How to develop a market-oriented and customer-focused organization
A global leader in a niche segment of process equipment wanted to achieve a market-oriented and customer-focused organization, and turned to Arthur D. Little in order to achieve the goal.
In order to change the current product-oriented organization into an efficient market-oriented and customer-focused organization, the following key questions had to be answered:
- How many, and which, vertical divisions/market segments are needed to optimally serve current and future customers?
- To what degree should sales activities (including marketing and technical service) be verticalized? How should sales be organized in smaller countries with sub-critical mass, where efficiency reasons do not allow for complete verticalization?
- Should new vertical divisions be fully autonomous regarding products and R&D competencies – i.e., is a multiplication acceptable? Or should responsibility for products, modules, and technologies be allocated to the biggest user?
- How should interfaces to operations (including production, SCM, order processing), corporate services and medical be organized in order to exploit growth and efficiency potential fully?
The new product-focused divisions committed to delivering additional growth of 6–7% as a result of increased market focus and cross-selling potential. In addition, the head count was reduced and the whole organizational structure was streamlined and simplified.
An organizational concept, which included the following elements, was elaborated:
- Organizational structure, including organigrams for all divisions per unit and region
- Resource and product allocation for all divisions, including the necessary head-count transfer
- Business plan with key data (revenues, EBIT, head count, assets)
- Definition of business processes and critical interfaces within divisions, between divisions and from divisions to headquarters
- Four implementation scenarios for comparison based on time frame, risks, development and composition of cash flow, head-count development, and implementation costs