The Problem with Corporate-Org Charts

by Gord Hotchkiss, Thursday, July 25, 2013 11:42 AM

Last week, I talked about the chasm between marketing and sales in most organizations, with the customer left to perish in the middle. One of the responses to that column was that there’s an even bigger divide between marketing and IT (a subject my friend Scott Brinker has written extensively and eloquently about).  The systemic problem that underlies this is that organizational org charts aren’t built in consideration of a customer’s requirements. The structure of the vast majority of companies is decidedly un-customer-centric.

Typically, the dividing lines of a company are decided by competitive profit and loss requirements, arbitrary product categorizations or regional segments. Within these corporate fiefdoms, the hierarchy of management is dictated by corporate traditions that are at least three decades out of date.  They were designed to run a company where economies of scale and sheer mass were the goals. Corporate strategy was aimed at mass producing and distributing as much product as possible to as many markets as possible. The focus was internal, with management’s eyes focused on productivity and profitability. Marketing was largely unidirectional, from the marketer out to the market. There was little in the way of feedback loops.

The typical corporate quadrumvirate is the CEO, CFO, COO and CMO.  All of these traditionally focus their gaze inwards. The “outside-in” perspective is not explicitly outlined in any of these job descriptions. Theoretically, CMOs should be on top of their market, but in practice this view is largely provided through traditional market research, which is usually several degrees removed from the reality of the market.  Even if a truly honest view of a company is captured in a research report, by the time it is digested internally, it’s spun into a form that bears no resemblance to the original.  Alarming findings are ignored or downplayed. Positive findings are exaggerated to bolster reputations and protect pet initiatives.  Corporate BS is in full-flow. Management typically has no idea how an actual customer perceives the business and its products.

Lately, an alphabet soup of new corporate office titles has been trotted out, paying lip service to the idea of customer-centricity: CXO (X=Experience),  CRO (R=Relationship), CIO (I=Innovation), CCO (C=Customer) or CAO (A=Agility). I know of a company that recently appointed a CXO. She was given the title and office, but nothing more. She had no resources, no budget, no mandate and no authority. She was literally stapled on the side of the org chart, with no lines of connection to anyone else, save for a single line running from the CEO down to her.  She soon found out that this was a one-way line. None of her frustrated feedback was taken into consideration.

I suspect the same is true for the majority of these new “designer-labeled” executives. The lesson? You can’t put a Sierra Club bumper sticker on a ’88 Buick, hoping to end up with a Prius.

In response to last week’s column, one reader asked the excellent question, “How do we bridge the gap?” The answer, based on my experience, goes far beyond including it in this quarter’s list of strategic initiatives. This is a foundational problem, and you’re not going to truly fix it without ripping apart the structure of your organization and rebuilding from the ground up, ensuring that the customer’s requirements dictate the reconstruction blueprints.

Let’s face it, that’s just not going to happen in an organization that has several years invested in doing business the same old way. There are handfuls of new companies, however, who “get” the importance of understanding their customers right out of the starting gate. They are re-engineering the org chart away from the traditional practice of simply being “big & profitable” to becoming “intimate and responsive,” knowing that profitability will come from that. They are eschewing typical titles, and all the political baggage that comes with them, in favor of creating new customer-aware roles with real authority.

In the end, I don’t think this is a “problem” that can be “fixed.” It’s one species of corporation, which will eventually be supplanted by another, better adapted to a new market environment.

3 comments on "The Problem with Corporate-Org Charts". 

Neil Mahoney from Mahoney/Marketing commented on: July 25, 2013 at 1:44 p.m.

The handfuls of new companies are the key to the rejuvenation of business in the US. Large B2B orgs -- and I spent over half of my Sales-Marketing career with them -- by and large choose CMOs from technical salespeople who don't understand the complexities and nuances of Marketing. Start ups and relatively new companies are usually headed by execs who understand what really motivates and stimulates their markets Neil Mahoney

Scott Brinker from ion interactive, inc. commented on: July 25, 2013 at 2:10 p.m.

Thanks for the nod my way on the marketing/IT divide! While reading this, I couldn't help but think of Clay Christensen and the Innovator's Dilemma. It's hard for existing organizations to escape their trajectory -- too many deeply embedded interests, incentives, and behaviors. That applies to new products. But it also applies to broader kinds of innovations -- such as these new ways of structuring the organization. In Christensen's view, like yours, that's really hard to pull off within the framework of the organization being innovated. But breaking out a separate organization -- being more like a start-up -- to work with fewer pre-existing constraints is one possible way to solve the dilemma. It strikes me that the idea of a new digital group of an organization -- headed by a chief digital officer (CDO) -- that is independent of the CIO and the CMO is one possible example of this. Many pros and cons to that approach, to be sure. But one pro may be the freedom to build a team that is better adapted to a new market environment.

Paula Lynn from Who Else Unlimited commented on: July 25, 2013 at 2:13 p.m.

Marketing is perceived as a cost, not as an investment. I do believe you are right about fixing and Neil from the technical perspective. The selfishies, people constantly putting themselves as the most important part of a picture, is a microcosm of the "problem".

Read more: http://www.mediapost.com/publications/article/205359/the-problem-with-corporate-org-charts.html?print#ixzz2a5sFFldI

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