"How dare you make such a change without my approval?" the man thundered. "Remember: I'm your customer. You're my supplier. Next time, run your brilliant idea by me before going public with it!"

The customer was, as you've probably gathered, a trifle upset. The supplier was suitably abashed. And while the matter might have been handled more delicately -- a fair amount of throat-clearing occurred by the half-dozen others seated around the conference table -- this is, after all, the golden age of The Customer, and said customer (a) is king;       (b) is always right; (c) comes first; or (d) all of the above.

Most readers probably accept the fundamental validity of the customer's position. He may have been overwrought, but he was the customer. Case closed.

But you might be inclined to reopen the case if you had a few additional facts. The customer in this scenario was the vice president of manufacturing for XYZ Inc. The supplier was XYZ's vice president of information systems, and the six throat-clearers were the rest of XYZ's management team. The loud customer complaint was actually a public pillorying of a colleague and hierarchical peer, not a vendor to whom money had been paid for services rendered. The hanging offense the supplier had committed was failing to get prior approval to some formatting changes for a family of reports.

Granted, the vice president of information systems should have "run it by" the vice president of manufacturing. But did his oversight justify that level of outrage? Most people, I think, would say no. So why did it happen? What got into the vice president of manufacturing?

What got into him was the notion of the "internal customer," a widely used model in the quality orthodoxy. The model has historical merit, having helped many organizations achieve significant quality progress over the years. Yet, it is a model whose time is passing. And unless that fact is recognized, this model ultimately will limit the quality progress an organization can make.

Quality means improvement

The quality movement isn't so much about being perfect as it is about being better; it's more about improvement than perfection. There are two kinds of improvement: continuous and breakthrough.

Continuous improvement says, "Let's look at the way we do things and find ways to get better and better at it." But the "it" -- the macroprocess by which things are done -- is taken as a given.

Breakthrough improvement says, "All bets are off. It's not a matter of getting better at the way we currently do things. It's a matter of finding newer and better ways of doing things."

It's not simply that the old ways of incremental thinking will prevent you from achieving breakthrough. It's that the very assumptions needed for incremental progress prevent breakthroughs from happening. The institutional mind-set required for continuous improvement is inimical to that required for breakthrough improvement.

Which brings us back to the internal customer model, which maintains that the workings of any organization can be considered a series of transactions between internal suppliers and internal customers. John does his job and produces a work product, which in turn is used by Mary to do her job and produce a work product, which in turn is used by Jim. So Mary is John's internal customer and Jim's internal supplier. Jim is Mary's internal customer.

The internal customer model does have some apparent usefulness. Unfortunately, it also has drawbacks.

Drawback No. 1: While the internal customer model can help ensure that John serves Mary well and Mary serves Jim well, it begs the question of whether John ought to be serving Mary or Mary ought to be serving Jim in the first place.

It is a fundamentally conservative model, biased toward steadily improving the John/Mary and Mary/Jim working relationships (continuous improvement) rather than achieving dramatic progress (breakthrough improvement). Ultimately, the model's logic can lead to the world's best, most efficient bucket brigade when what's called for is a fire hose.

Drawback No. 2: The internal customer model fosters unhealthy dominance/subservience relationships within an organization.

What made the vice president of manufacturing go after the vice president of information systems so aggressively? He had been trained to do so. The internal customer model is powerful because we've been customers all our lives. We all know how we like to be treated as customers. So, goes the reasoning, if we set up these customer/supplier relationships internally, we'll all treat each other better.

But you can't have it both ways. As customers, we believe that because we pay our suppliers, they ought to be subservient to us, in a business sense. While common courtesy demands civility, we really don't believe we owe our suppliers anything; they owe us. Is that a dynamic you really want to set up inside your organization? Was that the intended mind-set when XYZ trained everyone in the use of the internal customer model?

Probably not. The mind-set should not be, "You are here to serve me!" Rather, it should be, "We are here to serve our customer. How can we best work together to achieve that goal?"

The "customer" concept is indeed a highly evocative one. Unfortunately, it can evoke the wrong kinds of emotions and breed a sense of second-class citizenship among the internal supplier populations in an organization. If you doubt this, just ask the vice president of information systems at XYZ Inc.

Drawback No. 3: The internal customer model reinforces insular thinking, particularly among people who don't come into contact with external customers.

The principal argument for using the internal customer model emphasizes       that only a small percentage of an organization's people come into contact with external customers. The internal customer model gives everyone else something to focus on.

That sounds sensible, but it's actually dangerous. Saying that people don't have direct contact with customers is hardly the same thing as saying their work doesn't have any impact on customers. Does the person who designs the processes by which others must work have any impact on customers? Do people in staff positions who make demands on others for attendance at meetings or compliance with policies have any impact on other people's ability to serve customers?

All people in all functions have impact on real customers. Is it more difficult to know what that impact is for some functions than for others? Absolutely. But that's an argument for clarifying those lines of connection, not for blurring them.

The internal customer model is a cop-out. It says, "The impact on the customer for many jobs is hard to see, so we won't even look. We'll just redefine what we mean by customer."

Drawback No. 4: Bad usage drives out good.

Call it Gresham's law as applied to word usage. In theory, the internal customer model causes people to treat their co-workers with the reverence properly attached to customers. In practice, however, because the word "customer" gets used every time anyone so much as hands someone else a paper clip, it ceases to connote anything special. Rather than serving as a clarion call, it becomes instead rhetorical Muzak.

Drawback No. 5: In the final analysis, the internal customer model turns reality on its ear.

A few years ago, while running a quality seminar, I used a real-life example. The relevant facts were these: I had sent a package from Boston to Indiana, via the U.S. Postal Service. In addressing the package, I had neglected to include the recipient's street address. The Postal Service returned the package to me, but it took them a full month to do so.

It was intended as a "Gee, isn't it frustrating sometimes to be a customer?" story. After telling it, I asked, "In that example, who was the customer and who was the supplier?"

"You were the supplier, and the post office was the customer," one fellow answered.

I thought he was confused. "Are you sure?" I asked.

"Yeah," he replied. "It was your job to provide a complete address to the post office. They're counting on you for that, so you're the supplier and the post office is the customer."

It was a breathtaking example of how a seemingly sensible concept can lead one through the logical looking glass. The internal customer model can serve as a useful metaphor. But there is a difference between metaphor and reality. Otherwise, when the vice president of manufacturing thundered in the first sentence of this article, the others in the room would have opened umbrellas.

An alternative

Instead of saying "internal customer" and "internal supplier," say "client" and "provider."

"Client" because it still suggests the nature of the relationship: Party B counts on party A to provide something essential to complete party B's job. "Provider" because it suggests something about the direction in which the work flows.

If the solution is that simple, what's all the fuss about? Aren't we just talking about semantics? Yes, in part. But words matter, and they matter a lot. The very fact that so much has been invested in the term "internal customer" is a tacit acknowledgment of that fact.

The solution goes beyond semantics, though. The relationship between two co-workers and the one between a company and its customers differ in kind. Effective, productive relationships between co-workers are important, but they're important as a means to an end, not as an end in itself. When clients and providers work together, elements of that working relationship bear a resemblance to, but do not equal, customer-supplier relationships. Customers have needs; a company's job is to satisfy those needs. Co-workers also have needs. It is their shared responsibility to meet those needs, through negotiation and collaboration, in a way that results . in satisfied customers. We must not lose sight of that difference.

When most organizations paid quality little more than lip service, precisely defining who was the customer was less important. So much progress could be realized by ensuring that John did, in fact, serve Mary well that the internal customer model clearly proved a net plus, even for the external customer.

But now the competitive picture has changed. More organizations are taking quality seriously. We've gone beyond "do things right" and "do things right the first time" as rallying cries to "do the right things right the first time." And the ultimate arbiter of just what those right things are is the customer -- the real customer. Not the next person in the process or the next department over, but the person who pays money for goods and services. Anything blurring that reality should be avoided.

The root issue here is, ironically, the quality of our approach to quality. We have made continuous improvements in our quality efforts over the years, and that's a genuine cause for celebration. But the mind-set that begets continuous improvement is precisely the mind-set that prevents breakthroughs from occurring.

The internal customer model has served us well, but it has taken us as far as it can. It's time to change the model. It's time to let customer mean customer.

About the author

John Guaspari is a senior associate of the Lexington, Massachusetts-based management consulting firm Rath & Strong, which is a division of Aon Consulting. His books include I Know It When I See It and The Customer Connection.

© 1998 by Rath & Strong, fax (781) 861-1424.