Best-selling author and entrepreneur Ricardo Semler identified the negative effects of industrial compartmentalization on the level of engagement of factory workers. However, by dividing the frontline operation into separate teams and departments, we’ve adopted a similar form of siloization and as a consequence led office workers to become disengaged as well.
6.1 - END THE TURF WARS
When interdepartmental turf wars obstruct the exchange of information, because of resentment and cynicism between teams, blocking cross-functional solutions and creating inefficiencies throughout, the business will fail in its mission.
Silos tend to obstruct effective communication between separate teams and departments, stall innovation, lower employee engagement, increase resistance to change, and thereby decrease operating performance.
6.2 - LACK OF EMPATHY AND COMMITMENT
Employee disengagement will result in a lack of empathy for and commitment to a customer’s cause. Departments and individual workers become self-centered, entrenching the silo effect, and inevitably hurting customer performance. This goes back to the business strategy: instead of trying to be the best, leading to machismo, tribalism, fragmentation, and friction, we should strive for uniqueness, appealing to our creativity and our sense of purpose and meaning.
JOHN P. KOTTER: OPTIMIZED FOR EFFICIENCY
John P. Kotter, Emeritus at Harvard Business School, stated that “Any company that has made it past the start-up stage is optimized for efficiency rather than for strategic agility—the ability to capitalize on opportunities and dodge threats with speed and assurance”.
While adding to it, “The very structure we have created to operate efficiently and effectively today gets in the way of what we need to do to innovate for tomorrow”, therefore, “Organizations need a ‘second operating system’ that works in tandem with the traditional hierarchy, the original “operating system” that the organization depends on to get day-to-day tasks completed and out the door.”
“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”
7.1 - INCREASE SIGNIFICANCE
To advance from a siloed to an integrated customer development process, we’re suggesting to build a bridge, a fourth department: Success. This department needs to be assigned with the task to pro-actively assist customers in achieving their objectives sooner, bringing them nearer to the company, and in the process increase the significance of future relationships.
7.2 - RETURNING CUSTOMERS
While it makes sense to want to create more one-off customers as part of a product-centric business model to increase market share, in most other cases ─ provided we want the business to be more profitable ─ we need customers to return more often and spend more money throughout the extended customer relationship.
Therefore, the focus should be on getting customers to return, or at least refer. There is a bonus: it is at least 5x times less expensive to retain a customer and get them to repurchase than it is to acquire a new customer.
7.3 - UNIFIED CUSTOMER PROFILE
To improve value creation and delivery each frontline employee should have access to a unified customer profile to be able to act on relevant emotions, intent, and desires. Customer feedback needs to be shared continuously, preferably at a weekly Customer Roundtable, to advance from a discrete to a collective sense of achievement.
7.4 - TRANSFORMING THE CULTURE
It would be naive to expect any organization to make an instant leap from a highly fragmented operation to a cross-functional, collaborative one. However, it can be done and it is worth the effort as silos stifle organizations, hamper innovation, and deprive stakeholders of its full potential.
"In order for collaboration to take place, managers must give up their silos and their perceptions of power."
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