It’s a cautionary tale. 14th November 1999, and audience members in the Venetian ballroom at the Sands Expo and Convention Centre in Las Vegas wait with bated breath as Sony’s esteemed CEO, Nobuyuki Idei, prepares to make an announcement that will shake up the music industry.
So long seen as the forerunner in consumer electronics, Sony was unveiling a new Walkman. Except this time it was doing away with its steadfast formats – cassettes and CDs. The Walkman was going digital.
Just a few months after the first MP3 player came into existence and two years before the iPod’s initial release, this was proof that Sony was ready to adapt for the age of the internet, and continue to lead from the front.
Idei revealed the new device. The Sony Memory Stick Walkman. The crowd cheered. Then he revealed another version, for different formats. The Vaio MusicClip. The crowd cheered, but with a little less enthusiasm. Later, Sony was to reveal another – the Network Walkman. The company was releasing three versions of the same thing.
“By the standards of normal corporate strategy, this was profoundly odd,” says Gillian Tett, in her seminal 2015 book, The Silo Effect. “When consumer companies unveil new products, they tend to keep the presentation simple, to avoid confusing customers (or their own salespeople).”
And the reason Sony dropped the ball, says Tett?
“It was beset with silos: different departments of the giant Sony empire had each developed their own, different digital music devices.
“None of these departments, or silos, was able to collaborate with each other, or agree on a single product approach. The different digital Walkman products thus competed with each other, and cannibalised each other. That, in turn, made the products far weaker than anything Sony had produced before: they had none of the dazzle, confidence or sense of dominance that the original Walkman had displayed.”
Operational scars
Fast-forward to 2016, and in an age where customer experience is widely regarded as the chief battleground for most businesses, this type of story appears with increasing regularity.
The whitepaper “Why Silos Damage Customer Experience”, from Amy Scott, director of Sedulous Consulting, found that silo mentality is the biggest organisational hurdle to improving customer experience. Crucially, 41% of customer experience professionals state that ‘operational’ silos are a significant barrier to providing a seamless customer experience.
So what are operational silos, and why do they have such an impact on the delivery of customer experience? Huddle offers the following definition:
“An operational silo is a term used to describe any process, business unit, management style, or even employee who cannot or does not interact with any other process, system or employee. This sort of behaviour can happen innocently or through political machinations, by design or by design flaw, but whatever the case it is bad for business.”
41% of customer experience professionals state that ‘operational’ silos are a significant barrier to providing a seamless customer experience.
As in the Sony example, this lack of interaction between departments and employees can easily manifest into business decisions that are detrimental to customer experience.
“Operational silos encourage behaviour that is beneficial to those within the silo but often not in the best interests of the organisation as a whole—or of customers,” says Tim Pickard, CMO, Egress Software.
“As a result, office politics develop, as the teams and departments compete more with each other than they do with competitors. Collaboration becomes a rarity, decision-making becomes poor, and teams become inward-looking.”
The problem, according to Why Silos Damage Customer Experience, is that 70% of companies are “a long way from having integrated channels and a complete customer picture”—let alone being able to speak to customers in one voice across multiple channels and departments.
38% state that one of the three biggest hurdles for delivering a great customer experience is the complexity of the modern customer—for instance, the growing number of touch points; and 34% state that difficulty unifying different sources of customer data is one of the main stumbling blocks for delivering a good customer experience. With restrictive, operational silos in place, none of these hurdles can be overcome.
“The impact of each department within an enterprise on overall customer experience is often neglected and poorly understood,” says Gregory Yankelovich of Customer Experience IQ. “While each one has established metrics to measure its performance, only customer service and support departments are obsessed with measuring customer satisfaction.”
The issue, Yankelovich explains, is an age-old one – the bigger a business gets, the further away its staff feel they are from the customer. The difference between now and yesteryear is that, increasingly, customers are expecting that ‘local greengrocer’ feel from every business, regardless of its size or the channel they choose to interact on:
“Once or twice a week I frequent a funky coffee shop (French Hotel), in the heart of Berkeley’s Gourmet Ghetto. The other day I was standing in line to order my cappuccino, ready to give a barista my order. Before I had a chance to open my mouth, the barista gave me a cup made up exactly the way I usually order: with a smile and “hello”, and “how are you doing” to follow. This kind of experience you can only get in a place where the same 2-3 people work all the time and a transaction is very simple. Can it be re-created in a place like, say, Starbucks? Best Buy? Comcast?
“The technologies capable to create such a transformation have been available for over two decades. The enterprise culture, designed for unlimited scaling, did not find the motivation to leverage technology for re-focusing itself on its customers. It has used these technologies to reduce the costs of doing business instead. Operational silos bring efficiencies to operations, but they also create a broken view of the customer, as each silo has its own perspective on how a customer looks. To make it worse each department thinks that their perspective is the complete and accurate picture.”
And, as Yankelovich adds, even customer service departments are prone to an ‘operational silo mentality’:
1. Their obsession is not about holistic customer experience, but about customer satisfaction with customer service.
2. Their operational KPIs are often cost efficiency focused, and in direct conflict with customer experience goals.
No real fix
So how does an organisation create a workflow that allows for this complete picture of the customer, and for all employees to work fluidly towards improving CX?
“It’s about establishing an internal service dynamic,” says customer experience author and consultant, Adrian Swinscoe.
“There’s no such thing as physically pinpointing operational silos in your business. You need to find a way of establishing why everyone’s role is related to the customer. You also need to encourage interaction to flow across the business. If you’re in a call centre role and you’re suddenly getting a flurry of calls about a certain problem, what mechanisms do you have for flagging that to different areas of the business? If you’re a department head, are you empowered to work with other departments? If you’re the CEO, are you fostering a collaborative environment?”
In Why Silos Damage Customer Experience, Amy Scott says businesses should consider the following steps:
- Focus on the customer. “You must bring people together so they begin to understand the inter-dependencies between departments and the impact it has on customers. It is by bringing the outside in and sharing customer feedback throughout the entire organisation that people begin to see the effect their behaviour has played in the customer’s perception of their organisation. But whatever you do, it must not be a blame game, but something proactive and positive which brings people together as one unit – not something that creates further divisions. You need to frame the changes into something that creates positive action.”
- Share information. “This will discourage information hoarding and improve collaboration. If you frame the need to do this as a positive opportunity.”
- Develop cross-functional teams. “By bringing together people from all relevant points of view, levels, divisions and locations, who are committed to changing the way their organisation operates and hold set regular meetings. And encourage group members to network and communicate outside of these meetings and, more importantly, filter messages about the group’s activities to others in their own divisions or offices.”
- Get people to see things from other peoples’ perspective. “This can be done by rotating personnel in various jobs around the organisation. Invite managers from other areas of the organisation to visit your team meetings, even making them members of the group, as you work on mutually beneficial efforts.”
- Ensure senior leaders see things from the customer’s view. Encourage leaders to buy a product or use a service across different channels. Or make an enquiry or complaint. “This will give you an added insight as to how customers are impacted by silos along their journey and provide a real impetus to improve things.”
- Create a programme for connecting all your touch points and channels. “To enable all the people who come into contact with customers to have accurate, timely and relevant information about the customers so that they can make the right decision, at the right time, in the right channel. It is only by having integrated channels that you get a complete customer picture and can communicate with them in one voice.”
- Reward collaboration. “Recognise and reward people who work across organisational boundaries and share their stories to the whole organisation.”
- Change the way you measure success and align KPIs. “We all know that what gets measured matters, so if every employee and manager gets measured, rewarded and bonused on delivering successful customer outcomes, it will focus the mind.”
For Sony, the road from that infamous Walkman launch has been a treacherous one. In the mid- 2000s, the company was forced to accept that its role as a consumer electronics leader had diminished. Yet, in doing so, it took stock, established what it was Sony was still renowned for (PlayStation, mostly) and simplified its business process to ensure operational silos weren’t allowed to get in the way again. In the last three months of 2015, the company made $1 billion profit off $21.5 billion in revenue. And according to The Verge’s Vlad Savov, has almost entirely done away with major product launches too.
