Ranjay Gulati

In 2001, under price pressure from the government and managed health care organizations, GE Medical Systems (now GE Healthcare) created a unit, Performance Solutions, to sell consulting services packaged with imaging equipment as integrated solutions. These solutions, priced at a premium, were intended to enhance productivity by, for instance, reducing patient backlogs. At the time, lots of companies were making the move from selling products to selling solutions in an attempt to differentiate themselves in increasingly commoditized markets.

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Reprint: R0705F
For many senior executives, shifting from selling products to selling solutions&#8212;packages of products and services&#8212;is a priority in today&#8217;s increasingly commoditized markets. Companies, however, aren&#8217;t always structured to make that shift. Knowledge and expertise often reside in silos, and many companies have trouble harnessing their resources across those boundaries in a way that customers value and are willing to pay for.
Some companies&#8212;like GE Healthcare, Best Buy, and commercial real estate provider Jones Lang LaSalle (JLL)&#8212;have restructured themselves around customer needs to deliver true solutions. They did so by engaging in four sets of activities:
Coordination. To deliver customer-focused solutions, three things must occur easily across boundaries: information sharing, division of labor, and decision making. Sometimes this involves replacing traditional silos with customer-focused ones, but more often it entails transcending existing boundaries. JLL has experimented with both approaches.
Cooperation. Customer-centric companies, such as Cisco Systems, develop metrics for customer satisfaction and incentives that reward customer-focused cooperation. Most also shake up the power structure so that people who are closest to customers have the authority to act on their behalf.
Capability. Delivering customer-focused solutions requires some employees to be generalists instead of specialists. They need experience with more than one product or service, a deep knowledge of customer needs, and the ability to traverse internal boundaries.
Connection. By combining their offerings with those of a partner, companies can cut costs even as they create higher-value solutions, as Starbucks has found through its diverse partnerships.
To stand out in a commoditized market, companies must understand what customers value. Ultimately, some customers may be better off purchasing products and services piecemeal.

Silo Busting:&nbsp;How to Execute on the Promise of Customer Focus

Reprint: R0705F For many senior executives, shifting from selling products to selling solutions—packages of products and services—is a priority in today’s increasingly commoditized markets. Companies, however, aren’t always structured to make that shift. Knowledge and expertise often reside in silos, and many companies have trouble harnessing their resources across those boundaries in a way that customers value and are willing to pay for. Some companies—like GE Healthcare, Best Buy, and commercial real estate provider Jones Lang LaSalle (JLL)—have restructured themselves around customer needs to deliver true solutions. They did so by engaging in four sets of activities: Coordination. To deliver customer-focused solutions, three things must occur easily across boundaries: information sharing, division of labor, and decision making. Sometimes this involves replacing traditional silos with customer-focused ones, but more often it entails transcending existing boundaries. JLL has experimented with both approaches. Cooperation. Customer-centric companies, such as Cisco Systems, develop metrics for customer satisfaction and incentives that reward customer-focused cooperation. Most also shake up the power structure so that people who are closest to customers have the authority to act on their behalf. Capability. Delivering customer-focused solutions requires some employees to be generalists instead of specialists. They need experience with more than one product or service, a deep knowledge of customer needs, and the ability to traverse internal boundaries. Connection. By combining their offerings with those of a partner, companies can cut costs even as they create higher-value solutions, as Starbucks has found through its diverse partnerships. To stand out in a commoditized market, companies must understand what customers value. Ultimately, some customers may be better off purchasing products and services piecemeal.

Silo Busting: How to Execute on the Promise of Customer Focus

Summary.

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