Digital-First Organisational Architecture

The best organisations work in specific, unique ways which enable them to be world-leaders in their fields. Digital-first architecture is how they do it.

The delivery of the brand promise you make to your consumers is the result of the interaction of the four layers of your organisation.

At the base, we have Functions - the things the people in your organisation do on a day-to-day basis. Then we have Processes - the ways individual functions are combined together to achieve things. Next we have Outcomes - the results of processes, which are of value to the user, the organisation, or both. And finally we have Brand Sentiment - the way the delivery of outcomes is experienced and perceived by the consumer.

With that in mind, let's take a look at how this looks with a quick example...

An Organisational Framework for Uber/Lyft

Functions

  • Request a driver
  • Show rider request
  • Accept pick-up
  • Confirm pick-up
  • Confirm drop-off
  • Bill rider
  • Pay driver
  • Route optimisation

Processes

  • User requests driver, takes ride, is billed by system
  • Driver shown rider request for pick-up, pick-up accepted, confirmed, and drop-off confirmed

Outcomes

  • User delivered to destination and charged for the journey
  • Driver payed for service

Brand Sentiment

  • Map to choose start and end points, and to show location of driver and time to pick-up (user) builds trust and soothes through ease of use.
  • Best route from start to end point (driver) means drivers require less training and are helped to give a good journey experience, reducing their own stress and improving the experience for the rider.

As you can see, there are functions which detail specific, individual actions, processes built out of the base functionality, outcomes resulting from those processes, and interfaces to enable the interactions taken.

Some of these can be improved by working on the interfaces which deliver the user experience. For example, a large part of what makes Uber and its ilk so effective is that the app shows an exact time to pick-up. As we know from the fields of psychology, a known, specific delay is more bearable than an unquantified one. However, the real magic is the ability to request a pick-up at a specific place, without having to interact with a person. The level of friction is significantly reduced, the time required is shortened, and the experience delivers more agency for the user.

When we think about many of today’s most interesting organisations, they’re digital at their core. AirBnB, Netflix, Amazon, Microsoft, Alphabet and so on. It’s also why outliers such as Tesla and WeWork stick out as potentially hugely over-valued - they’re fundamentally non-digital organisations, which are treated as if they were, because of marketing and set-dressing. However, one manufactures batteries and cars, and the other rents real estate. Those are fundamentally not digitally enable-able businesses at this time. (Written March 2019, before WeWork’s fall from grace.)

What’s most interesting about these companies though, to my mind, is that they weren’t existing companies which evolved. Instead, they were built from the ground up to work this way. Nice if you’re a start-up, but what if you’re the incumbent? How do you evolve? Well let’s think about how organisations operate and improve themselves.

Looking at these from 1 to 4, we have organisations which are...

  1. Struggling to adapt, which needs to change processes to rapidly gain efficiency.
  2. Working as a cohesive whole, but focused only on short-term results
  3. Thinking long term, but organisationally siloed, requiring alignment to deliver effectively
  4. Focused on long-term results, and working both at organisational and departmental levels

The top right quadrant is the ideal for an organisation, where the board are setting long-term strategic goals, and departments are executing on shorter, measurable projects to deliver against that plan. Even here though, there’s still work to be done to ensure that stays as it should be. In areas one to three though, there’s work to be done to move to that place.

To get from two to four, the focus is on changing the focus from short to long term, to create an organisation which will still exist in the future. From three to four requires developing an holistic way of working across organisational departmental lines. And finally, from one to four, basically everything needs to be fixed.

Fundamentally, one cannot effect truly useful change simply through altering digital presence or a visioning exercise. The solutions to all these challenges start by altering the four layers of business. Changing what work is done, how that work is done, the outcomes generated, and the experience of those outcomes and the journey to them to alter perceptions.

A Brief Example

Let’s consider the case of a bank. The functions undertaken will be very similar, if not identical from one bank to the next. But how they're assembled into processes determines the efficiency and effectiveness of the organisation, in terms of its ability to organise people and deliver outcomes. Those processes create outcomes for the user, delivering a service or product. Finally, the experience of both the outcomes delivered and the touchpoints along the way creates differentiation.

Whilst we believe many organisations vigorously ‘nod their head’ to the notion of customer-centricity, not many of them have built and embedded the underlying capabilities needed to truly execute on the customer vision. Even fewer have organised themselves around the customer, with only 13% of organisations structured around the customer journey today.

Changing the Game - PWC, August 2017

As such, one bank can operate more efficiently than another, which we're seeing with the rise of the challenger bank market at the moment. It's simpler to create new processes out of existing functionality when you don't have legacy systems to support at the same time.

The Architecture Always Shines Through

There's an old saying in software programming - "the architecture always shines through". The same is true in organisational design - how seriously your organisation takes its digital enablement, and how its architecture functions will be reflected in the experience your end users have. If you don't have people looking at cross-organisational performance, then having Google Analytics on your site isn't going to matter. Certainly, the marketing team will get the benefit, but how about the customer support or buying or the C-suite?

How seriously your organisation takes its digital enablement, and how its architecture functions will be reflected in the experience your end users have

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Unless an organisation has a long-term, strategic vision for the experience it wants to deliver, and is executing on it in a committed, meaningful way, there's always going to be room to move up and to the right over time.

The combination of these is why the promise of CRM never materialised. Organisations invested in the software, but not the analytics and strategic operational side of the equation. Instead, a new technology layer was introduced, adding complexity to the organisation as a whole, whilst only facilitating a small part of it.

It’s not that difficult to learn about how your customers interact with your organisation, but it’s quite another thing to re-shape the organisation around that information. Most organisations, whether third sector or traditional businesses, are currently still structured by product and service or customer segment. Very few are actually designed and optimised around delivering great customer experience; instead they’re fine-tuned to create the lowest possible organisational complexity. This might be great for your ops people, but it’s not what matters to the people who engage with you.

Where to Begin?

We believe that all change efforts are composed of:

  • Observation: research, evaluation
  • Design: strategy, tactics
  • Change: execution, analysis

However, there’s a snag. This process, whilst simple in theory, takes significant time, and cross-organisational buy-in in order to work. This is where things tend to fall apart in the current landscape.

This is why we find it surprising that the majority of organisations saying that their CX initiatives will take two years or less to complete, despite also stating that there’s generally little buy-in at board level, and around a third generally stating that they lack a roadmap or vision for what the future of their organisation should look like.

In our experience, changing organisations of any size and scale to have a people-centred focus takes around three to five years or more. Even small organisations, for all their vaunted agility and nimbleness, generally take 12-24 months. Why is this? Because organisations generally lack in five areas when it comes to creating change: vision; metrics; ability; buy-in and budget. In short, when it comes to creating an end-user focused organisation, many organisations are currently all mouth and no trousers.

So how can we take the three steps required and fit them in with the realities faced by organisations in the real world?

Eating a Steak

Too often this aim of Observation - Design - Change is taken to be something which must be applied to an entire organisation in one go. Whilst this whole-organisation focus is laudable, it’s akin to trying to eat a steak in one go, with no cutlery. The end result would probably not be a howling success.

Instead, you go piece by piece. Such is the same approach for altering an organisation. The Design and Change elements must be focused on small areas, building replicable, scalable units which reflect the new vision for the company, which can then be applied more broadly. Thus a small, single change can, over time, be used to affect something much larger.

At the same time, this smaller, more modest method of working helps tackle the issues seen in organisational change. The vision required by senior management is better defined, and simpler to observe. The metrics by which it can be measured and deemed a success or failure are easier to create and report on. Fewer staffing changes or external advisory services will be required. The number of people required to help drive the change is reduced, meaning there are fewer points of failure. And finally, because the whole scope is reduced, the budget required to create the change is smaller, and the result scales, delivering greater ROI.

This approach can also be considered in one of two ways: departmentally or procedurally. In the case of the former, you’re looking to alter the ways of working of a specific business unit, to deliver improved customer experience. For the latter, a specific process with a desired outcome is modified to reduce friction and/or create a more positive perception. Neither one of these is the “correct” way; it depends entirely on how your organisation currently operates and where the greatest sources of pain are from your customer’s perspective as to which should be used. That’s a determination only you can make, as a result of studying the habits and feedback of customers, as part of a process of customer journey optimisation.

This last part is key to all of this. Whilst we’ve been talking in this chapter about the idea of organisational change, it’s worth remembering that this change is not for operational benefit (although that may well happen vis-à-vis the work done). Instead, this work is done in the service of the user, the person who will interact with your organisation.

This must always be the goal. It’s when this is forgotten that we see failures occurring, both in marketing more broadly, and CX initiatives specifically. When the marketing of a brand’s purpose is put before the work of delivering that purpose, customers will see the hypocrisy. When organisations value short-term gain more than long-term reward, they tend not to exist in the future. The same is true of customer experience work. If the organisation puts itself first, it’ll never see the reward of the work it does.

It’s this tension which makes digital CX work challenging. The gain is long-term, but the work needs to be done now. So when it comes to creating an organisation which innovates and executes well around digital technologies and marketing, that means we need to create an agile organisation.

The Biggest Example Going

In case you think this isn't something that your organisation could achieve because you're not a start-up, here's an example for you. Amazon migrated entirely to this way of doing things. Bezos sent an email with the following rules for how Amazon would operate, in order to make sure that it was efficient in terms of how it developed internal systems:

  1. All teams will henceforth expose their data and functionality through service interfaces.
  2. Teams must communicate with each other through these interfaces.
  3. There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team's data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.
  4. It doesn't matter what technology they use. HTTP, Corba, Pubsub, custom protocols -- doesn't matter. Bezos doesn't care.
  5. All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions.
  6. Anyone who doesn't do this will be fired. Thank you; have a nice day!

The same rules that make the architecture of team interplay for building things works for everything, because all work that teams in any organisation do is (or should be) done for the same reason: productive, useful output. By thinking entirely in terms of services, and how the organisation operates, Amazon was about to build out how it worked in a way which has made it one of the most valuable companies in the world.

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