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Why Internal Silos Mean Bad Customer Experience

Businesses failing to align strategy and delivery, finds study

7Nov

Struggling to deliver effective customer experiences? Your organization’s internal structures may lie at the heart of the problem.

That’s according to new research from digital agency and consultancy Inviqa which reveals that organizations are failing to align business strategy and digital delivery – and that customer experiences are suffering as a direct result.

The report – ‘Mind the digital gap: aligning strategy and delivery’ – surveyed 100 UK-based digital heads in roles such as chief information officer (CIO), chief digital officer (CDO), and head of digital, with the majority of respondents (69%) coming from enterprises that have been trading for more than 15 years.

It revealed that more than two thirds of digital managers (68%) believe internal structures are having a negative influence on their organization’s ability to deliver effective customer journeys.

Same problem, new choices

This is not a new phenomenon. Back in the 1960s programmer Melvin Conway made the observation that an organization’s structure has a strong influence on the digital products it produces, and that organizations with bigger teams tend to create larger monolithic systems.

Since then, there’s been growing awareness of the link between organizational structure and digital products, and some businesses have evolved new structures that make it easier to adapt digital products in response to evolving customer expectations.

Digital innovators like Netflix and Amazon have introduced multiple small teams – each responsible for owning the entire lifecycle of one particular part of the whole system. Structures like these give digital teams the autonomy to deliver value to the customer quickly, because each service can be developed and adapted independently.

But as the Inviqa report shows, organizations that aren’t as digitally mature are still grappling with the ‘siloed nature’ in which they deliver their digital products and services.

The problem with silos

Worryingly, the majority of the digital managers in the Inviqa survey say their business does not organize teams around major customer journeys (80%).

This may suggest the continued presence of siloed digital environments centred around individual customer touchpoints rather than focused on providing joined-up customer journeys across multiple channels.

But with an ever-growing number of touchpoints – and with  75% of people expecting a consistent experience wherever they engage with brands – it’s clear that brands operating in digital silos will struggle to improve customer experience in meaningful ways.

Why? Because as McKinsey has shown, legacy structures prevent organizations from understanding how their digital products perform against end-to-end journeys. Measuring satisfaction based on customer journeys, McKinsey says, is 30% more predictive of overall customer satisfaction than measuring happiness for individual interactions and channels.

Concerningly though, almost half (45%) of the organizations surveyed by Inviqa don't have any formalized system in place for measuring the performance of their digital products and services, and nearly a third (27%) measure the performance of individual touchpoints, rather than entire customer journeys.

Without being able to verify what is and isn’t working, these organizations stand little chance of being able to test and learn what resonates with their customers.

Becoming a customer-centric business

The journey to customer-centricity isn’t a simple one. It requires an operational and culture shift that can only be achieved by engaging stakeholders across the entire organization to review internal structures and identify what set-up best enables you to deliver on your business goals.

But with  42% of executives believing that silos are the biggest internal barrier to digital transformation, there’s never been a better time to review your internal structures. The good news is that organizations have started to formalize this process, with 60% of digital managers saying that their organization reviews internal structures and governance either yearly, or twice yearly.

Whatever the nature of your internal structures, they will only create lasting change if they are continually measured against strategic goals, reviewed, and adapted accordingly. Ultimately, they need to ensure cross-unit teams can work collaboratively, iteratively, and rapidly to address changing customer needs.

Digital innovators like Amazon are proof that having the right internal structures and culture is key to becoming a truly customer-centric organization. Now it’s up to the fast followers, beginners, and digital conservatives to take their own measures to align business strategy and digital delivery. Because where there is a disconnect between the two, they’ll fail to meaningfully improve the experiences you deliver.

Get the full picture

  • 72% ‘agree’ or ‘strongly agree’ that Agile creates better engagement across teams, but 44% are not currently using Agile in their organizations
  • 42% of digital managers believe that embracing new processes and methodologies that connect strategy and innovation is the most important change their organization can make to improve customer experiences
  • The ‘lack of internal agreement on where to focus efforts and resource’ is the number-one obstacle to achieving powerful customer experiences
  • The ‘time it takes to deliver digital initiatives’ is perceived as the biggest obstacle to achieving business goals

For the full findings and commentary, download the ‘Mind the digital gap: aligning strategy and delivery’ report here.

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