Tuesday, July 7, 2009

Move Over Tradition - it's Time for the Modern Customer-Oriented Organization Chart

With the advancements in Technology, companies are being forced to reconsider and adjust traditional ways of doing business. Marketing Information Systems have created efficiencies in marketing, streamlining the process for a concentrated and powerful customer focus.

Companies have the ability to focus directly on more isolated, concentrated and relevant profitable customers. As a result, the flow and responsibilities associated with a traditional organizational chart have evolved into a customer centric focal design, referred to as the modern customer-oriented organizational chart. Although both organizational charts involve the same or similar features, it is the manner and layout of these features that differentiates these 2 styles.

Traditionally, an organizational chart was designed from the top down, according to management. The upper management resided at the top of the pyramid as the critical point of decision making, driving the organizational leadership. In tier 3, middle management worked closely with upper management in addition to the frontline personnel, located in tier 2. The frontline personnel worked directly with the customers, located at the bottom of the pyramid in tier 1. Frontline personnel serviced the customers as well as mediated customer information to middle management.

In a traditional organizational chart, the structure is established in a way that relies on tier hierarchy, where critical consumer information is forced to flow upwards. As the flow of information progresses further up the pyramid, the accuracy and aspects of the information can become diluted. This type of organizational flow can be compared to the childhood game, “telephone.” The goal is to have a number of children share information. Starting from the first person in line, a message is transferred from one child to another until it reaches the last child in line. The desired result is to have the message relayed at the end of the line, exactly as initiated with the first child. Typically, as the message travels along the line of children, it changes in meaning, relevancy and impact.

The traditional organizational chart structure has a similar shortfall in design. The decision makers in top management don’t have an accurate pulse of the customer. Upper management makes decisions that affect the products and services offered by the company. If the message from the consumer becomes distorted as it moves along the chain of command, management’s current and future decisions are unlikely to address consumer concerns. “Managers who believe the customer is the company’s only true “profit center” consider the traditional organizational chart, a pyramid with the president at the top and, management in the middle, and frontline people and customers at the bottom, obsolete.” (Kotler and Keller. 2009. pg. 120)

The traditional organizational chart focuses attention on the decisions and responsibilities of upper management. Customers, located at the bottom of the pyramid, are typically unseen and unintentionally considered irrelevant in the decisions made by management. Although management may intend to use customer related information passed up the pyramid in making decisions, many times the consumer factor is minimized and decisions regarding the company operations overshadow any consumer input. As a result, a large number of decisions are made in the interest of the company, as opposed to the consumer, who ultimately makes the purchase. This can be critical to a company’s success because if the company doesn’t address consumer issues, frustrations, needs, opportunities and desires, they will experience substantial losses in market share as numerous consumers defect to other market opportunities.

In contrast, the modern customer-oriented organizational chart inverts the traditional chart, focusing the importance on the consumer. “At the top are customers; next in importance are frontline people who meet, serve, and satisfy customers; under them are the middle managers, whose job is to support the frontline people so they can serve customers well; and at the base is top management, whose job is to hire and support good middle managers.” (Kotler and Keller. 2009. pg. 120) Customers are also extending along side the entire length of the pyramid. As such, “managers at every level must be personally involved in knowing, meeting, and serving customers.” (Kotler and Keller. 2009. pg. 120)

This new style of information flow is much more precise. It allows upper management to make decisions that are inline and directly related to consumers as they now can relate to their input. “Some companies have created an ongoing mechanism that keeps senior managers permanently plugged in to frontline customer feedback.” (Kotler and Keller. 2009. pg. 138) This new approach places all focus, at whatever level, on the needs of the consumer. Decisions are now made on optimal operational factors that will ultimately serve the consumer in the most efficient and profitable manner.

The traditional organizational chart and the new modern customer-oriented organizational chart are similar in that they share the relational dependency among the 3 company tiers (top management, middle management and frontline people). In both styles, business units and personnel must work together in assigned roles, reporting structures and job responsibilities. The roles in frontline people and middle management are relatively similar among the 2 styles. However, the biggest difference is that the new modern customer-oriented organizational chart demonstrates the recognized importance of all levels to be available to service and support the consumer.

In the traditional style, frontline people were the only directly connected group to the consumer. In the new modern style, all levels of management as well as employees are focused on being available to directly service the consumer. A perfect example of upper management’s involvement in daily operations and interactions with customers is the CEO of Dominos. “As a continuation of Domino's Big Taste Bailout campaign, Domino's CEO Dave Brandon, made the first of two surprise deliveries in Killeen, Texas to Angela Waldrep, the first lucky winner.” (Trading Markets. 2009. para. 1) In the past, top executives would never have considered being part of the front line service. However, in today’s ultra competitive business environment, an expanding number of top executives recognize the incredible insight that can be gained through such frontline experiences.

References
Kotler, P., Keller, K. L. (2009). Marketing Management. New Jersey: Pearson Prentice Hall.

Trading Markets. Domino's Pizza CEO Delivers Pizza for a Year Prize to Killeen Resident. 2009. Retrieved June 15, 2009 from Trading Markets. Website:
http://www.tradingmarkets.com/.site/news/Stock%20News/2254713/

1 comment:

  1. Thank you mr.Kurt for your nice usefull blog , I saved the photo charts in your artical .
    also I added you in my blog.
    br
    Maryam

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