For many years, we have witnessed the failures of excessively product-driven management, where companies focus on the development and sales of products (from automobiles to toaster ovens) to their customers—whether the customers really want those products or not. This was epitomized by the “build it and they will come” mentality.
Numerous companies faltered in this over-the-top product mindset, because they were focused not on satisfying their customer’s needs, but on selling their wares. Think GM versus Toyota or the Days Inn versus The Four Seasons.
Now however, organizations are moving from product- to customer-focused management, with the basic premise that organizations need to engage with their customers and assist them in getting the most value out of whatever products meet their requirements best. In the world of IT, this is the essence of user-centric enterprise architecture, which I created and have been advocating for a number of years.
Harvard Business Review, in January-February 2010, has an article titled “Rethinking Marketing” that asserts that “to compete, companies must shift from pushing individual products to building long-term customer relationships.”
· Product-driven companies—“depend on product managers and one-way mass marketing to push a product to many customers.”
· Customer-driven companies—“engage individual customers…in two-way communications, building long-term relationships.”
The old way of doing business was to focus on the products that the company had to offer and “move inventory” as quickly and profitably as possible. I remember hearing the sales managers yelling: “sell-sell-sell”—even if it’s the proverbial Brooklyn Bridge. And the driver of course, was to earn profits to meet quarterly targets and thereby get bigger bonuses and stock options. We saw where that got us with this last recession.
The new way of doing business is to focus on the customer and their needs, and not any particular product. The customer-driven business aligns itself and it’s products with the needs of its customers and builds a long-term profitable relationship.
“In a sense, the role of customer manager is the ultimate expression of marketing find out what the customer wants and fulfill the need), while the product manager is more aligned with the traditional selling mind-set (have product, find customer).”
The new model for a customer-driven enterprise is the epitome of what social computing and Web 2.0 is really all about. In the move from Web 1.0 to 2.0, we transformed from pushing information to stakeholders to having a lively dialogue with them using various social media tools (like Facebook, Twitter, blogs, discussion boards, and many more)—where customers and others can say what they really think and feel. Similarly, we are now moving from pushing products to actively engaging with our customers so as to genuinely understand and address their needs with whatever solutions are best for them.
In a customer-focused organization, “the traditional marketing department must be reconfigured as a customer department [headed by a chief customer officer] that puts building customer relationships ahead of pushing specific products.”
I think that the new organizational architecture of customer-driven management is superior to a product-focused one, just as a emphasis on people is more potent that a focus on things.
Similar to customer-driven management, in User-centric enterprise architecture, we transform from developing useless “artifacts” to push out from the ivory tower to instead create valuable information products based on the IT governance needs of our customers.
Further, by implementing a customer-focus in information technology management, we can create similar benefits where we are not just pushing the technology of the day at people, but are rather working side-by-side with them to develop the best solutions for the business that there is.
In User-centric EA, users IT needs are met (timely and with quality solutions), while governance ensure that those needs are aligned with mission and prioritized with others across the organization. To achieve these goals, how should IT management best be organized in the enterprise—centrally or distributed?
The debate over a centralized or distributed management model is an age-old battle. A popular theory states that organizations vacillate in roughly three year cycles between a strong centralization philosophy and a strong decentralization philosophy. The result is a management paradigm that shifts from standardization to autonomy, from corporate efficiency to local effectiveness and from pressure on costs and resources to accommodation of specific local needs, and then shifts back again. The centralized system is perceived to be too slow to react to problems in the field or to issues within a particular company department or division, and the decentralized operation is perceived as fragmented and inconsistent.
To address the pros and cons of each model, there is a hybrid model for IT management, which incorporates centralized IT governance and solutions along with distributed IT planning for the line of business and niche execution.
In the hybrid model for IT governance, an IT Investment Review Board (IRB) centrally directs, guides, and authorizes IT investments through enterprise architecture, IT policy and planning, and a CIO governed-consolidated IT budget. At the same time, IT requirements come from the lines of business, and the lines of business develop their own segment (business) architectures. In some cases, the lines of business actually plan and execute niche IT projects for their areas, while the systems development life cycle for enterprise IT systems and customer support are handled centrally.
The hybrid model for IT management is a very workable and balanced solution that demonstrates true business acumen in that it recognizes the strengths and weaknesses of both approaches (centralized and distributed management), and capitalizes on the strengths of each in coming up with a best solution for the organization.