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Solving the ‘customer solution’ riddle

Prof. Ranjay Gulati’s latest research explains how firms must break silos to move from idea to execution if they want to connect with customers

By Matt Golosinski

5/9/2007 - Pulling a good idea out of the air is one thing; committing the time and resources to developing that notion into something truly valuable is quite another.

While devising “customer solutions” has become a mantra for companies challenged to differentiate themselves in commoditized markets, delivering on that promise demands bucking the status quo and making specific organizational changes, says Kellogg School Professor Ranjay Gulati.

The first step is to dismantle or transcend the functional, product, or geographic silos that can keep organizations from achieving their full potential by keeping knowledge and expertise segregated. By harnessing the holistic force of the firm’s human and intellectual capital, organizations can begin collapsing internal boundaries that Gulati says often prevent the creation of true customer solutions.

Achieving this result is easier said than done.

Gulati’s recent research explains the difficulty firms face in moving from idea to execution when it comes to producing actual solutions. The Michael Ludwig Nemmers Distinguished Professor of Strategy and Operations has devoted the last five years to studying how companies try to solve the customer solution riddle, identifying common organizational pitfalls while offering his recommendations.

Gulati’s “Four Cs” of customer-focused solutions show companies how to break out of the pack by creating strategic packages of services and products that are tough for competitors to copy.

Through coordination of expertise across company boundaries to ensure information sharing, division of labor and decision making, cooperation among all employees to foster a culture that rewards customer-focused behavior while creating metrics for customer satisfaction, leveraging the capabilities of generalists with the necessary skills, and forging connections between the company and external partners (rather than focusing on internal dynamics, as the first three Cs do), Gulati says firms can create powerful solutions and break organizational silos.

With insightful examples of those getting it right — and those who are not — Gulati’s “Silo Busting: How to Execute on the Promise of Customer Focus,” published in the May 2007 Harvard Business Review, offers a framework to align organizations so that departmental silos don’t sabotage the best-laid plans to create customer value. (A related book-length treatment of the subject will be published by Harvard Business School Press in 2008.)

Says Gulati: “It’s not just that the status quo doesn’t reward collaborative behavior — although the right incentives are also critical. It’s that the connections literally aren’t in place.”