It is a common corporate cycle: migrationto centralization
—in the pursuit o scale—ollowed by a period o decentralization—inthe name o customer intimacy and marketresponsiveness. Each wave can causeupheaval and customer conusion, andneither, as it turns out, is usually satisactory. The act that companies yo-yo back andorth between the two refects how rarelythey nd a stable, satisactory solution.In act, we would argue, centralization vs.decentralization is not only a alse choice buta dangerous one, as it can lead companiesto neglect customer needs and insights in thepursuit o scale economies, or conversely,become awash in complexity in the name o customer responsiveness. Both paths leadto poor outcomes. Instead, we suggest adierent route:
understand where scaletruly matters in your business, createmechanisms or capturing and leveragingcustomer insight (without creatingcomplexity), combining both to create aproftable business with good economicsand competitive dierentiation.
As simple as that sounds, it is hard to do. That is why
, the initiative launchedin 2008 by retailer Macy’s, is so notable.Under the leadership o CEO Terry Lundgren,the $25 billion retailer has undertaken acomplex organizational change, recognizingthat the needs and preerences o customersare signicantly dierent rom place to place. The goal o the change is simple: that anycustomer in any part o the country will walk into his or her local Macy’s and say, “This ismy store.
This is my Macy’s.”
Founded in 1858
CEO: Terry Lundgren, since 2003
Operates 850+ departmentstores under the Macy’s andBloomingdales brands
Fiscal 2010 sales of $25 billion
Headquartered in Cincinnati andNew York City