Why Networks Best Silos in the New Environment

That's the most frequently asked question of members of the Association of National Advertisers. These are large, sophisticated companies. They're supposed to know what they are doing. So why are they asking the question? The cynic's answer is simple: They want to cut more overhead costs. But the real answer is more nuanced: CEOs and CMOs realize the marketing environment has changed so profoundly that their current organization may be inadequate. What's changed the environment so radically is the new way in which customers capture and process information. It used to be, of course, that customers passively received the information marketers wanted them to have. Today, the customer is boss. The aggressive seeker of objective, sometimes quite negative information about brands and service providers, he sits in the center of a vast, digital network from which he may capture information with a mouse click. Customer at center So how should you organize your marketing department in this environment? Like a network. A network has nodes of functional capabilities. In an organization, these capabilities may be things such as a creative department, a direct-mail group or a research department. In addition to functional nodes, the network has a process for routing the information to where the information is supposed to be. And it has the information that each of the functional nodes uses or shares among the network members. This sounds a lot like the silos in the current organization, but there's one critical difference: The new organization is built around the customer. The unique information-gathering patterns of your customer should determine how your organization is designed. For example, a patient newly diagnosed with diabetes is likely to go to as many as four websites to gather information about the disease (WebMD, The American Diabetes Association, Living with Diabetes and any one of twenty support groups). The knowledge the consumer captures from these sites will drive attitudes and behaviors critical to all marketers of diabetes-related products. If the marketer is smart, he will design an organization that leverages this critical channel of patient information. This has two critical implications for every company. First, the ideal marketing organization will be different for every marketing company because every company's typical customer is unique. Second, it means that you as a marketing leader can't crack open a book somewhere and find the right organization for your company. There's no magic answer. DESIGN as if you are a network, with the customer at the center. IDENTIFY the different skills needed to compete, such as data management. OUTSOURCE those skills or hire as an internal capability. IMPLEMENT better processes to direct needed skills efficiently. Ask yourself another question: Is the best supplier of this needed capability likely to be inside or outside my company? That is, should I hire the capability and create overhead or contract for it from an outside resource, thereby paying only for what I use? And by the way, therein lies one of the great advantages of the new network-organization model. It may enable you to hire better capability, but only pay for it when you use it. It's like having access to the best vacation condo in the world but only paying for the three weeks a year that you use it. This may sound too good to be true, and in some cases, it is. You may need to internalize a capability that is outside your company today because it's cheaper and better to have it inside. Bottom line: Never forget the root cause driving the change and why it's so critical to respond by crafting an organization that can keep up. The customer has changed how he is capturing and processing the information necessary to a purchase. That's the new environment in which marketing lives and breathes. If you cannot adjust, you and your company may be struggling for economic survival.

Why Networks Best Silos in the New Environment

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