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Designing a More Successful Organization

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This chapter is from the book
Can a company change from being bureaucratic, rigid and isolated to being entrepreneurial, networked, and boundryless? Try applying the same strategies to your company as you do to your customers.

There is only one valid definition
of business purpose: To create a customer.

Peter Drucker1

Traditional Consumer

"Drucker is right. We need to create a customer. We need to find potential customers for our products and services, and then make them our own by focusing our entire organization—from R&D to marketing to operations—on the customer."

Cyberconsumer

"Drucker has it backward. It is the customer who creates the company. The empowered online customers will pull together the knowledge and products they need. There will be no loyalty to a particular company. Companies need to reshape themselves to the reality of this empowered customer."

The Centaur

"The purpose of the business is to create with the customer. It is not to create the customer. It is not to create for the customer, but instead to collaboratively work with the customer in developing and delivering products and services. To do this, we need to rethink how we are structured and how we connect with customers, online and offline."

Convergence Questions

>>>What does the new hybrid consumer mean for the design of the organizational architecture?

>>>What kind of organizational convergence is needed to make the company more flexible and connected to the consumer, and to support the implementation of the convergence strategies?

>>>How can companies apply the 5Cs of convergence marketing to the design of their own organizational architecture?

Designing the Convergent Organization

How can organizations address the gaps between their architectures and the needs of the hybrid consumer? This chapter explores how the same technologies and approaches that led to the emergence of the hybrid consumer can be applied within the firm to create a convergent organization. This organization can use the 5Cs to redesign culture and values, processes, structure, customer interface, boundaries, performance measures, and human resources.

John Sanderson, the CEO of a major packaged goods manufacturer, has been up all night wrestling with a problem he was thinking about on a trip back from California to Chicago. As he returned home from a meeting with leaders of the company's online startup, based in Silicon Valley, he was thinking about how his organization has already begun to transform its approach to marketing to meet the new hybrid consumer. It established this separate company to create a customized line of food products online. It began to build online communities around recipes and cooking, linked to sites with similar interests. The company has experimented with auctions and other pricing models for higher-end products and bulk orders. And it has offered customers engines for comparing products, sorting based on many attributes, creating and analyzing diets, and searching for difficult-to-find ingredients.

But the more the organization tries to "run with the centaurs," the more he feels it keeps tripping up. The company is not flexible enough. It is weighed down by traditional information systems, organizational structure, and processes. Perhaps most significantly, it is hampered by legacy mindsets. The technology is there to do much more, but the organization is not designed to take advantage of it. A traditional airplane cannot be expected to travel at supersonic speeds merely by adding an engine. It needs an entirely new design.

As he stretches out in first class on the red eye home, he realizes that he needs to do more than transform his approach to marketing.To deliver on the promise of the 5Cs —customerization, community, channels, competitive value, and choice tools—he needs to challenge his current view of the business and transform his entire organization. This is what keeps him awake on the flight home.

Could he transform his successful organization without destroying it? If he undertakes a radical overhaul, can the organization still meet its earnings targets? Will the current employees be able to operate in this new environment? What will it do to the organizational culture? And after all is said and done, how can he be sure that this organizational change will actually better meet the needs of the hybrid consumer? Sanderson is not alone in this challenge. Companies such as WalMart, Kmart, and Staples are wrestling with similar questions as they draw together their online and offline businesses.

Then it hits him: the same approaches that have created the challenge of the hybrid consumer can be applied within the organization to create solutions. Sanderson pulls out a legal pad and sketches out a chart, illustrated in Exhibit 10–1. For each of the 5Cs, he examines implications for organizational architecture. As he has done in exploring consumer markets, he now examines what has changed as a result of the new technology, what are the opportunities to do things differently, and what aspects of the organization remain the same. He is excited to see the possibilities for transforming the organization.

Exhibit 10–1 Applying the 5Cs to the Organizational Architecture

5Cs

Implications for Organizational Architecture

Customerization

Using customerization technologies, the organization can be dynamically "reconfigured" for employees, suppliers and customers so they see different views of the same organization.

Community

Developing real and virtual communities inside and outside the firm can help bridge traditional organizational "silos" to develop more modular, networked and flexible organizations.

Channels

By integrating physical and virtual interactions with customers, companies can conserve resources while delivering higher value to customers.

Competitive Value

As the value equation is redefined, companies need to develop new metrics to track lifetime value of customers and provide new ways to provide value to employees through more fluid work relationships. Companies can also outsource smaller segments of their processes, as with the move toward web services.

Choice Tools

Powerful tools for employee information, decision making, and managing the business can offer employees the real-time information and support to keep pace with the fast-changing and savvy centaurs.


Sanderson realizes that while the new hybrid consumers want to interact with the company in diverse ways, they also expect to have a coherent experience across all these channels. It is difficult to deliver this type of coherence with a piecemeal organization. In the past, when the customer was distant from the organization, the complexity was not apparent, but now that the customer is more directly connected to the organization, the inconsistencies, the complexity, and divisions within the organization have become much more transparent. Sanderson realizes that to achieve coherence, he needs to find ways to bring the separate parts of the organization together. He needs to achieve an organizational "c-change," redesigning his organizational architecture to meet the challenge of the centaur.

In this chapter, we'll examine how the 5Cs can be applied within the organization to create innovative organizational designs that are better suited meet the external challenges of delivering the 5Cs to consumers. We'll explore how companies are engaged in transforming their organizations to meet the challenge of the centaur and to take advantage of the new technologies and approaches offered by the 5Cs.

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