The Trouble With Silos
By Perry Rearick, Chief Editor, Follow Your Buyer
This article originally appeared on the Mungadai Marketing & Communications blog on August 8, 2019.
Silos are common features on the rural landscape of North America and provide the important function of storing feed for livestock. When harvested, fresh grain is fed into the tops and extracted from the bottoms when needed. Unimpeded movement of the stored grain is essential to their proper operation.
However, they don’t always work as intended. When the contents remain dormant too long, grain can stick to the insides of the silos and build-up at the base, creating ratholes and bridges, and preventing extraction.
WHEN SILOS APPEAR IN BUSINESS ORGANIZATIONS.
Silos, when used to describe organizations, are often a negative characteristic, meaning that different teams are not working together or communicating effectively. When you think about it though, silos alone are not a problem. Not every bit of information associated with any one department needs to be known by all other departments. Does research and development need to know who the accounting department invoiced in the past 30 days? Probably not. However, R&D would be interested to know that customers are not paying their invoices on time and spending cuts that will impact their operating budget are being considered by senior leadership.
This example is overly simple and not too common. However, two departments that can create harm to a business when plagued with information ratholes and bridges are marketing and sales. Sadly, ineffective communication between these two is common.
WHEN MARKETING AND SALES OPERATE IN SILOS.
I recall a meeting with a client who produced capital equipment for manufacturing. When asked how business was going, the VP of marketing crowed that they were achieving double-digit growth. I followed up by asking him to qualify what that meant for the company—were they planning a celebration? His disposition changed immediately as he described that the equipment orders they were receiving required such quick delivery that they had to ship large pieces of equipment by the most expensive means. The costs associated with delivery nearly erased their profits.
The VP of sales was thrilled with the growth in sales as well and attributed it to a high demand for manufacturing equipment from a specific market segment. However, she said there was a growing tension between her and the production team who were working at capacity, seven days a week. Safety violations on the production floor were on the increase and senior executives were concerned. The slim profit margins would not allow investment in additional hiring or much-needed facility expansion.
Business was, in fact, not good. They were selling more than they did the previous year, but their profit margins were less than 2%, and anxiety was high.
As we reviewed their advertising efforts, I highlighted that while they appeared to be getting interest from people with whom they wanted to do business, 100% of their marketing and advertising material was targeting the end of the buyer’s journey. Their leads were ready to buy now, but the sales team wanted prospects looking to purchase in 9-12 months. While both marketing and sales had participated in the annual planning session, critical information on the buyer’s journey, sales process and content strategy was not shared across the two departments.
SOLUTIONS FOR STOPPED-UP SILOES.
When grain in farm silos stops flowing freely, large portions of a harvested grain can be lost and the health of livestock is at risk. One of the solutions includes removing as much material as possible then lowering a person into the silo to physically break up the clumping material. The business process associated with this analogy is not pretty. Thankfully, there are more appealing options.
One solution for the equipment manufacturing company example is to establish a single position that is responsible for both marketing and sales. The person responsible for driving sales is also responsible for developing the marketing plan. The challenge is finding someone who possesses both sets of required skills. If able to find this individual, the results can be great.
Another approach is a functional reorganization and may be more suitable for companies with multiple product groups that could operate independently. Rather than an organization with two separate silos—marketing and sales—each reporting to a senior executive, the organization can be structured around smaller marketing and sales teams aligned with specific products or market segments. This has the potential of creating cohesive, agile teams with highly effective functional integration.
There are challenging features to this organizational structure. It requires mature senior managers who are skilled in leading decentralized teams in an environment in which they cannot direct each tactical activity. These are leaders who are comfortable in establishing realistic, mutually supporting outcomes, offering direction when needed, but not necessarily the how’s of achieving success. Additionally, finding people with the skills and mapping required to effectively serve on a cross-functional team can be challenging.
IMPROVING CROSS-FUNCTIONAL COMMUNICATIONS.
No one gets excited about adding another meeting to their schedule, but the right kind can offer immediate improvement if you suspect important information is getting trapped in your separate marketing and sales silos. Applying the five W’s to a coordination meeting-model can help reduce information stoppages and can encourage initiative from your teams to keep critical information flowing.
WHY?
The purpose of this meeting is to integrate the actions of two functional groups for single business outcomes, plan and track mutually supporting efforts, and improve overall communications.
WHAT?
The agenda has three components:
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A brief summary of marketing and sales actions from the previous week and the results if known, delivered by each person performing the action.
E.g. marketing states that an ad introducing their newest product ran in a specific industry magazine the previous week and sales representatives conclude that they will add it to their discussion points with customers. -
Review actions planned for the next week, again, delivered by the person who is responsible for the action.
E.g. marketing announces that the president will be published in a digital newsletter on Thursday and includes the article topic. The sales team already planned a contact list for sharing based on customer interests in the topic, confirmation of publishing allows them to execute. -
Review actions that should be planned for approximately 6 weeks in the future: the future window of time could be adjusted based on your organization’s required planning timelines.
E.g. sales is approved to attend a trade show that was not on the annual calendar and will need marketing collateral for the newest product. Since it was not on the annual calendar, a marketing leader is assigned the task and a separate coordination meeting is set by the marketing project leader and those attending the trade show.
*The value of this agenda is that it stimulates coordination by having each responsible member of the team speak about what they did, or plan to do. The meeting leader must be able to stimulate the sharing of information that is valuable to all.
WHO?
All members of your sales and marketing teams. If this group is just too big, the meetings could be organized by product sets or geographic target markets, if appropriate. Attendee list and organization should be aligned with achieving the outcomes of the meeting.
WHERE?
Meeting location should have visible tracking systems, e.g. dry erase boards or T.V. screen, large enough and positioned for all attendees to see. For this meeting, one doesn’t want all attendees seated and staring at a spreadsheet on their computer screens or mobile phones. Again, it is intended to stimulate communication and coordination.
WHEN?
This should be integrated into a business’ standard weekly work rhythm. The day of the week matters less than giving the attendees the opportunity to be organized and have the material they need. E.g. if marketing conducts an assignments meeting each Monday morning, this coordination meeting should not be scheduled before it.
I’ve never been part of an organization that didn’t experience some level of dysfunction as a direct result of teams and information being siloed. As a leader you can assume it exists in your organization. Consider where it likely resides, confirm its existence, and try one or more of the ideas offered above.