This is an updated extract from Adrian Swinscoe’s 2016 book, How to Wow: 68 Effortless Ways to Make Every Customer Experience Amazing.
Over the years we have seen many different variations in company structure with businesses organised by specialism, function, market, geography, matrix, and more.
However, following significant changes in markets, competition, customer behaviour and preferences and technology in recent years some of the more traditional, and particularly functionally-based, structures are now being called into question.
The criticism of these structures ranges from ‘they are not agile or responsive enough’, to ‘they are way too siloed and thus limit collaboration’ and ‘they are no longer fit for purpose and don’t match the needs of the modern marketplace, customer base and workforce’.
As a result, there has been – and continues to be – innovation and discussion around what constitutes the best organisational structure to deliver the best outcomes for customers and business alike.
Indeed, in this series we’ve shone the spotlight on customer experience as a driver for structural change. Within this we’ve looked at popularised structures such as holacracy, as used by Zappos, and how it has affected their position as a company much loved by their customers and employees.
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Other structures worth taking into account include:
• A team-based, flat lattice organisation as used by W. L. Gore & Associates, whose mission is ‘To make money and have fun’ and who as well as delighting their customers is continually ranked in the US and UK as one of the best companies to work for; and
• Democratic organisations as used by the publicly traded WD-40 Company, manufacturer of the eponymous WD-40 lubricant, whose stock price (at the time of writing) has grown by a factor of 4 in the last 6 years and on their 2104 employee engagement survey they achieved an engagement score of nearly 94%.
However, you may be asking – which of these structural changes would best fit my organisation? The answer is – it depends. On your market, your customers and your people. Some people will argue that form should follow function. But, does it? Maybe success criteria, rather than function, should determine the form of your organisation. What is clear is that it is no longer sufficient to assume that a traditional, functional based structure is the best way to go.
Insight in action
Here’s a great example of a firm, G Adventures, that has radically changed its organisational structure to allow it to allow it to engage its employees and customers more effectively.
G Adventures is the world’s largest small group adventure travel company, a leader in their niche and have been delivering double-digit growth year on year for the last twenty years. They also operate in 100 countries, generate over $170 million a year in sales and have over 2,000 employees.
In an interview, Bruce Poon Tip, founder of G Adventures, told me that:
• Traditional business focuses on profitability and growth first and then works backwards from there. In their (Looptail) philosophy, they focus on their people and their culture first and the rest falls into place.
• Their structure addresses the changes that are happening around us and allows their customers and employees to become their biggest brand advocates.
• The HR function has been eliminated from G Adventures as Bruce believes it is there to control and ‘manage’ the bottom performing 10% of your people as the company grows. However, it also stifles performance. Therefore, it was eliminated.
• Bruce has dropped the title of CEO (Chief Executive Officer) as he wanted to make sure that the traditional CEO position was not the most important position in the company.
• The most important position in the company is the customer-facing employee. Therefore, each customer-facing employee in G Adventures has the title: Chief Experience Officer (CEO)……… and there are hundreds of them.
• This has helped them make a mental shift to become more customer and externally focused.
• It has also helped bring them together, particularly as a team that is spread out over 100 different countries.
• Bruce gets the most pleasure from the stories that come from the partners and children of some of his employees, where they tell him how the work that they do, their organisational structure and their purpose has had such a positive and lasting impact on their personal and family lives. That does not mean that they are doing different jobs, it’s more that they are now working for a company that they believe in and that stands for something more than profits.
• The book (Looptail) that Bruce wrote tells the story of G Adventures and their transformation. It is meant to act both as an internal document as well as a book for public consumption.
• The foreword was written by and the book has been endorsed by His Holiness The Dalai Lama, who has never endorsed a business book before.
In essence, what they have done is move away from a traditional, hierarchical structure to one that is flatter and more ‘circular’, in nature. This is designed to help them keep leadership at the centre of decisions, but, at the same time, helps create enough freedom amongst their employees so that it drives sustained innovation, great results as well as engaged employees and customers.
Because their system is based on ‘circles’ it has been compared to the holocracy approach. However, in the ‘holacracy’ approach a company organises itself around the work that needs to be done and not around people occupying specific job functions.
Just because you’ve historically organised your business a certain way doesn’t necessarily mean that that is the way that you should always organise things. Organisations have to adapt to their environment as much as anything else if they are to survive and prosper.
However, given the example above this doesn’t mean that every firm should be thinking about ‘circles’ when they consider what is the right organisational structure for them and what they want to achieve. Leaders need to ask themselves the following questions about their organisational structures:
• Is your organisation flexible enough or nimble enough to be able to respond quickly to changing market and customer demands?
• Does your organisation suffer from siloed working?
• Are your silos getting in the way of effective and efficient collaboration and cooperation across your organisation?
• Are your departments and functions working well enough together in order to deliver the best customer experience?
• If not, what do you need to do? Could changing your organisational structure help you improve your customer experience?
The answers will go a long way to helping you determine the type of structure that will work best for your business.