Aligning your ducks: marketing organizational structure should line up perfectly with the bank's strategic plan and vision. Unfortunately marketing at many community banks is structured on an "ad hoc" basis--forcing it to react to market conditions--rather than being proactive.

• Author: Matheny, John
• Position: Strategic Marketing - Viewpoint essay

[ILLUSTRATION OMITTED]

What's the best way to structure your bank s marketing and sales organization?

Is it butter to accept a legacy structure as it exists, regardless of the bank's marketing and sales goals?

Or can you reorganize marketing and sales, aligning the organization structure so that it connects more closely with the bank's strategic objectives?

In this article. I will discuss some of the best practices with respect to evaluating your organizational structure and changing it, based on the strategic needs of marketing and sales.

Aligning organizational structure with long-term strategy to ensure that the functions to achieve this strategy are in place and are being carried out is, of course a business fundamental Further, this fundamental organization principle is typically broken down into basic business disciplines: senior management, finance, operations/manufacturing, marketing, sales and administration.

Essentially, a financial institution's overall strategies (as outlined by Raymond Miles and Charles Snow in their book, "Organizational Strategy, Structure and Process") arise from the way it decides to address three fundamental areas of its business:

* Entrepreneurial issues, or how a company manages its market share.

* Operational issues, or how a company implements its solution to the entrepreneurial issue.

* Administrative issues, or how a company structures itself to manage the first two issues.

Although businesses choose to address these issues in different ways, Miles and Snow suggested that many companies develop similar solutions. Ks a result, they postulated that there are four general strategic types of organizations:

* Prospectors.

* Defenders.

* Analyzers.

* Reactors.

Let's look at each of these strategic types in greater detail.

Prospectors

Prospector organizations are faced with addressing the issue of new product and market opportunities. These organizations take an aggressive approach to their business environments. They will often lead the market in the introduction of new products and services in an attempt to achieve organic growth. At the same time they may aggressively seek expansion and acquisition opportunities. They will often be aggressive in their pricing and have a broad product or service line.

Financial institutions that fall into the Prospector category may place a high priority on new product development to meet perceived changing needs in their marketplace. This in turn may create a diverse set of technology solutions and create operational challenges.

The administrative challenge of these companies is how to coordinate diverse business activities and promote innovation. Prospector organizations typically solve this problem by being decentralized, employing generalists (not specialists), having few levels of management, and encouraging collaboration among different departments and units.

Defenders

The entrepreneurial approach of Defender organizations is to maintain a stable share of the market. They will focus more on their current customer base and less on growth through new customers, and seldom on expansion into new markets. Defender organizations also tend to be slow to change. In short, their most important strategy is customer retention.

Operationally they tend to focus on cost leadership. In general, the best strategy for attaining cost leadership is standard and up-to-date technology. In financial institutions, however, Defenders tend to be slow to make the investment in new technology, particularly customer relationship management technology, which is critical to deepening relationships with customers and increasing customer retention.

Administratively, Defender organizations tend to be vertically integrated. In financial...