software first and then robustly test it prior to a full launch so that any remaining issues can be resolved in an extended test environment. Apple is in the enviable position of – in effect – using its customers as beta testers. Others can emulate this by ensuring that they put the customer first.

Technology companies need to remain focused on being innovative, agile in responding to a constantly changing market and absolutely aware of where the line is between being compliant and falling foul of regulation or legislation. The cost of getting the latter wrong goes far deeper than just a financial impact – it can disable an organisation and their ability to stay on the front foot.

Richard Goold - Moorhouse

Organisations should proactively work with regulators and understand what changes they are striving to achieve, so that legislation does not become a big stick to retrospectively redress something that has gone wrong. Technology giants must adopt a more strategic approach towards compliance, rather than attempting to manage each often conflicting new rule or regulation as it surfaces, or they may find it increasingly hard to maintain alignment between what they want to do from a strategic perspective and what they end up having to do on a day-to-day basis.

Unless this problem is addressed ahead of time, they will find themselves forced to spend far greater amounts of valuable resource and money on the sisyphean task of complying with fresh restrictions and rules, and far less on keeping pace with fickle customers.

An article from Richard Goold, Executive Director and Partner at Moorhouse. This article was previously posted in The Guardian.

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