Today’s guest post is from Jay Galbraith, president of Galbraith Management Consultants and affiliated research scientist at the Center for Effective Organizations at the University of Southern California. His clients have included P&G, Toyota and Nokia.
With bailouts and layoffs defining much of today’s global economy, businesses are increasingly under the microscope – dissecting spending, resource allocation and leadership abilities. These factors are not just driven by the individuals at the helm of these complex corporations, but also by the design of the organization itself.
While every company strives to reach its customers in a meaningful way, not all are able to efficiently and consistently operate at that level. Some may even think they are customer-focused, but are really structured around product groups. However, in today’s uncertain economy, companies must structure for sustained success, understanding that people, not products, ultimately influence the fate of the organization.
For instance, Best Buy in the past was like most retailers in that its organization was dominated by the buyer groups called Merchants, which were then organized by product lines with a product-centric mindset. But in the last five years, Best Buy has successfully transformed itself into an exemplar customer-centric organization.
First, it identified key customer segments and built a segment organization for each of the major consumer groups. These groups were divided by demographics and interest, such as young males looking for the latest technology gadgets and moms who need a computer system but have little time. The resulting segment organizations focused on what their particular customers really wanted, and created product packages to satisfy those customer needs. However, the Merchants were still product-oriented, organized by product groups like television, cameras, computers, cell phones, music, movies and games.
Best Buy then structured its Merchant groups into seven domains or customer experiences, which included home entertainment experience, sharing memories, personal communication, listening to music, playing games, home life and business minded, a holistic view that would follow the entire sequence of activities the consumer follows when executing the domain application.
Take, for example, “sharing memories.” The Merchants analyze the sequence from taking a photo, transferring it, storing it, managing it, improving it, sharing it and reproducing it. Then they ask, “What are all the devices, software and services that are needed to perform this sequence of events? How can these be combined seamlessly to create a satisfying experience for a suburban mom? The integrated experience for customers is the focal point, rather than standalone products.
Customer-centric organizations essentially become more complex organizations that are grouped around experience, consumer segments, products, services and software. However, the purpose is to take complexity away from the consumer and put it into the organization, ultimately creating a simple, easy and valuable experience in shopping for and using the company’s offerings.
So while great companies are still following the “Keep it Simple” mantra, there is now a new twist: “Keep it Simple…for the consumer.”
Image credit, aldomurillo, via iStock