A new way of thinking about organization structure

Striving to make customers the focus of an organization’s actions and decisions results in solid teamwork and collaboration by the staff.

A new way of thinking about organization structure

As organizations are increasingly challenged to do things better, more quickly and cross-functionally, is there room for a remake of the traditional organization chart? I think there is a need to do so to better communicate both focus and purpose.

Pyramid structure

In a typical hierarchical organization chart, the CEO occupies the lone box at the top and executives in charge of functions fill the next rows and levels below while their directors and managers are below them. Everything neatly piles up from the bottom of the organization into pyramids with levels on the pyramid indicating responsibility and authority. This chart represents the formalized power structure within the organization.

Back in the mid-’90s I was the CEO of a growing technology company that was creating a new product category. Staff were trying to understand both what needed to be done today and how things needed to evolve tomorrow. Applying only the traditional hierarchical view of the organization structure to communicate how we needed to think about the company and its mission seemed totally inadequate. I created a new org structure, something that I believe has passed the test of time over almost 20 years as I have used it internally and externally to communicate organization structure.

Customer at the core

At the heart of my org structure I drew a circle and labeled it “customer.” Then I drew a larger circle outside and labeled it “technology” or “products.” Then cutting to the core of the inner circle I drew a series of pie-shaped slices and labeled them with the names of the various functions within the company, things like “sales,” “operations,” “services,” “finance” – all of the functions other than the ones at the core.

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It is no coincidence that the customer is at the core of the organization. The customer also must be at the core of the whole company’s thinking. Meeting a customer’s needs today and through time gives a company a reason for being. Without customers there is no company and everyone, not just customer-facing functions, needs that reality to drive their thinking and behavior.

Appealing to customers

What a company offers to its customers, whether it is a tangible product, a service or a subscription, is vitally important to the company’s appeal to customers through time and, therefore, its success. That’s why “products” occupies that second inner ring. Investment in R&D and product innovation and all of the services and ecosystem around a product are critical to long-term relevance and success.

All of the functional areas cut to the core of the organization. Customers don’t just belong to marketing or sales – they belong to the whole company. Companywide everyone must focus on the customer’s experience, most obviously with its products or services and less obviously with every process that touches the customer. Every function must consider what it does with the objective of creating a delightful customer experience. This also speaks to cross-functional collaboration in pursuit of customer centricity.

External organizational view

Framing a top-level view of the organization more around the mission of delighting customers versus strictly traditional hierarchical structure has obvious benefits. It can align a company’s focus on what is most important, namely the customer. It can take a more outward look at what is important versus strictly a look at how a company has assigned authority and responsibility. It overtly communicates that teamwork and collaboration are expected modes of working. And most importantly, it speaks to what energizes people and keeps them committed to both the company and its mission.

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Nancy Knowlton
Nancy Knowlton is co-founder and CEO of Nureva Inc. and previously the co-founder and CEO of SMART Technologies. She writes about education, entrepreneurship, business management, technology, innovation and other passions.