Customer-Focused Teams Coming Apart at the Seams: Towards the Coherent Matrix Organization
A danger is faced by our fictitious company, E-Markable, and by many companies in various industries. The danger is that a Customer-Focused Team will drift off to become its own largely self-contained enterprise, with a set of policies and work processes that are increasingly unique to its customer, such that fewer policies and work processes are shared among component teams of the organization. Some might ask, is this really such a bad thing? Indeed, there may be instances where a formal corporate spin-off is appropriate, if not necessary. However, such atomization is not always indicated and, all too often, it occurs within the existing corporate structure rather than as a classic corporate spin-off. When several definable companies live under the same roof but share little more than common janitorial services, big problems await …
Consider some potential drawbacks:
- Reduction of Economies of Scale. Absence of shared policies and work processes will, over time, reduce the ability to share personnel, systems, plans, and other opportunities to achieve economies of scale.
- Increased Tension and Diminished Resources. As interests, perspectives, and processes diverge, pressures to spin off as a separate company will mount, particularly among personnel who are assigned to a “winning” team, meaning one which serves a customer with superior profitability and increasing volume. In the interim, there will be other productivity-depleting, morale-depleting, talent-depleting tensions between customer teams of varying profitability that will complicate alignment of objectives and resources over time. Such interteam tensions will complicate retention of talent for some teams, and thereby reduce their potential for future growth of revenue and profitability. If the most profitable customer team actually spins off from our corporate entity, resources for investment in growing existing customer teams and for acquiring new customers will be diminished significantly. As an aside, the departing team will be at a significant disadvantage in negotiating with its single customer going forward.
- Increased Expenses and Decreased Inter-team Cooperation. Diminished opportunities to share policies, processes, and personnel will increase expenses and enfeeble multi-team cooperation needed to gain and service new customers, particularly fledgling customers with longer-term growth potential.