Breaking Silo Mentality

Ask CEOs what the number one innovation killer is and the odds are more than even that the answer will be “silo mentality”. Again, ask them what the biggest reason is for the failure to deliver on strategy and the phrase “silo mentality” is likely to turn up again.

Silo mentality is in essence an attitude problem. It emerges when companies corporatize. As companies grow it becomes necessary for them to introduce distinct functional areas to make control possible. In the absence of silo breaking leadership, departments are inclined to cease sharing and cooperating with each other. Enter silo mentality.

The long and the short of it … silo mentality reduces efficiency and can be a contributing factor to a failing corporate culture. Silos result in the duplication of cost and effort, cause functional areas within your business to work at cross purposes, destroy cross functional synergy, stem the flow of knowledge and work against economies of scale. The largest problem, however, is a lack of alignment with the overall company strategy.

Customer focus

Successful companies are Customer centric. They continually focus their efforts on optimising the value that they offer their Customers and thereby prosper. The Customer becomes the single point of focus around which all functional areas unite.

Unfortunately, silo mentality forces a shift in focus. The Customer is no longer centre stage. Customer centricity is, to a degree, replaced by a low key “turf war” between functional areas. If left unchecked, the lack of Customer centricity will erode the ability of the company to add value to the Customer, which will place it in a weaker position relative to its more Customer centric competitors.

Impact on Strategy execution

At its core … Strategy needs to be Customer centric for it to be of any value. Further, any material strategic initiative will require an effort that straddles more than one functional area. Silo mentality stands in the way of multiple functional areas cooperating to deliver on a strategic imperative.

Silo mentality catalysts

Silos originate as a result of many factors. Catalysts such as the following play a role in allowing a silo mentality to take root:

1. Introduction of departments 
2. Mergers and acquisitions 
3. Emergence of pockets of knowledge that are not freely shared. 
4. Job insecurity, resulting in staff competing with each other. 
5. Divide and rule management cultures. 
6. Development of inner circles within management structures. 
7. Absence of a strong Marketing function capable of maintaining Customer centricity. 
8. The introduction of ambitious and divisive managers.

Often a series of silo catalysts, such as those listed above, play together to make the organisation increasingly insular.

An “us and them” mentality can sometimes appear, particularly in organizations that are under performing. It’s common in the turnaround space to find departments pinning the root cause of their under performance on other functional areas.

It’s a cultural issue

At its root … silo mentality is a cultural problem.

Like most undesirable aspects of a corporate culture, silo mentality is typically fed from the top. It’s generally fair to say that it is senior management that allows silo mentality to take root and prosper. As a complicating factor, silo mentality creeps into the organization slowly, and it is more than probable that it taking root was something that was not initially apparent.

Lead from the top

The reality stands that silo mentality is typically introduced from the top. When staff stop sharing with colleagues in other functional areas, they are typically taking their lead from the departmental heads. As a consequence, an initiative to break down silo mentality requires senior management to make a conscious decision to cease acting in silos and to start cooperating and sharing information freely.

We have already had a look at silo catalysts. Let’s shift our focus to potential silo breakers. The silo breakers that you implement in your environment will be dependent on the peculiarities of your environment, so what follows are merely examples to stimulate thinking.

1. Make a public, management led, pact to the organization to start breaking down silo mentality. 
2. Add interdepartmental cooperation and knowledge sharing as a KPI. 
3. Revisit and re-launch your corporate values. 
4. Recognise staff that act as silo breakers publicly. 
5. Promote only those that have the ability and willingness to cooperate and share, and make your position in this regard public. 
6. Break barriers that divide your Executive Team. 
7. Manage staff that are building or perpetuating silos out of the business. 
8. Undertake projects that require cross functional cooperation. 
9. Ensure that your annual bonus is in part broad based and does not actively encourage department performance at the expense of company performance. 
10. Eliminate formality in the company and the need to go through endless chains of command before engaging leaders. 
11. Establish common platforms and systems across the company and give people access to the same data and information. This discourages information hoarding. 
12. Design comfortable space in each building or on each floor where cross functional teams can meet in a relaxed setting to brainstorm products / services, processes and work cross-functionally to create solutions. 
13. Review your business process to make the flow of activity between functional areas cleaner and more information rich. 

In closing ...

The key to understanding silo mentality is to remember it is a human behaviour. There are only two ways of changing human behaviour. Punish adherence to the old behaviours … reward adherence to the new behaviours … in short, the carrot and the stick.

Silos are great if you're storing corn or grain … but not so great for organizations. In an organisation they stop innovation, stand in the way of strategic execution and quite simply make the workplace an unhappy one. Engage in honest conversation with your Team … get to the root of what your silo catalysts are … implement your silo breakers … and move forward.

Putting the focus back on the Customer

Staying connected with how your Customers view your company, products and services is crucial to maintaining high levels of customer retention and growth. After all, the end point of the products and services that your business markets is the Customer. The most logical way of finding out how your Customer feels about your Company’s performance, is simply to ask them.

Surprisingly, companies are often reluctant to reach out to Customers and take honest feedback. I believe that the root of this phenomenon is twofold. Firstly, folks don’t want bad news … and human beings are inclined to avoid it like the plague. Years ago an outfit with which I was involved (details not provided for obvious reasons) held a Customer conference of sorts, with a view to taking Customer feedback. The take out from the event was that “Customers were ganging up on us … and we are providing them with a beating stick to do so!” All the great feedback that was received was simply brushed under the carpet. Nothing achieved. Rather bizarrely, the primary learning was never to have a repeat of the event. This introduces the second reason why companies may be disinclined to take feedback from Customers … very often, they simply are not confident that they have the capacity, staying power or political will to act on the input provided. If you ask your Customers what you could do better … and they give you the answer, they expect you to follow through. If you don’t, you lose face.

The long and the short of it … if you intend to canvas your Customer’s opinion … you need to be brave and you need to be committed to act on the feedback provided. If your organization has the maturity to want to work with Customer feedback, it is advisable to make “touching sides with your Customer” a component of your annual strategic planning cycle.

A great way for companies to make sure their whole organization stays informed about what is happening in their Customer’s world is to make use of Focus Groups. It is generally advised that Focus Groups are run by an independent professional, someone that has the necessary skill to steer the conversation such that you get the required feedback. You will need to brief the Focus Group Convener that you hire. The briefing that you put forward will be a key determinant of the quality of the feedback that you acquire. Some thoughts regarding the types of questions that you may want to put forward to the Convenor during the briefing session are presented below:

1. How do you feel about our products and services?
2. How do you feel about our company?
3. What’s your typical buying process for this type of product or service?
4. What criteria do you use to evaluate potential suppliers?
5. What’s the decision making process and who’s involved?
6. If you were looking for this type of product again, what would you do?
7. What would you type into Google to find a business like ours?
8. Is our website a helpful resource for you? What would improve it?
9. Is it easy doing business with us? How can we make it easier?
10. Where do you experience frustration when doing business with us?
11. Who do you consider to be our competitors?
12. What can we learn from our competitors?
13. Where are we better than our competitors?
14. What trends do you see in your market right now?
15. How is the market in which you operate changing? What do we need to do to make sure that we remain relevant to your needs?
16. If there was one thing we could do better, what would it be?
17. How could we improve our products / services?
18. What line extensions should we be looking into?
19. What are our strongest selling points?

When selecting a Focus Group Convenor, it is suggested that you ask the following questions of the prospects:

1. Is the session held in camera? Will we be given a copy of the footage?
2. Is an audio recording taken of the session? Will we be given a copy?
3. Will a written transcript of the proceedings be made available?
4. Will the Convenor provide a report that details their independent assessment of the outcome?
5. Will the Convenor present the above report to your Executive?
6. What experience does the Convenor have that is relevant to your line of business?

The ideal candidate will respond to questions 1 to 5 in the affirmative and his or her response to question 6 will give you a sense of comfort.

Choosing a venue for the Focus Group is also important. It’s generally better that you don’t use your offices. Neutral ground is better … and it puts the participants at ease. There are some really great facilities available, so have a look around. The professional facilities typically have a one way mirror in place that will allow your Team to monitor proceedings without getting in the way. The Convenor will periodically interact with your Team and take guidance with respect to areas where you would like him or her to probe.

Typically, the Convenor would also play a role in selecting the Focus Group participants. Generally, you would provide the Convenor with your Customer database and he or she would randomly select prospects. A set of prospects that are willing to participate would be identified, a date set … and there you go! There is some degree of science to determining the appropriate sample size and selecting participants. You can rely on your Convenor to guide this process. A well constituted focus group should be representative of the dynamics of your Customer base. As a heads up, you can expect to have to compensate the participants for their time in some way or another. Your Convenor will guide you accordingly.

When you run a Focus Group, you may want the session to be company anonymous … i.e. you don’t tell the participants which company has initiated the session. Anonymous sessions generally provide better competitive context, whereas company specified sessions often give feedback that is better suited for deriving a Customer Service strategy. It’s a complex question. The route that you take will need to be informed by your objectives. I would suggest that you take guidance from the Convenor that you engage.

Once you have held your Focus Group, it is imperative that you develop an action plan to align your company to the observations made. The hard work then becomes prioritizing and taking actions on the feedback. It’s generally advisable to close the loop with the Customer. They have taken the time to give you feedback. You owe it to them to communicate back what you have done with it!

Over a period of time, businesses tend to become inwardly focused … and it’s often easy to forget that there is a Customer out there. Why not allow your staff to review the video footage of the proceedings … and ask them for their thinking? It’s an ideal opportunity to put your Customers back where they belong … centre stage.

Is poor service your Customer’s fault?

The Frustrated Customer

Some time ago a blog article caught my attention. The gist of the article was that if you are receiving poor Customer service, it may well be that you are simply a bad Customer. Initially I was a little irritated by the thought, but after thinking it through, I decided that aspects of the argument hold true.

Let’s step back a little. A few years back I was doing a project for a Client of mine, who for the sake of this article will be called Acme Incorporated. In short, Acme sells a fairly complex set of services to consumers. Acme had an ecommerce web site that had been underperforming their expectations and they wanted to know why their Customers were disinclined to use it. One evening, the Acme Team and I were sitting behind a one way mirror while a focus group of their Customers was being led through a discussion relating to the merits or otherwise of the Acme service offering, both relating to the website and the Acme service offering in general. One of the participants of the focus group was an elderly gentleman who was an absolute fan. The Acme Team loved the old chap. There were lots of comments like, “If only all our Customers were like that!”

For the sake of this article, let’s call the elderly gentleman Mr Smith. What made Mr Smith so different? In short, he was well versed in how to do business with Acme. He seemed to know all the “Rules of Engagement”. He also knew a couple of unpublicised “tricks” that he could use to make the process a little easier. Many of the other participants, particularly the ones that took the opportunity to vent, were clearly not well versed in the Rules of Engagement. Doing business with Acme was by all accounts hard work. The bottom line … the better versed the Customer is with respect to the Rules of Engagement, the easier it is for him or her to do business with you, and as a consequence the more profitable the relationship. Sadly, companies seldom place much emphasis on communicating the Rules of Engagement to their Customers.

Therefore has developed a product, Therefore Quantum™, which has been designed to allow for the efficient resolution of queries. One of the benefits of the Therefore Quantum™ offering is that it allows you to identify queries that occur repeatedly, which one would logically use as context for reengineering your business to make it less error prone. None the less, one of the typical observations that we have made over the years is that approximately 50 percent of queries are the consequence of errors made by Customers. Why would this be the case? Perhaps half of these Customer led errors are unavoidable. The balance of the Customer led errors are typically a consequence of the Customers not knowing the Rules of Engagement. The resolution of queries is an expensive exercise, albeit often difficult to quantify. The more your Customers know your Rules of Engagement, the less likely they will be to make errors in their dealings with you. Consequently, less of your resource will be tied up in query resolution. Perhaps more importantly, you will be saving your Customers a great deal of frustration, thereby making it more attractive to them to do business with you.

One of Therefore’s specialities is to assist companies that take product to market by means of Distributors, to change to a new Distributor in a low risk fashion, without disrupting the flow of product to market. A key component of these supply chain transition projects is the communication of the new Distributor’s Rules of Engagement to our Client’s Customer base. We have over the years developed a pretty slick recipe for this exercise. The interesting thing about supply chain transitions of this nature is that our Clients normally see a sustained turnover uptick, generally to the tune of between 10 and 15 percent. Logically, this can in part be put down to the new Distributor being more efficient than the old one. I believe that the bulk of the increase in turnover is attributable to the communication of the Rules of Engagement that occurs as a component of the transition project. Again, if your Customer base knows how to do business with you and the processes that they have to follow to do so is user friendly, they will be more inclined to transact with you.

In closing, some thoughts relating to the communication of Rules of Engagement to your Customer base follows:

1. Marketers, particularly those that operate in a B2B space, are always looking for content. Surprisingly, they often overlook Rules of Engagement material as viable content … probably because they are that close to the subject that it gets overlooked. Similarly, the Rules of Engagement make great content for your Sales Representative Team … and it shows that you want to make the Customer’s lot easier, which reflects positively.
2. New Customers need to be “on boarded” in much the same way that new staff are introduced to the organization. Ensure that the communication of the Rules of Engagement to new Customers is centre stage in your “new Customer on boarding” process. Surprisingly, I know many companies that in fact have no “new Customer on boarding” process. New Customers are left to figure things out on their own. This practice tends to result in relatively few “Mr Smiths” and a lot of Customer frustration.
3. Don’t just accept the status quo. If your Customers don’t find your Rules of Engagement user friendly, it’s time to start doing some re-engineering. You may find the “Moments of Reality … and the development of Strategy” blog article to be a useful read in this regard.
4. Communicating the Rules of Engagement is not a once off exercise. You need to continually be on the search for new mechanisms that you can use to make sure that your Rules of Engagement are communicated to your Customer. Customers are only human, they tend to forget.
5. When Customers are in need of help regarding doing business with you, they tend to resort to a visit to your web site. It stands to reason that your web site must accurately and simply document your Rules of Engagement. Your social media strategy should likewise operate on the same basis.
6. In business, change is often the only constant that we are in a position to predict. Your Change Management procedures need to be drafted in such a manner that any changes in the Rules of Engagement are clearly communicated to your Customer.
7. The better your Customers understand your Rules of Engagement, the lower your exposure to queries that are the consequence of Customer error. This will have cost, service and ultimately profitability benefits.