edf40wrjww2CF_PaperMaster:Desc
Aligning the Organization with the Market: Focusing on 'The Customer's Total Experience'
When Lou Gerstner became chief executive of IBM in the early 1990s, Big Blue was on a course to be broken up into smaller companies, each responsible for separate IBM business units such as PCs, software and the like. But Gerstner concluded the strategy was "wrong-headed" because it was contrary to the wishes of customers, according to Wharton marketing professor George Day. Rather than assemble their computer systems from a variety of vendors -- or even separate business units within IBM -- customers wanted help putting everything together.
So IBM embarked on a multi-year journey to align its organization with the marketplace, trying to create a company that was so responsive to the needs of customers that it would be hard for purchasers to go elsewhere. The bet was that movement away from a product-focused organization to one centered on customers would boost profits.
For IBM, the journey was successful. But in a forthcoming paper entitled, "Aligning the Organization with the Market," Day reports on a survey that found only mixed results among 347 medium- to large-size firms that attempted customer-focused reorganizations.
The companies reported significant improvements in everything from accountability for customer relationships to information sharing. Reorganized companies were easier for customers to do business with and better at responding to customer problems. But reorganizations often didn't translate into superior financial performance.
To better understand why, Day looked closely at 15 high-profile reorganizations around customers. Only IBM and three others -- Fidelity Investme ...