There are two strategic imperatives that you cannot fail to have missed. Firstly, digital transformation. Secondly, customer-centricity.

From McKinsey to Accenture to IBM to CapGemini to Deloitte to PWC to Forrester to Gartner and, of course, our very own Econsultancy and Marketing Week, all of the research, analysis and consultants’ advice bangs the same drum.

All businesses agree they have to become more digital and more customer-centric. 

All the research also agrees that most organisations feel they are very far from achieving these transformations. PA Consulting’s Digital Barometer says 62% of organisations have ambitions to be digital leaders but only 8% feel they are well on their way to achieving this.

All the analysis agrees on the barriers and challenges: leadership, culture and people, skills and capabilities, legacy technology. Business models are being disrupted and we all preach the need for innovation and more agile ways of working. 

The real problem is one of execution. We know the challenges and we believe we know which direction we need to head but actually doing it is hard. Finding and retaining the right people alone is a massive challenge. 

But let us consider organisational structures. Econsultancy publishes a very popular report called “Digital Marketing: Organizational Structures and Resourcing Best Practice Guide” and also offers advice and guidance to companies around the globe on organisational restructuring and digital transformation

The report first came out in 2011 but has been revised since. Among other things it proposes a digital maturity model which has five stages of evolution:

  1. Dispersed.
  2. Centre of excellence.
  3. Hub and spoke.
  4. Multiple hub and spoke.
  5. Fully integrated. 

The end vision for ‘digital’ is essentially that it becomes so much part of the organisation that it ceases to exist as a separate function. Most organisations, however, are currently somewhere between the centre of excellence and hub and spoke stages.

So much for digital. But what about customer-centricity? If you had a blank sheet of paper and were designing an organisational structure that was “fit for customer-centricity” and also embraced digital as fully integrated what would it look like? And where would marketing be in this structure?

I thought I would have a go. Below you can see my first draft which also has some notes on it. 

Obviously it is simplified and I have not given it too much thought as I am interested to get feedback to iterate it. In true agile style.

Some of the key points in the thinking behind it follow below:

(Click on the image for a larger version) 

Organisational Design for CX concept

1. It was created with businesses in mind that produce and sell some kind of product or experience.

‘Customer’ can be interpreted quite broadly to include stakeholders who might even be internal. 

2. There is a Customer Director who reports to a Chief Customer Officer on the board.

To date I have fought against the creation of new job titles and would still rather just call this Marketing Director but at least it helps mitigate the risk of accusations of functional empire building by marketing to subjugate sales and service. The CD (Customer Director) could come from any of those functions. 

3. The CD takes control of all front office functions including sales, service and marketing.

The CD envisions, architects and optimises the customer proposition and experience across all channels. You can see that there are capabilities around customer experience, including product management, and content that sit within the CD’s remit.

You will note that there is nothing specifically digital as it is part of everything.

4. There are data and insight capabilities within the CD’s overall team but there is also a client-side technology team embedded in the CX (Customer Experience) function too.

Infrastructural technology capabilities would be part of the back office but I think for agility and CX reasons it is important to have technologists that really understand design and interfaces as close as possible to marketing, sales and service. 

Is this a realistic embryonic model to deliver true customer-centricity with digital embedded throughout? Or should we stick to the functions, roles and terminology we are used to?

Ashley Friedlein

Published 20 March, 2015 by Ashley Friedlein @ Econsultancy

Ashley Friedlein is Founder of Econsultancy and President of Centaur Marketing. Follow him on Twitter or connect via LinkedIn.

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Martin Hill-Wilson

Martin Hill-Wilson, Owner at Brainfood Consulting

Ashley,

It's a useful model for a number of reasons. I think you have nailed the right balance using the CD and OD role and focus. As such it should allow more of the right behaviours to emerge as a result.

Secondly, it has the virtue of being a feasible evolution from current organograms. It should not put strategic planners into a tail spin.

Martin

over 2 years ago

David Sealey

David Sealey, Head of Digital Consulting at CACIEnterprise

Great post Ashley.

I tend to approach questions of structure from a different angle that follows Peter Scholtes' framework in the Leader's Handbook (see https://www.thesealeys.co.uk/wp-content/uploads/2014/03/digital-organisational-design.png for an example of it).

The first question to answer is what is the vision or purpose of the unit. This should be an altruistic endeavour rather than an internal purpose statement. In this case the purpose may be "provide customers with an easy, personalised and memorable experience on every major channel".

Once defined, purpose or vision then shapes process. Process shapes tasks, which in turn shapes capabilities and roles. Only once roles are defined do we come to the point of putting together a structure.

The answer may not be a million miles from yours but it certainly provides greater justification for the end diagram that is created.

Best regards

David

over 2 years ago

Matthew Tod

Matthew Tod, CEO at Logan Tod & Co.

Thanks for this Ashley, nobody is ever going to agree but let me try and build a little based upon my experience.
.
The Management Executive is the group that really runs the business day to day, not the board so the Customer Director should sit on the exec and probably not the board. CEO and CFO do have a place on both typically. Ops, IT, HR, and a 'Product' lead are the other members of the exec, but in truth it all depends on nature of the business.

Customer Director / Chief Customer Officer is part of the future I'm sure - though who knows the exact title, it may be CMO but I think something more expansive is likely in order to cover the broader remit. In that team I think you will find around half a dozen direct reports; something like this:

1. Sales leader
- Sales through all channels split by customer segment, with people responsible for sales by segment not channel

2. Experience leader
- Customer Journey regardless of channel, and again split by customer segment

3. Customer Technology leader
- All technology that enables the Customer team (Inc. CRM, digital marketing, analytics etc.)

4. Service leader
- Service through all channels as required to service each segment

5. Marketing leader
- Brand
- Customer acquisition across all media & channels
- Customer retention across all media & channels
- Content (an independent support capability for the above tasks)

6. Data & Analytics
Channel agnostic BI and analytics to enforce one version of the truth and to support all the above functions.

So I don't think we are far apart!

over 2 years ago

Louis Wahl

Louis Wahl, Chief Customer Officer at Wex Photographic

Ashley, thanks for making customer-centred organisations a topic for discussion. As the overall quality/capability of digital organisations starts to converge, the new differentiator is how quickly businesses adapt their processes to meet customer needs.

Re: the organisational chart. In many challenger brands, the distinctions between Marketing and Operations are being blurred. Good operations provide the real moments of truth that bely the marketing output. A good Customer Director/Chief Customer Officer becomes the agent of change in the business, and needs to have champions tied directly into their organisational structure.

I think that your structure is right that Customer and Operations are peers, they both sit on the Executive Board and report to the CEO. You could split the Customer department into Customer-facing and Marketing functions, for example a Head of Customer and Head of Marketing reporting to a CCO. As Voice of Customer is so important in these organisations, analytical capabilities should be shared between the two. This, hopefully, creates more champions for change, rather than creating a 'single point of truth'.

In the end, though, structures often promise more than they can deliver. The key to success is getting the people in those roles working together effectively.

over 2 years ago

Martin Hill-Wilson

Martin Hill-Wilson, Owner at Brainfood Consulting

Well said Louis. It comes down to coaching the right behaviours once the right sort of framework is established and the motivations between teams is aligned

over 2 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

@David Hadn't seen that Peter Scholtes framework before. Seems to me that something like 'tasks' shouldn't be so high up the chain unless, perhaps, it is an early stage business. Strategy > structure > people > process is a fairly standard approach.

It is interesting that culture and vision seem to be increasingly important in business. This might be because what is most scarce is talent and talent is attracted by vision and culture. It might be because the broader economic pressures are currently leaning towards growth rather than cost-cutting. It might be because of the tech 'bubble'. It might be because the culture/approach of the tech companies is infiltrating mainstream business. It might be the imperative to change, disrupt, innovate, be 'agile'. It might be because Generation Y are more motivated by values/beliefs/vision/culture than just money. Probably all of these.

It reminds me of Bezos's "Stubborn On Vision, Flexible On Details". Or of Spotify's "loosely coupled, tightly aligned". I think it was Spotify who talk of 'minimum viable process' too.

@Matthew Yes, you are right about the 'Board'. I meant the operational board (or executive team as you call it) rather than a PLC type board. I should update that in the diagram.

Otherwise, yes, the leaders you give pretty much exactly match to the areas I've outlined.

@Louis Yes, marketing and operations are getting much closer. My friend Jason sold his marketing operations consultancy to McKinsey last year (see http://www.consultancy.uk/news/754/mckinsey-buys-digital-marketing-operations-firm-agiliti) which I think is a smart move by McKinsey who, I assume, realise that strategy is great but delivering on it is the harder part now and marketing operations is really important and really hard.

Of course marketing is getting closer to other functions too. Technology most obviously - I enjoy Scott Brinker's Chief Marketing Technologist thinking (see http://chiefmartec.com/).

You are absolutely right in saying "The key to success is getting the people in those roles working together effectively."

Getting the right people in the first place is critical too. Jim Collins talks about this in his "Good to Great" (http://www.amazon.co.uk/Good-To-Great-Jim-Collins/dp/0712676090). He talks about "getting the right people on the bus" (for the ride). If you've got a strong vision, a strong culture, and great people, the rest is easy ;)

over 2 years ago

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Scott Brinker, President & CTO at ion interactive

Thanks for the shout-out, Ashley!

I think this "blank sheet of paper" exercise is a terrific antidote to "title inflation" that we've seen in seen in recent years. The reason why people have suggested that there be Chief Digital Officers, Chief Data Officers, Chief Innovation Officers, Chief Experience Officers, etc. -- even I have contributed to that soup with the notion of a Chief Marketing Technologist (a hybrid marketing/IT leader) -- is because we know the new kinds of organizational capabilities represented by such "chiefs" are crucial to businesses in a digital world.

However, having *all* those chiefs, as C-level or near-C-level peers, is clearly madness. But with the calcified organizational structure of most businesses -- legacies from last century -- it's not clear where such capabilities should reside and how they should interrelate to each other.

The right solution does seem to be a greater willingness to reimagine what org structure would be truly ideal in today's environment -- natively integrating these capabilities from the get-go.

I'm not suggesting that's easy, especially for existing firms -- change never is. But starting with a more open brainstorm of what kinds of conceptual structures are possible seems like a great start.

over 2 years ago

Daniel Lee

Daniel Lee, Web Analytics Manager at Evans Cycles

Considering customer/visitor insight is in fundamental in the transformation to a customer centric business, I was surprised to see this department so far away from UX (as I feel UX and Insight often go hand in hand).

I also feel that lessons learnt through insight and UX should shape the Marketing message and content which visitors see.

My structure wouldn't look too different to yours and if eConsultancy allow image contents, I would gladly share, but Analytics would be closer to UX in my version and have more responsibility when it comes to driving Marketing and Content.

Interested to hear your thoughts on this.

over 2 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

@Daniel If you connect to me on LinkedIn then you can send me the graphics direct via email perhaps?

And you should not judge the 'distance' as any degree of relative importance or prioritisation. The key thing is the control/remit that sits under the Customer Director.

over 2 years ago

Rob Mettler

Rob Mettler, Director of Digital Business at PA Consulting

Hi Ashley, great post and thanks for the reference to PA's Digital Barometer - full report online https://www.youtube.com/watch?v=uhpstQVZctY for those interested.

Your model tackles some of the fundamental customer experience challenges for me, those of creating a coherent end to end marketing, sales and service across channels - which historically have let customers down badly as they endeavor to straddle the organisational structure to achieve their goals - and your model serves that well with clear ownership and responsibility

The question it does raises for me is one of propositions and new value creation. For me digital business is about how you market and serve your customers/stakeholders and also how you shape and conceive new propositions and services. Creating unified propositions (e.g. breaking down product silos in sectors like Financial Services) and new wave propositions (e.g. a new revenue stream in a new market with a new proposition) move beyond marketing, sales and service - so I'd be interested to hear how those aspects fit into your model.

over 2 years ago

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David Physick, MD at Leadership Physic(k)s Ltd

Fascinating commentary. Is it all somewhat "smoke and mirrors"? While "digital" is new, the concept of delighting the customer, giving them exemplary service, a fabulous experience isn't. It's as old as business itself.

Some old principles hold true, namely structure follows strategy and people populate the structure. So, if the strategy is silent, coy, ambiguous about delighting the customer, no structure will work. In the cycle of consultancy fads, is the role of CCO another one? Surely, that is the remit of the CEO.... or has that been lost in the new focus of delivering value for the stakeholders?

Every organisation pleads poverty, strives to reduce costs, yet so few look at the cost of re-work. This concept born in Toyota was shown to be really red in tooth and claw when Toyota took its eye off the ball and was suddenly recalling cars like there was no tomorrow. Look at my old industry of banking where the cost of re-work in selling lousy products runs out to billions of pounds.

Drawing organisation charts can occupy many hours of fun. From pyramidal hierarchies to holacracies such as at Zappos. Yet the manner in which the "role profile" that sits behind the box on the chart is prepared is woeful. Job purpose statements are mini-essays within a tome like document (I once saw a profile for the Director of Patient Care at a UK hospital. 11 pages. Patient, apart from in the title of the job, didn't appear until page 6!). And, any sense of the job being a leader or manager of people is equally unclear.

Let's tread warily here and not try to use digital as an excuse to paint lipstick on a pig. The fundamental problem will still be there that there is inadequate focus on the customer and everything is front-loaded in the marketing resulting in over-promising and under-delivering.

Like leaving an empty chair at the Board table and putting a nameplate on it saying "Customer", so too should the first word on the structure chart be Customer and, perhaps, put it at the top of the page. As you get down to the bookkeeper, fork-lift truck driver in the warehouse, the floor-sweep, do they have a clear line of sight to the customer? Do they appreciate how what they do has impact on the customer, e.g. the bookkeeper processing refunds, the fork-lift truck driver not damaging good, the floor-sweep adding to the experience guests have in Disney theme parks? It is here that digital and physical become inextricably entwined and the golden thread is customer. Always, customer.

over 2 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

@David All fair questions. And, of course, you would hope that you are right that it should always have been about the customer. But I don't think it has. Just as 'people are our greatest asset' has been trotted out a million times before with no real conviction or substance in most cases. Or brands that are 'fresh and dynamic'. Yawn.

I think the difference now is that customer-centricity, customer focus, voice of customer, customer experience, whatever you want to label it, really is becoming the main competitive (dis)advantage. And 'digital' has brought that about by bringing transparency. There is nowhere to hide now. Marketing lipstick cannot disguise the pig. And it could before.

I agree that really it should be the CEO's job to focus on the customer. Indeed, the whole organisation's. But I don't know if this is practical or realistic yet. In big companies the CEO is still managing stakeholders (especially shareholders). Perhaps it would be better if the CFO or COO did this? I don't think Jeff Bezos spends too much time worrying about shareholders? Nor did Steve Jobs? Many internet companies/start ups are run by 'product' people these days who are very customer focused.

So really I think having any senior job title with 'customer' in it is perhaps just a transitional state for large companies to get used to the concept of *actually / really* caring about customers as opposed to talking that talk?

over 2 years ago

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David Physick, MD at Leadership Physic(k)s Ltd

When I was CRD at Barclays, my last "proper job", Matt Barrett was CEO. He wasn't everyone's cup of tea but in the first ever interview he gave after being appointed, which was to The Independent and that in itself said something, he remarked, ""The consumer, whatever they are buying, is long suffering. A service revolution is a little overdue. I find the legendary politeness of the English to be not in their self-interest. I think they should be ranting and raving at the service they get, wherever they are getting it, banks included. The consumer cuts business too much slack in this country." For me, that was a CEO clearly setting the customer agenda, which was subsequently sadly derailed. My fault, I had left by then (ha, ha!) Bezos is a fascinating example, as is Tony Hsieh at Zappos now, of course, in the Amazon fold. Thank-you for initiating this vital conversation.

over 2 years ago

Martin Hill-Wilson

Martin Hill-Wilson, Owner at Brainfood Consulting

David, Good to hear you again. Suitably quizzical!

I'd merely add that if all it took were words then the whole deal would have been nailed as soon as Drucker started voicing his insights. And 30 years on......

Maybe the dynamics are more favourable this time around.

Martin

over 2 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

As an addendum to this article and discussion thread I've been noticing a few moves and job title changes recently which might endorse some of what I outlined.

In the following examples the top jobs have 'customer' in them and are more senior than CMOs or Marketing Directors. Typically they have remit over marketing, digital, ecommerce, sales, multichannel CX, innovation and even customer service. In most cases they have P&L responsibility. Most have a lot of 'digital' experience.:

- Both Tesco and House of Fraser have recently created Chief Customer Officer roles which oversee marketing, ecommerce and sales.

- Dow Jones has a Global MD who is also the Chief Customer Officer

- British Airways creating a Director of Customer Experience post with a Head of Customer role reporting to it

- Vauxhall's Marketing Director was promoted to Customer Experience Director

- First Utility have a Chief Customer Officer promoted from being merely the CMO

over 2 years ago

Louis Wahl

Louis Wahl, Chief Customer Officer at Wex Photographic

@Ashley - this is an interesting trend. Driving change across a business to align comms, adapt processes, and lobbying senior managers to make a company more customer-centric is a big part (if not the whole purpose) of the CCO job. You need to have the scope within the role to make this happen. These shifts are most likely a reflection of this.

over 2 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

@Louis Sorry, I omitted you! How could I have done that ;) Of course, your previous employer RS Components has a role that is "Global Head of IT (Marketing / eCommerce)".

I haven't given the names in my examples of the individuals though it would be easy enough to find out. But I can now add:

- Wex Photographic created a CCO role which also includes the CMO responsibilities
- Severn Trent Water have created a new CCO role which oversees not just marketing but technology

The list will no doubt grow. Perhaps we should run some kind of CCO round table or event?

over 2 years ago

Martin Hill-Wilson

Martin Hill-Wilson, Owner at Brainfood Consulting

Ashley,

In fact Sarah's role at Severn Trent includes Customer Service as well

Martin

over 2 years ago

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