With a functional organisation structure, it's hard to deliver a consistently delightful customer experience. Organising around product management can make the organisation more responsive.
As business becomes increasingly digital, many companies are struggling to transform. To be truly digital, you have to accept that technology is now part of the product or the service you deliver. It's not a back office function any more. That means customers are exposed to it, and you have to change your mindset to reflect that.
We live in a time where every customer touchpoint is an opportunity to build or destroy your reputation. The end-to-end customer experience must be satisfying, otherwise customers will defect to a rival, and may even harm your reputation by sharing their poor experience. Customer complaints can quickly go viral on social media, amplifying negative experiences with interfaces, uptime or service delivery. There is an upside to social media, though: companies have never had so much feedback. Through social channels and other feedback mechanisms, customers are routinely telling companies exactly what needs fixing. The challenge, though, is to be able to absorb all that feedback and engage in continuous improvement. Many organisations use project-based change management, where updates are carried out in blocks, rather than being continuous and gradual. Multidisciplinary teams might come together for the project, where members work within the strict confines of their defined roles and hierarchy, and the team dissolves when the project is complete. That doesn't give the organisation the structure to deliver change flexibly and continuously, when it's needed.
Organisations are multidimensional, with lots of different lenses they can be seen through such as people, process, technology, product, and function. There isn't a single right way of structuring the organisation. However, one reason that organisations often struggle to operationalise the digital operating model is that they are structured along strict functional lines, with divisions dedicated to marketing, operations, and IT, among others. People might collaborate across organisation boundaries on a project basis, but the company is ultimately structured in functional silos.
That makes it difficult to consistently bring together the different parts of the organisation that are required to continuously evolve the customer experience. If the people involved are based in separate functions with competing demands on their time, that is likely to make change sporadic and ad-hoc.
We propose an alternative way of structuring the organisation, around product management. You combine talent from marketing, operations, IT and the other functions, but they are focused on delivering the end-to-end customer experience for a specific product. This model is already well established in manufacturing, but it's rare in what would traditionally be considered service businesses.
We also advocate an agile way of working that not only promotes continuous delivery, but also supports self-organising teams. People can come together in small project teams to focus on whatever their customers and their product need at any particular time. The team members contribute based on matching their talents to what the project requires, without the strict adherence to job titles and job descriptions that comes from a functional organisation structure. Empowering the organisation to be more responsive helps to deliver a better end-to-end experience.
The product management function sits between the front office and back office, and acts as the golden thread that pulls them together in service of the customer. To have the authority to push through change, the Head of Product must have a seat at the top table, reporting to the CEO. The leader of the product function needs a good understanding of both the front office and back office. He or she is more likely to be a business person with a good understanding of the back office than vice versa, because the role requires a deep understanding of the customer and the market. The candidate also needs to have had enough experience of digital systems delivery to be able to lead product development effectively.
The question, then, is how organisations can transition from the old way of working to the new way. I suggest they use the temporary structure of their next major change project to organise around the product. This is a low-risk way to test the model, without overcommitting. They can appoint a product manager, adopt agile philosophies, and experiment to see how it works. If it's a success, the structure can transition to business as usual.
As organisations transform to become digital platform businesses, they need to ensure their organisational structures don't hold them back. By restructuring around products, instead of business functions, they can continuously improve the end-to-end customer experience.
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