REORGANIZE FOR RESILIENCE: Putting Customers at the Center of Your Organization

In Reorganize For Resilience: Putting Customers at the Center of Your Organization(Harvard Business Press; January 19, 2010; $35), Harvard Business School Professor Ranjay Gulati shows how pioneering companies have overcome built-in institutional obstacles and spiked growth by reorganizing their structure and capabilities to be proactive, flexible and truly customer-centric.

Through interviews with more than 500 executives over a decade of boom-and-bust economic cycles, Gulati uncovered five key levers that pry open silos, expand mindsets, build partnerships and help an organization recognize and shift internal barriers to move toward ongoing resilience:

Coordination aligns tasks and information around a customer axis. At Best Buy, a conversation between two managers revealed that customers would often comparison shop at nearby high-end electronics retailers. These chance remarks led to the Magnolia Home Theater, Best Buy’s store-within-a-store where customers can try out high-end branded home entertainment equipment.

Cooperation aligns behavior around common customer-focused goals. If coordination is about what leaders do, cooperation is what workers do. That's Cisco insists that every employee talks directly with customers at least once a month – even the folks in human resources.

Clout enables individuals and divisions to take on meaningful silo-busting roles and ultimately enhance the outside-in responsiveness needed in a shifting market. Transferring power from regional units to a centralized customer information warehouse enabled Harrah's to build a national brand that customers could count on, no matter which casino they visited.

Capabilities means encouraging the boundary-spanning skills that managers and employees need to develop to cope with changing customer needs. Jones Lang Lasalle mandated that account managers spend time within each of the firm’s major units to gain greater knowledge of them.

Connections help companies achieve sustainable customer-centricity by leveraging the extraordinary value of effective partners. For instance, Apple only offers a small number of applications for its iPhone but because of its partners, it can offer ten thousand applications.

As a result of using these levers to shape their organizational strategy and structure, companies as diverse as Target, Cisco, Best Buy, GE Healthcare and Lafarge, a global cement producer, delivered total shareholder returns between 2001 and 2007 more than ten times the S&P 500 – and are poised to emerge from the recession stronger than ever. Drawn from such examples, Gulati's "practical insights into how to ensure that strategy turns into action are money in the bank," says Jeff Immelt.