Designing the organisation for a digital customer experience
The last two years have been the most disruptive for organisations and professionals in recent memory. Not only has COVID tested the resilience of the human race, it has also fundamentally changed the levers of core competitive advantage across industries. Thriving businesses, seen as disruptors in their respective industries, had to transform themselves overnight to adjust to the new normal. Organisations who ignore this or are slow to respond to this new world would either be completely out of business or risk a prolonged period of diminishing shareholder returns.
To achieve this transformation, there are three questions that CEOs and boards should answer:
- How to transform every part of the business into a digital business focused on end customers, using technology and embedding digital into core products and services?
- How to harness the power of data to provide end-to-end personalized experiences to customers across the entire journey and across different channels?
- How to drastically reduce the time required to transform the organization and bring the workforce along?
Successful digital transformation and building personalized customer journey-led experiences have implications beyond technology and requires careful organisation design. It requires a redesign of the operating model, organisation structures, internal work processes, measurement frameworks, governance mechanisms and reward policies. Often organisations fall into the so called “technology trap” thinking that buying the best-in-class technology/tools or copying initiatives from digital natives (like the Spotify model) will overnight lead to digital transformation. For transformations to succeed, organisations need to be fundamentally re-wired and redesigned to derive the best value out of their technology investments. Organisations also need flexibility to adjust to the rapidly changing external forces and break organisational silos to give a “unified face” of the organisation to end customers. This is not a one-off activity. Organisations need to constantly “mutate” and reinvent themselves to be relevant in the marketplace for their customers.
What do companies need to do achieve this “holistic” digital transformation?
Delivering a seamless customer experience across journeys requires new ways of working and a change in mindset amongst the workforce. Organisations need to be designed in the context of their unique strategy, product/services, and capabilities. Whether to hire a Chief Digital Officer reporting into the CEO with a global mandate to drive digital or leave this to the business unit leaders will vary from organisation to organisation depending on existing strategy, operating models, ownership of P&Ls etc. For example, how a product-led company with multiple product lines across categories would organize itself to deliver a superior customer experience would differ from how a global function-led organisation would do it. Organisation design is all about choices. There is no perfect design, there are just designs that fit best on a set of “design principles” and then there are compromises while selecting from the available choices. And, just as the organisation adjusts its strategy to compete in the market, organisational design must also evolve and mutate to react to the business strategy. However, we do see that a few design principles remain consistent across organisations that deliver successful customer experience transformations. All such organizations should:
Build structural agility - Empower small teams to operate and drive cross-functional collaboration, quick decision making & focus on end-to-end user journeys with a mandate to experiment and take low-stake risks. This requires senior executives to step aside from day-to-day micro decisions and empower autonomous cross-functional teams to take decisions based on clear principles set by them. How such teams are assembled would vary in every organisation. However, each team must focus on sub-journeys within the overall customer journey, partnering effectively with peers across teams to transform the entire experience and reacting to ever-changing- customer needs. Careful thought needs to be done to “weave” these teams into the larger organisation and how they are treated, rewarded, and governed. For faster decision-making, global organizations also need to focus on what capabilities it should centralize and what should be left to individual businesses units and/or countries.
Focus on how work gets done – All structures create silos. Processes define how work gets done in an organisation and within the context of a particular structure. For example, if the human skeleton is the structure, the processes are the veins and arteries that feed every part of the body to make it work. To build seamless customer experiences, companies must map out every activity required to serve the end customer (where it begins, bottlenecks, dependencies, who does it etc.) and build a holistic value chain. It must then setup small agile teams to solve small parts of this value chain and re-define the processes while keeping in mind the end-to-end customer experience. For example, a global telco was able to significantly reduce the effort required to onboard new customers by reducing the number of steps in the onboarding process across all functions and redesigning the new onboarding journey.
Build coordination mechanisms – While the work is delivered by autonomous agile teams, a clearly defined governance framework is required to drive strategic alignment, collaboration and resolve issues. The framework should clearly define governance forums across the organization, with a leader, composition, purpose, accountabilities, and frequency. These forums should be built across levels (i.e., strategic, tactical & operational) for holistic governance and seamless issue resolution.
Build enterprise data capabilities – Data today is a key ingredient to deliver personalized customer experiences and processes to leverage this data for meaningful insights are the “secret sauce”. To build these data capabilities, it is important to break functional / business unit silos by building a “global information centre” that focuses on data collection, harmonization and data dissemination based on clearly defined governance standards. How “strong” or “centralized” these centres should be will again vary based on an organisation’s unique context & operating model. For e.g., a global product company with global product P&Ls have built a “Digital Incubation Unit” to harness the dispersed customer data across different product organisations. Usage of this data to deliver customer experiences is left to the respective product organisations.
Build a global organisation – Experience led global organisations must be built to be local and global simultaneously. Customers expect a consistent brand experience that is personalized for them. Even the biggest digital organisations struggle to deliver this balance. While this is an age-old conundrum in organisation design, balancing global scale with local autonomy is more relevant today than it has ever been. Careful design consideration needs to be taken to maintain this “balance” to deliver personalisation at scale. A great example of this is McDonalds which delivers a globally consistent look / feel / experience across its stores, but menus are customized to local tastes, customer preferences and consumer data. A recent Adobe client built a platform organization for global scale and consistency and also setup up regional centres for faster delivery on local requirements of its 70+ subsidiaries.
Rethink performance management & rewards to drive collaboration - While the organisation is restructured to break functional silos and drive collaboration for an end-to-end customer experience, misaligned rewards can drive exactly the opposite behaviours. To ensure holistic change at an individual level, organisations must optimize their performance management and reward frameworks around “team performance” and “cross functional collaboration”. Organisations must strike the right balance between metrics that have a strong “line of sight” vs. those that drive collaborative outcomes. For example, a global consultancy company’s strategy was to drive greater penetration into its large global accounts. While it defined a new operating model focusing on key accounts, it failed to get any meaningful business results. An independent consultant was brought in and it was soon clear that while the organisation’s focus was on cross selling services into accounts for greater penetration, team bonuses were linked to their respective service verticals with no incentives for them to cross sell. It is therefore pivotal that metrics underpinning performance management and rewards should reflect the accountabilities/behaviours that the new organisation structure wants to drive.
Talent development & re-skilling – Delivering the above transformation requires people, and a lack of skills within the organisation can jeopardize the entire transformation. With the great resignation, the war for talent will only get harder. Companies will need to identify new ways of acquiring, developing and engaging their talent. They also need to build robust skill-based workforce plans leveraging data.
In a nutshell, to deliver digital transformation, it is imperative for leaders to redesign their organizations, build a digital culture, institutionalize agile and drive collaboration & risk taking amongst their employees. The extent of these changes would differ from company to company depending on their unique circumstances but would require focused leadership efforts on the key transformation levers discussed above. Finally, it is always good to seek external advice for neutrality and a fresh perspective. Leaders can leverage the established methodologies that consulting firms like Adobe Professional Services bring to the table along with their experience in delivering such transformations across multiple organizations and the expertise of their organization designers with the right mix of technical & business skills.
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