For GE Plastics, such innovations get their start in its 100,000-square-foot development center. "Customers don't always know what they need, so we help them figure that out," explains Ferdinando Beccalli, 50, vice president and general manager of GE Plastics and a 23-year veteran of that division. "We want to work closely with our customers -- from pellet to finished part."

In that development center, nearly 50 machines whir, clang, and stamp their way to a new future for the division. This equipment isn't just spitting out plastic pellets; it's experimenting on behalf of GE's customers, making higher-quality CDs that can be reproduced in less time than before, designing wireless phones that are smaller and thinner than today's models, and creating a new generation of lightweight car bumpers.

Put simply, GE Plastics is not just a supplier to its customers; it also acts as their change agent. The unit's engineers don't wait for customers to come to them with problems. Nearly half of the products that this division develops for its customers come from GE designers' ideas. GE figured out ways to inject color into plastic, which eliminated a customer's need to paint the material. It approached bottling plants with the idea of using a plastic conveyor belt to replace the noisy steel models. (Using plastic, which is inherently slippery, meant that plants no longer needed the lubricants that the steel belts required to operate smoothly.) GE Plastics also shaved more than a second off of its already short six-second CD-replication time, reducing that cycle time by 18%. In the process of testing ways to stamp better-quality CDs faster, the unit came up with another process that lets customers produce either more disks per hour or disks of higher quality.

Ultimately, listening well is more than just listening. It's about showing and telling -- showing your customers what's possible and then encouraging them to tell you what's compelling. "Serving your customers well boils down to providing them with financial benefits," says GE's Beccalli. It's nice when they can tell you how to do that for them, but in the final analysis, "it's your responsibility to figure that out."

Are you listening to that message?

Rekha Balu (rbalu@fastcompany.com) is a Fast Company senior writer. She's listening. You can reach Michael Rich (michael.rich@tch.harvard.edu) and David Schriber (davids@burton.com) by email. Learn more about GE plastics on the Web (www.geplastics.com).

Sidebar: Will Web Customers Spill the Beenz?

The Web has great potential for helping companies listen to customers and deliver services that are tailored to customer preferences. But one big problem for Web companies is that the customers with whom they interact closely come from the relatively small universe of those who actually visit their site. What if you could watch (and listen to) what people do across the entire Web? You could understand what kinds of offers motivate people, figure out why their attention drifts from one site to another, and anticipate what site they might go to next.

That's the idea behind beenz.com, a "Web currency" that more than 750,000 users are now earning and redeeming at about 200 e-commerce sites on four continents. For customers, beenz is the latest wrinkle in "loyalty" programs. They earn points ("beenz") by patronizing (or just visiting) participating Web sites. They can then use those points to buy things at other sites. For companies, beenz becomes a tool for understanding customer behavior. Member sites get reports on how customers use their beenz -- such as what they tend to buy or which sites they visit before and after the transaction. "For me, it's much more interesting to know not only your behavior within my store but also what you do in other stores," says Philip Letts, chairman and CEO of beenz.com.

But don't use incentives to try to change people's preferences, Letts warns. Instead, use incentives to intensify existing behavior. That way, you create a virtuous loop of activity and feedback. Reward consumers with beenz for spending time on your site or trying a download. That reward will then become an incentive for people to do more with the site.

Also, don't be tempted to keep redesigning your site every time you learn something more about customer preferences. Letts encourages people to use Java, which changes the basic look of a site. Use it for "pop-up" offers, and then collect data on the response to those offers. Here, too, he suggests going slowly. "You can only change a site's design and links so often," he says. But by layering new offers, you'll get the information that you need to get it right.