Five Myths Undermining Organizational Development in RetailBy Julie Rousseau Industry Principal, Business Strategy & Programs Demandware

The answer may lie not in a particular technology choice a retailer makes, or even in the tactical execution of an initiative. In many cases, strategic initiatives are at a higher risk of failure if the organization is not designed for optimum effectiveness; i.e. too many people, too few people or people that are in the wrong roles, insufficiently empowered for their responsibilities or unable to influence cross-functional processes. No matter how good your people are, if they are constrained by an inappropriate organizational system, they will not be able to perform well.

The universal need to deliver a consistent, unified customer experience is driving the realization that ecommerce activities need to be better integrated and managed within the business. This usually involves an overhaul of the internal software systems and business processes supporting online and offline sales, a shift towards more business control, and a corresponding review of the commerce structure, scale and responsibilities. The danger is that the technological change can outpace the organizational change, leading to a situation where aspirations for customer-centricity are undermined by channel-centric KPIs and outdated mindsets.

The good news is that as retailers tackle the new retail reality, useful patterns and approaches are beginning to emerge. However, to make use of them, leaders first need to shed some of the old assumptions that served well in the past but are no longer valid in the digital age. These underpin a few recurrent myths that Demandware has encountered, which can complicate the planning and execution of even the best-laid plans. If these misconceptions are prevalent in your organization, it’s prudent to educate and reframe thinking proactively before even beginning to design a unified, customer-centric operation.

There is a stable end state for retail organizations

Successful organizational development requires a shift in mentality that welcomes and embraces a constant state of change, because that’s what the furious pace of change in consumer shopping habits demand. There is no “end” to organizational development because there is no end to the evolution of the retail market. Many successful retailers are shifting from traditional top-down hierarchies and static business processes to an agile model operating in a constant state of beta, with iterative work cycles and horizontal communication that allows for trial-and-error initiatives. In this scenario, the focus rests equally on shareholder value, customer satisfaction and loyalty, and employee engagement.

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Why are some omnichannel commerce initiatives more successful than others? Why do some retailers grow faster than others? Or record higher profits?

No matter how good your peo-ple are, if they are constrained by an inappropriate organiza-tional system, they will not be able to perform well.

No matter how good your people are, if they are constrained by an inappropriate organizational system, they will not be able to perform well.

There is a formula for establishing the target size of your digital commerce team

Many industries rely on a rule of thumb that relates the number of employees to revenue generated. In manufacturing, for example, the expectation for such a formula is particularly strong. In retail, MBAs are familiar with examples from the branded manufacturing industry, so boards of directors often expect ecommerce resource needs to be estimated according to some multiplier of projected revenue. In reality, the cross-functional nature of ecommerce blurs the boundaries between it and the rest of the organization. Although it’s often treated as a separate channel, online activities mirror many of the offline ones. As a consequence, the size of the ecommerce team depends on the extent to which these natural synergies are exploited. As organizations mature, ecommerce skills filter through the business, with centralized teams becoming smaller and more specialized. These factors combine to make the idea of a headcount formula unrealistic and unworkable. The better approach is one that starts with a focus on processes, metrics and decision authority.

Business process follows technology

This myth manifests itself as a tendency to design the technology solution first, with the organization required to support that initiative following after. In truth, they should evolve in tandem. It’s true that tools influence process, because people have to fill whatever gaps in the process technology can’t support, and it’s unlikely that any technology will support the desired processes exactly. However, there is almost always flexibility in how the tools are implemented, and seemingly minor technical decisions can have a major impact on the level of effort required to support the tool once it is in production. Yet, such decisions are often taken by technical or project teams who do not appreciate the business impact of those decisions. Designing a web storefront, user experience or omnichannel initiative goes hand-in-hand with designing the processes, skills and resources needed to support it successfully. Team size constraints must be part of the technology specification, just as roles and responsibilities must be defined around the technology workflow and the capabilities needed to operate it effectively.

Org charts provide a window on best practice

The problem with organizational charts is that they pigeonhole retailers into one-size-fits all solutions likely to be out of step with your unique needs. Building your team from an existing org chart or job description usually means you’re using the wrong blueprint and hiring for the wrong skill set. Job titles can map onto vastly different roles, especially for fast-evolving digital specialisms. Instead, think about what needs to be done, how you will measure it and where decision authority will lie, before defining the roles. Using this method, a job description will get written in the process. There is a series of questions, dependencies and priorities you can identify that will guide you through role formulation. Think about what sort of person will do a job well and enjoy it and what skills they need. Cluster tasks into roles by considering skills and aptitude mix. Give people the authority that accompanies their responsibilities.

Technology enables cross-channel initiatives

Change management is, in fact, more important than technology in enabling cross-channel initiatives. Organizations realize they must adopt an ethos of customer centricity that spans all digital and physical operations, but unless they can inspire staff with the vision, and equip them with the skills, resources and incentives needed for changed processes, all within a clear action plan, these initiatives risk causing anxiety, confusion or resistance that can undermine even the best technology solution. Even better, engaging staff in change planning directly not only creates a sense of shared ownership but also unlocks powerful new opportunities for innovation. Good change management practice with visible sponsorship at the highest level is vital for the business agility that today’s retail environment demands.

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Demandware, the category defining leader of enterprise cloud commerce solutions, empowers the world’s leading retailers to continuously innovate in our complex, consumer-driven world. The Demandware open cloud platform provides unique benefits including seamless innovation, the LINK ecosystem of integrated best-of-breed partners and community insight to optimize customer experiences. These advantages enable Demandware customers to lead their markets and grow faster.

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© 2016 Demandware, Inc. This document contains archival information which should not be considered current and may no longer be accurate. Approved for unlimited distribution.

Teams and Tools to Help YouIf some of these myths hit home for you, consider scheduling an “Organizing for Success” engagement with a member of the Demandware Retail Practice team, or a customized consultation with Demandware organizational design experts. Retail Practice, whose sole mission is to help retailers optimize and grow their business, offers organizational consultation as a standard part of its onboarding to Demandware Commerce.

Our organizational experts have developed a proprietary new tool, the Retail Operations Canvas, to aid discussion and collaboration around organizational development. Although there are no one-size-fits-all solutions, the Retail Operations Canvas provides a framework for exposing the operational constraints and dependencies to consider as you plan your organization’s transformation.