There is no doubt that Simon Murdoch knows a thing or two about start-ups and the internet. As a co-founder of amazon.co.uk and a serial entrepreneur specialising in internet businesses, he is as good a person as anybody to ask about what sort of business works in this area.
“I like businesses that are very customer-centric,” he says. As he notes, the internet has come a long way since the days when he started Bookpages as a UK equivalent of the then fledgling Amazon.com back in 1996. Originally, of course, internet companies were able to win business by using their lower costs to be cheaper than traditional businesses. Now, however, whatever goods or services you look for on the internet, there will be many suppliers from which to choose. In a situation where they are all doing the same thing, “the only way for a business to differentiate is to be very good at service,” he says.
Murdoch spent two years with amazon.co.uk (as Bookpages became), and he witnessed a transformation from tiny start-up to a business with millions of pounds in sales, and hundreds of staff. But he recalls that Jeff Bezos, the Amazon founder, instilled in staff the principle that whatever the company did it had to be “completely customer-centric”.
Since then, of course, Amazon has moved on rapidly, selling much more than just books and also becoming a wide-ranging technology business, with service offerings and its own device for reading electronic books. But its website remains one of the easiest to use.
Murdoch has also moved on. For the past decade, he has been a serial entrepreneur and business angel investor specialising in internet-related businesses. Among those he has been involved in are the online betting business Betfair, the DVD rental company LoveFilm, the property information business Zoopla!, and the same-day delivery service Shutl.
Last month, he joined Octopus Ventures, which has interests in a variety of small and growing businesses. Among them are the London fitness club group Gymbox, the care homes operation Carebase, and Box-IT, a document management company whose merger with electronic archiving and workflow management company Stortext it backed. And now, through his role as senior investment partner at Octopus, Murdoch has become chairman of GetLenses.co.uk, which claims to be the country’s leading online supplier of contact lenses.
He says he was drawn to the business because it “provides a good service”. Of course, it helps that the UK contact lens industry is said to be worth about £500m a year and that only a small percentage of it is online. There are already many suppliers looking for a share of the market. But Murdoch believes that GetLenses offers the “personal touch” that customers are seeking, particularly when buying something such as contact lenses.
Michael Kraftman, the company’s managing director, has acknowledged this by writing on the website that when the company started it was focused on cutting high-street prices for lenses and
solutions at the same time as reducing the inconvenience of prescription checking. “But as we got bigger, we noticed something else. We found that our customers valued us for something else. They valued us because we treated them like customers, not like patients.”
This makes sense. But how can a company make the idea of customer service a reality? Particularly when it is, by definition, never face-to-face with customers.
One potential answer comes in a book with a title that suggests it has got little to offer in this regard. Employees First, Customers Second (Harvard Business Press, £17.99) might challenge the received view about the route to success in business, but author Vineet Nayar believes this is too simplistic. “The conventional wisdom, of course, says that companies must always put the customer first. In any service business, however, the true value is created in the interface between the customer and the employee. So, by putting employees first, you can bring about fundamental change in the way a company creates and delivers unique value for its customers and differentiates itself from its competitors,” he writes.
This is not just some hopeful-sounding homily from a management consultant. Nayar has come by this belief through experience. Five years ago, he became chief executive of an arm of a highly successful Indian information technology company. HCL Technologies had been a great success, but that position was under threat from big changes in the global IT market. The book is a record of how Nayar not only got the business back on track but made it one of the world’s fastest-growing IT services partners.
He and his colleagues came up with a series of practices and actions that brought about significant change. Nayar describes four elements to what he calls the company’s journey, but admits there may be others that people in different organisations might identify and that might be worth investigating.
But for the moment, the four phases are: telling the employees the truth about the situation and encouraging them to look to the future rather than the past; creating a culture of trust by opening the company’s books and enabling managers and employees to ask questions of each other; inverting the organisational pyramid to make |the supporting functions and the management accountable to the employees in the area where value is created for the customer and transferring the responsibility for change from the chief executive to the employees in the “value zone”.
Clearly, not every chief executive is going to be keen to relinquish the idea that he or she is the driver of change. But Nayar argues that getting away from that kind of attitude really pays off. Employees feel like owners, they are excited by their work and they constantly focus on “change and disruptive innovation at the very heart of the value zone”. He concludes: “When a company puts its employees first, the customer actually does ultimately come first and gains the greatest benefit, but in a far more transformative way than through traditional ‘customer-care’ programmes and the like.”