If you believe that the customer should always come first, you may want to think again.

Which is more important: the Customer or the Organization?

If you ask this to the typical MBA-graduate manager, the answer would most likely be “The Customer.” It sounds like a right answer. After all, isn’t the corporate mantra typically “the customer is always right?” And many managers have been trained to make the organization slave towards the needs of the market.

However, if you ask this question to a Japanese manager, chances are that his answer would be “The Organization.” As in, given a choice between making life better for the customer or making life better for the workers, the manager would first prioritize the needs of the workers.

The same can be seen in many socialist cultures, such as in France and the Scandinavian countries, where the needs of the workers must first be attended to before the organization can finally set to work dealing with the needs of the customers.

The point here is that customer-centricm is a bias that was encouraged by American business schools. But it is by no means the only correct answer to the challenge of doing quality business. Here’s why.

Many firms try their best, perhaps even struggle, to make their customers happy. And yet a lot of these firms end up closing shop just the same. Even if they did make the customers happy.

The reason? Turns out that the organization has been suffering from internal bleeding all along, prioritizing its resources in coming out with quality products at the expense of the well-being of its employees. Issues like stress (“I don’t care if you don’t get to sleep tonight, the customers are waiting!”) and resource allocation (“We can’t afford to give you a raise since we need to cut our products’ prices.”) plunge employee morale and, eventually, productivity. Soon, the best people just leave, effectively crippling the organization.

And of course a crippled machine can no longer make quality products, so the company can no longer make its customers happy even if it wanted to.

The Japanese believe in solving problems at the source (Read about the Ishikawa “Fishbone” Diagram in our March/April 2007 issue). Therefore, they believe that they cannot build quality products unless they had a quality organization in the first place.

Which is why Japanese managers tend to behave like caregivers, identifying sources of problems in the lives of their employees and finding ways to solve these, whether at work or even at home. The office becomes an extension of the workers’ lives. In the best-run Japanese companies, employees look forward to going to work and even enjoy doing overtime because management has succeeded in making the workplace a fulfilling environment.

(On the other hand, the worst-run Japanese companies don’t get it and run the employees to the ground… they demand all of their time and do not care about their well-being, giving them the worst of both worlds. Result: people jumping off buildings.)

The Organization-First concept works best when one manages to stock one’s organization full of truly quality people. The quality people feel appreciated and cared for, and in turn they deliver innovative ideas. At best, the people are so brilliant that managers no longer need to do anything but to just make sure that they are well taken care of and all of their needs are attended to. Result: the happy employees are the ones who take the initiative in delivering quality products to the consumers.

You can see vestiges of this strategy in firms such as Google, where the most brilliant IT minds have converged and are well taken care of. No surprise then that Google’s most innovative and customer-satisfying ideas come from these very minds and not from management.

After all, management just has to feed and care for these minds… and they’ll practically run the company operations themselves.