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Why We Need Marketing Silos

2011 January 16

For years now I’ve been hearing a lot of talk about how we need to break down silos in marketing.  Nothing could be further from the truth.

Silos are good.  They focus on getting a job done and there are lots of important jobs that need to be done extremely well by dedicated experts conversant  with the minutiae of specific problems.  Silos are therefore necessary and proper.

The problem is that most silos are isolated when they should be connected.  Specialization and ignorance are two vastly different things.  So while we need to keep our silos, we need to make them smarter and more plugged in to what’s going on around them.

The Big, Old Stuff

Most of the stuff we do is big and old.  We’ve been doing it for decades and we get better at it all the time.  The’ts why we can do a whole lot more of it with less people and at less cost than we used to.  Most companies that focus on big, old stuff are highly efficient.

Let’s take something familiar, like buying a national TV campaign in the US.  There are over 150 TV markets in the US.  The top 30 are bigger than many of the world’s national markets and they all have different demographic, ethnic and lifestyle characteristics.

Different content will have different ratings and appeal to different audiences in different markets.  What’s mass in one place might be eclectic and upscale in another, so it’s not just a matter of buying top rated shows.  Marketers must also navigate a mishmash of buying methods: Network buys, local buys, forward buys, spot buys…it’s enough to make your head spin.

Nevertheless, TV departments continue to shrink in the face of rising budgets.  That’s what efficiency is all about.

The Optimized World

Since we’ve gotten so good at so many things, it shouldn’t be surprising that “optimization” is a term that’s taken on a lot of importance.  Expectations are high and the margin for error is razor thin.  We’ve got lots of specialized software, systems and processes to help us along.

People who live in this optimized world can seem a bit dull.  They’re not trying to do lots of new things, just trying to do old things better and better.  The changes are incremental and most of us don’t notice the difference, but they do.  It’s become fashionable to ridicule people who live in the optimized world (even among those that live in it).

However, as new media matures and scale increases, optimizers are staring to shine in the digital world as well.  Their experience building large platforms and integrating lots of services under one roof is perfectly suited for search and display advertising online.

Publicis Groupe. for instance, created their audience on demand program specifically to create efficiencies and, as this article shows, there’s no shortage of impressive work going on in the big marketing agency arena taking emerging forms of advertising and making them work more efficiently on a larger scale.

The Crappy New Stuff

Of course, there’s only so much you can accomplish by making old stuff bigger and better.  As I’ve written before, there’s a substantive difference between creating efficiency and creating value. While becoming more efficient lets us do things faster and cheaper, value is created by truly breaking new ground.

Unfortunately, new things are usually crappy.  We don’t know how they are supposed to work or even sometimes what we’re supposed to do with them when they do work.

Often, they need other new stuff to develop around them before they become really useful.  Shopping malls need cars and suburbs.  Digital cameras need easy-to-use software and social media, electric cars will need recharging stations, etc.

Other times, the optimized stuff becomes so good that it opens the door to someone who makes products crappier on purpose.  That’s how Charles Schwab revolutionized the brokerage business and how Ricoh and Canon nearly put Xerox out of business.

The Crappy Effect in Marketing

The “crappy effect” is alive and well in marketing.  There are young innovative firms that are doing cutting edge things like mobile apps, location based marketing, augmented reality, semantic applications using linked data and content marketing.   Clients are enthusiastic, but understandably cautions as missteps are common.

Others focus on making it easier for individuals and small companies to do things that big companies do, but with less bells and whistles.  By using digital technology, crowdsourcing and dropping features, they can make a roughly comparable product significantly cheaper.

Much like the people in the optimized world don’t know that they’re boring, people in the crappy world don’t know that they’re crappy.  As they see it, they are breaking new ground, growing exponentially fast and will soon overtake the optimizers.  They often fail to understand how expectations change with scale.

Two Types of Organizations

Clayton Christensen, who coined the term disruptive innovation, argues that there are two different ways to organize work.

Integrated Organization: When things are new, not well understood and operational interfaces are weak.  Problems lack standard solutions.  Therefore, people need to be close to each other and communication has to be very intense. Without strong integration, crappy stuff doesn’t function at all.

One of my favorite examples of an integrated organization is Ford in the early days of the auto industry.  They put raw materials in the front of the factory and cars came out the back.  Everything was done on site and in-house.

Modular Organization: When an industry becomes more mature, interfaces improve.  Standard solutions to basic problems emerge and communication becomes more formalized.  People don’t need to be so close anymore and organizations begin to specialize in different parts of the process.

Modular organizations tend to be much more efficient, but less innovative.  That’s exactly what we see in the auto industry today.  Ford doesn’t really make cars anymore, they design and assemble them.  The components are made by a network of specialist suppliers (some of whom are integrated and innovative).

When stuff gets beyond the crappy stage, creating efficiency takes precedence over creating value.

Building Networked Silos

By now it should be clear why we need silos, especially as marketing makes the transition to digital.  About a trillion dollars per year is spent on marketing, far too much to gamble on untested ideas.  Large scale, modular organizations will continue to control the vast majority of activity.

However, there is a lot going on that is truly new, different and exciting.  We’re not very good at this new stuff (hence, the crappiness of it all), so organizations who focus on the cutting edge need to be highly integrated.

The real trick is to build connections between different types of organizations, through partnerships, informational exchange and open innovation.  However, networking between modular and integrated silos is easier said than done.  Here are some tips:

Be clear about what an organization is supposed to achieve: Do you want to be innovative?  Really?  Most people say that do, but when it’s time to sign the budget…well…certainty usually takes precedence over originality.

If you’re doing something on a large scale, your ability to innovate will be limited.  If you are serious about radical innovation, your ability to get a lot done efficiently will be diminished.  There’s a reason why when IBM developed the PC, they created a new organization to do it.

It’s important to choose.  All too often, people say they want to innovate and optimize, which really just means that they haven’t quite thought it through . It’s that kind of naiveté that makes it very difficult to build the kinds of partnerships required to succeed.

Integrate People: While it’s important for organizations to focus on one kind of activity, people shouldn’t.  Most jobs can be learned in 6 months and mastered in 2 years.  After that, experience is just as likely to make people worse as it is to make them better.  There’s absolutely no reason for people to continually perform the same tasks for decades.

Unfortunately, most organizations discourage diversity in experience.  The longer people are around, the better they know how to “work the system.”  They become managers and want to surround themselves with like-minded people whom they know well in order to form a power base.  Outsiders are suspect.

Great innovation is usually the result of synthesizing ideas from different disciplines.  Specialized expertise can be valuable for making incremental improvements, but rarely produces anything truly new and often promotes the kind of myopic thinking that leads to mediocrity.

Interconnect: If you’re clear about what your organization is doing then it should be just as clear what you should let others do.  If you are part of a larger enterprise, it is very likely that you can benefit from other divisions.  All too often, petty turf battles prevent doing so.

If your an independent organization, you will have to find partners.  Silicon Valley is great at promoting networked silos.  Everybody seems to be connected to everybody else somehow.  The marketing world tends to be more territorial, seeing competition where they should be looking for collaboration.

As marketing becomes increasingly digital, connections become technically more feasible, but philosophically more difficult.  It’s not our organizations that we need to “unsilo,” but ourselves.

- Greg

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