Walmart executives aren't likely to be shocked to learn that their stores are harshly lit environments with sporadic sales support. These choices reduce the cost of operations, which gives the stores the flexibility to charge customers less for a wide range of products. These choices funded the company's excellence in other, more important dimensions. Walmart had the stomach to let its customers solve their own problems in an uninspired setting in exchange for "always low prices," a deal their customers were happy to make.

As we mentioned before, if your customers don't all fall in the same operating segment — if they don't all want the same things, in the same order of priority — you have two basic choices. Your first choice is to focus without apology on one operating segment, to build a single service model around one segment's needs and keep your finger on its pulse. That's what Walmart and Southwest do. If a customer outside these companies' core constituency wants to do business with them, Walmart and Southwest will certainly take the money. But the companies won't contort their service models to also meet the needs of these secondary customers. Your second choice is to build different service models for the operating segments you uncover. Think emergency rooms and outpatient clinics within a single hospital.

When these kinds of questions start to haunt you, it's typically a good sign. It signals a pivot from the kind of customization we just described to some level of standardization. The trigger for this switch is usually the realization that it's not sustainable to keep delivering one-of-a-kind, made-to-order service. Your margins can't take it anymore. Moreover, the complexity of maintaining a wide range of distinct offerings makes the business difficult to scale operationally.

As we mentioned before, if your customers don't all fall in the same operating segment — if they don't all want the same things, in the same order of priority — you have two basic choices. Your first choice is to focus without apology on one operating segment, to build a single service model around one segment's needs and keep your finger on its pulse. That's what Walmart and Southwest do. If a customer outside these companies' core constituency wants to do business with them, Walmart and Southwest will certainly take the money. But the companies won't contort their service models to also meet the needs of these secondary customers. Your second choice is to build different service models for the operating segments you uncover. Think emergency rooms and outpatient clinics within a single hospital.

When these kinds of questions start to haunt you, it's typically a good sign. It signals a pivot from the kind of customization we just described to some level of standardization. The trigger for this switch is usually the realization that it's not sustainable to keep delivering one-of-a-kind, made-to-order service. Your margins can't take it anymore. Moreover, the complexity of maintaining a wide range of distinct offerings makes the business difficult to scale operationally.