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Tag Archives: Transformation

How to Create a Next-Generation Learning Organization That Enables Digital Transformation?

27 Jul

Survival of a business in this digital age largely depends on its ability to timely embrace Digital Transformation.  Digital Transformation entails using Digital Technologies to streamline business processes, culture, and customer experiences.

In order to compete today—and in future—and to enable Digital Transformation, organizations should work towards fostering a culture of continuous learning, since Digital Transformation depends on learning and innovation.  The organizations that holistically embrace this culture are called “Next-Generation Learning Organizations.”

The next generation of Learning Organizations capitalize on the following key variables; Humans, Machines, Timescales, and Scope.  These organizations incorporate technology in enabling dynamic learning.  Creating Next-Generation Learning Organizations demands reorganizing the entire enterprise to accomplish the following key functions to win in future:

  1. Learning on Multiple Timescales
  2. Man and Machine Integration
  3. Expanding the Ecosystem
  4. Continuous Learning

Learning on Multiple Timescales

Next-Generation Learning Organizations make the best use of their time.  They appreciate the objectives that can be realized in the short term and those that take long term to accomplish.  Learning quickly and in the short term is what many organizations are already doing, e.g., by using Artificial Intelligence, algorithms, or dynamic pricing.  Other learning variables that effect an organization gradually are also critical, e.g., changing social attitudes.

Man and Machine Integration

Rather than having people to design and control processes, Next-generation Learning Organizations employ intelligent machines that learn and adjust accordingly.  The role of people in such organizations keeps evolving to supplement intelligent machines.

Expanding the Ecosystem

The Next-generation Learning Organizations incorporate economic activities beyond their boundaries.  These organizations act like platform businesses that facilitate exchanges between consumers and producers by harnessing and creating large networks of users and resources available on demand.  These ecosystems are a valuable source for enhanced learning opportunities, rapid experimentation, access to larger data pools, and a wide network of suppliers.

Continuous Learning

Next-generation Learning Organizations make learning part and parcel of every function and process in their enterprise.  They adapt their vision and strategies based on the changing external environments, competition, and market; and extend learning to everything they do.

With the constantly-evolving technology landscape, organizations will require different capabilities and structures to sustain in future.  A majority of the organizations today are able to operate only in steady business settings.  Transforming these organizations into the Next-Generation Learning Organizations—that are able to effectively traverse the volatile economic environment, competitive landscapes, and unpredictable future—necessitates them to implement these 5 pillars of learning:

  1. Digital Transformation
  2. Human Cognition Improvement
  3. Man and Machine Relationship
  4. Expanded Ecosystems
  5. Management Innovation

1. Digital Transformation

Traditional organizations—that are dependent on structures and human involvement in decision making—use technology to simply execute a predesigned process repeatedly or to gain incremental improvements in their existing processes.  The Next-generation Learning Organizations (NLOs), in contrast, are governed by their aspiration to continuously seek knowledge by leveraging technology.   NLOs implement automation and autonomous decision-making across their businesses to learn at faster timescales.  They design autonomous systems by integrating multiple technologies and learning loops.

2. Human Cognition Improvement

NLOs understand AI’s edge at quickly analyzing correlations in complex data sets and are aware of the inadequacies that AI and machines have in terms of reasoning abilities.  They focus on the unique strengths of human cognition and assign people roles that add value—e.g., understanding causal relationships, drawing causal inference, counterfactual thinking, and creativity.  Design is the center of attention of these organizations and they utilize human imagination and creativity to generate new ideas and produce novel products.

3. Man and Machine Relationship

Next-generation Learning Organizations (NLOs) make the best use of humans and machines combined.  They utilize machines to recognize patterns in complex data and deploy people to decipher causal relationships and spark innovative thinking.  NLOs make humans and machines cooperate in innovative ways, and constantly revisit the deployment of resources, people, and technology on tasks based on their viability.

Interested in learning more about the other pillars of Learning?  You can download an editable PowerPoint on Digital Transformation: Next-generation Learning Organization here on the Flevy documents marketplace.

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5 Core Pillars Essential to Evolve into the Next-Generation Learning Organization

2 Jul

Transformation of an organization into a Next-generation Learning Organization (NLO) is a challenging endeavor.  The main hurdles include convoluted hierarchies, bureaucratic red tape, delayed decision making, and complicated organizational systems and processes.

To develop a learning organization, leadership needs to trim down bureaucracy and complexities.  They should make the best use of technology to gather holistic real-time data, deploy Artificial Intelligence at scale, and develop data-driven decision-making systems.

Five Core Pillars of Learning are essential for the creation of a Next-generation Learning Organization, including:

  1. Digital Transformation
  2. Human Cognition Improvement
  3. Man and Machine Relationship
  4. Expanded Ecosystems
  5. Management Innovation

Let’s take a deep dive into the first 3 Core Pillars.

1. Digital Transformation

The first pillar is Digital Transformation.  Next-generation Learning Organizations (NLOs) are characterized by their speed of learning and their adeptness to take action based on new insights.  They use emerging technologies to automate as well as “autonomize” their businesses, without relying too much on human intervention and decision-making.

By autonomizing, the NLOs enable machines to learn, take action, and evolve on their own based on continuous feedback.  They create integrated learning loops where information flows automatically from digital platforms into AI algorithms where it is mined in run-time to gather new insights.  The insights are passed to action systems for necessary action that create more data, which is again mined by AI, and the cycle continues, facilitating learning at fast pace.

2. Human Cognition Improvement

Next-generation Learning Organizations (NLOs) schedule time for their people to have unstructured reflection on their work.  While most organizations fear disruption of human work in future by AI and machines, NLOs assign unique roles to their people based on human cognition strengths—e.g., understanding relationships, drawing causal judgment, counterfactual thinking, and creativity.  These organizations are aware of AI’s advantage—in analyzing correlations in complex data promptly—as well as its shortcomings in terms of reasoning abilities and interpretation of social / economic trends.  NLOs make design the center of their attention and utilize human creativity and imagination to generate new ideas and produce novel products.  They assign roles accordingly, inspire imagination in people by exposing them to unfamiliar information, and inculcate dynamic collaboration.

3. Man and Machine Relationship

NLOs foster innovative ways to promote collaboration between people and machines.  They recognize that this helps them in better utilization of resources, maximize synergies, and learn dynamically.

To create effective collaboration between people and machines, NLOs develop robust human-machine interfaces.  The existing AI systems lack the ability to decipher everything, which is an area where humans excel.  NLOs supplement these shortcomings by setting up human-machine interfaces, where humans assist the AI by corroborating its actions and suggesting sound recommendations.  These learning organizations bifurcate responsibilities based on the risks involved, assign humans and machines appropriately against each job, and select a suitable level of generalization and sophistication between humans and machines.

Interested in learning more about the Core Pillars of Learning?  You can download an editable PowerPoint on Next-generation Learning Organization: Core Pillars here on the Flevy documents marketplace.

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Smart Organizational Design Approach vs. Traditional Reorganization Approaches

17 Apr

Time for change

Business environment has transformed drastically from what it was a century ago.  It has become immensely challenging due to competition, disruptive technologies, laws, and globalization.  These challenges warrant better performance to address customer needs and to survive—and outpace—intense competition.  Consequently, organizations have become complex.

The work that individuals perform in an organization has also shifted from manual labor and clerical jobs to knowledge-based experiential tasks.  Traditional workforce was required to adhere to commands and stick to routines, whereas today’s workforce needs to be more empowered, innovative, able to adapt to varying circumstances, and render sound judgment.

Adapting with the constantly changing business environment is essential for organizations aspiring to succeed in today’s competitive markets.  In order to stay competitive, more and more organizations across the globe are undertaking Business Transformation programs to reorganize their businesses.  However, a large percentage of such programs fail to achieve the desired outcomes.

For the Organizational Design to be successful, leaders need to be mindful of the revolutionized work settings and business environment of this age.  One of the major factors attributed to these failure rates is utilizing traditional approaches to reorganization, which are proving ineffective in this digital age.  These traditional approaches appreciate “level of control” and power, and underestimate the significance of employee autonomy and innovation.

The Smart Design Approach to Organization Design

Today’s Knowledge Economy necessitates the employees to be more empowered to decide on their own than merely following commands.  People act in ways that are best for their own interests.  The new approach to reorganization—termed Smart Organizational Design—aligns the workforce’s best interests with the organizational mission rather than seeking control over the employees.  The focus is on changing the environment (context) and mindsets of employees willingly and instilling team work and cooperation, thereby enhancing organizational performance considerably.

The Smart Organizational Design approach entails classifying the existing workforce behaviors, ascertaining the desired behaviors critical to improve performance, and providing environment (context) favorable to develop new behaviors.  The approach encompasses 3 main steps:

  1. Define why reorganization is necessary (objective)
  2. Determine the behaviors critical to support reorganization
  3. How to execute the Smart Organizational Design

Let’s dig deeper into the second step.

Determine the behaviors critical to support reorganization

The next step involves the leadership to determine the “what” element of the Smart Organizational Design approach—i.e., definition of certain behaviors critical to achieve the transformation purpose.  Determining the desired behaviors necessitates thinking through the following 4 critical Smart Organizational Design aspects.  These 4 design aspects work in tandem to shift the environment (context) for the workforce and motivate them to embrace the new behaviors crucial for improved performance:

  • The Organizational Structure aspect—pertains to management reporting lines, spans of control, and layers of hierarchy.
  • The Roles and Responsibilities aspect interprets individual and shared accountabilities to cultivate teamwork and cooperation.
  • The Individual Talent aspect specifies the right skill set and motivation to perform responsibilities of each role effectively.
  • The Organizational Enablers aspect outlines the elements necessary for creating the right context (environment) for embracing the desired behaviors, i.e., decision processes, performance management, and talent management.

Interested in learning more about the other step of the Smart Organizational Design approach and the factors critical for its success?  You can download an editable PowerPoint on Smart Organizational Design here on the Flevy documents marketplace.

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4 Organizational Design (OD) Elements Essential to Inculcate the Desired Behaviors Across the Organization

27 Mar

Inculcating productive workforce behaviors is of utmost significance in Business Transformation, successful Strategy Execution, and Performance Improvement.  However, making people embrace productive behaviors involves a concerted effort across the organization.

The realization of Transformation, Strategy, and Performance improvement goals can become a reality by developing a thorough understanding of the 4 components of Organizational Behavior.  These components act as powerful levers in shaping the desired behaviors in the workforce:

  1. Organizational Structure
  2. Roles and Responsibilities
  3. Individual Talent
  4. Organizational Enablers

These Organizational Design levers work effectively when combined and aligned.  Let’s discuss the first 2 levers in detail now.

Organizational Structure

Organizational Structure represents the management reporting lines that create the organization’s spans of control, layers, and number of resources.  Organizational Structure is a foundational driver to Organizational Design, which also has a strong positive bearing on promoting the behaviors critical to improve the overall performance of the enterprise.  This is owing to the power that a position exerts on the subordinates based on factors that are important for individuals—e.g., work, compensation, and career ladder.

The Organizational Structure indicates an enterprise’s priorities.  An organization is typically structured in accordance with its top most priority.  For instance, functional organizational structure is adopted by enterprises having functional excellence as a priority.  In present-day’s competitive markets, most organizations have to deal with several priorities at a given time, which could be conflicting.  However, this does not mean adding new structures on top of existing ones, thereby increasing unnecessary complexity.  Creating overly complex structures to manage multiple priorities results in red tape and delayed decisions.  All roles are interdependent, necessitating cooperation.  This means taking care of the needs of others—instead of just watching over personal priorities—and encouraging individual behaviors that boost the efficiency of groups to achieve collective objectives.

Roles & Responsibilities

Roles and responsibilities deal with tasks allocated to each position and individual.  Organizational Design depends heavily on redefining clearer and compelling roles and responsibilities—to avoid any duplication of efforts or creating adversaries among team members.  In a collaborative culture where cooperation is the mainstay of an organization, individuals should not only be aware of what is required of them, but also appreciate the responsibilities of their team members, the authorities their roles exercise, the skills required, and the metrics to measure success.

A methodical way to outline roles and responsibilities effectively—while minimizing complexity—that encourages cooperation and empowerment is through the “Role Chartering” technique.  The technique requires distinctly identifying all roles on the basis of 6 key factors:

  • Describing shared and individual accountabilities
  • Outlining indicators to track success
  • Specifying who has the right to decide what
  • Indicating the capabilities critical for roles
  • Assigning the leadership traits valuable for the roles
  • Charting the abilities required for accomplishing personal and team goals.

Interested in learning more about these components to Organizational Behavior?  You can download an editable PowerPoint on Organizational Behaviors here on the Flevy documents marketplace.

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How to Use the Porter’s Value Chain in Identifying Cost Savings and Differentiation Opportunities?

26 Feb

The Value Chain concept, first described by Dr. Michael Porter in 1985, is a series of actions that a firm—in a specific industry—accomplishes to produce a valuable product or service for the market.  The value chain notion visualizes the process view of an organization, perceiving a manufacturing or service organization as a system comprised of subsystems of inputs, transformation processes, and outputs.

Another way to define the Value Chain principle is, “transforming business inputs into outputs, thereby creating a value much better than the original cost of producing those outputs.”  These inputs, processes, and outputs entail acquiring and utilizing resources—finances, workforce, materials, equipment, buildings, and land.

An industry Value Chain includes the suppliers that provide the inputs, creation of products by a firm, distribution value chains, till the products reach the customers.  The way Value Chain activities are planned and executed determines the costs and profits.

Value chains consist of set of activities that products must undergo to add value to them.  These activities can be classified into 2 groups:

  • Primary Activities
  • Secondary Activities

Primary activities in Porter’s Value Chain are associated with the production, sale, upkeep, and support of a product or service offering, including:

  • Inbound Logistics
  • Operations
  • Outbound Logistics
  • Marketing and Sales
  • Service

The secondary activities and processes in Porter’s Value Chain support the primary activities.  For instance:

  • Procurement
  • Human resource management
  • Technological development
  • Infrastructure

Value Chain Analysis Benefits

The analysis of a Value Chain offers a number of benefits, including:

  • Identification of bottlenecks and making rapid improvements
  • Opportunities to fine-tune based on transforming marketplace and competition
  • Bringing out the real needs of an organization
  • Cost reduction
  • Competitive differentiation
  • Increased profitability and business success
  • Increased efficiency
  • Decreased waste
  • Delivery of high-quality products at lower costs
  • Retailers can monitor each action throughout the entire process from product creation to storage and distribution to customers.

Value Chain Analysis (VCA) Approach

Businesses seeking competitive advantage often turn to Value Chain models to identify opportunities for cost savings and differentiation in the production cycle.  The Value Chain Analysis (VCA) process encompasses the following 3 steps:

  • Activity Analysis
  • Value Analysis
  • Evaluation and Planning

Activity Analysis

The first step in Value Chain Analysis necessitates identification of activities that are essential to undertake in order to deliver product or service offerings.  Key activities in this stage include:

  • Listing the critical processes necessary to serve the customers—e.g., marketing, sales, order taking, distribution, and support—visually on a flowchart for better understanding.
    • This should be done by involving the entire team to gather a rich response and to have their support on the decisions made afterwards.
  • Listing the other important non-client facing processes—e.g., hiring individuals with skills critical for the organization, motivating and developing them, or choosing and utilizing technology to gain competitive advantage.
  • This stage also entails gathering customers’ input on the organization’s product or service offerings and ways to continuously improve.

Value Analysis

The second phase of the Value Chain Analysis necessitates identifying tasks required under each primary activity that create maximum value.  This phase is characterized by:

  • Ascertaining the key actions for each specific activity identified during the first phase.
  • Thinking through the “value factors”— elements admired by the customers about the way each activity is executed.
    • For example, for the order taking process, customers value quick response to their call, courteous behavior, correct order entry, prompt response to queries, and quick resolution of their issues.
  • Citing the value factors next to each activity on the flowchart.
  • Jotting down the key actions to be done or changes to be made to under each Value Factor.

Interested in learning more about the other phases of the Value Chain Analysis Approach?  You can download an editable PowerPoint on Strategy Classics: Porter’s Value Chain here on the Flevy documents marketplace.

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First Law of Digital Transformation: 3 Key Elements to Manage Digital Transformation

21 Feb

Digital 2

Gordon Moore, Intel co-founder, observed that the number of transistors in a dense integrated circuit doubles about every two years.  He projected that this rate of growth would continue for at least another decade.

His observation, termed the “Moore’s Law,” has correctly predicted the pace of innovation for several decades and guided strategic planning and research and development in the semiconductor industry.  Moore’s law is based on observation and projection of historical trends.

In 2015, Gordon Moore foresaw that the rate of progress would reach saturation.  In fact, semiconductor advancement has declined industry-wide since 2010, much lower than the pace predicted by Moore’s law.  The doubling time and semi-conductor performance has changed, but it has not impacted the nature of the law much.

Although many people predict the demise of Moore’s law, exponential growth in computing power persists with the emergence of innovative technologies.  Moore’s law is only part of the equation for effective Digital Transformation—there are other contributing factors including the role of leadership.

First Law of Digital Transformation

George Westerman—a senior lecturer at the MIT Sloan School of Management—proposes a new law, which states that, “Technology changes quickly, but organizations change much more slowly.”  The law known as the “First Law of Digital Transformation” or “George’s Law” is a pretty straightforward observation, but is often ignored by the senior leadership.  This is why Digital Transformation is considered more of a leadership—than technical—issue.

Just announcing an organization-wide Transformation program does not change the enterprise.  According to George’s Law, successful Digital Transformation hinges on the abilities of senior leadership to effectively manage the so many contrasting mindsets of its workforce, identify and take care of the idiosyncrasies associated with these mindsets, interpret their desires, and focus attention on encouraging people to change.

Above all, the leadership should focus on converting Digital Transformation from a project to a critical capability.  This can be done by shifting emphasis from making a limited investment to establishing a sustainable culture of Digital Innovation Factory that concentrates on 3 core elements:

  1. Provide People with a Clear and Compelling Vision
  2. Invest in Upgrading or Replacing Legacy Technology Infrastructure
  3. Change the Way the Organization Collaborates

Let’s now discuss the first 2 elements of the First Law of Digital Transformation.

Provide People with a Clear and Compelling Vision

Without a clear and compelling transformative vision, organizations cannot gather people to support the change agenda.  People can be either change resisters, bystanders, or change enablers.  However, most people typically tend to like maintaining the status quo, ignore change, or choose to openly or covertly engage in a battle against it.

For the employees to embrace change, leadership needs to make them understand what’s in it for them during the transition and the future organizational state.  This necessitates the leaders to develop and share a compelling vision to help the people understand the rationale for change, make people visualize the positive outcomes they can achieve through Transformation, and what they can do to enable change.  A compelling vision even urges the people to recommend methods to turn the vision into reality.

Invest in Upgrading or Replacing Legacy Technology Infrastructure

Problems and shortcomings in the legacy platforms is an important area to focus on during Digital Transformation.  The legacy technology infrastructure, outdated systems, unorganized processes, and messy data are the main reasons for organizational lethargy.  These issues hinder the availability of a unified view of the customer, implementing data analytics, and add to significant costs in the way of executing Digital Transformation.

Successful Digital Innovation necessitates the organizations to invest in streamlining the legacy systems and setting up new technology platforms that are able to enable digital and link the legacy systems.  Fixing legacy platforms engenders leaner and faster business processes and helps in maintaining a steady momentum of Innovation.

Interested in learning more about the First Law of Digital Transformation?  You can download an editable PowerPoint on First Law of Digital Transformation here on the Flevy documents marketplace.

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The 8 Most Critical Levers to Pull to Manage & Sustain Change

28 Oct

Most Transformation initiatives fail to achieve their anticipated objectives.

Change Management is all about engaging and rallying people — at all levels in the organization — to make the transition and sustain that change. It is critical to ensure that the entire workforce is eager and ready to embrace the required new behaviors. More often than not, the technical side of a change initiative is well planned, but it’s the implementation part that fails — particularly, changing the mindsets and behaviors of the entire workforce to enable change to stick.

Managing change is not an occasional affair; it is an iterative process that works on motivating human behavior to accept and adjust to a desired state of mind. The process is naturally evolving as it adapts in accordance with the feedback from the people.

Change Management demands a thorough yet organized approach to enable the “people side” of change to work — essential for accommodating and sustaining Business Transformations. This entails assisting people incorporate new mindsets, processes, policies, practices, and behaviors.

A methodical approach to make the entire workforce accept and support change constitutes 8 critical levers:

  1. Defining the Change
  2. Creating a Shared Need
  3. Developing a Shared Vision
  4. Leading the Change
  5. Engaging and Mobilizing Stakeholders
  6. Creating Accountability
  7. Aligning Systems and Structures
  8. Sustaining the Change
https://flevy.com/browse/flevypro/8-levers-to-change-management-3847

Now, let’s discuss the first 4 levers in detail.

1. Defining the Change

The first step entails outlining the rationale, scope, and results of the change initiative for the enterprise, key departments, and roles. There is a need to define critical elements, including the requirements from the initiative, the execution planning, and the adjustments needed to encourage people to work better.

The project sponsors need to clearly outline the essence of the proposed Transformation initiative, to realistically embed Change Management into the design of the program, and develop effective Change Management plans. An initial baseline of the expected effect of the program on people should be performed. The baseline also helps analyze the impact of the change program — in terms of skills inventory, head-count indications, adjustments in accountabilities and relationships, shifts in incentives and pay structures, and future learning needs.

2. Creating a Shared Need

Once the change and its impact has been delineated, the next thing to do is to create a shared understanding of the rationale for Transformation across the organization. To create a shared need for the Transformation endeavor, the change sponsor needs to build awareness of the necessity for change amongst the senior team, key stakeholders, and the entire organization; demonstrate to the people the benefits of change; and set up a feedback mechanism across the organization. The alignment afforded by developing a shared need for change helps build a strong footing for Transformation.

3. Developing a Shared Vision

An essential element of implementing transformation entails delineating a clear vision that outlines critical actions and the anticipated outcomes. It helps in encouraging and involving the workforce in the Transformation initiative, giving them a sense of purpose by becoming a part of something bigger. The vision of the organization after Transformation should be coherent with the company values and mission.

4. Leading the Change

This lever entails developing change leadership and implementation skills needed to drive and enable sustainable change. Engagement and commitment of senior leaders is essential for leading change. They are responsible for planning their and the entire workforce’s actions, demonstrating or role modeling the new mindsets and actions, designating program sponsors — e.g., business unit leaders who are enthusiastic about the Transformation initiative and also act as change agents — motivating others to support transformation, and setting up a road map for the change leaders to steer the organization to achieve the anticipated performance milestones.

Interested in learning more about these levers to Change Management? You can download an editable PowerPoint on 8 Levers to Change Management here on the Flevy documents marketplace.

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Aiming to Become a Customer-centric Organization, Then Where’s the Customer Department?

26 Oct

Transforming a product-driven firm to a customer-driven enterprise is inevitable in order to stay ahead in today’s extremely competitive markets. The days of mass marketing, mass media communications, and little-to-none direct interface with customers are long gone. The emphasis, now, should be on maximizing customer relationships and becoming customer-driven organizations rather than merely selling products. The technological advancements of this age offer potent tools for organizations to utilize in order to engage with the customers directly; gather and mine information; and tailor their products and services appropriately.

Leading organizations are making huge investments in data analytics and transforming their strategies to focus on the customers’ evolving needs. They are striving hard to improve their customer retention and deepen their relationships utilizing rich customer insights, tailoring products according to the personalized needs of the customers, and presenting the offerings in a variety of store formats.

The Customer Department

To become customer-centric organizations, companies need to transform their traditional marketing function into a new unit called the “Customer Department.” The Customer Department should be created to deliver maximum profits to the customers and nurturing customer relationships instead of pushing products.

This necessitates transforming the organizational structure, culture, strategy, and reward programs in line with the shift in focus from managing transactions to cultivating customer relationships. Specifically, there is a need to add the position of Chief Customer Officer (CCO) — under the CEO — and various Customer Managers underneath the CCO. The roles and responsibilities of these positions should be:

Chief Customer Officer (CCO)

The most prominent shift in a customer-centric organization is replacing the traditional Chief Marketing Officer (CMO) role with the Chief Customer Officer (CCO) role. Reporting to the CEO, the CCO is primarily responsible for devising and executing the customer relationship strategy, directing all the client-facing roles, and fostering a customer-driven culture in the organization. The main tasks of the CCO position include ensuring smooth flow of customer information, increasing productivity utilizing various metrics, and regularly interacting with the customers to understand their concerns.

Customer Managers

In a customer-centric organization, the Customer Managers (CMs) are in charge of various customer segments. They are accountable for enhancing the value of a customer relationship by ascertaining customers’ product needs. To make this role effective, there is a need to realign resources — people, budgets, authority — from product managers to the CMs.

The main tasks of the CM position include defining customer needs, extracting and interpreting customer insights utilizing various sources — e.g., mining customer forums, blogs, and online purchasing data — , and striving to improve the lives of the customers.

Additional Responsibilities of the Customer Department

Customer-centric organizations make the Customer Department accountable for some of the critical customer-facing functions which were once considered an integral part of the Marketing Department. These functions include:

  1. Customer Relationship Management (CRM)
  2. Market Research
  3. Research & Development (R&D)
  4. Customer Service
https://flevy.com/browse/flevypro/customer-centric-organization-the-customer-department-3860

Customer Relationship Management (CRM)

Traditionally, the CRM function belongs to the Information Technology Department owing to the technicalities involved in managing the CRM systems. The function demands evaluating the customer requirements and behaviors — which is a core function of the Customer Department alongside gathering and analyzing data necessary to execute a customer-development strategy.

Market Research

In customer-centric organizations, the Market Research function goes all the way from the marketing unit to other units that deal with customers — e.g., Finance for payments, Distribution for delivery. These organizations take a more granular view of customers’ behaviors, and gather and incorporate clients’ feedback to further improve customer lifetime value and equity.

Research & Development (R&D)

The R&D function should also report to the Customer Department, as, nowadays, the traditional R&D-driven new product development models are conceding to creative collaboration between the client (users) and producers. It’s not a good idea anymore to pack tons of features into a product and cause feature fatigue to customers. What’s more appropriate is to seek and incorporate customers’ input into product features by involving them into the product design process.

Customer Service (CS)

CS is another function that should be handled by the Customer Department to guarantee quality of service and to nurture long-term relationships. This important function isn’t worth outsourcing overseas as this often causes negative impact to the clients and organizations alike, due to poor customer service.

Interested in learning more about Customer Metrics, Customer Department, and Customer-centric Organizations? You can download an editable PowerPoint on Customer-centric Organizations: The Customer Department here on the Flevy documents marketplace.

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