January 01, 2020

Silos

I was at Nordstrom, back in 2006. There was a sales rep from Forrester Research. He wanted Nordstrom to be part of some omnichannel cross-brand team. He also wanted Nordstrom to execute omnichannel strategies. So he called me. And I told him I had no interest in doing things that benefited him. He called my boss. My boss called me. I told my boss I had no interest.

Turns out he called about everybody until he found a live one ... a Director in IT bit on his request, and she put all of the "silos" together and the Forrester sales rep began his process of pushing Nordstrom in the direction he wanted Nordstrom to go. He talked about how important omnichannel strategy was going to be, and he talked about how destructive silos were in a world where omnichannel strategy required strong collaboration and centralized decision making.

The vendor community hates silos. 

The vendor community loves centralization. And for good reason. It's easy to sell into a centralized organization. It's much easier to get change to happen when you only have to deal with a handful of decision makers.

As a result, you constantly read ... from researchers, from trade journalists, from vendors, from thought leaders, from consultants ... about the importance of tearing down silos.

What about within a company?

Silos are critically necessary within a company. Do you want a centralized team implementing new ideas? Never. You'll never get good new ideas if everything is centralized. When I worked at Eddie Bauer, they were owned by Spiegel. Spiegel was owned by Otto Versand. That company had an "Office of the Controller" ... and that "office" controlled things. Easy to sell into ... hard to innovate unless it's the kind of innovation that vendors and the "Office of the Controller" agree to.

At some point, innovation needs to be integrated with the business. But it needs to be done the "right" way. Retailers spent a decade integrating e-commerce in an "omnichannel environment" and it was not the right decision. That's a huge risk associated with integrating business units and tearing down silos ... do it wrong and you implode the business while missing out on the future. Ask any large retailer struggling today if they feel happy with their decision to integrate channels?

There's another reason silos exist.

Silos exist because people don't get along.

When a vendor demands that silos be torn down, ask the vendor if they have any silos in their business? They do. And they have them for the same reasons you have them. People don't get along. Somebody has a product, and somebody wants that product to change or innovate and those holding the keys say "no" and so a new group creates a new product. Sales teams promise things that the core business cannot deliver, so the sales team works with a rogue team to create a product that the sales team promised would be available.

The issue isn't silos.

The issue is "do people get along"??

When a cataloger grumbles that the e-commerce team operate in their own silo, this happens for a reason. Somewhere in the history of the company, the e-commerce team were set on their own to do things without interference. And somewhere in "more recent history", somebody wanted to integrate that team with the core business and if that was something that everybody could agree upon it would have happened. But somebody didn't like somebody else, somebody on the e-commerce team didn't want to be controlled by an old-school marketer, and so you keep the silo intact. If people could get along? Different story, right?

So we have a fine line to walk ... too much integration and too few silos and you have a centralized and unimaginative brand. Too many silos can be the outcome of people not getting along. Somewhere in-between you have the right mix of innovation and centralization. That's what we have to find ... the right mix.

Silos aren't the problem. We're the problem.

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