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Fortune’s Myopic “Most Admired” List: Where are the Customers?

Posted by Bill Lee on March 15, 2010 at 07:09 PM

Quick question: What’s wrong with this list of criteria Fortune Magazine uses for determining its vaunted list of the world’s Most Admired Companies?

1. Innovation

2. People management 

3. Use of assets

4. Social responsibility 

5. Management quality

6. Financial soundness 

7. Long-term investment

8. Product quality

9. Global competitiveness

First, it's remakably inward looking. Only two of the criteria deal with external impact (social responsiblity and global competitiveness). And none—zero—deal with customers. Remarkably, Fortune pays no attention at all to how much—or even whether--its Most Admired firms are admired by their customers, an amazing omission. (Fortune surveys only peer company executives who rate competitors within their industries to determine its Most Admired lists.)

Neither does Fortune look at how willing its Most Admired’s customers are to provide references, how passionately their customers promote or spread positive word of mouth, how skillfully these firms engage in customer co-design efforts or customer co-marketing. Nothing about how well companies engage customers in increasingly critical social media efforts whose success depends, increasingly, on getting customers into the online conversations about them. Nothing about how well these firms develop the most important of all their assets: their customers.

So here’s my question for Fortune and it’s survey partners, the Hay Group: which group can do more for your firm, your competitors or your customers? And therefore, whose admiration would you rather have? 

Reference Community Comments

Hi Bill -
I saw your blog post on our Fortune World's Most Admired Company study, and you raise a valid point. Customer admiration is certainly invaluable for any company. What we’ve found through our research is that companies are often admired most by their peers precisely for their great relationship with customers, which can usually not be achieved without internal focus on factors such as leadership, employee engagement and culture. So you are right to emphasize the customer relationship, but in our experience, it coincides more often than not with peer admiration.

Thanks Mark. Can you share some of that research with us?

Thanks Bill --
While the full details are proprietary, I’m happy to share some of the findings. In our research this year, we asked executives at top companies on the FORTUNE list about the connection between employee engagement and customer relationships. A high percentage of respondents (84%) believe their companies’ efforts to engage employees have resulted in a better relationship with customers. And 71% of respondents report that their companies have been successful in linking employee engagement levels and customer satisfaction levels. These results suggest that companies can become “more admired” in the eyes of both their customers and their peers by focusing on intangibles such as employee engagement and leadership.

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