Silo-ization: The Silent Killer of Profitability and Growth

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Steve Jobs rejoined Apple in 1997 and immediately destroyed company barriers, most product lines, and egos. He even allowed product managers to cannibalize other Apple products to make new ones because he said if Apple doesn’t do it, other companies will!  This is why Apple invented the iPod and Sony did not. 

He knew the secret to protecting Apple’s market leadership was to keep ahead of the curve even at the potential risk of competing with an existing Apple product.  This unification saved Apple.

Why are so many companies delaying unifying the sales and marketing silos? 

Let’s face it; people don’t like change.  They become comfortable with the current situation.  They justify the status quo by citing conventional wisdom and tradition.  But rigorously following tradition means abandoning innovation, and conventional wisdom is often wrong.  For example, contrary to conventional wisdom in the B2B world, sales and marketing very often operate at cross purposes. This is catastrophic for the organization. It prevents profitable revenue growth and endangers a company’s very existence.

“The world we have created is a product of our own thinking. It cannot be changed without changing our thinking.”  Albert Einstein

“Silo-ization” is a manifestation of a bigger problem! 

The true cause of silo-ization is whether you have present-minded management or future-minded management. In other words, do you operate in a mode of short-term results or long-term profitability and growth? 

In reading Lou Gerstner’s “Who says elephants can’t dance?” he shared how IBM was saved from bankruptcy by saving them from themselves. IBM was addicted to silo-ization. He stripped the separate business units of their autonomy and power. He then unified them into a common-goal system where everyone’s success or failure depended on the others who were not directly part of their department.  Silo-ization was caused by people who were more committed to their power and position, then to the organization’s health and future.

This is not an isolated case. This is where even the biggest companies fail! They discourage intercompany cooperation or pollination, and will even punish employees that attempt it. They do not encourage their employees or unit managers to share data and ideas across business lines. Customers are never really shared within this system, nor insights about them.

“No matter how elegant your strategy, occasionally you should consider the results.” – Winston Churchill

Unifying Sales and Marketing: Do the math

Marketing usually focuses on strategy & industry, whereas Sales focuses on tactics & execution. The combining of these two, into a single strategy, can not only save money, each dollar spent becomes a measurable investment in growing the customer portfolio. 

Case Study – A familiar story

This company was a pioneer in database server technology.  The product was the first to integrate hardware and software to provide extremely high-performance database processing.  

The Marketing department, or Silo “A”, viewed the product through the hardware lens.  As a result, they focused on the OEM / VAR industry markets, where the driving metric was price/performance. 

“Silo B,” the Sales department, viewed the product through the software lens.  They focused on the end-user and high-volume transaction processing markets. They were selling solutions to a critical bottleneck problem.

By ignoring each other, sales focused on the end-user and problem solving and marketing focused on price and product performance.  As a result, all the marketing materials generated were virtually useless for the sales organization. Sales needed marketing to expand the end-user market’s awareness that a solution to these very serious limitations of existing technologies was indeed available.  

But that did not happen

Instead, based on a study of current industry price/performance curves, marketing concluded that price decreases of 50% to 60% were necessary to bring the company’s products in line with industry standards.   This strategy was implemented by the product managers in spite of the fact that the sales organization was encountering virtually no price resistance from the customer base.

How many times have companies overreacted to poor sales by dropping their price?

This company not only did not increase sales, but they also slashed their profit per sale in half because of the overactive price reduction. This company was working overtime to implode!

What should have happened?

Sales and Marketing should have collaborated to create an ROI-driven strategy to meet the real needs of a profitable customer.  Targeting the right prospect with the right solution and at the right price and timing is the foundation necessary for sustainable growth and profitability; and can only be laid by the collaboration of these two business units.

“None of us is as smart as all of us”  — Ken Blanchard

Unifying Sales and Marketing is the key to profitability and best practices!

Creating and pursuing common goals will generate best practices in many departments. The product people, sales, marketing, accounting, customer service, and other divisions work together. This open system encourages communication, collaboration, openness, and honesty through intensive problem-solving sessions. This will result in the creation of a unified sales and marketing system that reaches common goals much quicker and less expensively.  Jack Welch created GE University for the very purpose of sharing knowledge and experience across company lines and brands.

“Everyone thinks of changing the world.  No one thinks of changing themselves.”  — Leo Tolstoy

Getting Started…

The unification process starts with an audit of both departments that begins with an internal roundtable that includes the sales, marketing, product, finance, and other key players.  The team of Samurai Business Group and Sales Overlays can facilitate this process and help you navigate the political and organizational issues that are certain to be encountered as you break down the silos and recast the company into an open and team-oriented operation.  Once the unification plan has been developed, our team can assist you in implementing it and monitoring and benchmarking your progress.

It’s all about money.

But it’s not about spending more; it is about investing it more wisely, so it can generate a greater return and position the company to dominate its markets.  The question is not whether you can afford to make the change. The question is whether you can afford not to.

Contact Samurai Business Group today to help increase company growth and profitability.

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