Want more value out of CX? You may want to move it. (Again.)

The contribution of CX depends on its location in the organization

By 2020, customer experience (CX) will overtake price and product as the key brand differentiator, according to a Walker study. Gartner is fond of the meme “Customer Experience is the new battlefield.” And Forrester expects that more than one-third of businesses will restructure in 2017 to shift to customer-obsessed operations.

It’s no secret that more and more companies are competing based on the experience of their product or service.

As businesses jump on the experience bandwagon to compete, they are investing in CX researchers and designers with unique skills and expertise. And as they amass talent, they are confronted with fresh organizational questions and challenges:

Where is the best place to place this new CX research and design discipline?

What organizational structure best capitalizes on the CX human capital investment?

Since 1995, I’ve led web design teams at start-ups and Fortune100 companies. Through the years, I’ve observed the design function placed and re-placed in different parts of organizations with varying results.

One of my conclusions is that there is no such thing as a ‘perfect’ organizational design, so businesses must iterate to find the right fit. Alas, organizational structures are as unique to a business as the business itself, and therefore, each business must determine where to place CX design for itself.

However re-orgs are disruptive to a company and should be minimized. Companies must be motivated to place design in a more stable position that will allow the talent to flourish and maximize the contributions to the business.

While the ‘right’ structure may be somewhat unique to each company, there are some patterns emerging in successful startups that may serve as models. In addition, there are risks and benefits that come with placement within existing organizations that should be considered. In general, the placement of the CX function depends on what contributions the company desires.

Sitting CX Near The Development and Delivery Team

If a business is focused on building experiences consistently, efficiently and as cheaply as possible, it may be advantageous to place CX in close proximity to engineering (VP engineering) or operations (COO).

When CX is located in a technology organization:

Contributions are driven by values such as:

  • Cost efficiency and cost savings
  • Speed of delivery
  • Growing features / capabilities
  • Ease of maintenance

Measurements are:

  • Productivity, time to market and number of features released.

CX Designers deliver:

  • UI frameworks, pattern libraries, reusable components, standards, redlines and wireframes (artifacts for developers), testing feature functionality, etc.

CX Placement for Maximum Growth

Alternatively, if a business desires to create experiences that differentiate or drive growth, it may be advantageous to place CX in close proximity to the product (VP Product) or business team (General Manager).

When CX is located in a business organization:

Contributions are driven by values such as:

  • Differentiation / Innovation
  • Purchase / Adoption / Consumption
  • Repeat / Habitual Usage
  • Margins / Profits

Measurements are:

  • Usage, customer success/failure; penetration of market; research discovery, etc.

CX Designers deliver:

  • Discovering unmet user needs, building things that are easy to discover, setup and use, building things that deliver self-evident, perpetual, intrinsic value (indispensable), building things that don’t require expensive promotion or extensive training. User research also can identify risks early, which allows the team to develop strategies for mitigation or management of the risks.

Both of these scenarios are common: CX is often embedded in an existing department or function such as an Engineering or Product organization. This is convenient because there is an established leadership structure and teams can simply be placed under a designated leader who now owns the CX function.

Potential Drawbacks

However there are potential consequences to placing CX within either existing function.

When CX is within an engineering organization, concerns about development costs and delivery risks may supersede the objective to deliver a design that makes it easier for the customer. For instance, designers may be coerced to simplify or ’standardize’ a design by over-prioritizing principles of consistency or re-use of patterns in order to make it easier or faster for the engineering team to deliver. In addition, design testing may be biased toward validation rather than learning which leads to rationalization and over-tolerance of issues that impact user outcomes.

Likewise, when CX reports to a business group that is driven by short-term revenue goals, it may become an instrument in customer exploitation through the use of ‘dark design’ methods that deceive, coerce, or manipulate the customer’s intent to the advantage of the business. In this case, ethical aspects of product use, such as the impact on the customer’s behavior and health are over-looked in the pursuit of hitting immediate business goals.

In short, CX will take on the values of the parent organization in which it is located.

These consequences are not of the daily variety, rather they are most likely to manifest when there is duress, crisis, stress, or urgency. Of course, these are precisely the moments when it’s most critical to have a business structure with the integrity to make the best decisions, which result from collaboration and balanced contributions of all disciplines.

CX as a Peer Organization Unit

Therefore, to get maximum benefit from a CX team, it needs to be positioned in the organization to avoid conflict of interest, which can happen when the values and responsibilities are compromised in favor of the goals of the parent group. Alternatively, for CX to both reduce costs, grow value and innovate, it may be best positioned as a peer to Engineering and Product Management.

As a peer organization, CX can complement the efforts of both organizations and serve as a counter-balance to each. Such a structure is more likely to lead to compromises that hit the ’sweet spot’ of innovation and great customer outcomes.

Indeed, positioned properly in the organization, CX talent can fully realize their potential and be empowered to deliver the compelling, delightful experiences that will allow a company to compete on the emerging battlefields of business.