Does your organization ever approach the same customer from two different divisions, or with separate product sales teams? Many large companies are matrixed with lines or businesses that create “silo behaviors.” These client issues are compounded by an internal compensation structure that reinforces separate customer approaches, rather than rewarding collaboration.
Working at cross purposes
A few years ago I worked with a multinational organization with four lines of business. The primary goal of the regional CEO was to grow sales in the region. This required him to align the goals of each business unit. All four lines had client contact and often called on the same customers. Customers were confused, opening up opportunities for competitors. Internally, there were duplicative efforts and process inefficiencies.
These issues were not unknown to the regional executive team, yet they struggled with how to fix the issues for clients. They knew there was a real cost, in terms of clients and revenue, but many thought there was little room to negotiate on how to best serve the client. The reward and compensation structure was something out of their control, right? Not quite.
Seeing the true picture
Rather than wait for the “powers that be” to fix the structural and reward and compensation issue, this regional team decided to figure it out for themselves. Stop At Nothing facilitated an offsite with the Regional CEO and his leadership team to help align and determine how the team could empower themselves, without waiting for headquarters to act.
We began with these four steps:
1. Identify the silo behaviors and impacts, on both the systemic and interpersonal levels. The need was to get specific, and understand at a deep level what the structural impediments were, what behaviors created silos, and how the structure and behaviors played out, both for the customer and internally.
2. Align around common goals. They collectively and transparently identified the individual goals of each business unit, and reviewed what it would take to create a customer strategy where the customer would win, the region would win, and the business unit would win. This meant some give and take.
3. Be transparent about internal challenges. Honest conversations about the issues and the impacts promoted a level of trust not previously experienced by this team.
4. Upstream the buy-in. The CEO and business units knew they needed buy-in from their individual business unit lines before going up to headquarters. They developed a strategic process to communicate what the region was doing and how each business unit would win while delivering exceptional customer service.
“Silos exist in structures. But they exist in our minds and social groups too. Silos breed tribalism. But they can also go hand in hand with tunnel vision.” –Gillian Tett, The Silo Effect: The Peril of Expertise and the Promise of Breaking Down Barriers
Recognizing what can be controlled: Did they want to work in silos or did they want to collaborate?
Through this effort, the executive team recognized they had some local control. Furthermore, they realized that they determined how work got done.
As they began to look at how best to serve the client, the executive team determined that they didn’t need to go all the way to headquarters to modify their recommendations for individual incentives or bonuses. They could still play by the structural rules, but by emphasizing collaboration they found ways to incentivize cross-team, customer-centric behavior.
The regional executive team established cross-functional, customer-centric sales teams. Additionally, they established a resolution team. When a client issue arose, they escalated the issue to the resolution team who would help determine what service(s) would best fit the client’s needs.
Before and after: framing the costs and benefits
An important step was to measure the opportunity cost of working in silos compared with the cost of incentives, including bonuses, to collaborate across organizational lines.
For comparison, team members first documented instances of “business as usual”-absent cross-teaming and collaboration efforts. They recorded precisely what services they provided clients and how much revenue those services generated.
Second, they demonstrated what happens to revenue when the region adopts a collaborative, client-centric approach. This meant that, at times, one line of business might need to “give-up” a client for the greater good because that client would be better served by another part of the organization. The team found this process extremely difficult to administer, especially when client-facing employees are incentivized to undertake individual rather than collaborative efforts. But they adopted this strategy anyway and did so for six months.
Higher level recognition and results
The overall region turned in higher than expected results, measuring the four lines of business combined. In addition, customers appreciated the collective approach that allowed for a more strategic, aligned focus on the customers’ needs. In the end, these leaders demonstrated to headquarters the true cost of operating in silos.
Because of the upstreaming communication strategy, and ensuring win-win across the business units, the headquarter level senior management decided to change the incentive structure for the entire company. This happened because this regional team helped the headquarters to:
1) Realize the cost to the business by failing to align the goals.
2) Recognize increased revenue generated by the “give and take” between the business units.
This transformation didn’t happen overnight. It took the regional team 18 months to fully influence headquarters. Had the regional executive team not aligned and collaborated, there would almost certainly have been no change at all.
Alignment and collaboration comes first.
The change to incentive occurred because of collaboration.
The regional executive team accepted accountability and, as a group, set up this new way of working. The key to their success was alignment and collaboration. The executive team did not need permission to align and collaborate. They didn’t need to wait for the structure to change to figure out how to solve the silo problem. They just needed to come together and talk it out. When they did, they found their solution.
When teams decide to align and collaborate, only then will the structural side of silos begin to collapse, those trapped inside the silos are then freed to behave as you would like them to.