"The Quest for Customer Focus"

Ranjay Gulati and James Oldroyd

Harvard Business Review

April 2005, pp. 92-101

The authors of this article studied seventeen companies that they identified as having made significant progress toward becoming exceptionally customer focused. The authors found that these companies take three concepts very seriously:

• They strive to learn everything they can about their customers on an individual level.
• They emphasize the importance of employees sharing what they learn about customers, even if it is inconvenient or does not seem to serve the best interests of the employee to do so.
• The insights gained from customer information are used to guide the organization's significant decisions, including the organizational strategy and the organizational structure.

The primary focus of the article is on a four-stage path that these organizations follow to create a lasting customer-focused mindset:

1. Communal Coordination—In this stage, the organization gathers and standardizes all information available about the customer into a single information pool. The information is then organized by customer (instead of by product, location, etc.). The IT organization usually controls and oversees this pooling of information.
2. Serial Coordination—In this stage, companies do more than just assemble customer information. They analyze it and draw inferences from it. There is usually a set of business analysis experts who pass their results on to the business units. The traditional roles and structures of the organization may present obstacles to spreading the information. Often, changes in the organizational and social structure may be necessary at this stage.
   In this stage, it is also usually found that there are critical gaps in employee skills to deal with so much information. This must be addressed through training or through centralizing the analysis function.
3. Symbiotic Coordination—In this stage, the company moves from analysis of past customer data to anticipating and dealing with likely future scenarios for customers. There are four different types of activities to do this: Creating models to predict customer behavior; Experimenting with various interventions to alter customer behavior; Measuring the results of these interventions; and Using feedback from the front line to improve the models and subsequent campaigns.
   The authors of this article say that many companies get stuck at this stage because they have difficulty creating and maintaining the constant informal give-and-take necessary among various units. The two most common solutions to this dilemma are to reorganize by customer segment or to add a new organizational unit to ensure coordination.
4. Integral Coordination—In this stage, the company moves past formal initiatives, and incorporate their deep understanding of customers into all of their day-to-day operations. Employees are given the freedom and latitude to use the value of customer-focus in nearly all their actions.

The key points of this article are illustrated through examples from Continental Airlines, Royal Bank of Canada, SBC, and Harrah's.

Back to top of page