“The Customer-First Organization”: Organizational Structure

Adapting to constant innovation and transformation has become the only way to compete in rapidly disrupting markets

We are in the age of the empowered customer. In both B2C and B2B alike, the customer is more empowered than ever before, with more data (both performance and social) to support their decision making, and lower barriers to switching loyalties. For leaders, this has created an imperative to structure and build organizations which can listen to customers and respond at speed. The cost of inaction is irrelevance.

Technology has become central to remaining competitive, both to enable the iterative cycles required to constantly optimize products, and as a stimulus for demand. In both our client interactions and in conversations with top product leaders, we’ve seen a rising need for chief product officers (CPOs) who are tech savvy, commercial and customer-focused.

The most advanced companies are developing platform offerings, becoming convenors of eco-systems and gaining invaluable insights in doing so. The product function has been at the eye of this storm, accelerating new approaches to the market and lubricating customer-focused conversations across diverse functions, from marketing and technology to the lines of business. As a result, product has been given an increasingly loud voice with a seat at the top table, and the remit to actively drive change and revenue growth. In building product functions, companies are creating a stabilising connective tissue between technology and the customer, allowing them to create new digital propositions, ways of working and to develop partnerships with technology organizations to broaden their reach.

How do other functions adapt to the creation of a product function?

Organizations need to think holistically about their structure before building a product function
The product function can play a central role in organization-wide transitions to agile and engineering methodologies. It is well-placed to act as diplomat, functioning as the glue that attaches engineering mindsets to the strategic aims of the company and translates end solutions into customer messages. Due to the connected nature of this role, product functions should sit alongside technology and marketing rather than reporting into either function. Two distinct partnerships are then formed with these functions:

The Marketing relationship is built around how Marketing and Product can partner in ‘nudging’ customers and activating customer behaviour towards in-product discovery.
The Technology relationship should have a healthy, fraternal tension. Product pushes technology for delivery and results, and to develop new initiatives rather than defaulting to a focus on feasibility.

"Product exists to translate the needs of the business into software engineering specifications, and has evolved to sit at the interface of Business, Design, Engineering, and the Customer – meaning fundamental changes to the organization structure will be needed.
Kriti Sharma

How do you bring the customer to the centre of the organization, and what does that really mean?

The product function should know the ‘why’ better than the CEO. The CEO will push for more features and bigger impact, but the product function will know the business case for it, what drives the customer interaction, and the data behind it all. The best product leaders will prioritise, deciding what must be built, what they would like to build, and what can they build that will surprise the customer. The customer is brought to the centre because product sits at the interface between building the solutions and getting them out to market.

Structures are then built around engaging the customer and metrics built to track this. These metrics usually consist of adoption of the product and engagement with the product, but the real success should also be measured by action-based follow-on activity. In other words, it’s fantastic that the customer is using feature one, but how long until they use feature two and three? Onboarding the customer in the first place, and then tracking in-product discovery is key to perfecting the customer journey.

"First of all, Agile is a capability, it is not a strategy. Organizations try to adopt Agile but this will not answer all problems. It is a capability, and a very valuable one which has immediate operational benefits, but one that cannot permanently affect a firm’s competitive position unless there is a strategy behind it that helps the team take the right decisions at the right time to direct that capability."
Tanya Cordrey

"Product is the connective tissue; as a leader in product, your own team may not necessarily report to you, the designers may not report to you, etc… you have to learn to get creative when managing that, and to collaborate even more widely."
Martin Eriksson

Customer centricity: balancing data and intuition to drive results for the customer

Speed to innovate, speed to react, and ultimately speed to market are core drivers of the product function. You can build in data capture mechanics at conception to create a live feedback loop, from which iterative processes are dynamically developed. However this would be only one part of the picture and, as such, the product function should work in close partnership with their stakeholders – often the business unit, the technology function for engineering and product design, and the marketing and go-to-market teams to help create an informed view of the bigger picture.

"The product role is a nexus between technology, business, storytelling, and design – with strong leadership capability surrounding them."
Johannes Bruder

Many are taking a two-tacked approach by balancing a purely machine-centric approach to building a product and then iterating with a more human one. Hiring a series of PhD scientists can only get you so far before product talent needs to translate the findings into what they believe the customer may want – using a sort of ‘Product intuition’. Because of this, the best product talent will occasionally step over traditional go-to-market channels and speak for the customer themselves.

"Product ‘intuition’ is very important – the art is to balance 1) the data, with 2) where the market is going, and with 3) what the customer will want."
Kriti Sharma

Framework for discussion

The ideal product leader comes in different varieties depending on your business, your strategy, and the maturity of your product function. The following set of diagnostic questions can help inform and frame your thinking around the most appropriate talent for your needs.

Current situation

• Is the product new to the market?

• Is there product buy-in from the top team?

• Is product development core to the business strategy?

• Who does the product function report to?

Current capability

• How sophisticated is the product function?

• What are the processes/structure in place – e.g. waterfall, agile, full-stack tribes and squads?

• Is the product team aligned to the business strategy?

• Is there a talent pipeline for the product function? Is the Product leader engaged in succession planning?

Strategy

• Transform, grow, or innovate?

• Are you looking to attract product talent with a new leader?

• Are you looking to attract investment?

• Are you looking to extend or consolidate your existing product portfolio?

• Are you looking to reposition your existing products?

• Growth through M&A and inorganic growth, or by farming the existing products?

Authors
Veena Marr is a member of the firm’s Global Technology Sector and Customer Activation and Growth Practice. Based in London, Veena leverages a digital and legal background to guide clients through times of transformation, expansion and innovation. Veena brings her extensive experience in partnering with Product functions to help clients assess, develop and hire exceptional Product leaders.
Sean Roberts is a member of the Technology Sector and is responsible for the Technology team in London. With a focus on fast moving technologies including Cloud, Security, Data and AI, and with expertise in Software, Connectivity and Business and Professional Services, Sean advises, recruits and helps develop outstanding leaders for companies in growth and transformation.
George Head is a Knowledge Associate for the Technology Officers Practice, based in London. Working broadly across the technology sector, George is focused on identifying emerging trends and codifying the priorities outlined by our clients.

PARTICIPANTS
We would like to thank all of our participants for their insights and time.

• Ron Gura, SVP Product, WeWork

• Markus Pultweiser, Chief Digital Officer, Deutsche Bank

• Kriti Sharma, VP Product, GfK

• Martin Eriksson, Co-Founder, Mind the Product; Chief Product Officer in Residence, EQT Ventures

• Johannes Bruder, Chief Product Officer, Delivery Hero

• Tanya Cordrey, Founder, Granary Square; Partner, AFK Partners

• Brian Harris, SVP Product, Nets Group

• Ben Fox, Chief Product Officer, AdTech, Verizon Media

• Josh Crossick, Chief Product Officer, letgo

• David Katz, Chief Product Officer, Afterpay

• David Cramer, CEO, Software and Data, CPA Global