Where operations, projects, and innovation collide and divide

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To build it or to maintain it. That is the question.
It’s a classic question in organizational design. The answer of course is you have to do both. I’m not talking about the decision of a product nearing the end of its life cycle where you decide between adding additional features or putting it in maintenance mode. Rather, this is about allocation of people and teams within an eCommerce organization to maintenance or operational activities versus allocation to projects.

I’ve seen terms like “run the business”, “keep the lights on”, and “operations”.   Those terms refer to activities that an organization does to maintain service to existing customers or to maintain production of existing products. In an eCommerce team this might be activities like maintaining server equipment, network connectivity, data backups, content management.

But we also need people assigned to “build the business”, “new projects”, and “innovation”. These are tasks like building new features in the system and creating entirely new products and services that have new demand in the market place.

It’s not just an IT problem.
Other functional areas of an organization design responsibilities around this need. A typical Sales team will have inside account managers (run the business) and new partnership development (build the business). Marketing product managers are challenged with how to split time between servicing existing products (run the business) and building new features (build the business) for their product. IT is challenged with it because they have systems to maintain while also trying to help the business build features and solutions on new technology.

Eric Brown makes a good case for splitting the responsibilities and focus of an IT organization into operational and innovation areas. His point is that people are trained and have skills in certain areas. If that is “running the business”, then keep their focus on that so they do it really well. But don’t expect them to be good at bringing new innovation to the business.

Asking the question is easy. Answering it is not.
So how do you solve allocating people across operational and new project work? In my mind, there’s no single answer. It involves creating a balance and is effected by a number of criteria:

  • People: How many people do you have? Smaller organizations may not have the luxury of dedicated people per function. I think this puts them in a tough spot because to Eric Brown’s point, not everyone has the mindset (or skillset) to contribute to both.
  • Time: How do you split time between operations and project? Do you set a goal for 50/50, 70/30, etc? That’s likely tough to follow week-by-week because emergencies like hard drive failures don’t run according to a schedule.
  • Priority: What’s more important the operations or getting new business? This is such a tough question. Leaders that have incentives based on new revenue growth certainly lean towards new business. But we know that companies that neglect their existing customers and operations may not see tomorrow to have a chance to build out new business.

eCommerce teams need to find a balance.
To play the eCommerce game, teams need the ability to experiment as well as implement change. That’s how you drive new business. But maintaining the existing store is just as important. So when you create an eCommerce organizational design make sure to account for run the business as well as build the business activities.

I’d like to know how you’ve solved this within your organization. What say you?

Communicating go-live deployments

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The work of eCommerce deployments doesn’t end with go-live sign-off.
If you work with eCommerce platforms then you know the happiness of after go-live deployments. The actual events of go-live deployments can be an adventure when unplanned events ‘happen’. But the work doesn’t end with the final sign-off and completion of the deployment plan.

There are a series of tasks after deployment.
One important step is to gather information from listening posts such as voice of customer collection areas. The success of the deployment is really based on how the customers use the system. Unwritten and unspoken voice of customer responses are visible by monitoring the key metrics of the site such as conversion rates, average order value, number of items in the cart, etc.

Don’t underestimate the value of communicating the success to other stakeholders.
I’m not referring so much to the confirmation email that usually goes out to the project team and direct project stakeholders. Certainly, that is an important communication to send. It let’s everyone know that the project team has successfully deployed the new release and that customers are now able to take advantage of the new features.

But there’s a way to get further benefits out of the release by notifying other company stakeholders and customers. This communication summarizes what changed and the value it provides to the customer. In other words, what problem did it solve.

Company stakeholders love this type of communication. It’s a group win that shows a team successfully navigated processes, approvals, and company friction to create something that adds value. People like sharing good news with others, especially clients. So a success communication is often shared again through forwarding. It’s the original viral communication within an organization.

Keep the communication simple and on point.
A good release communication  is simple and shows the changes visually. Often times this is done through a blog post or an email. The communication should be written in common language to engage the audience best. I like avoiding charts, tables, and highly structured templates.  (It’s not a specification!)

The communication should be upbeat. Let the customer know how excited the team is to deliver value to them. It’s why the team works and this work is a reflection of the team and the commitment to customer value.

Rethink competitive analysis

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Solution owners have the responsibility of performing a competitive analysis for an eCommerce team. It’s the process of knowing exactly how your site compares to the competition. We define if we are ahead, behind, or on par with key features that the industry and customers require. I’ve seen projects justified in the name of competitive alignment and at a larger scale entire strategies formulated in order to copy the competition.

But who says the competition is right?
Are they right because they are your competitor? If a competitor has an eCommerce site with a certain feature does that mean that my site must have it also? The answer is maybe. But it’s not your competitor that defines what is right, it’s your customers.

A better way to perform competitive analysis
First look at your customer input from tools such as surveys, web analytics research, and suggestion boxes. These tools will tell you what features customers value, those they don’t, and those they wish they had. This gives you the success factors or features to use in a competitive analysis grid. In other words, rather than using your competition as the baseline for success, use input from your customers.

It’s a multifaceted solution
When we start with what our customers are asking for first, we get a good view at the important features for the entire industry. This will provide some insight into competive analysis activities for new competitors or competitors with complementary products. Additionally, the will of the customer should be and is a much stronger position for project justification than merely copying a competitor.

Competitive analysis does have merit
With a thorough analysis you can see how you stack up to your competitor in meeting what customers value. You may have advantages in some areas and be behind in other areas. Plus, defining how you differ from the competition is one step towards creating your value proposition for prospective customers and investors.

Solutions ownership and competitive analysis are part of a complete eCommerce organization. See my mind map for an eCommerce organization for further thoughts on this topic.

eCommerce solutions ownership – customer focused results

An important role in an eCommerce operation is responsibility for solutions ownership and the results delivered to senior management and other stakeholders. It’s a senior role that focuses on the macro level results that  define the success and viability of the eCommerce team. In addition to the traditional financial and market metrics, the solutions owner must deliver customer focused results. It’s the customer focus that provides the building blocks for the traditional results and helps to set an eCommerce team apart from it’s competitors.

Traditional financial results

A solutions owner is responsible for profitable results with positive contribution margins. The contribution margin of a product is defined as the revenue minus the variable costs. eCommerce sites should consider both product variable costs as well as an allocation cost assigned to the channel for the variable costs associated with keeping the site running.

What about cost reduction? Typically, eCommerce operations help to reduce costs because they scale well and require less labor to maintain for the level of output. Cost reduction can be tied into the profitability calculations if the variable costs for the eCommerce channel are less than those for other channels. In this case, the channel would be more profitable per sale.

Customer focused financial results

An often overlooked part of financial results are those of the client, in a B2B relationship, or a customer, in a B2C relationship. In a B2B framework, the solutions owner is responsible not only for delivering results to his own company, but to his client as well.  The eCommerce operation is as successful as it is in keeping the client in business with it’s customers. The mission is to make the client profitable. This concept applies whether your site a straight B2B or a B2B2C site. Either way, the costs of the products from your eCommerce will be part of the final price that the end-customer pays and part of the profitability of the middle business.

The solution owner should also be concerned about the financial results of the customer because the customer’s financial results determine if they’ll be repeat customers. In this sense, the financial results must be in alignment with the strategic positioning of the product in the market place. If your product competes on lowest cost (i.e. Wal-Mart)  then obviously customers will repeat as long as they feel they get a better price. But if you compete on something other than price (i.e. Chic-Fil-A with community and customer service), then you will help customers to find ways to off-set the price premium. My drawer is full of Chic-Fil-A coupons for free food.  That makes me feel financially successful with those purchases. But it also makes me spend more money at their stores because when I go, I usually buy for other members in my family. I could list many other examples of this, but the point is the solutions manager must consider the financial results to the end-customer.

Traditional market results

Typically a solutions owner oversees market results that focus on market share, units sold, and the percentage of products sold through the eCommerce channel (channel penetration). These are good and necessary result categories that show how the eCommerce operation is performing in a broader context. It’s important to note that growth may not be the expected result in all cases. If the product is in the declining stage of its product life-cycle then year-over-year comparisons may be expected to show decline.

Customer focused market results

A solutions owner with a customer focused view of market results recognizes that the eCommerce channel does not compete with other channels but is offered as a complementary channel to the customer. In the early days of eCommerce, many companies setup the eCommerce channel as a stand-alone profit center with separate P&L metrics from other channels. There was fear among retailers that the eCommerce site would cut into the storefront sales. That kind of thinking leads to internal competition and moves the focus away from the customer. Over the years, companies have realized that customers like to shop using multiple channels.  So it’s the job of the eCommerce site to deliver an experience on par with a brick and mortar storefront and that has cross channel linking for the customer.

Organizational results

A third area for solution owners to deliver results is with organizational engagement.  As with any good manager the solutions owner must engage employees in the overall mission and success of the team. This means communicating openly about the objectives of the team and explaining how the objectives align to the greater organization. People respond when they believe and understand how they belong to the bigger picture.

eCommerce operation mind map

Statistically speaking, the posts I’ve written about the organizational aspects of an eCommerce operation get more views on the Merchant Stand than any other posts. It’s telling me that people are interested in ideas for how they can structure an eCommerce team and what areas of responsibility they should cover. I think the greater interest is that people are looking for ideas and ways that their teams can operate more efficiently to be more agile. I plan to explore more thoughts around organizational layout in an eCommerce operation in future posts. To help with that, and to invite others in the community to discuss this with me, I’ve captured my thoughts on areas of an effective eCommerce operation as a public mind map at mindmeister. I’ll update the mind map with changes and updates as the discussion progresses.

I welcome your comments on this discussion and thoughts on my mind map. The map is embedded here. You can drag the map to see sections not visible or you can launch to the map on the mindmeister site.