Editor's Take: Rethinking Those Silos

Certainly you’ve heard this before: The experts strongly urge you to “break down those silos” in your organization. But I’m now wondering whether that’s such a hot idea after all.

It was Bill Bass — a former Sears and Lands’ End exec who three years ago co-launched Fair Indigo, a fair trade multichannel apparel company (a company we profiled in our August 2007 issue) — who convinced me that such a free flow between divisions may not work. Bill, who recently left to run Charming Shoppes’ direct unit while remaining Fair Indigo’s chairman, said during a recent panel session at the National Retail Federation Convention in New York that he’s completely rethought this matter and rebuilt those silos before he left.

A quick bit of background: Common thinking has been that ever since online became a viable channel, catalog/multichannel merchants operated their e-commerce divisions separate from the rest of their companies. What’s more, those who operated retail chains also kept those units separate from their direct units.

One group didn’t know what the other was doing, and there was a fair amount of infighting for credit on sales across channels. In the end, customer service would suffer; future sales lost. So the thinking was that everyone should be totally in sync with what each unit was doing.

But after founding his company with such silo integration in mind, Bass recently reversed course.

“I had always felt the nonintegrated approach was a horrible idea,” Bass said. “We were partially integrated at Lands’ End and Sears, and completely integrated at Fair Indigo. But it was a mistake.”

Bass came to the realization that the rhythms and dynamics of the various marketing channels were too different — particularly catalog and online, with the catalog needing to be produced so far in advance and the Internet allowing you to create and change creative on the fly.

Bass said e-commerce needed one person to turn to if business wasn’t good. “But if you’re completely integrated,” he said, “you can’t do that.”

Other notable differences between channels, such as making online checkout easy and search better, “don’t fall into stores or catalogs,” he said. “There are other important duties that don’t fall within any one area.”

Then, there’s the background of the marketing people to consider. Retail marketing departments aren’t necessarily as sophisticated as catalog or e-commerce departments, because they’re often all about coordinating with TV ads or sale flyers. And the back-end systems differ greatly.

As for Fair Indigo, complete silo integration leads to things not getting done, “and you end up underserving customers,” according to Bass. “Customers want you to be best-in-class in every channel, and you start losing that even if you’re seamlessly integrated.”

All that said, if a partial or complete rebooting of silos gets tricky at your company, “When in doubt,” Bass said, “have them report to the CEO.”