Break Down the Silos Inside Companies

Companies continued to be siloed, depite the fact that this is counterproductive. Silos may be good ways to move information within an organization, but the infighting between silos in most companies gets in the way of real competitive advantage. Marketing, PR, advertising, sales, customer relations, etc. all remain in silos. Companies cannot afford this anymore, not only in terms of the costs of maintaining the silos and their inefficiencies, but also because it is ineffective in dealing with influencing customers and other stakeholders.

Silos create their own messages, their own organization, etc. They cost the company in many ways. Companies have customers, employees, investors, etc. Those are the important stakeholders for companies. Many companies, however, spend an enormous amount of time managing all the internal squabbles and turf wars rather than focusing on building value.

Look at the traditional value chain in text books. We have inbound logistics, outbound logistics, we have support functions, marketing, sales, etc. All of these are shown in vertical bands. Each is to work on their own activities and contribute to the value of the company. It has the right concept, but has been wrongly implemented in practice.

Some business strategists have been talking about "unbundling" the value chain. This is a means to turn the vertical silos into more horiziontal activities so that organizations inside the company work together toward common objectives. Marketing does not have domain over customers; the entire organization does. Finance is not responsibile for money; the entire organization should be financially oriented. We need stewards (experts) as the guides for each of these areas, but ownership should be done away with.

What if a company were to say the following? We have a number of stakeholders who create value for our company: employees, customers, investors, and others. We want a plan of how we can enhance customer value, investor value, employee value, etc. We do not want 3-4 plans from different functions, but rather one plan that is integrated and consistent. We will incentivize those who work collaboratively and penalize those who continue to want to hold onto their "sacred islands".

If CEOs demanded such an approach, the company would likely see people reaching out and working with others they have little or no incentive to work with currently. I tried a change like this within my piece of the pie at Nortel. Instead of having a VP of Advertising, the person became the VP of Customer Relations. It changed the nature of the activities from advertising to all of the things that were needed to enhance customer relations. It can work. What's stopping companies? What do other think about this?