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It’s a cliché: What seems impossible suddenly becomes the norm. Until May 6, 1954, when Roger Bannister ran the mile in 3 minutes, 59.4 seconds, the four-minute mile was considered by many to be beyond human capability. Experts said the heart was liable to burst attempting to supply enough oxygenated blood to the legs. Yet after Bannister showed the way, 300 runners broke the four-minute barrier within two years. Thousands more have since. For business, a similar thing has happened in recent years. A few companies made breakthroughs in using the Internet that put them well ahead of their competition, but most have now been widely copied. For instance, Charles Schwab & Co. (www.schwab.com), the brokerage firm, figured out online brokerage at a time when other established companies thought it was just a sideshow. Now, Schwab’s competitors all offer online brokerage. Companies in every industry have used the Internet to begin to operate more efficiently. Businesses across the board now let customers buy goods and request service around the clock. So what do we do now? To get to the next level, companies must figure out the equivalent of how to turn the mile race into a relay, through a complex sort of baton-passing called business synchronization. The race is already on. Synchronization is a deep type of coordination that lets a company pull together its disparate databases to understand who its most profitable customers are, so it can be sure to offer the right level of attention, and the right products, to each one. Synchronization also helps the company present a single face to customers, removing considerable irritation. Finally, synchronization gives a company a platform for change, so it can present different faces to different customers and develop new ones as customers’ needs evolve. By going through synchronization, companies can achieve an exceptional amount of focus, and in the right place: on the customer. Yet companies don’t need to rip themselves apart. Synchronization isn’t a huge software project like enterprise resource planning, where you take years, spend hundreds of millions of dollars, and then hope you see a payoff. Instead, synchronization is a series of small projects that each provide concrete benefits by building on all the painful systems integration and re-engineering that you’ve already done. Mohan Sawhney, a professor at Northwestern University’s Kellogg Graduate School of Management (www.kellogg.nwu.edu) who has written about synchronization, says AT&T Corp. (www.att.com) shows what happens when a company is out of sync with its customers. The company views its customers in different ways: as long-distance subscribers, wireless users, cable-TV watchers, cable-modem customers, and credit-card holders. Tracked in five different databases, one customer purchasing all these services appears to AT&T as five different ones. Because AT&T lacks a clear picture of customers, it has trouble cross-selling its services, irritates customers with a profusion of bills, and doesn’t know how to develop new offerings that might combine current ones. 3M Corp. (www.3m.com), by contrast, shows the benefits of synchronizing. If anything, it had a bigger problem than AT&T because it has 500,000 products, developed and marketed through more than 40 divisions. The manager of a doctor’s office who wanted to buy directly from 3M might have to go to half a dozen different Web sites—set up by its pharmaceutical business, its medical-surgical division, its office-supplies operation, etc. Each site functioned differently and required a different password. The sites didn’t share information. To synchronize 3M’s efforts with customers, the company began an effort in 1997 that pulled together information from its numerous databases, at a total cost of $20 million—a modest sum for a business with $15 billion in annual revenue. As a result, the company now gets a clear look at the profitability of individual customers, individual products, and individual business partners—and can, for the first time, manage accordingly. 3M also has pulled together its various Web sites so that a customer sees the company as a single, unified business. 3M gave itself the best of centralization and decentralization. It centralized its data and its dealings with customers, while leaving product units autonomous so they can continue to innovate as they have so well in the past. Thomson Financial (www.tfn.com) provides another good example of synchronization. A few years ago, the Canadian conglomerate knew next to nothing about the customers to whom it sold 1,000 uncoordinated products. Information was held in 37 different computer systems and 23 databases. As many as 30 salesmen would call on the same customer. In 1999, though, the company began to rewire itself. It started by profiling the activities of its three major customer segments: portfolio managers who handle money for clients, equity analysts who research stocks and bonds, and traders who buy and sell financial instruments. Thomson then mapped its product roster to each group’s list of possible activities and used software known as “middleware” to build a picture of customers’ purchases of all its products, rather than just tracking customers’ purchases product by product. As a result, Thomson now finds it can cross-sell effectively to 70,000 portfolio managers and 10,000 corporations. As 3M and Thomson found, synchronization requires rethinking your information-technology systems. They need to be made more flexible by becoming more modular. They also need to take on a new layer of software that will pull information on each customer out of your numerous databases and assemble a complete portrait, both of what the person is buying now and of what he might be willing to buy. The process also involves organizational change, to set up a group of liaisons who both pull together and interpret all the data that a company’s units have on individual customers and collect, on customers’ behalf, all the information that they want from the company. Synchronization may sound like re-engineering, but synchronization differs in a crucial way. It doesn’t require that companies knock down the walls between business units—just that information be able to pass freely through those walls. The other, more important difference is that synchronization includes outside companies. Re-engineering aspired to that but in reality almost always ended at the company walls. Before the Web came along, the technology to allow electronic collaboration between companies was very limited. Even when the Internet caught on with businesses, everyone was in the midst of a growth spurt and was investing in opportunities other than those that would use the Internet for efficiency and effectiveness—i.e., synchronization. “We’ve known for 15 years that we have to reinvent our business from the customer viewpoint,” one senior executive recently told me, “but it’s only today that we have the technology in place to do it.”
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