Do You Need To Change Your Organisational Structure To Improve Your Customer Experience?

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I’ve been thinking about whether an organisation’s structure impacts it’s ability to deliver great customer experiences recently. I’ve also been exploring this in my podcast interview series, where I interview leading authors, entrepreneurs and business leaders about what it takes to deliver great service and customer experiences.

What I’m finding is that to deliver great customer experience and exceptional customer service, organisations need to have the right culture, values, behaviours, mission and purpose etc etc in place.

That’s fair enough, you might say, and may not be much of a surprise.

But, what about an organisation’s structure? And, is the traditional, hierarchical and command and control structure still ‘fit for purpose’?



Bruce Poon Tip, founder of G Adventures, doesn’t necessarily think so.

I had a chance to chat to him about this in my most recent podcast interview, where we chatted about that and his new book: Looptail, which tells the story of G Adventures, their journey, success and how they have radically changed their organisational structure.

In his book, Bruce says that:

“The traditional ivory tower, military command-and-control style of leadership……is dead, and while you might get some results employing such tactics, you will forever remain vulnerable to being beaten by an organisation that is more social and engages employees and customers differently.”

If you are not familiar with G Adventures, you might think that that is a bold statement. But, Bruce makes that statement with an impressive track record. G Adventures is the world’s largest small group adventure travel company, are a leader in their niche and have been delivering double-digit growth year on year for the last twenty years. They also operate in 100 countries, generate over $170 million a year in sales and have over 2,000 employees.

However, he doesn’t stop there and goes on to say, in his book:

“high performing organisations often have a more open structure, and like them, we aim to create more freedom as we get bigger. Replacing those traditional office-based structures is how we put a stronger emphasis on our company culture – and how we avoid putting our employees in an organisational straitjacket”

In essence, what they have done is move away from a traditional, hierarchical structure to one that is flatter and more ‘circular’, in nature. This is designed to help them keep leadership at the centre of decisions, but, at the same time, helps create enough freedom amongst their employees so that it drives sustained innovation, fantastic results as well as engaged employees and customers.

But, G Adventures are not alone in pursing new and radical structures as a way of staying competitive, engaging employees and delivering great service. A recent story in The Washington Post (Zappos says goodbye to bosses), reported that Zappos, the customer service obsessed online retailer, is currently in the midst of implementing a new organisational structure called a “holacracy.”

This system, like G Adventures, is based on ‘circles’. However, in the ‘holacracy’ approach a company organises itself around the work that needs to be done and not around people occupying specific job functions.

Again, the rationale behind Zappo’s organisational change is to get more employees involved in how the firm is run, ‘stave off’ bureaucracy and retain their flexibility as they continue to grow. This, they believe, will also drive innovation and enable them to maintain their customer service edge.

Now, many people may ‘pooh-pooh’ these ideas as ‘airy-fairy’ and ones that will, typically, only work in smaller firms. With thousands of employees each, I bet, G Adventures and Zappos would disagree.



This doesn’t mean to say that that all firms should be thinking about ‘circles’ when they come to assess what is the right organisational structure for them and what they want to achieve.

However, I would ask one question if delivering great service and exceptional customer experiences is your goal this year and that is: Do You Need To Change Your Organisational Structure To Improve Your Customer Experience?

This post originally appeared on my Forbes column.

Photo Credit: Amy Phetamine via Compfight cc

6 COMMENTS

  1. Hi Michael, thanks you for that. You make a great point and it’s great to see Peters and Waterman’s thinking still being used……it’s evergreen and ever relevant.

    I guess the thing that I was trying to do with my post was not to have organisations see structural change as a panacea but to encourage them to look at the delivery of customer experience differently and realise that structure is an important element in the overall recipe.

    Thanks for taking the time to share your perspective.

    All the best,

    Adrian

  2. Take G Adventures Claims with a Pinch of Salt

    I have read a number of similar outrageous claims from small, distributed organisations like G Adventures suggesting they have rewritten the annals of organisational development on the back of one, small-scale, startup. We should take them all with a very very big pinch of salt. Like Peters & Waterman’s infamous book, they may be debunked, discredited and gone tomorrow.

    Although different organisation structures come into vogue over time, they always do so to solve a particular organisational problem. U-forms were developed to achieve economies of scale. M-form were developed to respond to segmented customer demand. Matrix forms were developed to combine responsiveness to segmented customer demand and technological expertise. And multi-firm network forms were developed to bring together many specialised capabilities to gain economies of scale and expertise.

    The newest organisational structures are collaborative multi-firm community forms that pool resources, typically knowledge, to support the growth of collaborative multi-firm communities. Snow et al describe this new form in a paper on ‘Organising Continuous Product Development and Commercialisation: The Collaborative Community of Firms Model’ (http://onlinelibrary.wiley.com/doi/10.1111/j.1540-5885.2010.00777.x/abstract). As Snow points out in his paper, this new form has evolved to provide dynamic innovation capabilities in the face of increasingly competitive markets where active collaboration is required to compete.

    Whilst it may be tempting to take G Adventures ludicrous claim that “The traditional ivory tower, military command-and-control style of leadership……is dead”, wiser organisational developers know that the devil is in the detail of step-by-step organisation design and development, not in the the hyped claims around a new management book.

    Graham Hill
    @grahamhill

  3. Hi Graham,
    Thanks for your addition.

    I’m not sure I would go as far as to call G Adventures small, especially when they have around 2000 people working for them and that would generally put them in the top 1% of firms by size in most economies.

    However, their story shows how they have adapted their organisational structure to fit the changing needs of their business, exactly, as you suggest that organisational changes generally come about to solve a particular organisational problem.

    In my post, I used a couple of examples of firms undertaking a change to ask whether problems and challenges that many other firms are facing could be addressed, in part or whole, by examining and, possibly, making changes to their organisational structure.

    The answer could be yes or no. I wanted to raise the question.

    Thanks again for your contribution.

    Adrian

  4. Hi Adrian

    In your post you say that G Adventures has 2,000 staff in 100 countries. With an average of only 20 staff per country, that makes it a highly distributed community of very small organisations.

    As an organisation developer with many years experience, I have a problem when evangelical CEOs take it upon themselves to write a book explaining how their amazing insights and organisational genius is the ultimate secret of their success. And particularly, that others should therefore copy them.

    Peters & Waterman’s In Search of Excellence was held up as the bible for managers in the 1980s. It was replaced by Collins’ From Good to Great in the 90s. Both suffered from the cum hoc ergo propter hoc problem and were subsequently exposed as being simply wrong. They over-fitted their data to one set of circumstances that proved not to withstand the test of time.

    I agree with you entirely that firms in rapidly evolving environments need to consider pulling the organisation structure levers as part of their response. Snow et al’s paper shows how IBM did this within its Blade server division. But they also need to pull a number of other complementary capability levers such as touch points, data, processes, technologies, working climate and collaborative working in balanced measure too.

    In sum. Whilst CEOs are right to consider pulling the organisation lever in response to rapidly evolving environments, they need to do so as part of a concerted capability building exercise not just as a quick organisational structure fix. It is highly unlikely that simply copying what one small, distributed organisation like G Adventures did will be a universal panacea.

    Graham Hill
    @grahamhill

  5. Hi Graham,
    Thanks for that.

    I agree that copying one firm is not a panacea and firms should be very, very wary of heading that way. I also agree that organisational change is only one ‘lever’ that can be ‘pulled’ to effect the change that firms need to make to ensure that they remain competitive and relevant.

    Thank you for the discussion and, also the link to the Snow et al paper. I look forward to reading it.

    All the best,

    Adrian

    @adrianswinscoe

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