Platform Business Models – Considerations for Organizational Redesign

Customer Experience Drawn On Blue Wall.

Implementing a platform business model, in contrast to a vertically integrated organization, centers on a dynamic platform directed at the customer experience. This has impacts on the entire organization with respect to key functions (such as sales, marketing, communications, IT and analytics) as well as their alignment and governance.

While “digital” is often the reason that organizations consider a platform model, there is not a one-size-fits-all solution nor is it as simple as creating a single unit focused on digital; rather a comprehensive digital strategy is necessary to support the core strategic drivers of the business – and position the organization to respond to business opportunities and build the teams to respond with digital (and other) tools. Questions include: Will the impact of digital be focused on overall IT integration? On systems and software that provide deeper analytics for product development and sales? On marketing and communications? On social media?

Agile companies have more fluid structures in which day-to-day work is organized in smaller teams that cut across business lines and market segments. The old view of “dotted lines” begins to fade as talent and tools are reallocated according to the business need. Digital technologies facilitate a more customized tactical approach to customers as part of a larger strategy. From both IT and marketing/communications perspectives, it’s vital to understand the “whole customer” (the strategy) and what tools (the tactics) are most important to engage them.

Here’s how to design your organization for the customer experience…

Designing for the Customer Experience

“In a world where physical and virtual environments are converging, companies need to meet customer needs anytime, anywhere.” (McKinsey & Company, “Digitizing the consumer decision journey,” 2014)

  • “Companies need to make strategic decisions about the best pathways to build customer value…Companies that ultimately succeed in omnichannel marketing and sales will likely resemble tech companies and, interestingly, publishers – effectively using big data and digital touchpoints to drive growth and reduce costs, while producing and managing a variety of content.” [From the above 2014 McKinsey analysis of banking, retail and other sectors moving to cross-channel customer experiences)
  • Disney’s “Compass Model” uses the points of a compass to understand customer needs and satisfaction – north (needs or what the customer desires), west (wants or an underlying objective or purpose), south (preconceived notions, positive or negative, about the experience and east (emotions customers have or are likely to experience). Such an approach drives thinking at Amazon, Lyft, Uber and even a major U.S. airport redesign. (McKinsey, “Developing a customer-experience vision,” March 2016)
  • That’s why in many companies, the CIO (Chief Information Officer) and CMO (Chief Marketing Officer) are strategic partners working together. They are both responsible for turning the “big data” and other analytics into insights, profits and growth. In large organizations, from corporations to universities, these two positions often sit on the management team; in smaller organizations, with size restrictions on talent, similar results are delivered through customer-experience teams defined by clear strategy, decision governance, genuine collaboration and transparency. This means assuring that the leader of the unit managing these teams has a sufficient understanding of IT, analytics and marketing skills to advance the business goals and ensure that the client (whether an internal sales manager or development officer, or an external consumer or donor) has the best-fit response. (McKinsey, “Getting the CMO and CIO to work as partners,” August 2014)
  • Yet another emerging role is the CDO (Chief Digital Officer). Organizations applying this approach are focusing on achieving results in a digital world while understanding that digital is no longer something distinct. Rather it extends across the enterprise’s value chain incorporating marketing, customer experience, production, supply chain and service operations. While this may be a more advanced model than is feasible in a university related foundation, there are certain practices that all organizations can use to better execute on their digital strategies, according to a PwC study of dozens of organizations: (1) define digital success (enterprise efficiency, customer and employee interactions, etc.); (2) appoint a CDO or equivalent – a bridge between tech and marketing; (3) focus on platform capabilities – establishing consistency, standardizing processes and consolidating technical platforms to avoid resource duplication, process redundancies and inconsistencies with customers; (4) invest in digital hubs – a place where the organization locates key talent and drives new methods for how this talent works with the rest of the organization; (5) optimize digital delivery pods – small teams of cross-functional employees [and in smaller organizations, could be combined with #4]; and (6) prioritize talent and retention – consistent, diverse and multi-disciplinary to make these actions possible. These organizations also set strategic roadmaps with horizons of two to three years, with executive leadership setting the priorities. (PwC, “Digital operating models: How leading companies achieve results in the digital world,” 2016.)

 In a survey of 1000 companies worldwide in 2018, Bain & Company found just 5% of companies involved in digital transformation reported that they achieved or exceeded expectations they had set for themselves – and a full 71% settled for dilution of value and mediocre performance. Those making the transition successfully defined operating models in five key areas – structure, accountabilities, governance, capabilities and ways of working and collaboration. (“Bain & Company, Organizing for a Digital World,” 2018.)

What This Means for Universities

In higher education parlance, these activities are often understood as part of the “engagement” concept – sales, analytics and marketing/communications activities to engage and retain customers and increasingly add value to their relationship with the advancement organization – i.e., university advancement, the foundation, alumni association and communications and marketing, etc. Over the last 20-30 years, the structural transitions have evolved something like this: (1) Phase 1, Advancement Services (with communications, stewardship and events embedded) – 1980s-90s; (2) Phase 2, Communications and Marketing broke out with its own seat at the strategy table – early to mid-2000s; (3) digital tools – CRM, interactive websites, social media, apps – took hold – mid-2000s on and (4) increasing demand for data/analytics for sales and engagement (i.e., development and alumni relations), with the result in many advancement organizations as a series of parallel, not well integrated, paths to the customer. However, the “platform approach” provides the chance to bring this all back together in a functional unit or service hub serving the entire organization.

In 2005, after a failed merger attempt between university development and the alumni association, the University of Virginia created the Office of Engagement, which has pioneered new ways of leveraging various engagement tools. The central office (housed in development) coordinates outreach with the independent alumni association to create a comprehensive engagement strategy – including alumni/parent travel, annual giving, lifetime learning, clubs, global engagement, regional activities, industry networking, discovery and more. This partnership illustrates a hybrid approach that embraces continuous new thinking; and, because of it, during Covid-19, UVA was well-positioned to rapidly transition to a virtual events model with relevant and meaningful content, sustainable and consistent programming and collaboration with university partners. In the first 40 days of virtual engagement, UVA’s Office of Engagement planned 41 events for over 14,000 registrations, which surpassed the record-setting registrations for the NCAA basketball championship in 2019. Why? For 10 years, through this office, the university had been continuously improving its comprehensive engagement model through in-person and virtual activities and was able to quickly adapt to the new circumstances. The operating structures and relationships were in place internally, including an extensive dependency on analytics to inform strategies (from CRM to a variety of engagement tools) – in effect, UVA has been using a platform approach to customer services and engagement for the development lifecycle.

The industry-wide study for CASE, Benchmarking Digital Engagement (2018) by CASE and mStoner reflected in a survey of 16,721 global advancement offices how their tools, practices and attitudes are evolving toward integrated, digitally enabled outreach and engagement with key stakeholders. A digitally savvy operation, according to the whitepaper:

  • Attempts to reach people where they are
  • Innovates in programming by using new approaches involving digital tools
  • Attempts to understand and track the loyalty of stakeholders
  • Relies on digital analytics in decision making
  • Emphasizes digital communications internally and with stakeholders
  • Operates from the perspective of a single institution rather than a siloed department
  • Empowers staff to experiment, innovate, community
  • Focuses on mobile experience for staff and stakeholders

Institutions considering redesigning engagement in this way will be well-served to shape an agile service unit that embraces all the functions around the customer experience – from analytics, to marketing communications using digital and offline tools, to events and stewardship – which is consistent with the platform model and would advance platform strategies. Moving away from the traditional Advancement Services structure sends a strong signal that this is more than back-office Advancement “operations” – rather, it’s about a forward-thinking strategic approach that is a far cry from the 1990s.

The title also sends a signal and something broadly defining the role – such as “Engagement Services” – will give fuller weight to all the activities necessary for an integrated approach. In the final analysis, however, if this unit acts as a team or services hub – with C-level leadership and work driven by business goals – structure will be less of an issue than governance and operating practices.

Applying these business sector insights and our recent first-hand experiences with advancement organizations suggest that the critical pillars of the unit’s effective design and functioning are: its strategic alignment, operational integration and clear governance – all to ensure that business goals for fundraising and engagement are met and the customer experience and journey are optimized.

— Janis Johnson

 

Other Sources (beyond those cited):

“How to build, organize and run a customer experience team,” Sitecore

“A Radical Redesign for Support Functions in the Digital Age,” Boston Consulting Group, Feb. 26, 2019

“Linking the customer experience to value,” McKinsey& Company, March 2016

“The Elements of the Platform Organization,” Simone Cicero, Platform Design Toolkit, May 12, 2017

“Designing the Organization for Digital,” Jason Baumgarten, SpencerStuart, January 2014

“Platform Business Models: Keys to Governing New Organization Designs,” by Reed Deshler, SHRM Executive Network, June 5, 2017