There are still a lot of companies where design as a tool to improve business, and satisfy customers, is neglected (proof?). In those cases, design is used as the shiny layer you put at the last moment. While it may work on the surface, it never last (proof?).
The CEO or the people leading the company.
The chief design
The person leading design inside the organization.
The design team
The people working for the Chief design, and executing all things related to design.
Where and how should design live
1. The executives need to truly believe why and how design can make their business successful.
2. The design lead needs to regularly and frequently communicate with the CEO or the people leading the organization about customers behavior, and design strategy.
3. The design lead needs to form a team of talented designers with those expertise: user research, interaction design, visual design.
4. User research needs to be an integrating part of product management and should organize, and make sense of all user/customer information collected from different departments.
Designers are creating products, services, experiences that affect people so they shouldn't work at a superficial level.