Silos may be a great way to store grain, but can cause problems when silo mentality runs unchecked in a company. We have all seen silos at work in individual departments, regional offices, different channels and even in different management levels within an organisation.
Silos are not necessarily a bad thing; they can be beneficial when used properly and provide organisations with a structure that works. They often foster expertise in different areas and promote a sense of individuality, accountability and responsibility. Silos also act as a method for ensuring focus around specific business deliverables. These are all good things, so why are they the biggest hindrance to corporate growth?
In an ideal world, silos would be:
- Transparent – allowing people to see inside the silo, enabling people to understand what that silo is working on and reassure them the work is in the best interests of the organisation.
- Permeable – allowing information to flow in and out of the silo, enabling other groups to leverage the expertise and information best across the entire enterprise and also allowing the silos to better understand their impacts on the organisation.
But these types of silos rarely exist.
Unfortunately on most occasions, silos encourage behaviours that are beneficial to the occupants of the silo, but are often not in the best interest of the overall business or its customers. It also plays into the hands of corporate politics, since silos help to keep things private. And we all know that in office politics, information is power.
A recent survey from the American Management Association showed that 83% of executives said that silos existed in their companies and that 97% think they have a negative effect.
Silos restrict clarity of vision across the organisation, and they breed mini-fiefdoms where people are less likely to collaborate, share information and work together as a cohesive team. Not surprisingly this leads to poor decision-making as well as impacting on morale within a company, its efficiency and profitability.
The structure of businesses’ silos often seems to work against the interests of customers and simply engineer the wrong behaviours. Since every manager is part of a silo, how often have you experienced frustration, when your priorities don’t align with someone else’s in another department? (Can you remember telling a colleague that whatever you needed was really important? Or telling another colleague that you were doing something that has a higher priority? We have all been on both sides of the equation.)
Often you find that silos are not aligned because of the company-centric or channel-centric nature of many organisations and the lack of alignment to the impacts on the customer experience.
And in some cases, the way they are measured and the KPIs of different silos actually conflict with each other. And remember that operational units will tend to deliver against what gets measured and their KPI targets, since their bonuses, especially management bonuses, are contingent on the achievement of KPIs. In order to deliver a great customer experience you need to change what is measured and align it to the customer and not the organisation.
In 2012, Beyond Philosophy did some research amongst customer experience professionals and executives, which showed that “silo mentality” is the biggest organisational hurdle to improving the customer experience. This is understandable as the end-to-end Customer Experience touches many parts of the organisation and, as Tom Peters once said, “any organisation over five people is too big”. You must have also heard of Jeff Bezos’ two pizza team rule i.e. that each team should be small enough to be fed by two pizzas.
Some companies, rather than being a seamless entity and speaking to the customer in one voice, frequently present mixed messages. Each silo has its own view of the customer and the landscape they exist in, each from its own perspective.
This causes the customer to see the organisation as disjointed and dysfunctional, leading to a lack of trust, irritation and creating a feeling that the company is simply incompetent.
Types of silos
Within a business, silos come in many shapes and colours – functional, channel and even hierarchical silos. And the impact these silos have on the way we deal with customers is huge. Silos illustrate a type of real inside out thinking, something that exists today in many organisations.
Operational silos – functionally based
- Where customer support isn’t connected to marketing – a big advertising campaign goes out leading to a rush of calls, but the call centre hasn’t been briefed and as such is understaffed. So people have to wait long times or simply give up, resulting in angry and frustrated customers and a waste of marketing spend.
- Finance and marketing not interacting – a company makes a credit card offer to customers, only to have the customers apply and be turned down because the company didn’t credit score them prior to sending the offer out. This results in angry customers who have had their time wasted, damaging your brand.
- Disjointed Companies – not acting as one entity either nationally or globally – e.g. credit card company and bank – same company but actually not. Sony is one company globally but they won’t guarantee a camera bought in one country and claimed against in another country (where they sell the exact same camera) unless you took out an international warranty when it was purchased.
- Customers having to explain themselves over and over again about the same issue to different people within the same organisation.
Channel silos – touch point based
As new channels and touch points emerge, old ones don’t disappear. Technology has and will continue to create more channels that affect the customer.
Yet the majority of businesses have a separate approach to managing retail, telephone, web, social media, email and mobile channels, and they still expect customers to be able to hop between these channels in one seamless interaction.
Today, more than ever, organisations are engaging with their customers across an increasing proliferation of channels and are finding it is their customers who are now dictating the communication channels. So it is becoming more imperative than ever for organisations to ditch their old “silo mentalities”. This means that they need to prioritise their energies on engaging their people to deliver great and consistent customer experiences across those channels.
So it is more important than ever to ensure that you act and speak in one voice – giving a consistent message & customer experience across all channels & touch points… but this rarely happens.
According to recent research by Foviance in the UK, more than a third (35%) of companies say that customer touch points are managed in silos and that delivery is inconsistent.
A similar proportion (38%) say that the customer journey is understood but is not managed well across touch points.
Customers share a great deal about themselves through their multichannel interactions. However, if it is all held in silos, companies can’t get a complete view on their customers & their history and therefore act on all this customer information without an overarching strategy in place and the tools needed to gather, distribute, and analyse this data to allow them to design a better customer experience.
According to recent research conducted by eConsultancy with over 650 companies, most organisations are trying to integrate systems, but the majority still have a long way to go. In fact only about a quarter (26%) of companies have a well-developed strategy in place for improving customer experience.
But almost 70% are a long way from having integrated channels and a complete customer picture, yet alone speaking to them in one voice.
So what are the barriers to improving multichannel customer experience?
41% of respondents state that organisational structure is a significant barrier – in other words operational silos
38% of respondents state that one of the three biggest problems is the complexity of customer experience, given the growing number of touch points (mobile, phone, retail outlets, email, etc).
34% state the difficulty of unifying different sources of customer data, which ties in with the previous two points about structure and complexity.
For example recent research shows that the same customer will “like” a company on Facebook while complaining about them on Twitter, therefore highlighting the need to have an integrated channel strategy.
Hierarchical silos – Organisational level based
Silos can also occur among organizational levels when team members are either inhibited or actively discouraged from engaging senior leaders without going through the correct protocols and channels. Far too often, junior level employees feel it’s better to play it safe than risk calling unwanted attention to themselves, and senior leaders may feel inhibited from engaging front-line workers. It is often found that communication patterns were extremely hierarchical: executives, middle managers, and rank-and-file employees communicated extensively within their own levels, but there were far fewer cross-pay-grade interactions in many organisations.
One way around this is having organisations with a flatter structure – those with fewer levels of management. This type of structure encourages employees to take initiative without needing approval from multiple managers. Instead of “shifting the responsibility” up the management ladder, flat structures empower employees to take charge, help make decisions and feel responsible for the company’s success, creating a collaborative environment”.
Smashing your silos
The situations created by the above silos are costly, avoidable and all due to poor communication between different parts of the company. Ultimately this leads to loss of sales because the customer will go elsewhere, where it is easier to do business.
So why does it keep happening and what can we do to stop it?
The first step is to break down the silos. Companies have begun to recognise the crucial importance of this, which is why in the last five years we have seen the rise of the Chief Customer Officer – a single board level executive leading customer experience efforts across business units such as sales, marketing and service, or even over an entire company.
More importantly, how do you begin to create an outside-in customer centric structure in your organisation? There are a few core things you need to do:
- Focus on the customer
Paramount to success is staying close to the customer of your product or service and learning how you are missing, meeting or exceeding their expectations. To do this, you must bring people together so they begin to understand the inter-dependencies between departments and the impact it has on customers. It is by bringing the outside in and sharing customer feedback throughout the entire organisation that people begin to see the effect their behaviour has played in the customer’s perception of their organisation. But whatever you do, it must not be a blame game, but something proactive and positive which brings people together as one unit – not something that creates further divisions. You need to frame the changes into something that creates positive action.
- Through freely sharing information across the enterprise and delivering it into the hands of those people who impact on the customer. This will discourage information hording and improve collaboration. If you frame the need to do this as a positive opportunity, that by eliminating the barriers between divisions or management levels you can create a better and stronger organisation, one which will serve the customer better, then you will see more people actively getting involved to make it happen.
I have a personal story involving Virgin Atlantic which illustrates the above two points nicely. Back in the 1990s, my mother had a car accident, and I had booked a flight out to New York via their call centre for the next day, with a return date the following Saturday. When I arrived at the airport, they told me how sorry they were to hear about my situation and upgraded me. During my stay in New York, I had to change my return fight twice -they were great about doing this and there was no need for me to explain the situation again.
Unfortunately, my mother died and my husband had to fly out to be with me at the funeral. He rang the call centre to book the flight but wasn’t staying over a Saturday night, so the flight would have been astronomically expensive. They said they would charge him the lower cost if he supplied a death certificate when he got back to the UK.
When we arrived at check in for our flight home to London three hours before our flight was due to leave, the check-in staff then asked if we would like to leave on the earlier flight, so they walked us from the check-in desk directly onto our plane and upgraded us.
At each of these stages in both countries, the whole thing was seamless and all people involved knew of the circumstances behind our trip, and treated us with the utmost empathy in what was an extremely emotionally difficult time. Can you imagine the impact this has had on me as a customer and how engaged I feel with the Virgin Atlantic brand, even today?
- By creating an atmosphere where collaboration, teamwork, trust and open communication are encouraged. Developing cross-functional teams is a great way to make this happen. By bringing together people from all relevant points of view, levels, divisions and locations,who are committed to changing the way their organisation operates and hold set regular meetings. And encourage group members to network and communicate outside of these meetings and, more importantly, filter messages about the group’s activities to others in their own divisions or offices.
Ensure you include key players on it, because if they are left out they can block change. Include skilled managers and leaders who can drive the change process and ensure you have backing from top management to give the decisions made by the group credibility and the remit to take the appropriate actions.
LEGO is a great example of this in practice, where customer service advisors are also members of new product design teams. It is not often that someone from the contact centre is able to bring the voice of the customer into this process.
- By getting people to see things from other perspectives. This can be done by rotating personnel in various jobs around the organisation. Invite managers from other areas of the organisation to visit your team meetings, even making them members of the group, as you work on mutually beneficial efforts.
At Tesco, senior management spend two weeks per year working on the shop floor to see what actually goes on and build direct relationships with customers and shop staff. And at Dyson, the first thing you do when you start working there is to build a vacuum cleaner.
- Connecting all your touch points and channels, to enable all the people who come into contact with customers to have accurate, timely and relevant information about the customers so that they can make the right decision, at the right time, in the right channel. It is only by having integrated channels that you get a complete customer picture and can communicate with them in one voice.
John Lewis Partnership has shown how to create a seamless customer experience across in-store and online channels, using each to complement the other – omnichannel. They know that about 60% of their customers buy both online and in shops so they adopted an approach to make it absolutely seamless for customers to move from one to the other. John Lewis’s became channel agnostic, so customers can research in one place and shop in the other; they can buy in one place and pick up in the other. They also have a transactional mobile site and mobile apps that enable customers to scan QR and barcodes of products in-store and order via the mobile site if they’re out of stock. This has helped John Lewis grow by over 9% against a background of the UK’s worst retail recession in living memory.
- Reward collaboration
If your reward system rewards individual achievement, change it to reward collaborative performance as well. Recognise and reward people who work across organisational boundaries and share their stories to the whole organisation.
- Finally, to make this really stick, you need to change the way you measure success and align KPIs across the entire organisation enabling you to drive the right behaviours. We all know that what gets measured matters, so if every employee and manager gets measured, rewarded and bonused on delivering successful customer outcomes, it will focus the mind.
Again at Lego, everyone is bonused on the NPS scores the company receives from the CEO to the customer service associates. And John Lewis ensures that employee satisfaction and customer satisfaction are inextricably linked. Last year all its 84,700 staff reaped an additional 17% bonus, worth nine weeks’ pay – from the CEO to the man who washes dishes in the café.
The work that it will take to break down your existing silos isn’t going to be easy, but it is necessary in the long term if your organisation wants to stay competitive and profitable.
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