Explore how embracing MACH® and composable commerce leads your business toward customer-centricity.
Introduction
What happens when a business embraces MACH® and composable commerce? More than technology, it paves the way for a transformation into a customer-centric organization!
For the purpose of this article, I'll use the term 'customer-centric' to encapsulate the concept of a business arranging itself around listening and responding to customer needs and wants on an ongoing basis. These can be manifested via a product-led organization (one that builds products themselves) or an online retailer (building the commerce capability used to take their products and services to market); the principles, concepts and core capabilities are similar.
Prior to making such a transformation, most businesses are project-driven, with a series of time-bound, fixed-budget workstreams that each have a finite scope and a supporting business case outlining the expected benefits. Each project requires its business case to be ratified, a budget to be sought and released and a project team formed to deliver the work.
The activities, process and governance surrounding this project-driven approach are well understood:
Duration: Projects are finite, with a start, middle and end. Project teams are formed for the duration of the project and disbanded upon its conclusion, with little or no continuity between the project team and the support team that’s onboarded afterward to maintain and operate the solution the project team built.
Goals: Project goals are focused on achieving cost, scope and time parameters.
Scope: Project scope is typically fixed — the project team is on the hook to deliver the requirements that were agreed up-front, and within cost and time constraints.
Metrics: Cost, variance, acceptance. The assumption is that delivery within these metrics equates to delivering the value promised in a business case that was produced many months — or even years — prior, despite how the market shifted in the meantime.
Projects can be successful at delivering the value planned in a business case, but they’re often not the best approach — or simply not viable — to supporting a business aiming to deliver an ongoing stream of value to its customers.
Why is this the case? What could — or should — happen when a business makes the shift towards customer-centricity, and why do so many businesses struggle to fully realize the benefits of this transformation?
Lean Agile: A better approach
The practice of Lean Agile (including Lean Product Management and ‘Lean Startup’) over the last two decades has clearly established itself as a better approach to listening to customers and delivering value in the digitally connected world we now live in. Its concepts have fundamentally changed modern software development techniques, including data-driven learning and experimentation.
How’s the Lean Agile — or any truly Agile — approach fundamentally different from project delivery? At its core, it’s a shift from traditional project delivery towards continual value-stream delivery: Delivering projects doesn’t always mean delivering value, but when it does, sometimes the delivery of value ends when the project is closed; hopefully whatever was delivered continues to be valuable!
Agile product management techniques provide the structure for a value-generating system that’s focused on the customer and designed to support continual value-stream delivery through value stream management. This is a significant shift compared to the typical ‘project approach’ that requires substantial change across all levels of an organization.
It’s important to note that the approach to budgeting is also fundamentally different — and easier! Rather than funding individual projects with fixed scope and timelines, Value Stream Management (or ‘Lean budgeting’) incrementally funds the continuous flow of activities that create customer value — value streams — essentially funding the Agile processes and teams as they operate interdependently to continually identify, prioritize and deliver customer value.
It's no surprise that many businesses struggle to transform themselves and fully realize the benefits of reorganizing around value-stream delivery—doing so requires both a technology change and an organizational change.
I’m lucky to work with businesses that have successfully transformed in this way — it’s an ongoing journey — and all have shared in retrospect that the ‘hard part’ of the transformation wasn’t the introduction of new technology as they originally expected, but rather managing the organizational change required: Both the mindset and the structure.
The key lesson? Start the process of organizational change management earlier, and give it more attention than you think it needs. This is hard because humans don't like change. Yet if we look at the most innovative leaders in the marketplace, it’s plain to see that they’re built and organized around embracing change; it's quite literally the core of how they innovate, lead and win.
Organizing toward customer-centricity
Let’s examine how leading businesses organize their people, processes and technology in a way that incorporates continual improvement (i.e., change), and identify where composable commerce and MACH technology are a critical enabler to realizing the benefits of making such a change.
An organization needs to focus on five primary areas to successfully transform into a customer-centric organization:
Business and technology leadership
People and culture
Organization and governance
Processes and metrics
Business intelligence
Casper Rasmussen’s MACH Maturity Assessment does a wonderful job at digging into each of the above in detail, but for now let’s summarise the key changes that organizations need to make within each area.
Continual value-stream delivery won't be fully realized without all aspects of the organization structured to support it. The connection between business and technology leadership is a critical place to begin due to the symbiotic relationship between them.
Value-stream delivery requires a collaborative approach to continual experimentation and improvement aligned with strategic objectives. This requires the working environment itself to be a 'safe' place where experimentation — and sometimes failure — is all part of continual improvement. A culture of openness, honesty, trust and courage is essential to building teams that take ownership of their objectives and are unafraid to fail for the right reasons.
Organizations need to be structured in a way that supports teams with a centralized, data-driven strategy shared across the entire business, focused on the customer journey. The structure around decision-making processes should enable teams and individuals to operate mostly autonomously whilst advancing progress toward objectives.
Being customer-centric means thinking of everything in ‘value terms’. Budgets and timeframes still exist (albeit in a different format from classic project delivery), but they serve to deliver customer value through the ongoing processes they guide. Value-oriented success metrics should also be introduced, along with an approach to measuring their change over time as continual experimentation takes place.
The iterative processes that support the continual value-stream delivery often borrow from Lean Agile techniques, but there are many agile models that can be applied to the same effect.
The insights derived from well-understood data drive an organization’s strategic decision-making, process improvement and actions. Data is also a great leveler within an organization; it prevents the 'loudest voice' from making decisions that have no empirical basis, supports experimental hypotheses and quantifies results.
Tying it all together
Mature product and service-based organizations structured towards customer-centricity typically support three interdependent, cyclical capabilities that collectively enable them to identify and meet customer needs and wants — the ‘engine’ that drives continual value-stream delivery:
A capability to identify and understand the customer's needs and wants. Design Thinking and Human Centered Design techniques are often applied.
A capability to experiment using data-driven hypotheses that identify the best approach to meeting the customer's needs and wants. Lean Agile practices are often applied.
A capability to reliably and incrementally develop incremental improvements that meet customer's needs and wants, such as feature enhancements. Agile development practices are often applied.
These three capabilities can be boiled down to an interactive process as outlined below—it's an idealistic but useful way of understanding their cyclical interaction.
Each of the above is an autonomous, core capability in its own right that may involve one or many teams, but each is also interdependent on the other. As capabilities, each must be nurtured and developed, focused around appropriate goals and supported from 'the top down' in order to thrive.
This cyclical approach to delivering valuable, customer-centric products and services works so well because it’s structured entirely around customer-led change. Each process plays a critical role in the ultimate result of continual value delivery to the customer and, as a result, the business.
Critically, this approach necessitates that the right technology exists ‘under the hood’ to support these processes. This is where composable commerce and other MACH technologies are so powerful because they provide the technical enablement for teams to operate unhindered in truly agile ways, following truly agile product-building techniques and processes. Ultimately, MACH and composable enable them to build and deliver value on a continual basis without the constraints otherwise imposed by legacy technology platforms.
References and further reading
The future of commerce
As we look towards the future of commerce, it's clear that customer-centricity will be the driving force behind success. The journey towards customer-centricity requires a shift in mindset and culture, a commitment to continuous improvement, and the adoption of enabling technologies like composable commerce and MACH.
Now is the time for businesses to embrace this transformation, empower teams, foster innovation and leverage the flexibility of composable architecture to build exceptional customer experiences that drive lasting success.
Now, I'd love to hear from you! How are you applying these principles in your own organization, and if you’re not, what obstacles do you face in doing so? What specific strategies have you found most effective in driving customer-centricity, and what impact have you seen on customer satisfaction, loyalty and growth? Get in touch with our team.
Rob leads Customer Success for commercetools in the Asia-Pacific region. With deep expertise in e-commerce and agile product management techniques, he has built and scaled digital practices and teams for top companies across the UK and APAC.