What do Midwestern farmers and communicators have in common? They probably have to work with silos. A silo is a useful, but dangerous, place for a farmer; while it stores
thousands of pounds of grain, it can also explode in some circumstances. For a communicator working in a company full of silos - departmental fiefdoms that operate as autonomously
as possible - the silo mentality represents a serious barrier to effective corporate communication. Different divisions may have their own ideas about what their company stands
for and how the core philosophy should be communicated. And division leaders may butt heads over strategy and message, with ripples of confusion and conflict spreading downward
among all employees.
But changing these patterns - breaking into the silos and setting up coordinated communications strategies - can happen, by convincing silo defenders that the company as
a whole will benefit from a unified approach, and that employees will be rewarded when they look out for the company's best interests, not just their department's. That was the
hypothesis, backed up by three real-world examples, presented at the 2000 IABC International Conference in Vancouver, B.C. on June 27.
Problems in Common
There are several characteristics that mark the "siloed organization," according to David Moorcroft, VP of public affairs & corporate communications at Royal Bank of
Canada. Siloed organizations tend to have highly decentralized, autonomous units, with a variety of business lines in numerous locations. They then support multiple communications
structures across the silos (marketing, advertising, Web sites, employee communications) in these situations. There is little or no integration of communication across business
lines. Corporate leaders do not establish a shared message, but allow each silo to dictate its own message strategy.
Moorcroft and co-presenter Tudor Williams, president of the eponymous communications management consulting firm, looked at three companies - Royal Bank Financial Group,
Hewlett-Packard Co., and Nortel Networks. Each of the companies has 50,000 or more employees, multiple offices in countries all over the world, and a multiplicity of brands. In
all three cases, rapid growth and/or acquisition facilitated the creation of the silos. Corporate leaders, anxious to minimize disruption and turnover, let each side retain its
own cultures and infrastructure. Not surprisingly, all three companies developed common problems, from brand dilution to internal competition for customers to contradictions
between messages and leadership behaviors. It takes time for the negative consequences - cost, confusion, internal competition - to be discovered, Williams said.
Companies allow silos to grow, in part because they are seen as orderly, he noted. But another reason that silos remain is one that business communicators are all too familiar
with. "There's the old phenomenon that 'information is power and therefore I must control it.'"
Breaking Down the Walls
Companies only begin to confront the consequences of allowing silos when the silos begin to take a toll on operations in some way, Moorcroft said. "It takes something
[significant] to change - the company runs into a challenge, e.g., customer satisfaction is down. Or companies decide to look at silo-busting when they have a cost-control program
under way." Royal Bank Financial Group finally tackled its silo problem when research showed that the organization's lion insignia is the second most-recognized commercial image
in Canada. Despite this knowledge, the company did not have a coherent strategy to make use of it. Moorcroft used the company's budget process to identify all the ways Royal Bank
was spending money on communications, and convinced management there was a more cost-effective way that also would strengthen the company's overall brand message.
For HP, the entry of a new CEO - Carleton "Carly" Fiorina, in July 1999 - galvanized the company into addressing its fractured image. At the time, the company was seen as an
amalgamation of smaller businesses (retail vs. b-to-b, consumer vs. industrial, products vs. research) loosely held together by a corporate structure. The company had never had an
identity as a single entity, a single brand. HP elected to hold the "Brand Jam," launching an integrated, centralized marketing and corporate communications strategy, with Fiorina
in the lead, reminding employees of the company's entrepreneurial, almost missionary-like roots, and encouraging them to buy into that purpose all over again.
Nortel dismantled its silos as it was seeking ways to exploit the new technology it was developing. The key was making sure employees and customers both got the same messages.
The company used "Come Together," the Beatles song, to sum up the internal message that the divisions had a responsibility to work closely and pull in the same direction, toward
sharing the benefits of the company's technology with its customers.
All three companies focused on how the customer views the organization as a whole, then, based on the customer's vision, they established a common set of values and principles
for their organizations. The intention was to provide a consistent customer experience regardless of which part of the company was doing business, thus building on brand identity
in an accessible fashion.
In each case, doing this meant taking steps to centralize communications responsibilities. At Royal Bank, Moorcroft likened it to creating an agency within the company - the
communications headquarters reports to corporate management, while it assigns staff to support the different business divisions. Business communicators in the field work closely
with their divisions, but continue to report to the communications headquarters. HP and Nortel established similar structures.
Coordination out of a centralized office also makes it possible for business communicators to tie in sales and marketing programs. At HP, dual responsibility for marketing
communications and corporate communications rests at the VP level, reporting to Fiorina, while planning is carried out cross-functionally. Nortel centralized its communications
functions under the chief marketing officer, who reports to the CEO.
Just as the silos will undergo a tearing-down, so, too, will their communications functions as they are centralized, Williams and Moorcroft warned. But Williams sees the
concentration of communications in a centralized group leading to opportunities to expand staff and funding. As the communications program becomes more effective, the company will
invest more in the function, he argued. Moorcroft, on the other hand, believes that pooling resources in a single department should create economies in both manpower and budget.
"I hope it [creates job losses], if you've got duplication and infighting," he says.
(Moorcroft, 416/974-0520; Williams, 604/543-6440)
Structure and Process for Buy-in
- Centralized corporate communications
- Linkage with sales and marketing
- Centralized brand and image control
- Integration of planning cross-business
- Strong CEO leadership of process
- Incentives for cross-silo behaviors
Source: Royal Bank of Canada