Operating Models - How a fragmented organisation kills revenue growth
Alan Crowther
CRO Coach & Mentor, Private Equity Advisor, Commercial Excellence Thought Leader
I’ve evangelised regularly on the importance of customer-centricity and its direct link to profitability. One of the most critical influencers of customer-centricity lies in the construct of the organisation.? The empowerment of customer engaged staff is critical – but it’s likely to be destroyed if the rest of the organization is not brought into line to support them. The location of authority in the organization structure, and the structure itself, are absolutely vital ingredients in implementing a collaborative and successful customer-centric operating model.
Over time many businesses have morphed into different shapes and sizes – perhaps driven by inorganic growth, expansion into different regions, natural scope creep and so on. But the consequences can be highly damaging when the organisation hasn’t been knitted together to support a common and united goal - to accelerate profitable revenue growth.
During my travels, I’ve come across a wide range of organisational models and agile working practices, each with varying levels of success.
From these experiences, I’ve identified six specific organisational decelerators that consistently hinder customer-centricity in B2B businesses of all sizes:
1. Competing individual product-orientated profit centres
The least suitable operating scenario for customer-centricity consists of a business with many individual P&Ls, misaligned business agendas, silos of internal departmental targets and internal politics. Successful organizations align and empower resources across a unified organization with a customer mentality. In an ideal world, this means building an operating model around customer segments – not competing product or service lines. We must start with the customers’ needs and build solutions from the various capabilities we have to offer rather than torment the customer with inconsistent pitches from a number of product lines motivated to optimize their own department’s performance.
2. Lack of an executive accountability for ‘the customer’
Vital to achieving a shift in culture and behaviour across the business is to have a senior-level person accountable for ‘the customer’ – hence the rise in importance of the Chief Revenue Officer. CRO’s objectives are to excite both the leadership and the organization into becoming a customer focussed operation, uniting decision-making and driving cross-company action. Note that this role should not carry the sole burden of responsibility for customers – that is everyone’s to own. Rather, the CRO is the driver of change and the central customer ambassador for the organization.
3. Lack of resources and skills relating to the customer’s environment
The fastest and by far the most effective way to enhance the market-facing culture of an organization is to recruit people from within the market into which you are selling. Recruits from the customers’ environment will hit the ground running by focusing on the right issues and using customers’ language. They build customer relationships quickly leveraging their affinity to the market and, importantly, tend not to be affected by the internal baggage of the organization given their external orientation. They also become natural ‘market ambassadors’ within the company and can be used as agents of change on the journey to organizational customer centricity.
4. Absence of a single view of the customer
It is difficult to galvanize the organization around the customer without a common, transparent set of tools enabling customer visibility, supported by consistent methods for customer engagement. A CRM tool needs to become ‘the place we live’ for any customer-centric business. Commonly under-utilized e.g. as a repository of customer data, used properly it is a strategy for managing all your company’s relationships and interactions with customers and potential customers. It helps you stay connected to them, streamline processes and improve your profitability through better levels of productivity. Once fully mature, CRM tools should join up sales, customer success, marketing, operations, service and HR departments as well as third parties within an entire customer ecosystem.
4. Lack of consistent sales language and supporting processes
Many organizations suffer from ‘cottage industry’ processes and reporting embedded within the various silos and without a common customer-related purpose. It is vital that everyone within the front line of the organization (and those in supporting roles) is trained in, and consistently uses a playbook supported by a professional sales methodology (i.e. The Way we Work). Teams that operate using a recognized and common language work more effectively and efficiently. This language becomes embedded within the CRM system, helping to set the culture of the business across the business and up to executive levels.
6. Misaligned planning processes and budget setting
Commonly, annual planning cycles involve the executive teams setting the year’s high-level goals with the finance team determining a budget which then gets cascaded across various silos of the business. This triggers the ritual ‘arm wrestling’ activities within the profit centers that eventually determine the final budget. But, to ensure an injection of customer centricity, it is vital to ensure that the marketing and sales plans, with the associated investment requirements (e.g. from the IT or product teams), are sequenced at the beginning of this process. This will ensure that targets and appropriate levels of investment are based objectively on the market opportunities rather than upon ‘who shouts loudest’. This necessitates that the planning processes across departments are choreographed as part of the overall group budget process.
The operating model is more than just an organisation chart – it's about how the business knits itself together with harmonious customer-centric goals. Successful businesses benefit from teams who are externally focused, regardless of internal boundaries, and aligned by common systems.
I’d love to hear if you’ve encountered any of these challenges within your organisation. What other barriers to creating a collaborative, customer-focused organisation do you see? Let me know!
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