One Company Strategy: Break Silos and Move Faster

Terri Long:

Welcome to the Elephant in the Boardroom where we talk about the business practices we love, love to hate.

Jeremy Eden:

That is these are the practices that frustrate employees, anger customers and hurt shareholders.

Terri Long:

I'm Terri Long.

Jeremy Eden:

And I'm Jeremy Eden.

Terri Long:

And we are the co CEOs of harvest earnings. We challenge conventional wisdom, share our stories, and give you advice you can use at work and even sometimes at home.

Jeremy Eden:

It's time to banish those elephants. And in the boardroom.

Terri Long:

Today we're gonna talk about a very pervasive problem in corporate America. And that is that companies, particularly bigger companies, do not act as one company. They are in silos. And oftentimes one silo does not behave in a way that is good for another silo. And to illustrate this, I am going to read an entry on Glassdoor about Fidelity. Now it's going to seem like we're picking on Fidelity, and I guess we are a little bit, but just because this is such a perfect example. But we know that this behavior happens absolutely everywhere. So Glassdoor about Fidelity Advice to Management is the title of this entry before you go ahead and launch all these improvements to the client and employee technology.

Terri Long:

Maybe, I don't know, Backtest at first, for all the improvements, each of the more than dozen updates that have been implemented in the last year, it doesn't seem like anyone even took the time to realize the rather significant and obvious problems that would be created by its adoption. Yes, the new technology update solved one problem, but it has also created five problems that didn't exist with the old technology. Problems that are quite requisite to carrying out the stated role of the jobs you're asking us to do. I mean, even something as simple as, hey, this new telephony system doesn't allow one associate to call another associate didn't show up on anyone's radar. That's a little shocking seeing as how we kind of need to be able to call one another numerous times throughout the course of every single single day.

Jeremy Eden:

Little frustrated, that is, that is perfect.

Terri Long:

And, and, and we see it all the time everywhere. And you always like to say it's not because people are dumb or evil, it's that they're in these silos and they know what they know and they are not necessarily reaching out to the users or the, the other impacted areas to see what might result from this. So we're going to, we're going to give a few examples of things that we've seen that solved, you know, ideas that, that solved the issue of teams not collaborating. And then we're going to talk about some solutions. You want to go first?

Jeremy Eden:

Yeah, I will. And in fact, not only do they not always reach across, in some cases there is the view, maybe a corporate myth that they are not allowed to reach across. And here's a perfect example of this. Many years ago when we were doing some work for Goldman Sachs, their European trading group, which was located in New York, would get up every morning, the salespeople and they would get this binder full of unique research that had been done overnight by the research department and they would call their customers about the trading that was now already going on in Europe. But it took them two hours to go through all of that material and. Yeah, and distill it to the best messages, the best news so that they could make calls that might be very short, tailored to the person they were talking to. And when we asked them how long it took them, they spent about two hours preparing this and how they felt about that. And they were very frustrated because they were losing time calling people with this great information while competitors might be getting ahead of them.

Jeremy Eden:

So the question of course was well, could it be done shorter? Yeah, it'd be so great if they just did bullet points, shorter summaries, maybe give us all the background material that we could go to if we needed it. Sounds good. Why hasn't this happened? Oh well, there's a Chinese wall between research and trading. We're not even allowed to talk to them. Well, as you might imagine, and these are very smart people, highly motivated with the money at stake. But this was the belief. Well, it turns out yes, you weren't allowed to talk to the research group about recommendations, but you could talk about report formats. So they ended up changing the report formats after meeting with the trading group once that was approved by audit and legal and ended up with much shorter reports, gained a large portion of that two hours out of their eight hour day, which equivalently basically added about 30 or 40% to their sales staff without adding an additional human being.

Jeremy Eden:

And that generated 8 ton of revenue for Goldman Sachs.

Terri Long:

That is pretty awesome. Okay, so another one of our, our favorite, one favorite stories about collaborating is that when we were doing Heinz and what in Europe they had 30 factories and they all made very distinct things. I mean, you know in, in the US we all think of Heinz is ketchup. But you know, Heinz in the UK Heinz means beans. That was, you know, their, their thing for, for decades maybe still the thing, I don't know, in Italy they baby food, I mean all sorts of. In France was Seafood, all sorts of different Heinz products. And these 30 factories did not report up to the same folks. And they didn't necessarily know what the other factories were making.

Terri Long:

So, huge canning factory in England making soup, Heinz soup. And of course, many soups have pasta shapes, noodles in the soup, and they were buying them from a vendor. Well, lo and behold, there was a factory, I believe, in the Netherlands that made noodles and was not even close to capacity in the factory. So at one point during our project, we had brought every, all the factory managers together, and they all did a little display, a little show and tell about what their factories made. And suddenly, you know, light bulb, hey, wait a minute, we're buying, you know, paying a vendor a profit, whereas we're, we're sitting with excess capacity in this factory that could provide us the noodles we need in England. And that's what they did.

Jeremy Eden:

And so many companies grow up through acquisitions, and those acquisitions often lead to. Which is how Heinz got into this situation of the silos. So here's another one. And Heinz did a phenomenal job with our project. But this was an example that they would tout about what they came up with by crossing lines. They had two divisions, and I'll talk about that word a little bit later, but they had two divisions in the US One that sold to consumers through supermarkets as we all buy their products, and the other design desserts and other items that would be sold as a third party to restaurant chains. And those two divisions were in the same building, separated by a floor. So people working in both would travel up and down together in the same elevator, but they never talked to each other.

Terri Long:

And it was a tall building, so there was a lot of time in the elevator.

Jeremy Eden:

Yeah, that elevator speech could be, you know, a whole PowerPoint presentation. The people that ran the two divisions many, many years ago had very different goals, didn't particularly like each other. So we got the product managers from these different divisions to all work together in a series of very structured meetings. And lo and behold, it turned out that they had this idea that if some of the desserts that they did for Applebee's, for example, or TGIF could be branded and sold in the supermarkets, the supermarkets would love it. And the TGIF or Applebee's would get license fees. Everybody could make money. And nobody had ever gone to TGIFs and said, would you be willing to license this? Well, they went to the Walmart to sell it and to TGIF and Applebee's to get permission, and it became a whole sub Product line of using things they knew how to make. Customers liked them and they could sell them through these two different methods.

Terri Long:

And it doesn't feel like that big of a deal now because it's very common. You see many branded things. But then it was not. It was sort of the beginning.

Jeremy Eden:

It was done.

Terri Long:

It was the beginning of that. So, yay, Heinz. And yet another Heinz example, before we move off of Heinz examples, which is probably our number one most cited example. And for whatever reason, I mean, we love it. But also people seem to remember it dices in tomato sauce. That's the, that's the short version. So again, factories, this time in the, in the United States. There were three in Ohio.

Terri Long:

We then, as part of the project, embarked on the Buckeye tour and we went to each of these three factories and they, again, they were in, in, in different lines, food, service and consumer. But that didn't really play a role in this particular idea. We're walking around the factories and the line manager, and we're just chatt with people and the line manager says what frustrates him and that is that the dices clog the line and therefore they have a lot of downtime and they're struggling to meet demand for this. So, you know, normally you think, well, okay, do you need a new line? Do you need to throw more people at it to get it back up and running sooner? You know, are there. What other solutions are there? Well, of course, one solution is to remove or reduce the dices that reduce the size of the dices in the tomato sauce so it doesn't clog the line. But, you know, obviously the factory guys can't do that. They're not in charge of the recipes. Well, who is? I mean, R and D is for developing them and then marketing is for, you know, testing them.

Terri Long:

So all three of those divisions had to come together to say, is it okay for this popular product that we reduce the dices? And you always like to tell the Italian angle to it. There was this thought that Americans like it when we call our sauce, you know, Italian style because, of course, who does it best? There's a great, they might be giant song for kids about pasta. Who made. Who invented pasta? It's about the Chinese invented pasta. But Italians make it best. That's debatable, of course, but they all make it well. So the thought was, well, if it's Italian style, it has to have dices in it, which I don't even know if that's true. It turned out, of course, in the end, marketing Tested it and smaller dices and some and some smooth sauce was preferable to the consumer.

Terri Long:

So reduced the time, the downtime and improved sales. Total win win because of collaboration.

Jeremy Eden:

So three more quick examples and we're going to get to some solutions about this. So the next one is a call center from a retail company. And the call center was open 247 because that represented at that time the best level of service you could provide. And the head of retail believe that is what should be presented. And the retail ops people who ran the call center thought, well, we're here to serve, we'll kind of do what we're told. But they were very frustrated because they knew that being open all night long was kind of nuts and very expensive. So they did an analysis to show the head of retail what it was costing. And head of retail wasn't that blown away by that.

Jeremy Eden:

He knew cost a lot. I mean when you see it in dollars or cents, it was a little eye opening, but not terribly. So the question was how to work together to say, okay, we're getting our money's worth. And the idea was, well, let's see who's calling all night long. And no system could tell them that. Their systems wouldn't tell them. So we came up with this idea of basically having a manual, a little log that call center operators used at night to indicate what the customer was calling about. And lo and behold, most of these customers that were calling in the middle of the night weren't rich customers calling from Paris or you know, high volume customers calling from Paris or London or something in the middle of the night.

Jeremy Eden:

It was people who wanted a chat line, a precursor of our day and age now. And they were low volume users, basically unprofitable users who would call and ask about products and ask about things that shocked the head of retail. And when he saw that, he agreed to not just he eliminated the night shift, but they then created a private line for those customers who truly did deserve having access at night. But it was only by those two groups working together did they uncover the reality about this. It's a good example why benchmarking is no good either. At that time, every other competitor did this also. So they weren't worse than anybody else, but nobody else had really dug deep.

Terri Long:

I don't know. This story always makes me a little sad, I got to admit, for the lonely people who lost their 24 hour call in line. Of course nowadays you can hire an AI service to call mom in the middle of the night to check that is true. That's a whole nother story.

Jeremy Eden:

We worked for another retail company that had pianos in their offices because they actually catered to an elderly group. And they wanted people to come in and relax and sit and listen to a little piano. And that was not eliminated. That was maintained.

Terri Long:

Nordstrom's does that or did that. I'm not sure they do it too much. I mean, the piano is still there in my local one anyway, but I haven't heard it in a while. I don't know why they wouldn't just have either a player piano or. Well, anyway, another food example, not Heinz, I guess we won't name this one. I mean, we. We name names when we're allowed to name names. Just, you know.

Jeremy Eden:

Yeah.

Terri Long:

So this is an example of, you know, decisions being spread out over a lot of different people and then therefore not coordinated. So we worked for a company that made frozen pizza. They had lots of different. They had several different brands, but then lots of different varieties. And it turned out that they ended up with an enormous number of different kinds of pepperoni, just slightly, you know, each one slightly different. Because when R and D was developing the recipe that was the perfect one they wanted. But of course, when you're.

Jeremy Eden:

And. And. And not. Not out of, you know, being, I don't know, super particular, it's that for microwave, you needed a different pepperoni than not microwave.

Terri Long:

Well, I think there was some super particularness. I mean, you know, R and D people are trying to develop the best product they can. I mean, within, you know, some constraints. But what they didn't have in their head is if we can reduce the number of kinds of pepperoni, we will get a volume discount. So, you know, when we did the project and they were examining the cost, you know, what, you know, what costs can we take out of the pizza? You know, people don't go for the pepperoni because that's important. Right. You don't. You.

Terri Long:

You think about the box, the. The cellophane paper, the whatever. But that's a fairly minor cost. So making a significant difference there is hard. But, you know, what they were able to do was figure out that they needed a much, much smaller, like a third of the kinds of pepperoni, because there really isn't that much difference from one to the next for the most part. So they got down to seven pepperoni from in the high 20s and saved a boatload because they were able to get volume discounts. And then after they were convinced that those did not impact sales numbers in any negative way, they were able to Reduce even further, down to four, I believe.

Jeremy Eden:

And another good example where, you know, procurement would have loved to have pursued this much earlier, but they kind of felt like, well, you know, we're here to serve the product managers in R and D, and if they want 22, we'll get them 22. Okay, the last one. So. And this is another kind of procurement issue, but here it was the other way around. So this was a big retailer. They had a thousand stores and they turned their, they had sales on all the time. They had turned over their product, their seasons. So they would get window posters, and the window posters would advertise whatever marketing was pushing for that month 10 times a year.

Jeremy Eden:

Not literally 12, but 10 times a year. And so once each time, the thousand stores would get seven of these posters or whatever it was, and they'd put them up in their windows. Seemed all good, except it turned out some stores only had three windows, some only had four. The maximum was seven. That meant that a lot of these stores were getting posters and throwing them out. And they knew they were throwing them out. And their view was, well, somebody in corporate must have made a good decision. And it wasn't even talked about.

Jeremy Eden:

And then through a cross collaborative effort, this issue was raised. Why do we have to buy these things if we're throwing them out? And it turned out procurement had made a really good deal with the vendor to do seven and didn't think the vendor would give them the same good deal if they cut back. And when they went to the vendor, the vendor was, yeah, sure, we can custom tailor this. And maybe they raised the price a little, but it was way offset by the reduction in the number that they had to buy.

Terri Long:

There we have, I mean, we have hundreds, if not thousands of examples of very simple but great ideas where all it takes is for divisions in companies to come together and talk about, you know, the, the interactions between them and how one can help the other. Division is the opposite of multiplication. So we, we want to talk about, you know, the force multiplier that you can, that you can create in your own company by getting people to talk together together and solve problems together. But they're problems oftentimes that nobody even knows exist. The first thing we're going to mention is that, consider cross pollinating your managers. Not even just your managers, maybe your, your, your staff, your employees as well. But, but managers are particularly effective. It is very normal for somebody to just go up their silo because that's their expertise.

Terri Long:

But you know, if you have smart, dedicated, good managers, they will be able to contribute just as well in another area. Now I know McDonald's is famous for making people go and like flip a burger for a week or a day or I don't know, something. And that's great. But the more you have people move around in the company, the easier it's going to be to recognize the things that are occurring in your company that don't make it one company. Everybody wants to be one company. And if you cross pollinate your managers, that will go a long way to getting a broader vision at the top of the house to see these issues.

Jeremy Eden:

Along the lines of this one company. Walter Isaacson wrote a biography of Steve Jobs and Apple and he was explaining why did Sony, this incredibly powerful, great, fantastic company, not compete effectively against Apple when it came out with the ipod. And his explanation was that Steve Jobs ran a unified one company approach, whereas Sony had divisions. And then Walter Isaacson said, and even the word divisions is ominous. And he attributed this to the ineffectiveness of Sony competing with Apple. So the second thing you can do is have structured physical meetings like the noodle meeting or the fact there was a noodle meeting, the food fair, the fact the food fair in Europe that Terry described. Setting those up.

Terri Long:

Another thing is something we call speed collaboration. Speed collaborating. It's based on speed dating. And you could do this just every now and then when you bring your folks together for, you know, I don't know, town halls or whatever, you bring your key leadership team together for set up little, set up a table, just like speed dating and have division spend 15, 20 minutes, or maybe even less, 10 minutes, talking about how they interact. And just even that interaction will, will spark some thought about, you know, what you require us to do. These reports, do you realize how long these reports take? And then the other people might say, well, no, we didn't. And here's the, you know, the three pieces of information we really need. Kind of like the sales effectiveness example at Goldman Sachs.

Terri Long:

But speed collaborating tends to be super fun and energizing and it builds networks within your company as well.

Jeremy Eden:

Next one is require functions, particularly the less powerful ones, to challenge why other functions are imposing costs on them. So when they do their budget, it's not good enough to say, well, you know, we're going to have to buy 22 flavors of pepperoni. No one talks about a budget at that level. But, but implicit in their numbers is that assumption instead is what could, what could we be doing so that you, procurement, don't have to buy, spend so much money on pepperoni and have them challenge people that are imposing costs or helping them lose revenues, which is no good either.

Terri Long:

And then something we do in our projects is that we use a steering committee. I mean, obviously that's not even close to unique to us. Have a steering committee that is, you know, basically the top of the house or the top of your group that will sit and hear ideas from the folks in the company so that the entire team hears it. And so if I'm the legal department and I hear somebody say, well, we're only selling CBD oil in Michigan because we can't sell it other places and you know, that's costing us revenue. So therefore we're looking for other ways for other new products or whatever. As the chief legal officer, I might say, well, wait a minute, it's also legal in Illinois and other places. So just hearing these things, everybody hearing these things together can spark a lot of cross team collaboration that will otherwise not exist. If the silos just stay in their silos.

Jeremy Eden:

Tied in a little bit with that is there is a dynamic in many organizations where units within that organization actually have very different incentives and bonuses and promotion opportunities that are counter to the one company approach and are motivated often not to collaborate and talk and share. And by having that steering committee, the top of the house can make sure that they are breaking through those sometimes intentional and often unintentional behaviors. And then we have one last one.

Terri Long:

Well, I mean, it's very related, I think, right? I mean, make sure your incentives and bonuses and that the budget reflects shared goals. I mean, we actually did a whole podcast about this very recently about how budgets drive terrible behavior. And much of it is because the incentives and the budgets are very division focused, very silo focused. And maybe only at the top, the very top of the House, is there an overall component that is significant enough to drive behavior. Sort of. The lower you go in the organization, often the higher percentage is tied to your own division. And that creates a lot of behavior that is very disruptive to the company.

Jeremy Eden:

And then we have one last, last one, which is the other thing is to give recognition that's positive when cross collaboration occurs. That could either be done by the steering committee, it could be done through awards, it could be done through newsletters. But, but highlighting when. Because a lot of this behavior people want to do and do do, and you can encourage them to do it more and build it into your courage. So positive recognition for this specific kind of behavior is our last point.

Terri Long:

Well, I have one, I have a last, last, last, last point. And that is just advice on new projects, mostly IT projects, but really anything if you are going to change something, you have got to get the boots on the ground involved. You know, just taking it full circle to the Fidelity Glassdoor comment. They made all these changes and at least this person felt like the people who were actually going to use the system did not get to weigh in on what was important for them to do their jobs. It is the people closest to the work that need to be consulted to make sure you don't have these unintended consequences in other divisions. You may be very clear on what it's going to do to your division, but make sure you know how it affects everybody else.

Jeremy Eden:

And with that, we should each go back to our own little cubby cubicles and work on. Well, I have no idea what you're working on.

Terri Long:

Perfect. I like it that way.

Jeremy Eden:

Perfect. Yeah.

Terri Long:

Okay. Have a great day everybody.

Jeremy Eden:

Back to work. Thanks for listening. To learn how Harvest earnings helps large companies overcome the bad practices, Visit our website, harvesternings.com or email us at infoharvesternings.com.

Terri Long:

Also, please subscribe wherever you get your podcasts. And if you're feeling generous, leave us a rating and a review. It really helps others discover the show. Until next time, I'm Terri Long.

Jeremy Eden:

And I'm Jeremy Eden. And now it's time for us to get back to work. Bye.