Customer focus, the factor that we forget

Running a business has become little more than the application of standard processes learned in business school plus ensuring that the balance sheet is efficient - meaning it corresponds to the latest model favoured by financial analysts.

People who build their own businesses can do so only by understanding their customers, knowing what they want and giving it to them. A successful business first inspires its employees, who then engage with and inspire its customers. Shareholder value is the residual that is left from meeting their needs.

If it becomes the starting point - as is so often the case these days - then whatever the short-term gain to the which may result share price, it quickly turns into customer neglect and the business suffers.

Because of the heavy financial emphasis on management in this country, fewer and fewer executives actually know and understand the detail of the business they run. As a result, companies consistently perform below their potential, though this is normally only visible when they take over private companies. Then we can see how, more often than not, the purchase starts to go downhill shortly after - largely because the new owners do not understand the subtleties of what they have bought.

The value destruction is huge. Indeed, the accountancy firm Deloitte published a paper earlier this year which said that 60%of the businesses bought by companies were disposed of within five years.

Orange, the mobile phone operator, is only the latest example of this. It is losing ground fast in the UK and this week decided to replace its top man, Bernard Ghillebaert, who has headed the business for the past three years, though one has to wonder if that will do any good.

The problem is that the parent company, France Telecom, has never given any indication that it understood why Orange was successful before it bought the company - how former chief executive Hans Snook and his team created the coolest of cool brands to appeal to the kids.

A phone is a phone is a phone, but cool is something special. But ignoring this, France Telecom sought to re-position the brand, changed the advertising, totally destroyed the image and made it appear that only a nerd would have an Orange phone. Now it wonders what has gone wrong.

France Telecom is, sadly, by no means unique in this respect. Customer focus is one of those clichés that drops casually from the lips of management but only a handful of companies - Tesco, Marks & Spencer, Rolls-Royce and Legal & General, for example - actually get it.