How to achieve the ultimate customer-focused company

August 6, 2008

Credit for this snapshot of silos goes to B & B Rogers, urban photographers from Louisville.

Last year, Ranjay Gulati wrote an article entitled “Silo Busting: How to Execute on the Promise of Customer Focus” in the May issue of the Harvard Business Review. Gulati’s main argument was that many companies claim to be focused on their customers, but are unable to deliver on these promises without restructuring or changing the company culture. Gulati honed in on four essential values that companies must espouse in order to successfully be customer-centric. These are coordination, cooperation, capability and connection.

Coordination: Gulati explains that most companies are organized around a specific function, product or geographical location. However, customers don’t necessarily group themselves that way, and often the solutions they seek transcend these boundaries. Gulati suggests that companies need to create processes or mechanisms that break these divisions – or silos – so that the customer gets the benefit of the entire company.

Cooperation: In this instance the focus is in two directions – cooperation among business units to achieve measurable customer satisfaction, and empowering employees who are closest to customers to with the authority to make decisions that benefit the customer. This kind of cooperation ensures the customer always comes first.

Capability: According to Gulati, in order to really meet customer demands and produce tailored solutions, companies need staffers who “have experience in several products or services and a deep knowledge of customer needs” as well as having the skill to cross organizational boundaries. Gulati calls these individuals “generalists” those who can always see the big picture.

Connection: Gulati’s research supports the idea of aligning more closely with suppliers and partners. The rationale is that not only does it provide cost-cutting measures and allow the company to focus on core activities, but it also helps support better solutions for the customer.

Gulati’s four “C’s” make sense, as they help companies spin around the most important axis: the customer. From Tatham‘s point of view this can be summed into two key words – process and culture. Companies who coordinate their processes to cut across all divisions and provide an end-to-end solution for their clients have a much greater appreciation for just how much cooperation, capability and connection it takes to foster a culture that cares about what the customer wants and thinks. It forces them to pare down on redundancies and use the hidden capacity they find to continue fuelling further efforts to offer more wholistic customer-focused innovations. But, if there’s one “C” that Gulati implies as number 5, it’s that behind all these efforts the most crucial is listening to the voice of the customer. And that’s how to break through silos.