Know your competitive orientation
Every business tends to gravitate towards one of three competitive orientations – Product Innovation, Customer Intimacy or Operational Excellence.
Examples: John Lewis design their business around customer requirements. Toyota tends to organise around end-to-end lean process. Apple organise around different products such as the iPhone.
Although a firm may display a mix of all three, there is usually a primary orientation, which best serves that business. This primary orientation should really drive the best or optimal organisation design for that business. What is your company’s orientation and is the operating model properly aligned to that?
Sometimes a business will struggle as they are espousing one orientation e.g. Customer Intimacy and yet the customer experience suggests a different reality. In one example we experienced, the business were espousing Customer Intimacy, but in reality were more focused on ensuring internal process efficiency, which came at the expense of not being easy to do business with as a customer.
In another example a major manufacturer was overly focused on trying to achieve Customer Intimacy and yet the customer only wanted a cheaper, reliable and operationally efficient delivery. Being clear on what the customer wants/needs is important. Understanding what orientation best meets your business intent and customer reality will help achieve the optimal organisation design.
If customer intimacy is important then it often means designing the organisation to make it “easy to do business with”, perhaps with a simple interface for the customer. This in turn can sometimes mean more organisational complexity is experienced internally (not by the customer). Rather like the swan seeming serene to the external customer, whilst furiously paddling its feet internally and unseen. The internal cost to organise can subsequently be higher, but that is okay if Customer Intimacy is the primary orientation.
The point being there is always a balance to be achieved. In other words, there are trade-offs. Knowing what is most important strategically will help the correct organisation design choices.
David Stephenson is a Consulting Partner at Outvie and an expert in business and organisational change