Functional/Network Hybrid Structure at Group Commerce

Group Commerce follows a hybrid of Functional and Network organizational structure (Nohria, 1991, pp. 4-9).  Labor divisions have been created and broken up in to a hierarchical format.  The necessary activities are grouped together as they relate to a common function (Nohira, 1991, p. 4). 

Interestingly, GC is primarily a technology company.  Yet, the technology department has the smallest reporting structure and is rarely a part of day to day discussion.  However, they are the most important part of the organization.  GC powers patented sales and customer service engines to publisher-clients, thereby, serving as a cost efficient entity for other companies who want this technology but do not have the internal resources, or are not willing to pay for it.  Publisher-clients are defined by websites that have a consumer and editorial component.  DailyCandy, New York Times, Boston.com and Meredith are examples of Group Commerce’s publisher-clients.

Product Management creates and manages what GC can and cannot provide for publisher-clients.  They are the foundation builders and are essential to setting parameters for Revenue and Client Services.  The revenue department is essentially sales, but on a very large scale.  They are consultative in nature and design specific details to meet the needs, desires and expectations of the publisher-clients.  Once the terms are agreed upon and a contract is in place, Client Services takes over. 

Client Services is the go-between for publisher-clients and Sales Operations and Merchandising.  Client Services communicates what the client wants and expects to Sales Ops and Merchandising.  These two departments work closely together to devise a plan to relay to the sales managers, who in turn communicate the desired expectations of the publisher-clients.

Sales and Merchandising have shared goals.  The sales team is responsible for driving consumer revenue to the publisher-clients, and the merchandising team is responsible for ensuring the needs of the publisher-clients are correctly communicated to the sales team.  

Group Commerce also employs a network structure, as it is a highly adaptable organization (Nohria, 1991, p. 9).  Being a start-up, GC is rapidly changing and redefining itself.  Although its structure is well defined, the communication between departments can become blurred and expectations are not always managed properly.  For example, the business development directors may secure a publisher-client and promise deliverables that are unrealistic or impossible for Sales Ops and Merchandising to achieve.  Client Services does not know these expectations cannot be met and become a type of mediator between the two departments.  This results in extreme pressure on the sales team to take on more than is realistic or possible. 

There is very little communication between Product Development and Sales Managers.  The sales managers are simply given instructions.  They then communicate the demands to the sales force.  This creates angst and uncertainty amongst the lower ranks, as they do not feel that they have a voice in their own destiny.  A solution to this would be to have the sales mangers communicate what the team is able to deliver, directly to Product Management.  Because of the high speed of growth and need to bring on as many high-quality publisher-clients as possible, these lines of communication remain closed.

Since, there is merging and collaboration among Technology, Product Development, Sales Operations and Merchandising, GC has a hybrid structure.  This eliminates the weakness that can be present in a strictly functional structure, such as being unable to respond quickly to changes that may transpire within separate departments (Nohria, 1991, p. 5).  Yet, because of the closed lines of communication between departments, GC  has sacrificed efficiency for speed (Applegate, 1995, p. 2). 

Group Commerce is successful in achieving its primary goal of merging technology with sales and profit and rapid growth.  However, in order for it to remain sustainable and accomplish its long term goal of longevity, it must create dotted lines between the departments and empower all employees to become “information and knowledge literate.” (Applegate, 1995. P. 5).  Problems are surfacing and upper management could lose control, as they are ignoring the chaos and continuing to push forward with record setting speed.  “Speed counts, but not at the expense of control.”  (Applegate, 1995, p. 8).  If GC were to adopt a systems thinking model, instead of adhering to the functional/network hybrid it is today, I believe the organization would be better organized by developing a shared purpose and understanding of departmental actions and directions (Applegate, 1995, p. 12).

References:

Applegate, L.  (1995). Managing in and informational age: Organizational challenges and opportunities  Boston, MA:  Harvard Business School Publishing.

Nohria, N. (1991).  Note on organizational structure. Boston, MA:  Harvard Business School       Publishing.