Departmental silos will kill a companies’ competitiveness in the digital economy

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We have all experienced it – being transferred from one department to another, in banks, car manufacturers, retailers, insurance firms, airlines, Telco’s or any other company when we have a question or complaint. Chatbots can be even worse. Holding on and listening to elevator music is the worst.

To make matters worse, some staff even complain to customers that their company works the way it does.

Consumers are not interested in how a company “works”, they want their question answered, fast and accurately. I learnt this when I worked for a bank 30 years ago, yet it still prevails widely.

This is because of departmental silos.

This means that no single person takes responsibility or is empowered for addressing the actual needs of a customer. Whilst there are many reasons for silos, tradition being one, new companies simply accepting that their industry “works” in a certain way, business schools perpetuating this in their course design and people that are over-specialised and cannot relate to other people or departments.

Of course I know regulatory and governance processes complicates these processes, yet this remains the concern of the company, not the customer. Bank1One, the US bank once renowned for its customer service ethic, went so far, many years ago that they used triplicate documentation to follow-up on queries. This was long before systems could solve these problems.

This issue also permeates recruitment. I am told companies like Tesla and banks find it difficult to appoint people in Germany as many are so “indoctrinated” by their “industries” that any different way of thinking, is almost impossible for them. This makes it very difficult for growing companies as they often need to recruit from their traditional industry, even if they operate totally differently. It almost means we build “obsolescence” into our companies.

Yet, digital technology changes all of this, if designed and planned correctly. It does not happen by default or osmosis. It means planning around customer needs and whatever technology best addresses that in an integrated manner.

I do not see much evidence of this, we operate in silos and buy technology purely based upon silos.

I recall a senior executive at a global tobacco company telling me a years ago that the CTO and CMO never “talks”. When IT requests are received from marketing, it can entail 5000 individual requests, it is hardly prioritised or contextualised. When asked why so many as that requires huge resources, it leads to confrontation. At best, it leads to very long implementation times, just for marketing to say they are never prioritised. Marketers are simply not agile, with exceptions. Neither are many CTOs. This means many are not “ready” for change.

Clearly many marketers never dissect their customer journeys and the internal systems back-up required to deliver that. Similarly, many systems are bought by boards and CTOs, that bear no relationship back to the customer. One consumer deal with one company, across all touchpoints.

These issues perpetuate parity in companies.

Unless real time is spent – and all parties engaged – on how the design of the company matters when it solves customer needs, it is hard to be competitive in a manner that adds customer value. Value leads to margins, lack of value to discounts.

I was struck yesterday, by a move of global pharmaceutical company GSK, in how they decided to design their customer and marketing teams in multi-disciplinary fashion. The company restructured. This is off course like how the process of much lauded “design-thinking” works.

A large American airline once stated to a friend of mine, that they purchased 15 different CRM systems in 17 years (all motivated by new brand managers), none of these were ever implemented properly as staff changes meant every new staff member had his or her own favourite software supplier. I do not have to say anything more, these purchases have long-term impact in ongoing licensing fees and most importantly, not addressing the need they were meant to serve for customers. This means an enormous waste of money and an opportunity cost.

We all know how different departments in the same company may try to “sell” to us, even at times for services we already use!

Digital will change all of this, yet it requires thinking, strategy, cross-company people engagement and planning in traditional industries. It is not whether it will, all industries will be impacted, the worse will be those that remain siloed. As I stated in an article before, “step outside” of your industry and view your customers in a different way, as your industry itself may disappear in its current form. This is taking place in many traditional industries.

Digital technology is not siloed, the fact that data points can “talk” to one another and can aggregate and “machine learn” – let alone apply AI, means systems can solve customer problems fast and effectively with little human intervention. Yet, it must be planned that way.

One of the most under-stated benefits of the digital economy is the vertical integration of internal and external ecosystems. Amazon does not have to explain or have elaborate call centres, I have a problem, I state it online, my product is replaced, no questions asked.

I use a business bank, called Tide, where bookkeeping software is built into the bank itself. This means, my bank will, free of charge, give me a P&L statement, tax calculation and expense categorisation, without me having to do anything. The bank is designed around this.

All small fragments of competition take on the large companies. Eventually, customers think differently about their options. There is no point in talking customer-centricity if the company is not designed to deliver that.

Product or service design is how a company structures itself, resources itself and operates to solve customer needs. It is the overall experience the customer has when engaging with a brand and/ or a company. I was fortunate to work with companies that thought this way from the onset, OUTsurance, 20twenty online bank, BR!GHTROCK – these companies thought and did things differently.

Some may say it is easy to start that way, it is hard to change legacy systems and processes. Yet always remember it does not matter what you or I think, the best customers will go to a company that better satisfies their needs.

So, to be competitive in future, think before you act. Your systems can give you an advantage, yet only if it is experienced that way by customers. Before that, designed that way.

It is down to the simple question, “why” one product or service outperforms others. Competitive advantage unpacks customer needs and designs people and systems around that, across functional silos.

If you do not do this, you may just find your core customers defect at faster rates as more companies are designed in a “digital-first” manner. The fact that the top ten global companies are now all digital technology based, is simple proof of that.

Design your company to lead, not lag.

Please feel free to mail me any questions or viewpoints on [email protected]

For more information on Dr Thomas Brand, click here

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