How to Execute on the Promise of Customer Focus
Silo Busting: How to Execute on the Promise of Customer Focus by Lance A. Bettencourt and Anthony W. Ulwick
In 2001, under price pressure from the government and managed health care organizations, GE Medical Systems (now GE Healthcare) created a unit, Performance Solutions, to sell consulting services packaged with imaging equipment as integrated solutions. These solutions, priced at a premium, were intended to enhance productivity by, for instance, reducing patient backlogs. At the time, lots of companies were making the move from selling products to selling solutions in an attempt to differentiate themselves in increasingly commoditized markets.
GE’s plan seemed to work well at first. The Performance Solutions unit enjoyed strong initial revenues, in part because most new contracts included additional consulting services valued at $25,000 to $50,000. And the unit had some notable successes. It helped Stanford University Medical Center, for example, make the transition to an all-digital imaging environment at its adult hospital, children’s medical center, and an outpatient facility—moves that delivered millions of dollars in new revenues for the medical center and substantial cost savings.
But by 2005, the unit’s growth had begun a swift decline. It turned out that equipment salespeople had trouble explaining the value of consulting services, so when they called on customers they couldn’t contribute much to the sale of additional services. What’s more, these reps were reluctant to allow Performance Solutions salespeople to contact their customers. And by marketing the unit’s consulting services with its product portfolio, GE generated solutions that were useful for customers whose problems could clearly be solved using GE’s equipment but less compelling for those whose needs were linked only loosely to the imaging products.
In the end, GE refashioned the unit to address customers’ needs in a more comprehensive fashion and to better align the sales
In 2001, under price pressure from the government and managed health care organizations, GE Medical Systems (now GE Healthcare) created a unit, Performance Solutions, to sell consulting services packaged with imaging equipment as integrated solutions. These solutions, priced at a premium, were intended to enhance productivity by, for instance, reducing patient backlogs. At the time, lots of companies were making the move from selling products to selling solutions in an attempt to differentiate themselves in increasingly commoditized markets.
GE’s plan seemed to work well at first. The Performance Solutions unit enjoyed strong initial revenues, in part because most new contracts included additional consulting services valued at $25,000 to $50,000. And the unit had some notable successes. It helped Stanford University Medical Center, for example, make the transition to an all-digital imaging environment at its adult hospital, children’s medical center, and an outpatient facility—moves that delivered millions of dollars in new revenues for the medical center and substantial cost savings.
But by 2005, the unit’s growth had begun a swift decline. It turned out that equipment salespeople had trouble explaining the value of consulting services, so when they called on customers they couldn’t contribute much to the sale of additional services. What’s more, these reps were reluctant to allow Performance Solutions salespeople to contact their customers. And by marketing the unit’s consulting services with its product portfolio, GE generated solutions that were useful for customers whose problems could clearly be solved using GE’s equipment but less compelling for those whose needs were linked only loosely to the imaging products.
In the end, GE refashioned the unit to address customers’ needs in a more comprehensive fashion and to better align the sales