Applying the customer lens to organization design

Recently Strategy+Business published the 10 Principles of Organization Design. Overall some excellent information here. I'd like to add my 2 cents based on what I know about customer-centric organizations, and how this outside-in perspective can better ensure success. 

In point #1, Declare Amnesty for the Past, S+B highlights the importance of reconnecting with your sense of purpose, what will differentiate, and what capabilities will help you deliver on your value proposition. 

 I wrote about the 6 common errors in crafting a corporate-level value proposition here. Bottom line, make sure that value is defined as a best-fit customer outcome to which you can map all activities of the organization. If you have multiple customer types, you should be able to find the common denominator. If you can't, that very well could be one of your root causes of organizational dysfunction.  

#2: Design for DNA: the 8 building blocks of organization design - image from Strategy& below. What's not explicitly clear here is what links them all together: it should be your customer outcome. Just as DNA ultimately creates a distinctive human being with a specific personality and strengths, your organizational DNA works together as an emergent system to create something greater than its parts. The critical step here is to "backcast" your DNA: identify the ultimate outcome of your living system and work backwards to define each building block with the end in mind. 

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I'd also like to touch on motivators and commitments. In an ideal world, what motivates your employees maps to what motivates your customers. Otherwise, it makes it very difficult to deliver on your customer-centric outcome. The best brands are their own customers. Harley Davidson delivers on its promise because it is staffed with people, from the top to the bottom, who "get" this customer psychology. Apple appeals to designers because they hire for creativity and design. Slack is so wildly popular because the company built the program for themselves first. You must become who you want to attract as customers, which is why point #1 above is so essential. At the end of the day your culture is formed by who you hire, which is informed by strategy.  

Let's talk decision making and metrics, two blocks that can be immediately addressed by incorporating the customer-centric outcome. Do your decision-making criteria include "will this initiative help our customers feel ____?" If not, add it. Do you track your customer-centric outcome in terms of metrics and be crystal clear on how each department or group delivers on that metric? If not, map it out. 

Norms: Tell customer stories. Create personas and plaster them around the office. In every meeting, hold an empty chair for your customer and ask what they would think about the topic and the decisions reached. Practice some very low-hanging fruit activities to get teams thinking more in terms of outcomes rather than busywork that may not contribute directly to revenue. 

Processes: Use tools like journey mapping to get various teams on the same page. When properly done, journey maps prioritize fixes and innovation opportunities, dramatically improve efficiencies by breaking unnecessary silos, and improve the customer experience. Another essential process is that of sensing: like a living organism, every company must have the capability of aggregating, analyzing and acting on customer insights, learning from those insights, and restarting the process. A once-a-year survey doesn't cut it if you want to be agile and responsive to customer needs. 

After you've begun implementing some of these practices, you'll be in a better position to determine the structure of the organization. Some best-practice companies organize by customer journey, like USAA: the drawback is when the same customer must interact with two different journeys (home insurance and car insurance) and they don't interconnect; a frustrating experience when you're moving to a new city, for example. A better approach is to organize by customer type. From there, you can look at leading-edge examples like Morningstar to explore emergent models that deliver greater empowerment, employee satisfaction and growth.  

To learn more about how customer value informs the business, see our post on the Value Platform.