Monday, May 9, 2011

The new world of customer centered organizational structure

This is the second of a two-part post on organizational structure.  Part 1 can be viewed here.

Perhaps you have been operating in a Power Pyramid, where authority and decision making are concentrated at the top of the organization.  The old organization with layers of thinkers, communicators and doers respectively didn't serve customers.  It served the organization.  In addition to the omission of customers from the company radar, the old structure underutilized its people resources, relegating even highly experienced, outstanding individual producers to the status of "warm body."

The enlightened company is saying "no more" to the Power Pyramid, and instead is embracing this Performance Excellence Model:

Notice that customers are not only on the model - they are the purpose for the model.  Everything on the inverted pyramid is intended to support the development of a satisfied, loyal external customer base.  Loyal means they are repeat buyers.  Loyal means they are likely to refer other customers to the company. 

The foundation of the Performance Excellence model is Strategy.  A business can't be excellent when it doesn't know what it wants to be when it grows up, nor how it plans to get there.  Strategy need not be a 50-plus page tome.  But it goes beyond this year's budget (the business plan) to a 2- or 3-year window.  Vision, the foundation of the foundation, as it were, might extend as far as a 10- or 15-year view - or maybe longer.

Supporting the strategy are Process and People.  Process is comprised of all of the "how it gets the work done" components of the business.  It defines what the people do, and well-managed processes obtain the optimal leverage from the corporate IQ.  Well-managed processes are both effective (producing the results customers want) and efficient (doing so with the minimal investment in people and other resources).  Strategy determines the priority of attention on the improvement of production and business processes.

The People component is about leadership, about culture.  It might seem like a blinding flash of the obvious that company culture has to align with the strategy, but many, if not most, companies have gaps.  Leaders and owners become frustrated at the behavior of their direct reports, forgetting that, to quote Peter Drucker, "Management is cause, and all else is effect."  Smart companies don't leave the culture to chance - they develop their leaders in alignment with their strategy.

Notice the center of the model - the interim goal is "Satisfied, Loyal, Internal Customers."  These are the people who interact with the customers through various points of connection.  It becomes the job of senior leaders to make sure that every employee has the resources by which he or she can satisfy customer wants and needs.  In the customer-focused company, peers look for ways in which they can benefit other people downstream in their work processes.  They are involved in creating solutions to customer problems.  They own their results.

Remember the old saw, "If momma ain't happy, ain't nobody happy"?  Same goes for companies and customers.  Without customers, nothing happens.  And if you have customers going out the back door while you're investing heavily to bring them in the front door, you're not going to grow at the pace you want to grow.  Turn that Power Pyramid upside down.  It's the first step in achieving the results you want for your company.

1 comment:

Larry and Rebecca said...

I like it! It is so simple and yet so many firms just miss it.