We are rarely proud when we are alone – Voltaire
Until today, most organisations have been proud of their decentralised product and country structure, with good reason – they have their own management teams that are intimate with their customers and markets, are perceived as conversant with their products and applications, even close to their competitor strategies and above all, accountable for results.
However in periods of financial stress, relying on a decentralised organisation with highly autonomous silo units is no longer competitively feasible. Success and sometimes even the survival of that organisation require addressing the silo-driven problems, by replacing isolation and suspicion, with communication and cooperation.
Organisations that link past practices to the present or future must be prepared to understand that the rules of play are themselves subject to new interpretations, evolution and change. Making sense of different contexts, and the processes by which they are situated in their wider environment, raises important questions about the way in which boundaries between different ways of doing things are achieved and maintained.
Below are some of the specific problems or missed opportunities that have been created or worsened by the silo structure. It is important to understand these issues, not only to motivate change but to provide a change target.
I. Marketing resources are misallocated
I spend 98% of my time on Sales because that’s where my focus is to get that immediate impact on revenue… I leave the Marketing to a more junior member of staff (because the immediate impact is immeasurable and does not get our management’s attention).
Let’s face it – silo teams are organisationally and psychologically unable to make good resource allocation judgements. Without centrally driven discipline, allocation is usually made by forces that retain it’s own cash flow or share of new investments. As a result, Sales will always receive the bulk of the resources because they can pay their own way, whereas Marketing is the “painful” investment which does not appear to be needed. Any strategy (if at all), tends to be underfunded – much to the detriment of the organisation.
And when there is a need to create and enhance the supporting central marketing group, silo units perceive this move to be a threat to them. They resist any effort to control the levers – believing that their performance (which they are held accountable) will suffer, and that their market knows best.
II. Lacking clarity and linkage
I don’t understand how that applies to me.
When it comes to a global Brand, each silo is motivated to maximise the power of the brand without any concern for the brand’s role in other business units. This is because their reporting structures and performance evaluations are silo defined. In most cases, there is just simply no incentive for them to collaborate or even reach out with ideas or information.
If you can’t see the wood for the trees…
When there is an overlap in markets, inconsistent product and positioning strategies can also damage the brand and result in marketplace confusion. These mixed messages are hard to convince even its own organisation that the brand stands for something, and if it is worthwhile to have the discipline to be true to that message. This is a big barrier that frustrates communication, and even reinforces prejudices. The power to work more collaboratively can build mutual understanding across this divide to generate valuable opportunities and new insights, where each silo might just learn from the other. In order to succeed, making sense of other people’s thoughts and actions take imagination and interpretive understanding.
III. Inhibited programmes causing massive inefficiencies
My market is unique, therefore different to yours.
With a multi-siloed organisation, pockets of brilliance may happen, but they tend to be isolated and rarely leveraged. It is not enough to have a success here and there – maybe and occasionally are not good enough. The key to moving from good to great is to develop excellence within these silos and be nimble enough to leverage that excellence. Excellence can take many forms. For example, differences should not compromise the fixing of universal tastes. Universal needs should be translated into a standard product or service that can exploit the economies of scale.
Silo organisations are too focused on their own businesses to open their minds to the fact that when all silo units are aggregated across products or countries, the economics change. When competitors are exploiting scale economies, these organisations are swimming upstream by clinging to a siloed world. Shared experiences generate communal resources that can be used as tools for enabling future practice. Many organisations want suppliers that interact globally, some even try to avoid country-by-country relationships. It is therefore important to understand that along with global influences reaching into local practices, local activities can also reach towards global opportunities. Improving efficiency by moving information from one place to another is often more concerned with helping the organisation do better at what it already knows, than it is with doing something entirely new. There must be a shift in mind-set where expectations about “the way that things should be done around here” interact with influences from elsewhere – whether in the form of information, ideas, movement of people, capital or other factors that force people to do things in a different way.
So how can silo barriers in organisations be reduced or eliminated?
Birds of a feather: Influence is a strategic imperative.
Alone we can do so little; together we can do so much – Helen Keller
Influence resides in individuals — a constant in all contexts. It is because influence is a social construct. Your influence over me depends as much on me, as it does you. It’s often more the action and reaction of those around as it does on what been said or done. Like respect, it is given to you by others, not imposed on them by you.
Lip service is not enough —Usually this requires credibility to have buy-in throughout the organisation. For example, to re-frame Marketing as a driver of the business strategy, instead of a tactical management function. This means allocating the necessary resources and budget to get measurement in place. Without the demonstration of ROI, it further enhances the silo unit’s stature, and reaffirms in their minds their image of Marketing of being soft and unanalytical.
Clarity is key — No idea starts off inherently influential. Ambiguity costs organisations millions in operations every year and it is the successful companies who identify this and engage in relentless pursuit of clarity in their organisation culture. Innovation and creativity depend on the capacity of individuals and groups to integrate information in new and original ways. In the case of Marketing, it can be installing a common marketing planning process (e.g. frameworks, templates, etc.) and information system. By doing so, it provides a solid basis for communication through the creation of common vocabulary, measures, information, and even decision structures. Unless there is a clear, accepted process with understandable and actionable components, every siloed unit will go down its own way and as a result will be mismanaged – both strategically and tactically.
Acknowledge existing interconnectedness — Much of today’s countries are shaped by the legacies of long-standing trading patterns, imperial expansions, colonisation and strategic interventions. An essential part of this is what people have in common and the processes by which that common ground is used to communicate and generate new knowledge. Knowledge needs “knowers” – people who have the capacity to think and act in any given context. When there is collaboration, people share a similar way of interpreting and responding to information signals – where sometimes emotional factors will become far more important, than rational argument.
It must be said that the common instinct of forcing centralisation and standardisation of an organisation can be dysfunctional. Though the objective rather, is to address the silo-driven problems to enhance cooperation and communication, resulting in a stronger offering and Brand through the synergistic strategies and programmes. It is not about a structure change, but rather the realisation that silo units now need to work as team members – for any chance of success.