Organizational Alignment: It's the People, Stupid

Bob Thompson
Founder, CRMGuru.com
Member

Posted 27-Apr-2004 11:23 PM
Here are some questions to get the discussion rolling on Organization Alignment, one of the critical success factors in CRM success.

1. What does "organization alignment" mean and why is it important to CRM projects?
2. How would you know if your organization was well "aligned," or not?
3. What kind of organization changes are likely in a shift from product- to customer-centric strategy?
4. What change management techniques are helpful in getting people "on board" with your CRM program?

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Bob Thompson
Founder, CRMGuru.com

Niko
Member

Posted 30-Apr-2004 02:12 AM
Hi Bob,

Extremely interesting disucssion, I believe. In my experience, CRM intitatives have failed because they were seen as yet one more technology rollout project; or management dictated change of business processes.

Invariably, It was 'applied' or affected a certain group or BU in the organisation, which certainly blocked real progress in achieving the expected results. In failed projects that I am aware of, people in the department that 'practiced' CRM, came up against blank walls of and miles of red-tape from other departments/units, with the results of a total breakdown of the intended customer care process. Quite often the people on the departments that practiced CRM were not given the right incentives, or were staffed with people of the wrong profile to do the job, as the new Customer focused initiatives would dictate.

Specifically to the questions, my take is this:

1. Organisational alignment means the whole organisation has changed strategy, value chain, objectives,and tactics to become customer centric. For a CRM project of any value to become succesfull, it is not enough for this organisation to deploy yet one more contact center, or consolidate / update existing technology. The organisation must have a clear vision of the products and value that they want to bring to the customers; employ the right profile of people to sell them and serve them; give them the appropriate training (very important! and always one that is skipped with disasterous results); and reward each employee or group of employees appropriately.

2. The customer will tell me!. One has to use all the tools in hand (starting from churn points, to questionaire feed back), to identify specific areas of the organisation that cause customer 'dissatisfaction'. This has to be coupled with a value chain evaluation to identify/confirm internal friction points and loss of value or neutral value operations. The business units or departments that are within those boundaries are suspect of missalignment.

3. The main one that comes to mind is the elevation of the customer contact people to a 'driver' position of the organisation. All the other departments became the supporters of this group. It does matter what the product people say on what should be done or can be done. From that point onwards, they do what the market tells them it needs, through the customer contact people, and the brand managers (who should be closer to the customer than in a 'traditional' organisation). Human resources becomes an enabler of the appropriate training, employee profile and reward scheme to achieve targets.

The second point in mind, is that the reward stracture for everyone in the organisation has a significant portion attributed to customer satisfaction, and retention. Rewards on pure internal effieciency are minimised (but not eliminated—after all, one needs to be afficient and effective).

Finally, management becomes (or should become, else the game is up), a thought leader and enabler of the whole process. Management in such an organisation is at the bottom of the triangle, not the top, behind the parts of the triangle that deal with the customer. It helps define, identify and execute the customer centric tactics at every level, and takes rapid corrective action where appropriate. Management should be there for the 'big' but also for the 'small' things that will make the difference.

In other words the whole organisation 'wraps' around the customer, rather than its products and market.

4. Many apply. Visioning, Training, Coaching, Mendoring, anything that will break down departmental resistance, infuse a sense of urgent need of focused and justified change to every employee. Meaningfull workshops that will help employees identify with the brand and its values, feel proud about it, and eager to represent it to their customers and prospects in the best possible light.

Regards,

Niko

Graham Hill
Guru
Member

Posted 09-Aug-2004 01:02 AM
Bob

It seems that 'Organisational Alignment' has become a hot topic in CRM. The implication is that if we can just align the organisation around customers—or at least around 'CRM' as an internal proxy for customers—then everything will be OK. It's such a simple, sensible idea, it's tempting to ask why everyone isn't doing it!

The answer of course, like many things in organisations, is that it isn't that simple. It also isn't that new. Marketing writers like Levitt, Drucker and Webster have been extolling the virtues of a customer-orientation for almost five decades. But hardly any companies of any size have built a long-term customer-orientation that pervades the entire organisation, as is implied as the end-goal of organisational alignment. British Airways achieved it in the late 80s, but that disappeared with its emphasis on cost-cutting in the 90s. Saturn achieved it in their automobile dealerships in the 90s, but that disappeared when GM retook control. Nordstrom were lauded for their excellent customer handling, yet at the same time had some very bad press surrounding employee mis-management practices. The list goes on.

What should be clear is that it isn't simply about developing the right customer-facing people, processes or technology, but about the fundamental values that drive the whole organisation's attutudes, behaviour and culture. In moving from a process, departmental or product-orientation towards a customer-orientation, it is these values that need to change if the organisation is to be realigned around customers.

The values are those often described as a 'high-performance work system' and include:
1. Clarity of Direction, so that staff and suppliers (and even customers) know where the company is going and why
2. Customer Focus, so that everyone knows that the customer is Job No 1
3. Enriched, Enlarged Jobs, so that staff do meaningful, value-adding work
4. Team Empowerment, so that teams are able to manage their own work to completion
5. Open Information Access, so that staff have access to the right information to manage their own work
6. Quality Assurance, so that teams and staff are responsible for the quality of their own work
This isn't a complete list but I'm sure you get the idea.

The CRM programmes that have failed invariably have not built these sort of values into the organisation. Moving from the values that are most often associated with, for example, a product-orientation, towards these customer-oriented values requires an organisation to evolve through a number of well-defined steps. This can be slow and difficult work which many mangers do not have the patience to see through to completion.

As I suggested at the beginning of this posting, this is not as simple to do as it sounds. But it is absolutely necessary if an organisation wants to realign itself around customers successfully.

Graham Hill
Independent Management Consultant

Mark Sauter
Member

Posted 17-Aug-2004 11:14 AM
I'd like to enter this discussion sharing my CRM ‘implementer' experiences while with Dow Corning Corp. We had a multi-year effort since ~1997 that culminated in 2002 with a re-defined enterprise strategy, a new e-based business model, and a new revitalized brand identity. Although the effort can be labeled ‘CRM' we minimized the use of that term as it carried narrow connotations (IT project). Past two years have continued to validate the approach, results, and the sustainability thereof.

I'm very intrigued with the questions you pose, because my experience is they are the Achilles heel of many failed CRM efforts, especially when CRM is applied within the manufacturing sector (my experience). Before I address your questions, I need to provide a bit of contextual background.

Initially CRM IT tools were built to accommodate the raft of information and associated turnaround speed of customer engagements (i.e., optimizing ‘call centers'). CRM ‘tools', at this time, were built to accommodate ‘front-office' operations. For many industries this sufficed; hence, the CRM baby was birthed.

However, that's not the case in the manufacturing sector, where it's just the opposite. Most costs and resources, within manufacturing organizations, are found within the ‘back-office' operations. Although we'd like to ‘believe' decisions are driven by market place "needs", in reality they're driven by back-office efficiencies and productivity. Right or wrong, that's reality; and ‘reality' should form the starting point for any successful CRM venture.

Here lies the real challenge to CRM success in the manufacturing sector ... "show me how CRM will affect our ‘internal' productivity?" Like-it-or-not, they don't totally grasp the use of ‘customer' data to drive decisions; typically it's not as concrete as the historical, albeit internal, data they're used to using. Many fail to see the significance CRM can and should have on internal productivity ... if they did CRM efforts would be accelerated and ROI increased. Thus, skills of CRM ‘leaders', to be successful, should be directed here ... your questions are an excellent starting point. Although I'll comment from my manufacturing perspective I'm discovering the applicability is far more universal.

1. What does "organization alignment" mean and why is it important to CRM projects?

Productivity. CRM must move beyond ‘external', longer-term, rationale (satisfaction, loyalty, etc...) and represent impact on more immediate needs many organizations are facing—cost/profitability! Yes, by focusing here first it might limit the ‘idealism' and/or breadth of a particular CRM investment (not all bad); however, it significantly increases buy-in due to answering the more immediate internal question, "what's in it for me?"

As the case for ‘productivity' is built and understood, the need for operational alignment becomes obvious (at least within the manufacturing sector) in order to effectively and profitably ‘deliver' upon the promise projected via CRM. Once again, by respecting "ability to deliver" (i.e., operational alignment) it might initially slow the pace of CRM introduction; however, by so doing it better reflects reality and secures appropriate step-wise support.

2. How would you know if your organization was well "aligned," or not?

Ability to ‘deliver' upon expectations. CRM can be used to gather and synthesize marketplace information (i.e., prioritize / focus); however, equally it should be used to ensure internal "commitment" to act and respond to it. The former (gather/synthesize information), in comparison to the latter (internal commitment), is far easier, and where many CRM ‘tools' are well equipped. The latter requires a significant degree of cultural reorientation. There's a lot of silo's and bureaucracy in many of today's organizations, and CRM runs head-on into this. Total organizational alignment, pre-CRM launch, is unrealistic; however, CRM breadth and pace should be regulated to reflect it—using the ‘data' generated to justify continued alignment efforts in this regard.

3. What kind of organization changes are likely in a shift from product- to customer-centric strategy?

Hah! Suffice to say this ‘shift' affects virtually all elements of an organization. Magnified exponentially by the degree in which the ‘product-centric' approach was historically successful—i.e., power structures are institutionalized around it.

With that said IT IS POSSIBLE! CRM, ultimately, requires customer-centricity to be sustainable; and in so doing requires top-down support. ‘Support' that when tested—typically at implementation—won't falter; the ‘real' reason behind most CRM failures. With that said, ‘top-down' support must be earned. Executives, although they might agree with the need for CRM, must equally assess the cost, time and risk (personal & organizational) for implementing it. Building a case for big-bang change doesn't work; however, a step-wise progression does—as confidence increases so will their support.

Following a just a few areas that will be impacted: Business and Market Strategies; business processes; decision making; degree of cross-unit collaboration; customer segmentation (can't be all, or even the same, to everybody); sales and marketing skills; information ‘analysis' skills; executive relationships; etc... The situational ‘context' of every organization is different; hence the approach taken.

4. What change management techniques are helpful in getting people "on board" with your CRM program?

Another huge mouthful! As stated above, every situation is different. The context and circumstances vary, as does the cultural readiness. Using change management ‘diagnostics' can help objectively assess an organizations situation, allowing for better and more realistic decisions and approach. Sadly, in many cases, people espouse the use of ‘change management' however, in attempting to force-fit the wrong things. Change management can and should be used to ‘regulate' the pace and breadth of any CRM investment based on the degree of organizational commitment and situational readiness—used to counter-balance CRM Idealism. Best practices and/or technologies, proven elsewhere, are only as good as the organizations commitment and readiness to take advantage of them ... many times we miss that.

Regards,
Mark