Helping businesses organize for digital is one of the most requested services we get in our digital transformation practice. It’s therefore something we spend quite a lot of time considering.
We first published our Digital Marketing: Organizational Structures and Resourcing Best Practice Guide back in 2011, although it has gone through several iterations since.
The basic premise was that organizations were structured based on their digital maturity and that an increase in digital maturity would lead eventually to digital being fully integrated and cease to be a ‘function’.
The five stages of organizational maturity are:
- Centre of excellence.
- Hub and spoke.
- Multiple hub and spoke.
- Fully integrated.
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However our current client data shows that most organizations are currently somewhere between the center of excellence and hub and spoke stages, and that progress to higher maturity levels seems to stall in almost every case.
We already knew this model wasn’t perfect (which model ever is?).
In fact our CEO Ashley Friedlein, wondered recently what would an ideal digital organizational structure look like if we had a blank piece of paper to work with.
Neil Perkin, the author of the “Digital Marketing: Organizational Structures and Resourcing Best Practice Guide”, added further, excellent insight with this post around the effectiveness of organizing into small agile teams (No team should be larger than can be fed with two pizzas).
However I think there are several other levels of complexity that the large global organizations that we work with face:
The reality of having a wider range of stakeholders
Marketing is not controlled entirely by the CMO.
Yes, there are global brand guidelines created centrally for all to follow, or global technology platforms for everyone to use. However budgets and resources are often decided far away from corporate HQ, where local issues can take precedent and supporting the sales team is considered a bigger priority than investing in digital marketing.
The decision maker is often a business leader whose rewards are tied to growth, costs and profit metrics. In this environment the concept of customer centricity, two pizza teams or agile tribes would find little traction, however useful they may be.
The realities of scale
Many of the organizations we have worked with have thousands of marketing personal, some who have been loyal to the business for 20 or 30 years, but most of whom lack deep digital skills.
Neither up skilling or replacing these marketers is possible to the degree required to move to a fully integrated model. This is why we see such extensive use of COE models.
It’s the only reality that can happen given the existing position on the ground, while still being able to make some progress on building digital capability.
A need to be product or category focused
There are many reasons why a business is given to being more product focused than customer focused. For example, in the Pharmaceutical sector the cost of bringing a product to market, the go to market structure (distribution is through healthcare professionals in most cases) and the regulatory environment essentially relegates customer needs to a poor 4th place.
Should this be changed? We would say yes, but the reality is that this will be a very slow process and will not impact organizational priorities at scale anytime soon.
Another example would be in medical devices, which in many markets are driven by very detailed specifications.
Often these specifications are created pre tender and therefore direct influence presales is a key market driver.
Go to market complexity
Often there are multiple go to market models in play simultaneously – Direct, online, reseller channel, retail, wholesale, etc.
Sales volume through one channel in smaller markets will often mean a small team (or even an individual) having to operate and manage marketing requirements across all of them.
This isn’t to say that organizations can shy away from the changes needed to take advantage of digital.
In fact it’s vital that they do, as the benefits in terms of creating a modern culture, fit for purpose in the 21st century – one that is agile, decentralized, innovative – run much deeper than simply taking advantage of new technologies.
I personally love Spotify’s model of squads, tribes, chapters and guilds:
However a one-size fits all approach is not going to succeed for large complex organizations. Spotify has the advantage of a relatively simple market place.
Yes it is highly competitive, there is a need for delivery excellence and business agility is vital, but they also have relatively few unknowns in terms of audience or go to market strategy.
Some of our clients have more than 5,000 people just in their marketing function. They are organized over multiple business units with dozens of product divisions sitting beneath them and are faced with the realities of operating in multiple international markets, with diverse cultures, languages and regulatory environments.
Organizational theory tends to struggle when faced with these less than ideal inputs.
Our answer has often been to recommend hybrid organizational structures.
- Centers of excellence to drive planning, measurement and innovation.
- Business support units to drive change at a local level and educate business leaders.
- Embedded expertise for key functions that a specific business needs.
- Cross-functional project teams for project implementation, including drawing expertise from functions listed above.
- Steering groups tasked with longer term capability building AND oversight of delivery (review and recommendations).
One must also remember that while organizational structures are important, they tend to get trumped by culture and well-designed processes.
If people want to make things happen, and there are simple processes in place that give them the authority to do so, then structural issues can usually be overcome.
The key to this are flexible guardrails and well considered control mechanisms.
- Guardrails tell people what the minimum expected outcome is and guard against risk, yet have the flexibility for people to manage and innovate locally.
- Control mechanisms might include having a unified measurement framework (so everyone understands what good looks like) or real-time dashboards (so everyone can see the level of reporting they need).
Ideal? Almost certainly not. But then again our clients don’t typically work in an ideal market place, have unlimited resources or can start over. So for now, it’s probably as it needs to be.
Want to chat more about your organizational challenges? Get in touch with our digital transformation team at email@example.com