Breaking Down Silos to Create Greater Value

Silos exist throughout the organization and they impede the organization in many ways. Organizations were historically set up along the so-called value chain. Each internal group was there to contribute to the overall value of the company. There were support functions --HR, technology, etc.-- and then there were functions that created and sold the products--inbound logistics, R&D, outbound logistics, marketing, sales. The structure of the value chain as it appears in textbooks has virtical bands--silos for each function. They were to do their thing and then hand it off.

Companies do not work this way anymore, at least not the efficient one. It is time to turn the value chain horizontally. Companies should focus on the value they are trying to create externally. They have many stakeholders--customers, employees, investors, and others. Why not ask the internal organization to come up with integrated, consistent plans and actions for each of these stakeholder groups? It would not be appropriate to have a customer program from PR, marketing, sales, etc. They would have to develop it in harmony. Similarly, there would be one organizational plan for investors, employees, government, etc.

If the organization incentivized integration and penalized silos, it would soon find that the traditional silos would begin to break down. Granted, each of these activities would need an expert steward (marketing, communications, finance, etc.), but the concept of “ownership” within an organization would begin to unravel.

What this would mean is that everyone would really need to fully understand what he/she did to add value and stop arguing over small bits of turf that may be intellectually interesting and functionally relevant, but add little value to the organization. Those who knew their stuff the best and had the best ideas would win, not just those who were appointed kings of a function.

When I was at Nortel, I headed both marketing and communications. I had a VP of Advertising who, as one would imagine, wanted to talk about advertising. I changed his title to VP, Customer Relations. His plans almost immediately changed. We gave prominence to those who headed Customer, Employee, Investor and Government activities. We asked all of the other communicators, trade events people, etc., to work with these VPs of major stakeholders to support them. The media were seen by us as being vehicles, not a key stakeholder. It was one small start to what we did throughout the company. Many in my organization argued that I was killing traditional PR; others said I was killing traditional marketing. Clearly I was. That was the intent.

In much of my work now with companies, I attempt this conversion through “Stakeholder Relations Councils”, bringing together all of the relevant functions to work together to integrate strategy with brand to engage the organization and enhance reputation.