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TransformationJan 19, 2018

Digital Organizational Design

Justin Bell

Digital is on the agenda of most companies across industries. In our work with clients on their digital transformation, we’re often asked to help with a couple key questions:

  • Who should own digital?

  • What is the best organizational model for digital and how it interacts with other parts of the business?

We have identified five different organizational design options and some considerations for each to help our clients make this important decision.

Spoiler alert: It isn’t a one-size-fits-all answer. Like many things, it depends on the client’s starting point as it relates to digital (read about our digital maturity model here), their specific goals for digital, and understanding how centralized or decentralized the company already is in other functions.

The ultimate end-state for most organizations is that digital is embedded into the core business units (e.g., sales, marketing, operations, etc.) and a central theme in the overall business strategy. However, in many cases that may not be a realistic or achievable near-term step and may slow down progress on digital initiatives if the organization isn’t ready to operate in that way.

Instead, it is important to evaluate the organizational model that best fits where you are today and helps you move forward toward your goals.

Five Organizational Design Models for Digital

We describe the five models here at a high level and some of the inherent pros and cons.

Channel Oriented (A) – Establishes a standalone organization, aligned by channels, which works closely with technology.

Pros:

  • Enables an independent organization that can think and behave differently.

  • Draws clear responsibility lines by marketing channel.

  • Enables hyper-focus on individual channels.

  • Removes complexity.

Cons:

  • Requires continued reliance on technology for development and support.

  • Creates ambiguity around emerging channels.

Technology Integrated (B) – Establishes a standalone organization integrating capabilities from marketing and technology.

Pros:

  • Enables an independent organization that can think and behave differently.

  • Integrates capabilities from marketing and technology.

  • Utilizes and reassigns existing talent.

  • Supports technology-driven marketing innovations.

Cons:

  • Requires a new C-level role.

  • Necessitates reorganization of existing marketing and technology teams.

  • Creates roles that are partially redundant.

Channel / Segment Matrix (C) – Establishes a C-level role tasked with “owning” the customer experience.

Pros:

  • Aligns to customer-centric business strategy.

  • Creates an organization that can own the end-to-end customer experience.

  • Maintains channel-centric expertise within marketing.

Cons:

  • Addresses digital needs at a different, potentially more disruptive level.

  • Requires comfort within a matrixed and complex organization.

  • Necessitates flexibility, integration, and many resources.

Center of Excellence (D) – Establishes a “virtual” organization responsible for company-wide digital strategy.

Pros:

  • Enables an independent organization that can think and behave differently.

  • Facilitates rapid digital strategy development.

  • Empowers subject matter experts to impact multiple organizations and disseminate best-practices.

  • Impacts the fewest resources.

Cons:

  • Limits and/or isolates impact of small teams.

  • Embeds digital natives within organizations where they have less relevance.

  • Represents a potentially temporary solution.

Hybrid (A+B) – Establishes a standalone organization that can scale to support both marketing and enterprise needs.

Pros:

  • Enables an independent organization that can think and behave differently.

  • Creates a focus on “craft.”

  • Maintains some of the existing sub-organizations while more effectively assembling a leadership level.

Cons:

  • Requires C-level executive sponsorship.

  • Creates roles that are partially redundant.

  • Drives mixed opinions regarding support of upward mobility.

You can read more about our approach to digital transformation here.

Let us know if you’re going through a digital transformation. We’d love to share our experience with you.

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About: Justin Bell is the president of Credera. He enjoys leading teams, working with clients on their digital strategy, and understanding how technology can be used to accomplish business objectives and IT velocity/efficiency initiatives. Read more about Credera’s perspective here.

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