{"id":43030,"date":"2005-08-14T21:00:00","date_gmt":"2005-08-15T04:00:00","guid":{"rendered":"http:\/\/customerthink.com\/jay_galbraith_sell_products_please_customers\/"},"modified":"2005-08-14T21:00:00","modified_gmt":"2005-08-15T04:00:00","slug":"jay_galbraith_sell_products_please_customers","status":"publish","type":"post","link":"https:\/\/customerthink.com\/jay_galbraith_sell_products_please_customers\/","title":{"rendered":"You Can Sell Products–and Please Customers: An Interview With Jay Galbraith"},"content":{"rendered":"
It’s easy to call your company customer-centric, but where do the customers come in and how do you keep the product from getting lost in the shuffle? CRMGuru.com founder Bob Thompson spoke with organization strategy expert Jay Galbraith on the challenges of building an organization that serves the customer with a superb product. This <\/i>Inside Scoop interview took place July 12, 2005. The transcript was edited for length and clarity.<\/i>\n<\/p>\n
\nThe Star ModelTM<\/sup><\/a><\/b> The HP strategy<\/a><\/b> Innovation and relationships<\/a><\/b> Bob Thompson<\/b> Jay Galbraith<\/b> \nBut for the most part, I’m really working for myself, and with a network of long-time colleagues, largely on reorganizations. There’s a number of organizations that are trying to offer solutions. If they want to get their products to work together as a solution for the customers’ problem, then they’ve got to get their divisions, or business units, to work together in order to create those. It’s that process and that kind of challenge that I’m spending most of my consulting work on.<\/p>\n Bob Thompson<\/b> Jay Galbraith<\/b> Bob Thompson<\/b> Jay Galbraith<\/b> Bob Thompson<\/b> Jay Galbraith<\/b> \nThat got them into these four-dimensional organizations. To me, it was more than just adding a solutions unit or a global accounts unit to their already kind of three-dimensional matrix. I got interested in that, and that’s clearly what my practice is today.\n<\/p>\n \nSo on the basis of a number of case studies that I did, I was financed by McKinsey—their design practice—to help them put together some ways of trying to deal with this complexity that their customers were having. That’s what really got me into it.<\/p>\n <\/a>\n<\/p>\n The Star ModelTM<\/sup><\/b> Bob Thompson<\/b> Jay Galbraith<\/b> Bob Thompson<\/b> Jay Galbraith<\/b> \nThe real issues are, then, how to tie the product and the customer parts of the organization together. This requires a lot of management processes. The planning process, itself, is really center stage here, but there’s also new product development. There’s new solutions development. So it’s a very process-intense organization, and this, I think, quite often is the piece that’s missed. It means aligning your rewards systems and measures around it, so you’re interested in customer share as opposed to market share, and you also have some human resource policies.\n<\/p>\n \nThere’s a different set of people that usually need to be brought in. Nobody has enough global account managers these days because it’s usually not just a salesperson. It’s someone who manages the account. And no one has enough project managers to put together these solutions.\n<\/p>\n \nSo when you move—when you change your strategy—it’s a matter of putting into place those structures, processes, rewards, and people as a whole total package. It’s really organizing around the customer.<\/p>\n Bob Thompson<\/b> Jay Galbraith<\/b> Bob Thompson<\/b> Jay Galbraith<\/b> \nThe other one is if you’re a good product-centric organization, very often, you have a bottom-up kind of strategy that you’d find at an HP or the old 3M. So what you need now in a solutions strategy is a top-down component that gives it a logic as to how these products will all fit together in a solution that’ll create value for a customer.<\/p>\n Bob Thompson<\/b> Jay Galbraith<\/b> Bob Thompson<\/b> Jay Galbraith<\/b> Bob Thompson<\/b> Jay Galbraith<\/b> Bob Thompson<\/b> Jay Galbraith<\/b>
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\nI’m delighted to welcome Jay Galbraith, the author of Designing the Customer-Centric Organization<\/i>, to our Inside Scoop<\/i> interview. Jay, welcome to our program, and tell us a little bit about yourself.<\/p>\n
\nI’d be glad to. I’ve been on the faculties of a number of business schools, such as the Wharton School and the IMD in Lausanne, Switzerland, but today, I’m spending most of my time just working on my own, consulting, writing and speaking. I do affiliate with the Center for Effective Organizations at USC. This is Ed Lawler’s center [Lawler, a human resources management expert, is the director of the Center for Effective Organizations at the University of Southern California’s Marshall School of Business], and we do some workshops and work on some projects there.\n<\/p>\n
\nHow did you get involved in this area? Was there something in your background before you got into the book writing and consulting gig?<\/p>\n
\nYes, I’ve always been associated with matrix kinds of organizations, complex organizations, from my early days. My first faculty position was teaching at Sloan School at MIT and getting into managing R&D. These are projects and functions and big aerospace projects, and I learned matrix. From there, I’ve really gone on to work on projects where it’s just really difficult to get a nice, clean way to break up your organization into independent units.<\/p>\n
\nYou’ve done a lot of work and you’ve written some other books on organization, but what caused you to write this specific book about designing the customer-centric organizations? I mean, I don’t get it. Every organization is customer-centric. All you have to do is ask them.<\/p>\n
\nRight.<\/p>\n
\nSo I don’t know why you’d have to go about designing an organization or writing a book about it. Obviously, you found there was a need. What was that?<\/p>\n
\nWe were putting together a program when I was on the faculty at IMD, and a colleague of mine had done a survey on the priorities that CEOs have. Some of them were the obvious ones, managing constant change and so forth. But they also encountered one in which they were having difficulty managing organizational complexity. This arose because most of these multi-national organizations were organized by business units and countries in some kind of matrix, and then they had functions. Suddenly, there was this rise of the customer who wanted longer-term relationships that wanted to be serviced around the world. This required them to set up global accounts, and very often, that, then, became a customer business unit or some customer-facing activity that was more than just sales.\n<\/p>\n
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\nEarly on in your book, you outline what you call a “Star ModelTM<\/sup>” and use it as a way to describe what an organization should look like, so it’s more than just an organization. It’s more than just who reports to whom, for example.<\/p>\n
\nThat’s right.<\/p>\n
\nCould you spend a moment or two and outline what that Star Model’s all about and why you believe it’s a good model?<\/p>\n
\nYeah. It’s been sort of my guide to dealing with clients. It basically says you start with strategy, which is fairly standard, and that gives you the criteria for choosing how you want to organize. There are a number of organizations moving toward really offering solutions, rather than just stand-alone products, so that’s the strategic change. Then you design an organization structure, which is often adding a kind of customer-facing front end to deal with these customers. There’s a back end of the business that’s also built around your product lines that gives you global scale.\n<\/p>\n
\nBut moving to a customer-centric strategy, doesn’t it require that other elements of this model be changed?<\/p>\n
\nThat’s right. <\/p>\n
\nIn your experience, among people, structure, rewards, and processes, is there one that stands out in your mind as being the most problematic, the most screwed up, if you like?<\/p>\n
\nYeah, there’s a couple. It’s rare that you put all the processes into place, because you want to be able to assemble very rapidly a team of people to a proposal or an opportunity that a customer has, and then, if you win that, to be able to pull together another team to execute it. One of the things is that, with assembly and disassembly of teams, this is not a natural act for a number of companies. You really just start to become more and more like a consulting firm or an investment bank where you organize around deals. There are some good models to follow here.\n<\/p>\n
\nBut you still need to consider both, right?<\/p>\n
\nYes.<\/p>\n
\nAnd the customer-centric advocates sometimes forget that there still are products and solutions—<\/p>\n
\nThat’s right.<\/p>\n
\nAnd people still buy things or services.<\/p>\n
\nIBM is a good example, because they still have to have world-class products to combine into the solution, and when they don’t, they’ve been getting rid of their storage unit and they put that into a joint venture.<\/p>\n
\nYeah or their PC unit.<\/p>\n
\nPCs. And then they’ll buy them outside. So you’ve got to go to market with the best.<\/p>\n