The following is the second part of a two-part blog series on “silo indifference,” employees’ resistance to company initiatives that disrupt traditional operations. Read Part One.
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Consider this recent New York Times article (July 26, 2012).
News Summary: Google’s Fast Internet for $70/mo.
FAST SERVICE: Google says it will charge $70 a month for its long-awaited, ultra-fast Internet service in Kansas City.
THE SIGNIFICANCE: The service is intended as a showcase for what’s technically possible and as a test bed for the development of new ways to use the Internet. Bypassing the local cable and phone companies, Google has spent months pulling its own optical fiber through the two-state Kansas City region.
OPTIONS: For another $50 per month, Google will provide cable-TV-like service, too. There’s also a free, slower option, though households have to pay a $300 installation fee.
What is Google doing?
First, Google is learning by doing.
The project is framed specifically as a “showcase” and as a “test bed for the development of new ways to use the Internet.” Since this involves changes in consumer behavior, Google couldn’t just survey the public. The cardinal rule in market research is that you can’t do market research for a product that doesn’t exist because the customers have no experience of it. The services driving Internet usage today weren’t even conceived in the early days of the Internet. The only way to find out what will happen when Google offers service speeds that are 100 times faster than today’s service at comparable prices is to prime the pump and learn by doing.
Second, and very importantly, Google is wisely laying the foundation for a frontal attack on silo indifference. The best way to overcome this pervasive roadblock is to develop a showcase project that demonstrates clear, compelling value. With a clear, practical pathway to clearly superior new value, the counterpart managers throughout the company will migrate to the new value proposition. The wonderful thing about a successful showcase is that the managers throughout the company can actually come see it. They can “kick the tires,” and actually talk to the customers.
This is the fastest and surest way to accelerate change, to overcome silo indifference.
Why the Phone Company Failed
Contrast this with the case of a regional Bell phone company about 20 years ago. This very strong, successful company was a regional powerhouse with ample resources. It was deciding whether to deploy broadband/video capabilities, and if so, how to deploy them.
The obvious path was to conduct a study, which naturally showed that the customers were generally interested, but not enough to pay a compensatory price.
At the same time, however, an alternative proposal was offered to conduct a limited showcase project by wiring a small upscale community of about 30,000 with video, and linking the community’s “communities of interest” (i.e., schools, sports, clubs, etc.) through the network. This would give the customers an opportunity to forge new communications pathways and to develop firsthand a sense of the potential value.
In essence, this could have been a forerunner for many of the Internet-based services we now take for granted, and would have catapulted this company far in front of its competitors.
The company had ample resources. But the innovators in the company failed to gather support from their counterpart managers. In the end, the finance department killed the project, noting that it could not convince them that it offered returns comparable to those that flowed from the existing operational program of replacing old switches. Silo indifference in action.
What happened to the company, at the time a very well-respected industry giant? It languished and ultimately disappeared, merged into another regional Bell, then both into another.
How can an innovative management team create effective showcase projects that overcome silo indifference? Here is an old family recipe that really works.
Just do it.The cost will be very low, often trivial – frequently involving a few well-selected customers or suppliers – and the results can be transformative. There is no downside.
Do it all the time. Set up showcase projects in all areas of your company, especially those that are involved in customer and supplier relationships. What do you have to lose? A minute fraction of your revenues and resources are involved, and the upside is enormous.
Keep doing it. Very often the most important findings only emerge after the showcase evolves over time (perhaps a year or so). The second- and third-order changes are the most powerful. Remember that very few successful business ventures wind up pursuing their original business plans, but rather the key to success is to learn from experience and to evolve rapidly. The most successful venture investors understand this well.
Select the most favorable conditions for innovation. Many companies select important customers or suppliers for showcases. Big mistake. There is too much at stake and the innovations necessarily will be incremental and tactical. Instead, look for a relatively small customer or supplier that is very innovative, where the CEO has “fire in the belly” to do new things, the company knows how to partner and the operational match is great.
Involve your counterparts early. Get your functional counterparts from the other silos involved from the beginning. Let them help shape the project, and in the process they will become champions. The project will almost certainly benefit from their perspective and capability, and the outcome will have the highest likelihood of being adopted.
Showcase projects offer the shortest distance between you and effective change. They are limited in scope, so you often don’t even have to ask permission, but the results are compelling. They are the ultimate change accelerators.
Why not try it?
Jonathan Byrnes is a senior lecturer at MIT and author of the recent book, Islands of Profit in a Sea of Red Ink. He is president of Jonathan Byrnes & Co., a consulting company with which he has advised over 50 major companies, medical institutions and industry associations. Contact him at firstname.lastname@example.org.
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