Simple story, important insight. Your customers are the source of all truth.

I was connected with a CEO working to turn around a company with a disruptive video infrastructure technology. They’d quickly gotten to $1MM in ARR then stalled.

This CEO had a previous exit, selling a $40M financial information company to a bluechip bank. He attributed that company’s success to instilling three simple cultural principles:

  1. We are a learning organization
  2. Your customer is the source of all truth
  3. Everyone has equal say on what it means to serve the customer

His current company had lost track of these principles.

Its market success, including signing up many Fortune 500 companies, had gone to the leadership team’s head. They started to make two simple mistakes.

  1. Rather than actively learning from their customers and market as they had in the beta and early product phase, they began to confidently pitch their “transformational” product.
  2. Similarly, agile scrum and cross-team learning gave way to hierarchical direction with the early leaders starting to control and manage information at the team level.

When he stepped in as CEO and introduced his learning organization initiative, the first two principles didn’t cause much friction.

The company’s early success, after all, had come precisely from active learning from its customers. The new CEO’s initiative was seen as a helpful reminder, not a threat.

The third principle, however, that “everyone in the organization had equal say on what it means to serve the customer” led to active and passive resistance. 

Egalitarianism it turns out can be really threatening to power.

The new CEO was saying: “Good ideas can come from anywhere. There are learning organizations and then there are egalitarian learning organizations.”

The traditional leaders were threatened by the idea of “leaders as a conduit rather than an authority” with a focus on serving their customers by serving team members.  

They were also threatened by the principle that: “If your manager is not serving the customer, you should escalate to the next level of leadership.”

For the CEO, however, this new approach was non-negotiable. Legacy leaders could commit to build a customer-centered, egalitarian learning organization or they could amicably transition out of the company.

80% of the legacy leaders stayed and worked through putting processes in place for managers to effectively act as a conduit for customers while empowering any team member to directly share important customer-related information.

After six months, the company started to accelerate towards the next growth peak.

By viewing their customers as the source of truth and committing to egalitarian learning, the company experienced rapid, sustained innovation across all customer-facing teams – from product development to product delivery, sales, and marketing.