I recently spoke to a CEO, who expressed frustration with the lack of cooperation in his organization. One incident in particular stood out. A smaller product group within his firm landed a new client. After the deal closed, it was revealed that another (larger) product group was calling on the same client.
Instead of collaborating, both teams pursued the business on their own. While the niche product group did close business, the larger team did not. The result was a relatively small sale, a lot of internal he-said-she-said, and a less than united company in the eyes of the customer.
Had the two teams collaborated, they could have provided a more robust solution, behaved as joined forces, and potentially won a much a larger deal. The client even commented, “Don’t your people talk to each other?”
Why didn’t the two teams communicate? After all, they work for the same company, and they could have increased their scope and reputation. Failure to collaborate cost the firm revenue and potentially damaged their rapport with a major client.
Most companies have their own stories about silos; be it between two product divisions, HR and Finance, or Operations and IT. The larger the organization, the worse it gets. It stymies innovation and has a chilling effect on morale. Longer-term it can plummet customer engagement and brand reputation.
In my experience, a lack of cooperation and silos are rarely rooted in malice or even turf defending. Emotionally and psychologically, humans are hardwired for collaboration and connection; we simply cannot survive (in any sense of the word) alone. Being a human is a team sport.
More often, a lack of collaboration is the (unintended) result of bad systems. Leaders who want to break through silos to create cooperative, united, purpose-driven organizations, must address the root causes. In most large organizations:
Self-oriented systems don’t occur by design, they happen by default. There are three key barriers. We’ll start with the most obvious and move to the more insidious.
Compensation drives self-orientation
A team that gets compensated only on their own product line is hardly set up to collaborate. The same is true for any team that is commissioned or bonused solely on department-based metrics. For example, in the situation described above, if the team was compensated for overall company performance (in addition to individual performance) they may have been more incentivized.
But there’s another, less obvious sign on self-oriented compensation in the earlier story: the sales team was exclusively paid when the deals closed. There was no incentive for client retention, referrals, client satisfaction, or even the effective use of the solution. This drives the team’s mindset to think self-first.
What to do instead: In addition to individual performance compensation, add group performance and customer retention into the compensation mix. Discuss these shared objectives as often as you do individual targets.
Metrics are internally focused
When success or failure is defined by internal-only metrics, customer-impact is absent from the conversation. When a team or individual thinks: How can we hit our targets? they look inward. When leaders ask, How can we make a difference to customers? people think more holistically.
Inserting the impact on customers a lens for decision-making broadens the horizon, instead of each group focusing on their own metrics, the entire group is working towards helping customers.
What to do instead:
Include customer success metrics as part of the organizational narrative. Here’s the difference:
Internal metrics are things like revenue, profitability, conversation rates and pipelines. Outward looking metrics are things like customer satisfaction, net promoter scores (NPS) and customer retention. Make these outward looking measures as present and important as internal sales, financial and production targets.
Short-term success is prioritized over longer-term impact
One reason people don’t cooperate is because they don’t feel like they have time. An organization that defines itself by the team’s ability to hit quarterly targets is always going to feel the urgency of the short term. Organizations that define success by the ability to make a sizeable, lasting impact on their customer-base thinks in the long-term.
What to do instead: Tether the team to a belief in something bigger than themselves. Belief that customers are out there, and need your company to seize opportunity, grow their businesses, reduce risk etc. prompts more innovative and noble thinking than the drumbeat of today’s metrics alone.
Improving cooperation is an increasingly urgent challenge for leaders. When location-based teams left the office to work remotely, social interactions that may have once fostered collaboration, or at the least the opening for collaboration, evaporated.
Here is a truism I’ve seen play out many times in the last couple of decades: a lack of collaboration doesn’t happen by design. It happens by default. The traditional framework and language of business points us inward, towards short term self preservation.
But here’s what we know: Organizations that point themselves outward, who declare bold impact as a North Star and foster the purpose driven cultures to make it happen, get better results. They’re more innovative, they have better customer advocacy, they’re better places to work, and ultimately, better financial results follow.