Professional Documents
Culture Documents
POINT OF
POINT view
2010 Black Friday sales were up only .3 percent over last year, yet online sales are up 16 percent
against last year. And, 60-70 percent of offline, store and catalog sales are now impacted in some way
by digital commerce, either through comparative ratings and reviews, research, or targeted promotions
and personalized campaigns. Almost all retailers are making significant investments, ranging in scale
from about 1-3 percent of revenue, in cross-channel capabilities including online, mobile and social
media to build brand and drive new revenue streams.
Despite all this momentum and spend, however, few companies have managed to successfully bring
together the thinking, skills, and experience required to create a unified, successful cross-channel
organization. What’s required for a company to build a successful cross-channel organization? How
does one ensure maximum return on all those investment dollars?
Organizations move “up” the matrix from level one to level five as they develop more cross-channel
capabilities. Aspects of the organization should be evaluated, designed, and built with respect to
incentives and rewards, people and culture, business processes, technology, and internal structure as
companies develop a more sophisticated set of capabilities.
Level 5: Optimized • Incentives broadly rolled out • Distinct multi-channel culture • Process updated for • Technology enables • Full update to optimal
bedded in organization multi-channel tracking of multichannel stucture for the
Full roll-out, organization is • Continuously monitored / customers
• Completed end-to-end organization type
nimbly responding/executing optimized / communicated • Continuously monitored / product lifecycle, shared • Use of flexible cloud-based
on metrics optimized / communicated future vision and scenerios systems considered
• Incentives adjusted in • Roll out initial activities and • Core processes updated • Core technology upgrades • Structural changes for
Level 4: Limited Execution select cases partnerships, working for multi-channel rolled out high-priority areas
Implemented changes across groups, vision completed
high-priortiy channels
• Plan developed for • Shared vision created • Plan developed for cross • Close on major • Excecutives have identified
Level 3: Alignment addressing conflict channel visibitlity investments needed structural changes needed
• Broaden consensus
Gained consensus on design • Vendor identified
elements to be changed • Determine approach to
shaping culture
• Identification of where • Conversation Started • Current state processes • Identified gaps in cross- • Excecutives have shared
Level 2: Assessment incentives are in conflict identified channel tracking vision of gaps and current
Identified gaps and completed • Consensus built around challenges
established foundational need for change • Gaps Identified • Created baseline state
• Baseline metrics set • Consenseus built around
vision & baseline metrics need for change
• Channel conflict and mis- • Culture fails to recognize • Internal processes • Technology gaps prevent • Organizational structure
aligned incentives slow the the value of multi-channel oriented to single- single view of multi- inhibits optimized multi
Level 1: Initial adoption of multi-channel channel or silced activites channel customer channel customer
Initial organizational status operations experience
• Lack of flexible
technologies
The first model is a COE or digital operations hub with strategy, Web site, mobile, and capital spending
responsibility, but no direct P&L (profit and loss statement). IT, such as it relates to digital, online,
and call center operations, is part of this organization, and the organization serves its business line
P&L counterparts through named liaisons that help prioritize capital spending and investment across
the company as a whole. In this model, there is a great ability to try new ideas, experiment, and learn
without disruption to the traditional, P&L-based business lines.
The second model is a digital operation COE that has its own P&L for direct sales. A Web site, call
center, and fulfillment for any digitally-enabled orders run through this organization. This simplifies
investments, since there is no longer competition between channels, but the change is large and it’s a
big strategic shift to execute in this model.
Finally, the most sophisticated version of the cross-channel organization is where digital is embedded
within each business line, and it is no longer a separate organization. This is the most evolved and
advanced organization, and the hardest to achieve without a lot of duplicated cost in various brands
or business lines.
6. Centralize or decentralize?
The benefits of centralizing a lot of business functions include generally lower total cost, more control,
and clear standards. Potential negatives are that a COE runs the risk of being further removed from the
customers than are the P&L business lines, and the fact that response to the market could be slower than
if driven within P&L-based business lines. On the other side of the coin, decentralizing digital functions can
create a quick response to market needs, but with a loss of central control, consistency, and standards and a
likely increase in duplication and higher total cost to the company. For all these reasons, a balanced approach
to a COE that evolves over time is usually most appropriate for customers, employees, and company needs.
In conclusion, there is no better time for any company to be moving toward a new set of digital and cross-
channel capabilities. Momentum is strong, future growth in digital is all but certain to continue, and
consumers will continue to expect more seamless interactions that build brand experiences, boost loyalty
and retention, and bring in new customers — but planning, creating and evolving the digital organization to
make use of any investments in social, mobile, or cross-channel commerce is the hard part, and without the
right organization, it’s impossible to win.
ideaengineers.sapient.com
email info@sapientnitro.com
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