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June 23, 2005
GE Begins Reorganizing Around the Customer
Posted by Britton
One of thet greatest barriers to success in terms of leveraging customer intelligence is structural. Too often, companies organize to simply sell more products instead of enhancing customer growth and profitability. But there are reasons to believe change is on the horizon. 
Corporate bellwether General Electric has just taken a step in the "customer- focused" direction by reorganizing around industries to reach its next level of growth. GE Chairman and Chief Executive Jeffrey Immelt stated: "This change allows us to leverage our exceptionally deep leadership team to accelerate growth and improve productivity."
As part of the move, GE will consolidate 11 divisions into six businesses: infrastructure, industrial, commercial financial services, NBC Universal, health care and consumer finance. While the decision is certained to reduce operational costs and rendundancies, it also lays the groundwork for new approaches to customer management.
As opposed to managing the client based on product, the restructuring potentiallly makes it easier for GE to mine and manage customer information in ways that help it expand its existing customer relationships. The focus is no longer the product, but rather, the customer's industry. Considering GE's influence on business in general, it will be interesting to see which companies follow suit and begin taking steps in this direction -- organizing around their customers as opposed to the products and business lines.
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1. Jane Chin on July 2, 2005 11:10 AM writes...
What will be the metrics in this model that can satisfy the continual support of such a customer-centric approach? This shift in focus will now uncouple product sales and therefore a key element in what management are used to when measuring "effectiveness". Other companies will follow suit once they agree with the metrics of success in this model or if they just want to do what GE is doing.
Permalink to Comment2. dr ray on July 24, 2005 09:07 AM writes...
Jane, I was just at a conference where a GE exec spoke about this. They are putting great stock in Net Promoter score, something developed by Fred Reichheld at Bain. To be frank, I was shocked that they would consider this measure for such an important purpose. Again, we have a proxy score based on the self-reported difference between customers who recommend vs. not recommend your product or service. The weaknesses of this method are significant, yet compensation will be based on this pseudo score of loyalty!
Why I was surprised is because there are robust techniques out there that actually can link consumer experience and behavior to sales - and that GE either hadn't considered or dismissed them.
I think they will be in for quite a bumpy ride with the NetPromoter score.
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