This is not a new argument, but one that has been around for decades (requires subscription or can be purchased by copy) – and one that is still very much unresolved in most companies – including startups. John Hagel brought it up again at last week’s marketing innovation conference – “what business are you really in?”
Most companies are made up of an “unnatural bundle” of businesses which really do not belong together and which require vastly different core competencies to manage successfully – product innovation, infrastructure, and customer relationship business. To be a product innovator you need to be fast, nimble, have really bright and passionate people in the field you are innovating in, and processes should be kept to a minimum to enable emergent behavior and creativity. In an infrastructure business, it all comes down to automation and operational excellency in the face of heavy investments, and process rules. The customer relationship business is very customer information-centric, and should be focused on customer life-cycle relationship economics. So all in all, it does not require an advanced degree in management to realize that companies need very different skill-sets in the executive suites as well as in their line management to turn those different businesses into successful endeavors.
So why are so many companies trying to do it all? Even when looking at new business models – such as ASP-based models (ASP= applications service provider), where one sells software as a service and thus incorporate part of the customer relationship piece of the business into the product – it makes sense to outsource the customer relationship part of the business to a company who’s sole purpose it is to focus on managing customer relationships. Not only is there more to a customer relationship than purchasing and billing, but those companies that focus on customer relationship management only will develop economies of scope that will make it unpractical for small player to sell directly.
What business are you in? Are you still managing customer relationships as well as product innovation? If you do, chances are that you are looking at the customer call center as a cost center…which is one heck of a BAD idea…