Organizational Structure Considerations

An excerpt from the forthcoming book “Organizing and Managing Insanely Great Products” by David Fradin with RN Prasad.

The key to overall company and product success is focusing the entire business on the customer and the customer’s experience.  If done well, the profits will follow.  How the organization is structured is key to that success.

In this section I will look into customer satisfaction, big data and analytics, understanding what the customer wants to “do”, organizational structure, metrics, data, process, autonomous vehicles, management tracking and digital.

Looking into the Future: Customer Satisfaction

Economic forecasts say by 2050, China will have the largest economy in the world, followed by India and then the United States.  This means global companies must have a presence in those economies, talent from and developed in those countries and authority delegated to enable the company to be closer to the customer in those countries and be agile for success.  Customer satisfaction will be the king.

No longer should a customer have a problem and call into one department, explain the problem only to be told to call another department.  Or if the call is transferred, have the phone call hung up in the transfer.  Then upon reaching the next department having to explain the problem all over again.

Customer service will have to be like Apple’s customer service.  Their support people will stay on the line during the transfer to someone more experienced in one’s problem and will explain it to the new support person.  Plus they stay on top of the problem and follow up until the problem is solved.

The same customer focus will be apparent to the customer whether or not they are within a physical store, through a web browser or on a mobile device.

Big Data and Analytics

The successful companies will use “big data” to gain insights in real-time and provide new products and services in response to sensing what the customer wants to do.  HR will use big data to predict the competences of the staff needed in the future, to ease hiring, and to predict which people are more likely to help contribute to product and company success.

Today’s customer-centric companies are watching in real-time, changes, and use agile methods to respond quickly.  The luxury of waterfall is quickly going away or the organizations sticking to it may soon be out of business.  Keys to success is creativity, speed, action, flexibility, risk-taking, and outstanding collaboration throughout the enterprise.  These organizations don’t get themselves tied up by the sales prevention and customer satisfaction departments which are sometimes called finance, or legal, or HR, or IT.

Understanding what the customer wants to “do.”

For companies to become more customer-focused, organizations need to go into more detail than the big-picture outcome-based innovation or jobs to be done approach.  They need to understand the tasks or what people and companies need to do.  Why they do it. When they do it. How they do it. Where they do it. Who does it. What they want to do.  How important is it.  How satisfied are they with the current solution. Then they organize around each task and come up with ways to help the customer get what they want to do done faster, cheaper, with better quality.  Which, by the way, is called innovation.

Organizational Structure and Communications

The organizational structure should be based on cross-functional multidisciplinary teams and agile interactions to design and build insanely great customer experiences with their insanely great products and services.  These teams have experts in strategy, research and development, user experience, industrial design, marketing, branding, sales, and supporting IT.  It is done this way instead of function-based organizations.

Things like encouraging employee networking, interest communities, and information flows should be done.  Plus incorporating outside partners and nurturing partners.

Metrics for Success

Driving all of this can be the metrics selected for success.  If the wrong “metric” or KPI (Key Performance Indicator) is selected, disaster could follow not only for the company but also for the customer and the public.

For example, Pacific Gas and Electric, the northern California gas and electricity provider, set their success metric as being shareholder value.  The result was decreased maintenance on energy distribution networks (natural gas pipelines and the electrical grid).  That lack of maintenance contributed to a natural gas line that blew up in 2010, killing dozens of their customers.  From 2016 to 2017, that lack of powerline maintenance caused 17 out of 19 forest fires killing hundreds of their customers and destroying thousands of structures costing tens of billions of dollars.  All because the management metric was profits and shareholder value.

Don’t believe me?  Just Google the court decisions on these matters so far, with many more coming.

Perhaps such metrics as customer loyalty, retention, churn rates, and new customer referrals would drive the ecosystem better?

Apple, Amazon, and others do this without worrying about investor value.  But that value follows typically. HP did it for 50 of its first years in business while ignoring Wall Street’s quarterly profits fascination and doing and implementing long-term planning.

One company also did this recently by improving product quality using Six Sigma techniques.  They even delayed a product release until quality issues were resolved, thus resulting in an eight percent improvement in warranty cost, and saved $100 million.

Focus on the customer creates significant value for the customer and the company.  Another result of such focus is it creates insanely great customers and significantly increases customer loyalty.

It’s the Data, Stupid!  The Money is in the Data

The book “What Would Google Do,” (Amazon https://amzn.to/31QYhRP) which came out in 2011, answers the question that everybody seemed to be asking when Google started.  What is Google’s business model?  How is Google going to make money as a search engine? What everybody seemed to miss, “What Would Google Do” answers very clearly.  It’s the data, stupid.

Google collected tremendous amounts of data on human behavior and monetized it for advertising purposes.  Many companies and organizations, like the government, have lots of data, but they don’t monetize it, yet.

For example, a few years ago, I had internet service from Comcast, and every time it rained, the service went down.  For repairs, Comcast had the local repair person come out after I called.

Five times I had the local guy come out.  First, they rewired my condo.  Then they replaced all the components out to the street connection box.  They could not fix the problem.

Since Comcast could not solve the problem, I searched and found out how I could gain admin access to the modem.

In the errors log, I found hundreds of  “Ranging out Errors.”  and I told the Comcast technician.  He did not know what that meant.

I searched some more and found a technician in Argentina that had posted on the internet that a “Ranging Out Error” said the signal to noise ratio got to the point that the Internet connection will not work.

What was happening is that when it rained, one of Comcast’s routers or switches was getting wet, resistance was going up, the signal to noise ratio was going bad, and my Internet access was going away.

But I had no way to tell Comcast network operations about this problem.  They would not let a little customer like me communicate with Network Operations people who managed the network from the street back to the central office.

Many of the other condo owners in my complex had the same problem.  They too were frustrated.

So I had to get the attention of more senior Comcast managers.  I called for a tech to come out ten more times.  I figured that each call costs them about $150 each and soon a spreadsheet of tech call costs by geographic area will quickly land on a manager’s desk, and he would say “what is wrong in that area of the network?”.  Soon after that, the problem soon went away.

Since I teach product management at Cisco and the modem was from Scientific Atlantic, which was owned by Cisco at the time, I made a suggestion.

Write a little program that would go out and download the error logs on all the modems and all Cisco routers/switches and analyze the data, perhaps even using artificial intelligence and machine learning.  That analysis would show wherein the network there is a problem and enable Comcast to be proactive in eliminating issues and predict and act so they don’t happen.  Cisco could put together a service offering and sell that detect and report service to their cable network customers and others.  Hence, they can turn “data” into money.

So what has to happen to make this happen?  Product managers must be empowered to cross departmental lines to develop and deliver products/services that improve the customer experience.  Plus the organization needs to support and encourage this.  HR can take the lead an encourage product management empowerment.

Process Changes and IT

Functional process changes can significantly enhance the customer experience and profits.  So when evaluating potential process changes using AI, machine learning, and robots, the focus should not be on cost or effort reduction but on creating value with new and improved processes.  That is the value for the customer.  As a result, the organization needs product success managers that know how to develop product strategies to do this.

From an organizational standpoint, the most drastic of changes will be occurring in marketing and how IT supports that function.  In the past, marketing has been pretty much on its own.  Now with web sites, blogs, search engine optimization, content marketing, tweets, mobile, and more help from IT is essential and must be quick and flexible. Not to mention the collection and use of big data all focused on understanding the customer and what they want, whether wherever they are.  In short, the organization needs to support and assist in the customer’s journey.

With the advent of the Cloud and SaaS, it has become easier and faster to develop cross-departmental applications that enhance collaboration.

The organization should also be structured to take into consideration security.  It is well known the costs to the organization and individuals if security is breached.  Target, Equifax, the Democratic National Committee, and most recently governments and health organizations have been taken, hostage.

Shortly, virtual reality will assist in the fidelity of team communications. It may help in training customers and employees in such departments as support and service. Marketing may use it to augment a prospective customer’s visualization of the product or service they might be considering.  To take advantage of this new technology, IT will need to be more involved with marketing for such developments.

Autonomous Vehicles

Autonomous vehicles will change how people will get to work, it will drive less need for parking (if their car is running around making money for them while they are at work), and the need for more charging stations.  This will affect HR’s planning role for employee satisfaction.

Management Tracking

Product success managers have an unusually complex job from customer needs to market strategy to engineering to marketing, sales support and sometimes operations, distribution, and pricing.  They have to do all this with general-purpose tools like spreadsheets, email, and word processing.  HR can be very helpful by providing more sophisticated tools like Spice Catalyst’s JIRA plug-in called Productize.

Productize was developed by a student of mine, Uday Kumar, to enable greater visibility of the product lifecycle status to management, assist in the centralization of assets, and use the collaboration features of JIRA.

You can video a couple of videos about JIRA at https://youtu.be/RgYFsM34BnU and https://youtu.be/XGgZ-z0v7s0?list=PLE9WUHg1PW40NxKNX6DaPwOMjIv_TtOwJ

And Productize can be downloaded from the Atlassian Marketplace at https://goo.gl/AFbBlV

Digital Innovation

While the enterprises worldwide are rapidly moving towards a mobile-first world, cloud-based for their products, services, and business model, HR needs to do the same or be left behind.  If they get too far behind, they will come to the point of irreverence to the rest of the organization.

Summary

Customer satisfaction is king and companies will use big data and analytics to achieve it. Satisfaction starts with understanding what customers want to do and how satisfied they are with the current solution.  The organization should be structured to encourage and support cross-functional, multidisciplinary teams and are hopefully being driven by good metrics.

Companies can look at their data as a resource that can be monetized or used to competitive advantage as Google does. Processes should be enhanced to improve customer experience and provide security.  Autonomous vehicles will change how people get to and from work.  Tracking of the product life cycle will get to be more and more important. Digital will affect the organization enabling teams to be dispersed worldwide.

Podcast: Play in new window | Download (Duration: 14:58 — 27.4MB) | Embed

Subscribe: Android | Email | Google Podcasts | RSS | More