At one of the world’s most respected manufacturers – a company known for innovation and employee engagement – the CEO was asked recently about his greatest concerns about the enterprise. “We lack leadership capacity,” he said. The company was entering an intensive phase in its quest to become digitally adept, seeking to master new technology, and it had not made enough progress in improving its employees’ skills or connecting with customers through digital channels. “We need our top executives, in particular, to be better at thinking long-term and driving meaningful change.”
The problem, he added, was not so much a lack of technology acumen as it was a lack of connection between the company’s formal leaders (those with the highest-ranking positions) and their employees and customers. These senior executives needed to demonstrate that they could stay on top of today’s complex challenges. Only then would employees feel confident enough to really invest themselves in the company’s future. The formal leaders also needed to be more skilled at understanding their customers – less focused on giving them what they demanded immediately, and more on recognizing how customers were changing and what kinds of experiences would make them more loyal. “If we want to really do our best with employees and customers,” the CEO concluded, “we, as the top team, need to work on ourselves.”
This CEO’s conclusion represents a high-leverage opportunity that is overlooked at many companies. A well-designed leadership experience (LX) – oriented not just to solving issues of strategy and execution, but to addressing the leaders’ own collective development – can be linked to employee experience (EX) and customer experience (CX) in a way that fosters a healthy, productive, emotionally driven commitment among all three groups: leaders, employees, and customers. This, in turn, can forge a stronger identity for the company and set it up for success in the digital age.
Many business leaders are beginning to recognize return on experience (ROX), a concept that we have pioneered at PwC, as a critical way for their companies to create value. They are investing in CX to build customer loyalty and in EX to improve their culture and transform their workforce. They’ve heard enough stories about experience-obsessed companies, such as Southwest Airlines, cleaning products manufacturer Method, or the most innovative healthcare providers, to know that CX and EX are related; emotional engagement among employees tends to produce high customer engagement.
But they need to bring their own leadership experience into the mix. If good CX is a trajectory of appealing touchpoints and good EX is like a social movement in the way it inspires commitment, then good LX is a catalyst for the rest of the enterprise. What leaders learn has a direct impact on the quality of EX and CX because everything that senior leaders say and do is amplified throughout the organization as employees respond and comment. Employees pay especially close attention to where those leaders pay attention, and they adjust their own behavior accordingly. In this way, leaders can influence employees to create the kind of company presence that attracts customers.
We call this approach “return on experience cubed,” or ROX3, because the three forms of experience reinforce one another so strongly. A design that aligns LX, CX, and EX can greatly improve all three forms of experience – and can equip the organization for a more effective transformational journey. Indeed, redesigning these three elements together is one of the most effective and scalable ways to influence a company’s culture and shape its future.
For a more in-depth exploration of ROX3, read the full article in PwC’s strategy+business newsletter. This excerpt is republished by permission.
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