The decision to transform a company, to recode its essential DNA for customer centricity, is not something to be considered lightly. The shift is not about changing what you do or merely improving how fast you do it for your customers; true customer centricity begins with the very definition of who you are and why as a company. The effects of such a profound reinvention of company identity necessarily will be global, touching every aspect and level of the organization’s strategy, process, people and technology. If the change is real, movement will be seen in the perceived value of both the skill sets and knowledge of the individuals themselves and in how people are organized and deployed within the firm.
In the organizational structure of a typical software manufacturer, the most valued employees are assigned to the traditional core functional groups of Development, Sales and Marketing. Directly supporting elements of Administration, Facilities, Operations, etc., are found in the next layer out from the center. Relationship management, the Customer Support / Customer Service teams, resides somewhere further out on the fringes of the structure — if it hasn’t been outsourced entirely. That organizational framework clearly reveals that the company and its people are product centric, they think of themselves as a software manufacturer. The purpose of the company is the production of the technology and its distribution for profit. There is nothing inappropriate about such a stance; virtually all technology companies begin as product-centric entities. Form follows function, the traditional software manufacturer organizational structure puts skill sets, knowledge and experience close to where they are needed to build and deliver a technological product. The result serves who they are and what they do.
The traditional software company organizational pattern also reflects its product centric profits realization strategy. The bulk of the profit is front-loaded, taken in the course of the initial sale of the product. Under this model, the company may assume and accept as much as 20% per year turnover or more in its customer base, relying on high margins and a constant influx of new customers and new sales for its continued success. The two most important groups, as a result, are Sales and Development, for they are perceived as directly keeping the engine of the company going.
When a company makes the commitment to redefine itself in terms of its ongoing profitable relationship with its portfolio of customers, to become authentically customer-centric, the traditional organizational structure of a product-centric software manufacturer no longer serves. Since the product being sold is no longer a box, a packaged functionality, but profitable relationships over time with a specific community, the key skills and experience required for success are those of relationship maintenance and extension. A new core group needs to take the lead, to become the bridge between the customer groups on one side and the rest of the company on the other.
If there is no visible change in the organizational structure, then it is likely that either the commitment to the recoding of the company’s DNA is open to question or the chances for success in the new direction & profitability model are going to be hampered.