Silo Saboteur: The Organizational Structure Destroying Your Brand Strategy
You’re losing valuable growth opportunities and have extreme difficulty building and effectively marketing the brands in your portfolio. If this sounds like a problem you’re facing, it could be the result of organizational silos sabotaging your brand and business strategy. What do you do? My study containing interviews with some 50 CMOs (as reported in the book Spanning Silos) provides some answers. But first, allow me to set the stage.
Autonomous organizational silos organized around products, countries or functions have been for a century the answer to managing complexity, keeping close to customers and products and holding managers accountable. However, silos no longer work because they:
- Create a branding mess. Silos often produce inconsistent visuals, debilitating marketplace confusion and a lack of an internal brand vision.
- Lack scale. Effective marketing these days often involves sponsorships, loyalty programs, promotions and advertising that is simply not effective or even feasible without scale.
- Lead to resource misallocation. The large mature silos absorb resources and the young growth businesses get starved.
- Inhibit silo-spanning offerings. Silos make it difficult to create silo-spanning offerings which differentiate and/or respond to consumer demand for system solutions versus individual components.
- Prohibit leveraging success. When a great product or marketing program is created, it is tragic to see it confined to a single silo unit. Firms are now recognizing that modification to the silo model is necessary. But what’s the better alternative? The collective insights and experiences of the 50 CMOs in the study resulted in two headlines.
Don’t Blow Up Silos
The goal shouldn’t be to blow up the silos by centralizing and standardizing, even though doing so may be part of the solution. Rather, the goal should be to replace competition and isolation6 with cooperation and communication. Anything that advances that goal, whether it be teams, common planning forms, enhancing the information system, cross-silo events, joint projects, or whatever, will be helpful. In some circumstances, an aggressive CMO change agent can centralize decision making. Almost always however, such action requires the involvement of a strong, respected CEO rectifying a crisis where the status quo is obviously not working. If either of these conditions are missing, such dramatic changes will lead to a flame-out and a CMO exit.
Assume Non-Threatening Roles
The CMO and central marketing group can be effective assets for reducing silo barriers when they assume non-threatening roles as facilitators, service suppliers and/or consultants. For example, the central marketing group at Nestle runs centers of excellence around topics which many silos share interests; such as, the Hispanic market, mom & kids and Wal-Mart. VISA acts as a consultant to the country silos when interpreting and taking action on tracking data.
The central marketing at BP is the go-to place for segmentation research which gets them to the silo strategy. Pogo said it well. “We have met the enemy and it is us.” Many firms have either failed to recognize the silo problem or flamed out in an attempt to address it. The good news is that there are approaches that work and firms that are seeing some success. For more detail see my book, Spanning Silos: The New CMO Imperative.