02/28/2012 05:13 pm ET Updated Apr 29, 2012

Skunkworks, Reorganization and How to Excel in the Digital Age

Outside of the technology sector, most of the large companies that I encounter are startlingly similar.

They're massively successful and indisputably recognized as world-class leaders by consumers as well as the business community. Their executives are all quite smart and good at what they do. They acknowledge the world is going through a technological revolution and that digital technologies are transforming their businesses. They know that to stay up to par, they have to lead in the Internet space, too. But for some reason they just can't get it done.

Here's why: traditional organizational structures are ill-equipped to meet the challenges of the digital age. While they can execute like a fine-tuned machine against core business goals, they generally consist of a series of silos -- and digital is inherently integrated. Management of what I call the "software layer," a layer of technology that surrounds the core business and serves as the focal point of interaction with the outside world, requires a more unified approach.

I'll demonstrate the mismatch through GlobalCorp, a hypothetical company. GlobalCorp has a division for each country in which it operates, and within each country, it maintains a different business unit for each kind of product it sells. Then it has separate organizations for its internal operational departments like sales, marketing, customer service, and so forth. Each group is set up to accomplish those specific tasks, and pre-internet, this worked pretty well. Now enter the digital era. GlobalCorp needs to be able to interact with individuals through the Web, but no one has the authority to create a company-wide Web experience. As a result, each group goes at it alone, implementing its own solutions. They mean well, but their efforts are often tailored to the sole interests of their own group. The needs of the broader organization are not considered.

Flip to the experience of internet users. They go online to interact with GlobalCorp, one task of many that they're trying to accomplish in their busy day. But the company's digital footprint is so fragmented and disjointed, they're unable to figure out where they need to click to get where they need to go, and they have an inconsistent brand experience. Neglecting user needs is the fastest way for companies to lose potential and existing customers, business partners, press calls, job candidates, and various other valuable interactions and relationships.

Two main types of unusable digital experiences result from management by traditional organizational structures. At the digital agency I run, some clients come to us with more than 1,000 discrete websites for a single company. That's a big problem. Another issue is when the company has one site, but presents the content in a way that matches its internal organization -- even though most users aren't familiar with a company's internal structure and lingo. In both cases, users become confused and even stymied, unable to complete their intended digital interactions with the company. These problems become exponentially more deleterious as they surface in mobile, social, and other digital touchpoints.

The transition to an organizational structure that supports long-term leadership in digital can come to life in three phases, all of which can eventually run concurrently.

Step One: Launch a Skunkworks Project. This step requires the least amount of heavy lifting and political strife, yet it can produce tremendous results. A skunkworks project is an undertaking where a new, small, and nimble division is placed outside of the existing organizational structure, reports directly to a C-level executive, and is tasked with creating groundbreaking products and solutions that support user and business needs. Even companies structured to excel at digital, like Google, lean on skunkworks projects to nurture great leaps ahead. For non-technology companies, it can produce the big bang needed to fuel great momentum toward digital leadership.

Step Two: Implement Concentric Organization. Concentric organization requires that a small group of digital experts, perhaps some of the same individuals from the skunkworks team, develops and implements a company-wide digital infrastructure that, again, is designed to meet both user and business needs. This team must be a full-fledged, accountable business unit with its own P&L and performance goals, and it must have the authority to influence company-wide operations. Without these attributes, it often becomes a powerless internal agency responding to the whims of various departments. Its end product should be a system that allows large numbers of non-technical employees to use digital tools to advance their specific business goals, which protects the external user's experience by standardizing the output. Once developed, key digital team members should be exported to relevant departments throughout the company to aid in integration.

Step Three: Reorganize Comprehensively. The final step is to combine the online and offline functions of a particular area. For example, a single customer service group should handle issues via telephone, email, and social media, and a retail merchandizing group should manage products in both the offline and online stores. The result is an organization structured around each stage of the relationship between customer and business.

When all three elements are working together, the company is unified by a strong foundation of clear digital business goals and tools, and can maintain a consistent and wholly usable experience for users, while producing cutting-edge digital products. But this machine, the Software Layer, won't work for long without adequate leadership. One person acutely aware of user needs, business goals, and technical feasibility must remain in charge of the company's entire digital footprint. Everyone "owning digital" is almost as destructive as no one owning it -- it's all too easy for factions to fracture from the whole, for the infrastructure to deteriorate, for top-level business goals to lose their weight, and for the user experience to degenerate. A company is a truly digital organization only when management maintains a keen focus on meeting user needs.

Aaron Shapiro is CEO of Huge and author of Users Not Customers.