Is It Time to Blow Up the Retail Org Chart?

Discussion
Nov 21, 2013
Ryan Mathews

Want an efficient, 21st century retail organization? Well, a good place to start might be by blowing up that antiquated 19th century Industrial Age organization chart.

Many a management consultant and incoming CEO’s first steps toward putting his or her stamp on a company are to realign reporting functions — swapping out direct lines for the dotted variety and vice versa; diagramming new reporting structures; perhaps even daringly cobbling a new box or two onto the existing model. This doesn’t begin to include performing such arcane maneuvers of the management dance as first centralizing and then de-centralizing activities and responsibilities; flattening the chart only to reestablish new hierarchical command and control models; or devoting countless hours to erecting and tearing down silos.

Oddly, given the popularity of this approach, nothing significant ever seems to change. Perhaps that’s because what we really need is a radical recasting of retail roles and responsibilities, one that nods less to the 19th century millinery shop and more to current digital, information-driven market models.

In the same way that finance played an increasingly critical role in corporate governance as the 1990s rolled on, what used to be called information technology now underpins literally everything a company does, making the role of the CIO or CTO as functionally vestigial as that of the CFO or CMO.

Everyday, the confines of the traditional organizational model are making it more difficult to address the opportunities created by consumer-facing technologies and platforms while eroding the margins of business as usual. We ought to be asking ourselves what a truly information-driven, digital and physical retailing organization could look like, how it would internally align resources, share data in real time and learn and evolve.

We stand on the edge of radical possibilities, shackled by organizational models of the past. Where are the chief customer officers or the chief corporate learning officers? Do we really need boxes separating technology, marketing and sales?

Do you agree that most retailers’ organizational models are unsuited to keeping up with the challenges of new platforms and channels? What old titles do you think can be retired and what new roles need to be identified?

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18 Comments on "Is It Time to Blow Up the Retail Org Chart?"


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Ben Ball
Guest
5 years 6 months ago

The author begins and ends with a false premise – that retailers are “shackled by organizational models of the past. Seldom is a business actually “shackled” by its org chart.

When asked to evaluate org structures, we start with one simple question – “tell me how the org structure is physically impeding your accomplishing your goals.” Responses typically begin with a bold rush of “…well let me tell you!” and end in a whimper of “…well, I guess it’s really that Charlie just isn’t doing a very good job of working with I.T.” or similar.

Seldom is an organization’s performance the org chart’s fault. It is almost always a red herring for other underlying problems such as culture, incentive, misaligned objectives, and ill-fitting personalities.

Bill Davis
Guest
5 years 6 months ago

Absolutely. Technology roles need to get more visibility so the CIO/CTO role should have a seat in the executive inner circle and all business functions need to become more technology savvy. A big piece of this means understanding that just because an idea can be thought up quickly, that doesn’t mean it can always be executed quickly. The big rocks (e.g. infrastructure, data/analytics, mobile) take time to fully develop, but prototypes can and should be brought to market quickly to test feasibility.

Reviewing Amazon’s annual reports, should offer some insight.

Diana McHenry
Guest
5 years 6 months ago

Love this article. Our old titles and boxes and systems are shackling many large companies – from retail to CPG to technology companies. Chief Customer Officer, Chief Innovation Officer and Chief Analytics Officer would be some picks for newer roles. Supply chain teams also need a seat closer to the highest levels in a company.

Mark Heckman
Guest
5 years 6 months ago

In supermarkets, the notion that merchandising, marketing and advertising can live and operate in silos is now flawed thinking. Contemporary retailers must coalesce these areas under common leadership with common goals. Add to that the emergence of all things digital and you have an expanding group of departments that in the past lived and operated on their own, but can no longer do so.

Some larger retailers have anointed a CMO to guide these often disparately run departments, but I like idea that the these disciplines should be re-grouped into a “customer experience” focus. A Chief Customer Experience Officer, reporting directly to the CEO, makes sense to me on many levels.

Once organized around the shopper, marketing, merchandising, digital, advertising and even public relations have the commonality they need to work in unison.

Peter Charness
Guest
5 years 6 months ago

I think there are some areas where technology, or more specifically the way a shopper interacts with the retailer due to technology, have changed, that requires some fine tuning of the organization. There were some expedients that retailers have taken in the past (like e-commerce is just another store and the inventory managed accordingly) that can’t live up to today’s needs.

The marketing/digital/e-commerce arena is an area in need of review in many places. One good question a retailer might ask is “who is responsible for managing the omni-channel customer shopping experience of that “360” customer, or is the “person” responsible really a disconnected 3 or 4 different ones? In many organizations there is no good answer to that question.

David Biernbaum
Guest
5 years 6 months ago

This is a very well done piece by Ryan Mathews. No, we do not need a lot of boxes separating technology, marketing and sales, nor do we need a lot of boxes and arrows that slow down category management, and category progress.

Ian Percy
Guest
5 years 6 months ago
19th century? How about 17th century? That’s when the Newtonian model was adopted by the world – a model based on linear cause and effect, command and control, the world as machine. What do we do when the silo, command and control model doesn’t work? We add more silos and more command and control. The whole system of government might come to mind here. We now know the universe is run on and is held together by omni-present energy. Everything interrelated, not in defined boxes as they tend to be now. And that brings us into the quantum realm. I’ve been presenting a quantum model to organizations for quite some time. Usually it scares owners and executives half to death because they fear losing control. (Yes, sadly, many think they have control now.) The greatest manifestation of bio-mimicry is to look at how all of nature is “organized.” The internet follows that quantum model extremely well with everything connected to everything at all times. So my feeling is if it’s good enough for the entire… Read more »
Dan Raftery
Guest
5 years 6 months ago

Mr. Mathews raises several good points once again, but they seem to be targeting the org chart just because it is an old tool. I thought an org chart is supposed to communicate job responsibilities and functions. And where would the poor HR folks be if they didn’t know what skills to bring to an open box?

In my experience, the way a chart looks reflects the style of the leadership, so it must change when incoming and outgoing styles differ. Rearranging the boxes and lines is a given. I think the more important question is how can a company evolve their organization to keep pace with the evolving marketplace?

Concepts like blowing up the org chart (much like the over-used “disruptive …”) don’t really fit in a business that needs to keep eyes on both a complex set of operations and on the relevant changes in the business environment.

Mohamed Amer
Guest
Mohamed Amer
5 years 6 months ago

Bravo for taking on this sensitive topic! Org charts do impede organizational performance because those innocuous boxes and lines on paper and slides become institutionalized and lead to silos and turf wars of battles that no longer matter.

Another way of looking at this is if all you do is do your best to optimize within an existing structure, then you are certain to gain tremendous efficiencies of those things that you’ve chosen to do; it’s just that the world had changed around you and what you’ve focused on historically no longer matters. It’s not only about doing things right, but doing the right things. Most of today’s org charts- and retailers aren’t the only ones struggling with these – are perfect for the industrial revolution.

A constellation of new roles and titles need to revolve around the customer and the new relationships with and expectations of the brand. What you call them isn’t as important as realizing that change and speed are a must.

Ralph Jacobson
Guest
5 years 6 months ago

Disruption of management structure most often creates disruption in the business, regardless if the business is a small family store or a multinational corporation. “Blowing up” the org structure has huge risks. Strategic, operational, financial, let alone the HR aspect of those with new roles that may or may not be to their liking.

I feel a retailer or a CPG company should infuse new roles as they become warranted. We all know of many newer ones that both industries are adopting. Additionally, if older procurement, trade relations, etc. roles need to be updated, then that should happen as necessary. Wholesale changes should most often be avoided. These smaller, role-by-role changes can take place as quickly as required.

James Tenser
Guest
5 years 6 months ago

A very provocative thesis, Ryan. Clearly, treating retail stores like so many factory floors is an antiquated option. And aligning retail organizations along functional disciplines only (finance, IT, logistics, marketing, category management, HR, store operations and etail) limits retailers’ ability to deliver compelling performance for shoppers.

A modern organizational model would empower each store as its own business, with its own set of customers and an appropriate degree of functional autonomy. It would simultaneously leverage the strengths and scale and core practices of the master brand.

Store managers should be the stars under this system. They must be multi-disciplined individuals who are trained and enabled to effectively leverage all the functional and knowledge resources provided by the HQ. They should be evaluated in part based on their ability to deliver superior shopper experience. Senior management should near kill themselves in the effort to clear away all possible obstacles to that end.

In other words, my ideal organizational model would have HQ functions accountable to the stores, not the other way around.

Matthew Keylock
Guest
Matthew Keylock
5 years 6 months ago

There seems to be an immediate jump to structure and charts when considering the organization model. This is perhaps not surprising as it is often the most visible way to demonstrate change, status and control.

Reporting lines are clearly one dimension of the model, but there are many other dynamics in the overall “ways of working” like measures, incentives, values, accountabilities or P&L/budget ownership that also need to be understood and in the right balance.

In many cases it may be issues in these areas that are driving the perceived structural challenges that a “band-aid” of creating a new structure will not overcome.

Lee Kent
Guest
5 years 6 months ago

I hate boxes! Except maybe if i need to pack stuff up. I love sieves! You can pour stuff through and it filters out the unwanted. Hmmmmm….

Moving on, yes, retailers by and large need a big makeover when it comes to organization. What should that organization look like? Not sure and it all depends, but in the end it should act like a sieve, not a box.

Some of the roles that need to be viewed from the top? Where’s the money? Where’s the inventory? What’s the merchandise? Who’s the customer? How do we reach the customer? What is the experience?

That is just the short list, but you get the picture. Right?

Frank Beurskens
Guest
5 years 6 months ago

Chief Engagement Officer might replace the Chief Technology Officer, honoring the fundamental difference between purpose and process. Engagement as a driving force shifts the attention from hierarchically induced silo structures designed to protect the house and insulate/distance the customer’s voice from “C” ranks, to customer engagement as the purpose of business. It shifts technology away from its vaulted role as invisible, arcane, and magical to the pipes and wiring that get things done, for the purpose of engagement – connecting with the consumer.

David Zahn
Guest
5 years 6 months ago

Underpinning Ryan’s compelling question is the notion of whether our organizations have become an example of form following function, or the other way around.

I applaud him for raising it and think that by the enthusiasm of the responses (for and against) it clearly shows how passionate people are about the topic.

My own experience is that the org chart DOES impact performance by creating subtle boundaries around communication channels, evaluation/rewards systems, roles and responsibilities, etc. They are not impenetrable (and Ben Ball correctly points out MANY of the other issues that influence performance) – however, to ignore that organizational charts have an influence runs counter to reality.

I think that the new titles and reporting structures (and more importantly, the roles) have to be more focused on the customer/shopper/consumer and less on a “function” that is separated from or devoid of recognition of the impact the role has on the customer. Further, the linear aspect of org charts does not reflect the current needs of the business.

Gordon Arnold
Guest
5 years 6 months ago
As soon as you leave something up to interpretation, structure, meaning and formality are gone for good, or at least until you are replaced. Executives with a loosely configured organization chart of responsibilities are letting you know from the onset that there are people in important positions, perhaps including themselves, failing to perform to a minimum level of expectation and/or need. The cause for these weaknesses are many and need disclosure on a priority basis or the replacements will own a high probability of similar inadequacies. The majority of chief executive officers are selected for their potential to increase profitability. This very approach dooms any quest to develop the company’s business goals and specific market plans. There is nothing so empty as a goal for profit taking. It gives no credence to the nature and viability of a company. This will also cause the decay of any corporate identity and market leadership. That is how Studebaker went from carriages to automobile manufacturing, and downward to a leasing company and onward to even further irrelevance. There… Read more »
Vahe Katros
Guest
Vahe Katros
5 years 6 months ago
The modern brand will be measured by the quality of the customer experience. In the design world, the customer experience is seen as that point where three circles intersect (think Venn Diagram): the customer, the business, and technology. So as an example, if I find a valuable audience I want to win over that involves a few specific business functions, one would bring together the appropriate small team – a team no larger than a group that would consume two pizza’s and work the methodology. The team would by nature be cross functional, and they would be trained around how to bring an idea from concept to prototype. (actually we first build a pretotype (http://www.pretotyping.org/). I believe the answer to increasing the amount and quality of outcomes, can best be accomplished by spinning out a new organization that consists of people who know how to coexist and thrive in this kind of setting. This group would be put together carefully to avoid the poison that kills the process. Changing the org chart is secondary right… Read more »
Shilpa Rao
Guest
5 years 6 months ago

Retailers need org structure that unifies channels and experiences. Chief Customer Experience Officer, Chief Insights Officer, and Chief Omnichannel Officer could be some of the new roles. There is no doubt that technology is pivotal to an information driven organization, and the role of a CIO/CTO and Chief Innovation Officer will be crucial.

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