09 Feb Organizational Design: It’s All About The Customer Experience (CX)
We all know how we feel when we hear buzzwords like “organizational design” right?
Tired. Worn out. Exhausted.
In fact, it’s everything we shouldn’t be feeling. We should be jazzed about the new ideas on the table, and eager to learn more. We shouldn’t feel overwhelmed by a term before we ever hear the purpose and potential punch behind it.
But it happens. And the term “organizational design” is no exception because it sounds daunting. Still, the way you strategically organize your company structure — aka “organizational design” — can either propel you forward into growth or trap you in the status quo.
And that sounds cliche, right? Yeah, probably. But here’s the deal: With the evolution of today’s constantly connected and empowered tech-savvy consumer, the status quo may no longer be good enough — especially for those tasked with growing the top line.
So, let’s buckle up and take a quick dive into what this term means and how it can be used to ignite (or even re-ignite) growth in your business.
It’s a Customer-Focused World After All
I don’t shy away from the importance of the customer experience. Probably one reason why is because I am a consumer and I want the companies I work with to dote on me just like anyone does.
The other reason why has more to do with the other side of the equation – what customer experience does for your brand, business, and bottom line. It’s something I yammer on about a lot for good reason.
You’re fighting for attention in a noisy world. Your buyer’s attention is constantly shifting from one thing to another. Just think of your day and how much you have on your plate. Your customer is the same.
So, probably the single best thing you can do to earn your buyer’s attention is to give them a positive experience.
And that starts long before your business ever comes into the picture.
It starts with a profound insight into the customer journey, which, perhaps not coincidentally, begins way beyond the transaction your buyer makes with your business.
Let me paint a picture for you of what this doesn’t look like.
Understanding your customer’s journey doesn’t look like you shouting from your rooftop about the hot item-of-the-month at your store.
It doesn’t look like a profit windfall induced only by tossing coupons on customers like confetti.
What this DOES look like is this: Your company built on a foundation of attracting loyal fans, inspiring brand ambassadors, or even creating a community centered on your lovely products or services. It’s these fans, ambassadors, and community who are on the front lines when your customer’s journey begins and the ones who you need to get to shout your name from the rooftops.
Sounds great, but now what? How do you build this foundation, especially when you’ve already been in business for several years? What are the ins and outs of making a long-term customer-centric strategy a reality?
You start here: Organizational restructure.
Sounds daunting, right? Stick with me here because although it’ll take effort, the payoff is worth the work. To prove my point, let’s look at two well-known companies.
A Tale (or Case Study) of Two Companies
You’ve probably heard of JC Penny (JCP in hip speak) and Apple, right?
The two sell vastly different products, but each has the same goal: To get consumers to buy their products.
Both faced a fork in the road. One took the right path, and the other almost crashed and burned.
First, the company that did it right: Apple.
Apple has become the look-to company for what to do right when it comes to building loyal brand ambassadors. But at one point, they faced their own organizational crossroads. They could continue to chase after low-hanging fruit and large markets, such as the consumers who demand phones with screens so big they barely fit in their hands, but they chose otherwise.
Apple shifted their focus. Instead of looking for new markets, they restructured their business to focus exclusively on growing alongside their customer’s needs.
Now, the company that did it wrong: JCP.
Ex- JCP CEO Ron Johnson, who hailed from Apple, wanted to turn JCP into an Apple-like shopping emporium experience. His vision was to design a store where a new legion of younger, hipper customers came to hang out and pay full price for goods. It was a growth move. That was primarily the formula that worked for Apple stores, so he assumed it’d work for his department store too.
To start, he eliminated coupons and discounts and, as Fortune put it, alienated his core customers.
The problem was, he failed to understand the core values of JCP.
He also tried to go digital in a way to prove that JCP could be more than just a place to get merchandise. He wanted consumers to discover ways to enrich their lives. He digitally integrated showrooms, which he assumed would help meld the physical and digital experiences.
Of course, the website was a major part of these initiatives, as were other digital aspects of business.
What Mr. Johnson failed at wasn’t having a vision. He had plenty of that. His mistake was that to fulfill his vision and complete a digital transformation he tried to achieve massive structural changes without getting buy-in from the traditional old management.
Apple restructured their entire company to meet the demands of their consumer. JCP did not.
The moral of the story is this: Organizational design matters to your long-term growth and overall success.
You’ve bought into this concept now, haven’t you? Great! Now let’s talk about what this looks like in action and how this can work for your business.
The Seeds of Change: Company Culture & a Customer-Focused Business
When a company decides to make an about face and re-position itself to focus on the customer (like Apple did), it becomes what we call a “customer-centric business.” That’s just jargon for a company that’s driven by delivering the best possible customer experience.
It’s a team effort to facilitate the best possible customer experience. It doesn’t – it can’t – happen in silos.
It takes a village to create an impressive, attention-worthy customer experience. Everyone on the team must get on board: Sales, operations, managers, executives, developers, accountants, marketers, and of course your front line customer success team.
Since you can’t make a shake up like this overnight, the shift need to happen from the top down. Once leadership has changed their mindset, there’s a trickle-down effect. Employees follow suit and become invested in the goals and ideals. StoryVesting (another useful area I hammer home about often) gets embedded in your company.
It is within this fully immersed mindset that great things can happen.
Full disclosure here: This is the kind of thing I stake my career on.
Why? Because I believe that firmly in it.
With that said, I fully recognize that on the surface this might seem simple and a little bit trite. It’s easy to talk about the importance of customer experience and then gloss over it as you get sucked into your day-to-day operations.
I get it.
That’s why, to maintain steady, serious growth, you might need to undergo a significant shift in your company’s culture. Here’s an excellent visual summary from Deloitte University Press, showing all the business components that should ride along with a culture shift:
Overwhelmed? Don’t be.
This will take work, no doubt. You will likely experience a couple of growing pains between now and your Apple-like status. But the result is well worth a few minor aches and pains.
With that said, I’m going to show you how to make this as easy and painless as possible.
Step One: Take a Good, Hard Look at Your Culture
Before any restructuring happens, before any shakeups occur, you need to set a benchmark. Where are you now? What are you doing to grow? Who’s handling the growth?
Chamath Palihapitiya, once Facebook’s VP of User Growth (Mobile & International), said it best when he said, “growth is not so much about having a ‘growth team’ as it is about uncovering what drives user adoption.”
Side note: he’s in software/software development and so “user-anything” is tantamount.
Chamath’s words speak to me. He’s talking about long-term growth; not hockey stick growth that’s only sustainable in the short term.
He’s talking about infusing growth into every nook, cranny, and corner of your company’s culture. No single team handles growth. Everyone – from the CMO and CEO to the interns – in your business is a steward of your firm’s success.
Having multiple teams working toward the same goal is powerful because it works for both startup and Fortune 100.
But, it takes time. It’s a marathon of steady growth instead of a sprint of short-term gains through explosive marketing campaigns. These, I firmly believe, destroy value when you spend your resources chasing short term ROI.
With that concept of growth infused into your company, I’d like to welcome you to the new world of organizational design centered around a data-driven consumer-centric culture.
This shift is taking place whether you’re on board or not.
And it All Begins With Your Organizational Culture
In Chamath’s view, companies don’t have a growth problem. When a corporation continues to grasp after low-hanging fruit for a quick gain, it’s clear they’re in the midst of a culture problem.
Consider this: Sustainable growth won’t take place until you answer the following three challenges:
- How to get people in the front door?
- How to get them to an a-ha moment as quickly as possible?
- How to deliver core product value as often as possible?
You’ll notice that each of these questions is centered on the customer’s path to purchase. They also involve people from every area of your company to answer to regularly.
I’m pounding this point home because I’m such a firm believer in it. But you get it now. A customer-centric culture is critical to your overall growth.
Now onto the real meat here: What does culture have to do with your organizational structure?
If your organizational structure doesn’t allow for the right kind of culture to thrive, change might be in the air.
I see this in many of my enterprise consulting assignments.
Most companies need to change their organizational structure simply because they are organizationally designed based on yesteryear’s strategies, yesteryear’s consumer and yesteryear’s technology stack. If founders, executives, and leaders don’t look at organizational design through the lens of StoryVesting, the 3Ps (People, Process, Platforms) and the Modern Marketing Funnel (er journey), competitive and sustainable growth is going to be a challenge with today’s tech savvy and empowered customer.
To better understand this point, let’s take a quick step back in time and look at the evolution of organizational structures. I have a hunch you might be surprised at how outdated yours is.
A Small History of Organizational Structure
First Up: Divisional Organization
Let’s rewind one century. About 100 years ago, when companies started realizing they could diversify and expand their markets, the divisional organization was created. Modern companies (in those days) realized that the more diverse their product offering, the more each product division needed its own unique marketing, engineering, finance, and sales departments.
They all existed under the same CEO, but otherwise, they were separate divisions. Each division had its own unique profit-and-loss statement and marketing plan. You could pretty much scale this type of organization into oblivion until it took over every business in the world. The approach? Just keep adding divisions.
Next: Functional (Matrix) Organization
Soon after this, companies started moving more toward a functional organization where there was only one Marketing department, one department for Engineering or Research, one for IT, and one for Finance too, etc. There was also only one single company-wide P&L statement, which meant employees were pretty far-removed from a feeling of ownership for what happened to the company. Accountability was (and continues to be) hard to achieve for the majority of employees.
Traditional Business Structures Lead to Silos
Do you notice a trend here? Silos.
Different departments are responsible for various customer-facing opportunities. For example, the website is run by Web Services, but a whole separate team manages PR. Then you have your loyalty program, which is handled by yet another separate entity.
It’s difficult (nearly impossible, actually), given the constraints of traditional organizational structures, to implement long-term, customer-centric growth. Marketing must, by necessity, span the entire organization.
So, *drum roll please*, I present to you the concept of “flat” organizational structures.
Flatter is Better.
Simply put, flat organizations exist when staff answers directly to executives. Middle management is cut out of the equation.
Flat is usually better. Here’s why:
- Flat allows Marketing more direct access to every employee for two-way communication on branding, goals, and customer-centered activities;
- Flat permits the creation of a shared culture;
- Flat allows for employees to take the initiative when there aren’t multiple layers of approval and hoops to jump through;
- Flat allows for more collaboration as employees are free to re-organize according to task or project;
- Flat encourages engaged employees;
- Flat promotes a healthy learning culture when even low-level employees are rubbing elbows with high-level management and a broader range of management.
A lot of big-name companies are praised for their innovative office culture and their “flat” organizational structures. But if you take a look at this (very unofficial) sketch of their actual structures, turns out they’re not so flat after all…
So, what is the ideal structure for a modern business that’s customer-centered and therefore poised for growth? I propose creating a network of teams.
A Network of Teams
To solve these structural problems, one trend we’re seeing is that companies are switching from a functional (matrix) structure. This strategy can only be described as “a network of teams” and that, of course, is a whole new model.
It’s not often that the world of the military and Hollywood meet, but when it comes to the modern model for organizational change, they’re more similar than they are not.
In this new model, teams are glued together by command centers, just like in the military.
But also in this new paradigm is a structure like the one used in Hollywood: diversified teams. Think of the production crews, actors, directors and the rest of the crew who all come together for a movie, then disband until the next one comes along. The next one might require a different combination of talents (Matt Damon can play action-hero-spies like Bourne, but is he right for every part?), so teams rarely ever consist of the same makeup.
The Optimal Approach for Today’s Buyer: The Hybrid
The key driving force here is that you must integrate marketing into every aspect of a company rather than existing as a separate entity, cordoned off from the rest of the enterprise. Here’s what it looks like in visual form:
Now, let’s look at this in action so you can start to see how this will pan out for your business.
Picture a large organization which is good at the customer experience. In this organization, they have a central marketing academy where all of their marketing diaspora attend. The purpose? To ensure cohesiveness in their marketing messages across each division of the company.
To put on these academies, the modern growth marketing team must be agile and expert in all data and research coming in from BI, tech, operations, and sales (just to name a few). The more tech and data savvy your marketing team becomes, the faster they can execute and optimize the journey.
If customer journeys are more important to optimize than touch points — and I’d argue that McKinsey is spot on with their assessment — then marketing needs to be viewed as a business intelligence department rather than the old-school stigma of advertising, lead generation or conversion optimization.
Are you starting to see how important your CMO is?
Sorry folks! Marketing has changed, and that’s a good thing. But changing up marketing without changing up the organizational design? That’s a recipe for trouble.
Propelling Growth Through Organizational Design
The simple idea of focusing on the customer and the client’s journey has huge ramifications that reverberate throughout a company. I’m not joking when I say that to become truly customer-focused, companies are shattering their very own frameworks, tearing down old structures and reorganizing themselves.
Now that we have a solid understanding of what modern structure must look like to develop a customer-centric approach poised for growth (phew!), we can talk about a few specific, critical elements for redesigning your corporate structure.
It all starts with data.
Companies who are reorganizing themselves are morphing into sleek, modern machines that eat data for breakfast, lunch, and dinner and then turn it into growth. But for many, the suggestion of restructuring their organizational processes and realigning departments are fighting words. It’s radical. It’s hard. It’s…change.
If you choose to shut your eyes to the new ideas in modern organizational design, you can’t say that you’re full-on poised for growth. So, let’s take a closer look at what it is and why it’s a must in today’s world.
The Marriage Between Your CMO and CIO is No Longer Optional
We are living in a digital world, and your customer is a digital girl (or guy).
Digital is everywhere from couch cushions (where consumers browse the Internet looking for their next big purchase) to in-store research, to post-purchase surveying and customer service follow up.
Focusing on the customer experience involves consuming heavy portions of digital.
This new behavior is why many people get confused.
“Digital” spans a huge realm of strategies, tactics, and techniques across a wide swath of people, processes, and platforms.
Even though the term is vague, one thing remains true across the spectrum of digital: No matter which strategies and techniques you’re adopting, they’ll work best if you integrate them with the rest of the functions at your company.
This approach takes a coordinated effort, where marketing plays a bigger business intelligence role in every department across the board.
If marketing knows the consumer better than anyone else, then doesn’t it make sense that the data found by the marketing team should be in the center of both your internal and external business intelligence activities?
But It’s Your CIO That’s the Gatekeeper to this Data.
As many companies — both large and small — are quickly discovering, Big Data is a freaking beast.
Regardless, this data is critical when it comes to understanding your ideal consumers. By keeping it in the CIO’s silo, it goes to waste, and nothing can be done to harness the facts and figures to improve the customer experience.
Every touch point and each micro-moment need to be analyzed and optimized — and we’re not just talking about measuring opt-ins here. We are talking about coupling data points like Google Analytics user flow data with landing page heat-mapping data or ascertaining blockage points within the mobile experience based on churn or fallout.
It’s no wonder why Gartner predicts that the CMO will spend more on tech than the CIO in 2017.
If your company is using Big Data to become more customer-focused, then it’s logical to place more emphasis on ensuring a healthy, happy marriage between the CIO/CTO and CMO.
And that involves a shift in structure and culture.
IT spending will continue to gravitate away from traditional back-end functions towards customer experience and engagement features. As such, anyone tasked with Big Data needs to tightly integrate with Marketing to make sense of it all through the eyes of the customer.
This points to a far bigger realignment in many organizations, especially when looking at how your team appears against RocketSource’s modern marketing maturity index.
HR’s Not Immune From the Shake Up Either
I haven’t mentioned HR yet, but that’s not because their roles don’t need restructuring. Recruitment, training, and retention practices are all a part of creating a tech-savvy customer experience. To achieve this, they will need to work closely with the CMO and CIO.
In other words, they’ll likely have to approach hiring differently.
With fluid, agile teams of workers made up of vested and skilled employees who promote the company culture in everything they do, there will be more of a focus on innovation, iterative improvement, personal empowerment, and agile collaboration.
The Fact Is: Growth Necessitates Structural Change in Most Organizations
How in the world do you go from realizing the importance of the customer experience to understanding the need to restructure your organization? I’ve just hinted about the changing roles of IT and Marketing. This is part of what it takes to transform a company into one that’s truly customer-centered.
But wait, there’s more (says, Billy Mays).
Let me give you an idea on some of the ways I’ve seen how organizational design strategy has changed how teams operate and succeed today.
For starters, cultures need to look at marketing in an entirely different light. In a collaboration of creative eye candy, Pardot and Salesforce nailed it in their now famous infographic depicting the modern marketer.
This goes way beyond the rest in what marketing does in 2017 versus old-school perceptions of marketing. Now, marketing teams will have more impact beyond the funnel as they dive deeper into the customer journey. This is what I call the bow-tie funnel journey.
I’ve said this for years and years…modern agile marketers must see the big picture — not just the top and bottom of the funnel.
For this type of data- and customer-centric marketing approach to happen (and growth to happen), here are some of the changes that need to occur:
- Touchpoints managed by marketing should merge with mobile-first initiatives;
- Omnichannel experiences (for brick and mortar) will see improved ROI by tying together the entire customer experience across each micro-moment;
- Content mapping will become more strategic, detailed and personalized to the buyer personas as social media and content departments view the experience as a whole;
- CX data initiatives will become embedded into a culture of Ask;
- Real-time BI analysis will allow the agile growth teams to conduct rapid and iterative tests/improvements over a wide variety of platforms and devices
For those just starting out, let’s work backward from the ultimate goal (growth) so that it becomes a logical progression. This is also an excellent recap of everything we’ve covered so far.
- Do you want growth? Focus on the core pain points that your customer would like to see resolved by way of collecting psychographic and behavioral CX data. Go beyond the Net Promoter Score (NPS) and start asking the hard questions. Improve your alignment with StoryVesting.
- Once you know what your modern and empowered customer wants from your business (by way of psychographic and behavioral data), build strategic growth models around the client’s journey and don’t forget to include to identify the strengths and constraints of your business. Yes, every business has constraints and strategies that don’t take them into account WILL inevitably fail. Hire a 3rd party strategic growth partner like RocketSource.co to help you get this right.
- No growth strategy is possible without the right talent, processes, and platforms — access and audit the knowledge, skills, and tools needed for tactical execution.
- To harness collaborative talent, a company-wide consensus must be to topple the silo effect.
- Start small by realigning and connecting team processes first, then reorganize staff in agile growth pods with tech-savvy growth marketing leading the efforts in all things internal and external
Now, I realize that this flow is very trite, but it’s important you understand how critical a role organizational design plays in helping your company grow.
Organizational Design is the Next Big Marketing Strategy
Is any of this feeling disruptive to you? If so, that’s a good thing!
I’m hoping this will strike the right chord and you’ll have an a-ha moment about the way you think about the role of marketing in your company. If that occurs, you’ll be hungry to make the sort of internal structural changes that will deliver actual long-term growth.
And if you do, you won’t be alone.
A whopping 92% of companies are considering structural changes to make the kind of sweeping changes required for these new paradigms I’m about to introduce to you now, according to Deloitte. For that 92%, altering company culture is the primary goal. Why?
Because you can’t focus on the customer in any way that has real meaning and impact unless everyone’s on board and doing it from the heart.
Every company craves growth. That’s no surprise. But in my experience with hyper-growth businesses and massive enterprise paradigm transformations, without all the necessary forces behind you and a well-built organizational design strategy, rapid and sustainable growth is hard to come by.
Today, your CMO and your CIO have the power to build a sublime omnichannel customer experience. Core company values are not enough to drive sustainable results in today’s complex digital world. Agile execution, hybrid team organization, data sharing and cultural identity built around the customer are all key factors — among a list of others — to drive modern transformative growth.
And the basis for all of this to happen is through a modern approach to organizational design based around StoryVesting. Disruptive? Most likely. Transformative? Definitely. Approaching growth through this perspective is not easy, but it’s entirely within the modern organization’s grasp.