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Mind of Jacka: ​You Can't Handcuff a Customer

Blogs Mike Jacka, CIA, CPA, CPCU, CLU Aug 07, 2020

Unfortunately, a lot of organizations do nothing, hiding their heads in the apocalyptic sand believing they can survive the new world by doing things the old ways. And, as bad as such a reaction is, there may be one that is worse — an approach that shows an organization acting out of fear rather than progress.

Let me give you an example. (And it will become quickly evident why I am not providing the organization's name. I'll be using all my compositional, editorial, and obfuscational superpowers to conceal its identify. But, trust me, this is a real situation.)

There is a company that is being challenged in this new environment. With more people staying at home, its method of service delivery has been under attack. (Of course, this applies to almost 100% of organizations out there. But, in this situation, the impact is even greater.) The company is trying to change, but it is a struggle. And that struggle has been made harder because of agile competitors — companies and individuals who, in this new environment, can deliver the same quality, but quicker and cheaper.

There are two responses to such a challenge. The first is to recognize the need to change and determine how best to accomplish that change. The other is to try and force your customers to stick with you. To paraphrase the knight in Indiana Jones, they have not chosen wisely.

The company seems to believe it can monopolize the customer base, trying to handcuff their customers by putting restrictions on the product in such a way that the organization feels their current customers have no choice but to stay. The organization thinks they have a stranglehold on the customers, and they are trying to tighten that grasp.

In the long run, this will not work. (Actually, in the short run it probably won't either.) The customers will find ways around the roadblocks and continue to seek out competitors who provide the same value in easier formats and more cheaply. In fact, in some cases the competitor's value is better … and still faster and cheaper.

It will be interesting to see how long it takes for this fait future to come to pass.

If your organization faces a similar challenge — if it is tied to approaches and methods that do not work in this new world — it needs to find the agility necessary to change; it must figure out how to compete. If competitors have better delivery systems, then the organization's delivery systems must improve. If competitors can provide the same quality more cheaply, then the organization must find how to do it cheaper.

And, if the competitors have done none of this, then the organization must find how to beat them to the punch.

No organization will survive by trying to do the same things it has always done. And failure will come that much more quickly if the organization thinks it can force its customers to comply. The organization must change. And internal audit must be there to help ensure the success of that change.

All well and good, and this could be the end of the post. However, I want to point out something about these two posts. There is actually nothing new here; they just represent an adaption of a risk internal audit should always have on its radar — strategic risk. In this case, it relates to the risk that strategies have not adapted to new situations.

With the change that is hurricaning around us, everyone should consider throwing their strategies out the window — the strategies of the organization, the strategies of the internal audit department, everyone's. As my dad often said, to make God laugh, make plans. And right now, God must be having quite the guffaw as he looks at our organizations and watches how "the best laid schemes o' mice an' men gang aft a-gley."

Take a look at your organization's approach to handling its customers. But take the deeper dive to understand if the organization's strategies are being adjusted, how they are being adjusted, and what will be done to ensure those new strategies will succeed.

Mike Jacka, CIA, CPA, CPCU, CLU

Mike Jacka is co-founder and chief creative pilot of Flying Pig Audit, Consulting, and Training Services (FPACTS), based in Phoenix.