Initiatives aimed at improving performance are often launched with great uproar, costing an organization significant investments. Such initiatives necessitate extensive changes in the Organizational Culture and the way the enterprise systems and processes function.
However, most initiatives fall short of realizing success. Decades of scholarly research on Change Management reveals that the issues that contribute the most to the failure of strategic initiatives are:
- Incompetence in sustaining process improvement.
- Lack of trust on senior leadership.
- Failure to embrace new ways of doing business.
- Performance relapse.
- Inability of the initiative to produce any positive financial returns.
- Skepticism towards the desired behaviors and return of impractical employee behaviors.
Researchers have carried out scores of studies to isolate the drivers of lasting change. Research published in MIT SMR in 2005 discusses how leadership can design and execute Transformation initiatives that bring lasting changes in the organization. The study entailed in-depth analysis of the strategic Customer Service Enhancement (CSE) initiative undertaken by a large clothing retailer, having franchises in multiple geographic locations.
The researchers conducted 20 semi-structured interviews with leaders, in-store operations and support function managers. Detailed notes of the interviews were shared amongst the researchers alongside an exhaustive literature review. A case study of the initiative was prepared using independent research to have an unprejudiced viewpoint, free from any bias. Feedback from the organization’s management was gathered and incorporated throughout the study to seek clarifications or corrections. Data analysis was carried out employing a coding scheme developed using Atlas.ti tool. Comparative analysis was conducted and similarities and differences in conclusions were discussed.
The study brought to light 4 key processes necessary for change to stick in an organization. These key processes assist in laying the foundation for successful institutionalization of change initiatives by creating a company-wide culture that encourages enduring change:
Let’s delve deeper into the first 2 processes.
Chartering is a process through which an enterprise classifies the purpose, scope, and the way people interact with each other on a strategic initiative. Clear delineation of project boundaries, resources, responsibilities, and reporting lines are the elements integral for the success of a change initiative.
The Chartering process entails 2 critical components:
- Boundary Setting
- Team Design
Boundary Setting involves the key steps a team takes for accurate definition of change initiative’s scope.
The project team should clearly outline the problem(s) that the project is, and isn’t, going to tackle. Ideally, while designing and executing a change initiative, the focus of the engagement should be on confronting the most crucial problem area. The leadership should ensure not to confuse the core team by eyeing too many priorities to deal with through the strategic initiative.
The Team Design element of Chartering involves ascertaining the roles, accountabilities, and guiding principles for team’s collaboration. Team design entails creating ground rules for team members to interact, devising mechanisms to manage conflicts. The leadership needs to not only maintain diversity of the project team’s expertise, but also ensure they complement each other, and inculcate a standardized approach to decision making in project teams. There needs to be fostered a culture of positive discourse and testing ideas amongst the team members. Incorporating these guidelines helps spark thinking, learning, and decision making.
Learning aids in anticipating and dealing with hurdles during implementation of Transformation initiatives. Learning enables the managers to improve the quality of the new processes. it is a process through which managers develop, test, and refine ideas before full-scale implementation. The process entails 2 critical components:
The discovery element involves gathering data to identify the objectives of the change initiative and outlining ways to achieve those objectives. Before rolling out a complete implementation of a change initiative, testing and refining the individual elements of the initiative immensely assists in the success of the initiative. Gathering adequate information relevant to the initiative, setting up baseline metrics to measure performance, and identifying issues hampering customer satisfactions are the key aspects of this phase. The team should learn from the failures of prior initiatives, introduce change in a systemic fashion rather than piecemeal, and encourage people to change rationally as well as emotionally.
Interested in learning more about the other processes critical for change to stick? You can download an editable PowerPoint on 4 Processes of Sustainable Change here on the Flevy documents marketplace.
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Transforming a product-driven firm to a customer-driven enterprise is inevitable in order to stay ahead in today’s extremely competitive markets. The days of mass marketing, mass media communications, and little-to-none direct interface with customers are long gone. The emphasis, now, should be on maximizing customer relationships and becoming customer-driven organizations rather than merely selling products. The technological advancements of this age offer potent tools for organizations to utilize in order to engage with the customers directly; gather and mine information; and tailor their products and services appropriately.
Leading organizations are making huge investments in data analytics and transforming their strategies to focus on the customers’ evolving needs. They are striving hard to improve their customer retention and deepen their relationships utilizing rich customer insights, tailoring products according to the personalized needs of the customers, and presenting the offerings in a variety of store formats.
The Customer Department
To become customer-centric organizations, companies need to transform their traditional marketing function into a new unit called the “Customer Department.” The Customer Department should be created to deliver maximum profits to the customers and nurturing customer relationships instead of pushing products.
This necessitates transforming the organizational structure, culture, strategy, and reward programs in line with the shift in focus from managing transactions to cultivating customer relationships. Specifically, there is a need to add the position of Chief Customer Officer (CCO)—under the CEO—and various Customer Managers underneath the CCO. The roles and responsibilities of these positions should be:
Chief Customer Officer (CCO)
The most prominent shift in a customer-centric organization is replacing the traditional Chief Marketing Officer (CMO) role with the Chief Customer Officer (CCO) role. Reporting to the CEO, the CCO is primarily responsible for devising and executing the customer relationship strategy, directing all the client-facing roles, and fostering a customer-driven culture in the organization. The main tasks of the CCO position include ensuring smooth flow of customer information, increasing productivity utilizing various metrics, and regularly interacting with the customers to understand their concerns.
In a customer-centric organization, the Customer Managers (CMs) are in charge of various customer segments. They are accountable for enhancing the value of a customer relationship by ascertaining customers’ product needs. To make this role effective, there is a need to realign resources—people, budgets, authority—from product managers to the CMs.
The main tasks of the CM position include defining customer needs, extracting and interpreting customer insights utilizing various sources—e.g., mining customer forums, blogs, and online purchasing data—, and striving to improve the lives of the customers.
Additional Responsibilities of the Customer Department
Customer-centric organizations make the Customer Department accountable for some of the critical customer-facing functions which were once considered an integral part of the Marketing Department. These functions include:
- Customer Relationship Management (CRM)
- Market Research
- Research & Development (R&D)
- Customer Service
Customer Relationship Management (CRM)
Traditionally, the CRM function belongs to the Information Technology Department owing to the technicalities involved in managing the CRM systems. The function demands evaluating the customer requirements and behaviors—which is a core function of the Customer Department alongside gathering and analyzing data necessary to execute a customer-development strategy.
In customer-centric organizations, the Market Research function goes all the way from the marketing unit to other units that deal with customers—e.g., Finance for payments, Distribution for delivery. These organizations take a more granular view of customers’ behaviors, and gather and incorporate clients’ feedback to further improve customer lifetime value and equity.
Research & Development (R&D)
The R&D function should also report to the Customer Department, as, nowadays, the traditional R&D-driven new product development models are conceding to creative collaboration between the client (users) and producers. It’s not a good idea anymore to pack tons of features into a product and cause feature fatigue to customers. What’s more appropriate is to seek and incorporate customers’ input into product features by involving them into the product design process.
Customer Service (CS)
CS is another function that should be handled by the Customer Department to guarantee quality of service and to nurture long-term relationships. This important function isn’t worth outsourcing overseas as this often causes negative impact to the clients and organizations alike, due to poor customer service.
Interested in learning more about Customer Metrics, Customer Department, and Customer-centric Organizations? You can download an editable PowerPoint on Customer-centric Organizations: The Customer Department here on the Flevy documents marketplace.
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