Silo busting case by ranjay gulati

silo buster meaning

As a company becomes more adept at inducing coordination and cooperation across units, new skills become valued and desirable. The author gives the example of Apple, which offers only a small number of applications for itself, simply because its partners can offer thousands more.

They hold solving customer problems above all else and celebrate customer-oriented victories. So if a person left his or her specialized area of expertise to run an account and after three years…the firm was no longer providing services for that account, employees feared that that person would be out of a job. The company, which had been organized by customer segment from to , reverted to a technology-focused structure after the Internet bubble burst, forcing the company to address costly redundancies. Sales commissions in some organizations encourage managers to bring in new customers rather than nurture existing relationships, for example. Customers themselves may not be able to articulate their needs precisely. Even specialists whose roles may not change much in the new organization will probably have to develop some generalist skills and learn how these could contribute to their advancement. One researcher found that Toyota, the most highly trusted auto manufacturer, had transaction costs that were about 20 percent of those at GM, the least trusted automaker. Furthermore, they establish clear career pathways for those who pursue the generalist route.

Interesting quotes from the book: Managers everywhere face the most turbulent market conditions since the Great Depression. The book even gives one excellent example of Bharti Airtel, in his leading wireless phone company, that did reverse outsourcing by signing off its telecommunications network to Ericcson, Siemens, and Nokia.

By redefining the boundaries of the company in order to connect more tightly with external partners, companies can not only cut costs by outsourcing all but core activities and perhaps even by finding ways to outsource them but also create higher-value solutions by combining their offerings with those of a complementary partner.

Ensuring that enough people in the organization have the skills to deliver customer-focused solutions and defining a clear career path for employees with those skills. Having worked with the customer, the company also needs to develop cooperation.

For instance, corporate customers wanted the same people who found or built property for them to manage it.

What is silo busting

Even after the account manager position was instituted, final pricing authority rested with the units, which made it difficult to compete with multiservice packages. In fact, in some cases each line of business offered its own technology or solution for the same problem. From to , U. Customer issues are in Cisco priviliged even to the board meetings. Sometimes this involves completely obliterating established silos and replacing them with silos organized around the customer, but more often it entails using structures and processes to transcend existing boundaries. In contrast, customer-focused companies, even those in technology-intensive arenas, build an outside-in perspective into all major elements of their cultures. But after early successes, they institutionalize the notion that markets respond primarily to great products and services. In , the two companies launched Starbucks Cream Liqueur, which is sold in liquor stores, restaurants, and bars, but not in coffeehouses. Knowledge and expertise often reside in silos, and many companies have trouble harnessing their resources across those boundaries in a way that customers value and are willing to pay for. To coordinate these promotions and partnerships, Starbucks has formed an entertainment division with offices in Seattle and Los Angeles. Sometimes this involves replacing traditional silos with customer-focused ones, but more often it entails transcending existing boundaries. The book is based on over ten years of research. For those executives, Best Buy outlined the rationale for the new approach, including detailed financials, and held breakout sessions with the teams responsible for developing and executing the strategy for each customer segment.

An unanticipated benefit of the training was that it brought the account managers together regularly, helping them to stop identifying only with their silos and to begin forming a group identity that enhanced their cross-silo networks.

JLL unit heads—who wanted to maximize their own return, not subsidize other units—refused to budge on prices.

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Silo Busting: How to Execute on the Promise of Customer Focus