Over the past few years most of the leading consulting firms have attempted to identify a hard core of reasons why transformations fail. It’s reassuring to note there has been consistency in their findings with around 25 reasons cropping up repeatedly. One of the more prominent of these has been organisational silos.
Something has to change
There’s no doubt we have to do something about the fact that 80% of transformations fail. In most cases this is terminal for the businesses concerned. Transformation has been taking, on average, around three years to execute. This doesn’t mean it’s a one-time project of course, it will always be a transition to a new paradigm where transformation is constant and on-going. In fact, what many consider to be “job done” is actually just the process of getting a business to the starting line.
Even this though, takes time, is expensive and often painful, although done the right way the pain and expense can be minimised. Nevertheless, if having dug deep into your pockets and weathered the storm you discover you are still not where you need to be, you’ll be fortunate if you still have the resources or even the will to do it all again. That’s why we are witnessing so many business failures.
Transformation is a bigger deal than you may think
Transformation is a fundamental change for any business. It’s not, as some business leaders seem to think the process of automating an existing model — that usually ends up with the business accelerating in entirely the wrong direction and ultimately hastens their demise — but a complete, ground up redesign of the business and organisational silos make progress in this respect almost impossible.
One of the things so many business leaders struggle with is the philosophical change transformation represents. Many of us have written about the issues traditional business leaders have with the culture change, but the digital world is absolutely a new paradigm and to survive we all have to re-think both our business models and our own preconceptions. For employees at every level of an organisation the struggle is often made tougher by one particular aspect of traditional management practice that is proving highly counter-productive in the new paradigm.
The importance of democratic and inclusive management
Many traditional businesses that think their management approach is democratic will probably have underlying command-and-control bias. It’s almost inescapable for traditionally trained managers and pretty well the norm in family and privately-owned and run businesses. That doesn’t mean corporates aren’t immune though. I see this all the time and have just encountered a large Portuguese conglomerate whose future is threatened by its organisational silos.
How organisational silos are created
In fact, team dynamics in successful new-era businesses couldn’t be more different to those of many pre-digital businesses. With digital technology setting a much faster pace, businesses have discovered that they can only keep up by harnessing the combined power of all their stakeholders. Traditional business, despite what they may believe, have always tended to operate by treating employees in particular as units that replicate actions dictated from the boardroom. I think there are few business leaders that would admit to this, but it’s true nonetheless. This practice imposes inefficiencies that are simply unsustainable in the new era, but it also leads to the creation of organisational silos which is a far more fundamental issue.
The silo thing usually starts in the boardroom where a business leader will encourage competition between the different departments represented around the table. This is a major factor in the stress and burn-out of many senior executives and is massively counter-productive for a number of reasons. It also sets a trend within the organisation. C-suite executives replicate this philosophy down through the hierarchy. We see departments pitched against each other and even individual employees encouraged to view their colleagues as a target or threat. If you don’t believe me, give a thought to how many businesses have managed their sales departments with targets, rewards and penalties, even if the latter of these is unspecified. Putting aside the fact that the role of what used to be sales people has changed immeasurable in the digital age, this is a sure-fire way to create organisational silos.
Don’t be deluded by short-term success
I know there will be senior sales people who will point to the positive effects of this kind of competition and there’s no doubt the approach has worked in the past. It may still be possible to gain some short-term benefit by pitching your sales teams against each other, but don’t be seduced by this delusion of success. In the new paradigm any positive effect will be short-lived and the organisational silos this creates will make even day-to-day progress sluggish and difficult. It is wholly incompatible with the agility typical of a digital-age business.
Don’t get me wrong. Friendly competition is fine, but when it escalates, especially when the business faces challenges, such as competitive disruption, it often extends to individual employees seeing colleagues as the enemy. That’s when a business starts to get into all kinds of problems. The most common outcome is departments and individuals avoiding facilitating their colleagues. This often even develops into a habit of obstructing them and their initiatives. I’ve seen culture like this bring businesses to a grinding halt and once ingrained, it’s hard to undo.
Success depends on unity
The route to success in the digital era depends on unifying your stakeholders rather than setting them against each other. The security of a tight-knit community appeals to our most powerful, primal instincts. It reduces individual stress, adds confidence and therefore contributes greatly to innovation and operational efficiency, none of which are possible when organisational silos exist.
There’s no doubt that every business has to transform and time is running out for those that aren’t already on the road. In fact, a business that hasn’t started their transformation already isn’t going to have the time enjoyed by their predecessors, to tackle the project. There simply aren’t three years remaining for an, as yet, untransformed business.
This means that to survive businesses that are only now embarking on their transformation journey have to move far quicker than those who have already been successful, but that’s not impossible. You only have to look at some of the transformations that have emerged from the Covid crisis to see how unnecessary a lot of the process and delays businesses assume are necessary are in fact just getting in the way of their success.
The power of brand communities
A key requirement of today’s leaders is to remove obstacles that hinder cooperation between employees and other stakeholders. In his book Cascades, Greg Satell reveals how social, military, political and business transformation over the centuries has only ever been successful when leaders have brought their stakeholders together in strong communities focussed on a single, clearly defined promise.
Where businesses are concerned these communities are brands. Brands have always been communities of people who share values and beliefs and a common objective. They have never been, as many people have believed, confined to elements like logos, culture and products or relationships between a business and its customers. Organisations may have been able to get by without understanding brands and how they work until now, but that just doesn’t cut it in the unforgiving digital paradigm.
Using brand communities to eliminate organisational silos
I introduce clients to my Brand Discovery programme and, applying this we work to define their brand in a unique brand model. The value of this process can’t be overstated. Working with senior executives, I witness their epiphany and adoption of a new management style more appropriate to business in the digital economy. Apart from all the other benefits derived from this process the brand model represents the essential foundation upon which to build a community.
Make no mistake, the process of community building requires skills, effort and a dedicated internal marketing campaign. You’ll use all the tools you might adopt for a marketing communications targeting customers, but directed inward. We commonly use Intranet, social media, events, incentives, gamification and on-line training programmes to attract and unify employees and other stakeholders.
Your campaign can be as complex or simple as you like or your budget allows. As with everything else, provided you know what you are doing, the more you invest the quicker you’ll see results, but it’s important to appreciate any other initiatives designed to develop and grow your business will be neutralised, at least to some extent, unless you first build your community. Trying to reduce investment in internal marketing is a false economy and will delay or even eliminate your chances of success.
Once you’ve eliminated organisation silos you can lead your community
Building your community is only the first step though. It takes enlightened leadership to leverage the tremendous power a brand community affords. Together with my specialist partners I mentor management teams as they gain the understanding and skills they need to fulfil their roles as leaders in a contemporary organisation.
Defining, building and leading a brand community in this way eliminates silos and removes the threat of counter-revolution that is so often the cause of transformation failure.
June 22, 2021