Put the customer back in the boardroom: directors: be diligent about monitoring the health of your company's No. 1 asset.

• Author: Quelch, John
• Position: Endnote

ANY CEO KNOWS that customers are the source of all cash flow. But how much time does your board of directors spend on discussing the well-being of this most important asset? Judging from the agendas of most public company board meetings, the answer is "precious little." Three factors explain this.

First, intensifying governance requirements are elevating finance, audit, and legal issues on the boardroom agenda at the expense of discussion about what drives the business. Shareholder interests are squeezing out customer interests, yet without customers, shareholders have no interests.

Second, directors with any marketing background are becoming an endangered species. Fewer Fortune 500 CEOs today came up through marketing than did so 10 years ago, partly because corporate growth during the 1990s was based on financial engineering rather than delivering genuine incremental value to customers. Today, Sarbanes-Oxley requirements mean companies are scrambling to add nonexecutive directors who can qualify as financial experts rather than people with any expertise or interest in customer management.

Third, marketers are themselves partly to blame. Marketers used to be the customer experts in a company. But in the 1980s, management strategists decided that everybody, no matter what their function, should "own" the customer. Marketers should have responded by learning to collaborate with the other functions like R&D, manufacturing, and finance and to take the lead on business development teams. Instead, many marketers sat in their silos glued to computer screens covered with market research data or tried to implement overly complicated customer relationship management systems, and they lost touch not only with their customers but with their colleagues.

Now, in 2003, many companies no longer have the finances or the opportunities to grow through merger and acquisitions. It's back to basics and back to organic growth. That means a renewed focus on customer acquisitions and customer retention; understanding which customers are profitable to serve and which are not; developing valued, differentiated benefits and bringing them to market in products and services that target those customers willing to pay for them. Any board of directors should be checking how many managers in the company are brilliant at doing these things. Ask the human resources director to assess your company's bench strength on customer insight and marketing management. You may be...