Why Are Silos Killing Your Growth Strategy?

Is a silo mentality killing CRO?

Conversion rate optimization (CRO) is on a roll. Companies are falling over themselves to recruit CRO specialists and managers as part of their growth strategy. They may not all have the same responsibilities but they are usually expected  to deliver sustainable growth through optimisation of user journeys. This often includes developing and coordinating  a roadmap for A/B and multivariate testing.

Often though CRO is implemented too narrowly without an effective plan. For example when I was employed in a CRO role I was asked to create a testing roadmap within a couple of weeks without any budget for research or usability testing. It was as if I was the oracle for CRO. However, CRO is a business strategy and not the sole responsibility of an individual department or business unit.

This misguided view of CRO  does not lead to sustainable business growth as it  soon runs out of steam once the obvious things to fix are exhausted. Further, cro requires collaboration across departments to draw in a diverse range of skills and expertise.

Unfortunately in many  organisations CRO suffers from the same silo mentality which results in slow, bureaucratic business decision making and a culture which encourages waste and strangles innovation.  Despite a desire to improve business efficiency the basic building blocks of most organisational structures are still the traditional functional silo.

Why does this matter for CRO?

For CRO to deliver business growth it needs to be embedded in the culture and requires a collaborative approach to business change. For example testing needs to integrate with the product roadmap, reflect business goals and inform marketing strategy. Companies which operate within rigid silos find CRO fails to deliver sustainable growth because the silo mentality discourages collaboration and cultural change.

“The great defect of scale, of course, which makes the game interesting—so that the big people don’t always win—is that as you get big, you get the bureaucracy. And with the bureaucracy comes the territoriality—which is again grounded in human nature.” – Charlie Munger – Berkshire Hathaway

Silos also prevent organisations fully exploiting the collective knowledge of the customer that is held across the organisation. Silos make it more difficult for customer data and knowledge to be effectively shared to inform decision making that creates the most value for the customer and organisation.

Image of Kodak logo

Kodak was organised into product silos and in the 1970s it controlled around 90% of the film market and 75% of the camera market. They invented the digital camera in 1975 but believed they were in the business of making film because their largest operational silo reinforced this perception to defend its own self-interests.

Kodak went bankrupt in 2012 after selling its digital camera business to save the film business.

Why do silos form?

Silos are a natural reaction to organisational growth and greater complexity. Companies create specialist functions in response to business expansion and increased work load. Silos facilitate the building of expertise and knowledge for specific business purposes.

Our herd instinct encourages people to become strongly attached to those within our immediate group. We form emotional bonds with people we have shared experiences with. This can result in people putting the needs or goals of their business unit ahead of the objectives of the organisation as a whole.

Sheep on the road image
Source: FreeImages.com

As projects are often resourced and financed from within a function means that outcomes and insights are not always shared outside of the business unit concerned. This can lead to both physical and emotional obstacles to collaboration between business units. In the worse-case scenario this can result in conflict between departments as they aim to protect their own interests rather than those of the organisation as a whole.

Why do silos harm growth and innovation?

Silos create competing subcultures within a business. This limits ways of working and communication between business units, but it also reduces social interaction and trust between people working for the same business. Digital silos disrupt information and knowledge sharing which is essential for CRO.

This is why large organisations can be bureaucratic and slow to adapt to both internal and external demands for change. This often damages the customer experience because it becomes difficult to respond swiftly to changes in customer needs or preferences.

What problems do silos cause for CRO?

Fragmented vision:

Unless CRO is part of the culture of the organisation functional business units will continue to create their own goals and strategy for optimising the user experience or conversion rates. Apart from duplicating effort and resources, this results in the vision of the organisation becoming fragmented. This creates conflict and dilutes the effectiveness of customer focused strategies.

Inefficiency – silos create friction and mistrust

The conflict created by business units having their own vision for optimisation damages trust between functions and often causes inefficiencies as departments fail to share knowledge and duplicate tasks. I’ve seen this result in brands replicating successful A/B tests conducted by another business unit rather than acknowledging and learning from the test. In addition priorities are set according the business unit’s goals rather than what is important for the business as a whole.

With CRO this often results in experiments being delayed due to a lack of design or development resource. Unfortunately such delays can make tests less relevant or obsolete in some cases as product releases change the default experience.

Image of Sony HQ in Japan

Sony case study:

In 1994 Sony reorganised into eight stand-alone business units. Initially this led to cost savings and an improvement in profitability. But managers also began trying to protect their units, not just from competitors but also from other departments. Sony’s business units became less willing to share experimental ideas or rotate the brightest staff between departments.

Collaboration stopped and nobody wanted to take risks. In the late 1990s when the Internet began to disrupt the distribution of music each Sony department tried independently to experiment with new solutions. However, none collaborated with the Sony Music Entertainment Group (previously CBS records) because SME refused to cooperate with any department as its officials were terrified that digital music would undermine revenues from records and CDs.

Image of Sony Walkman

Apple on the other hand worked as one cohesive company with one profit and loss. Engineers at Apple developed a two-step solution to allow users to download music from the internet and then listen to them on a portable device.

Apple  also developed the iStore to provide music groups with some royalties and designed the platform so that it could be accessed by anybody using any platform. Sony’s digital music system on the other hand relied on proprietary technology that had to use their own platform. This limited Sony’s ability to compete with Apple in both the music download market and the portable music player market which Sony had practically created with the Walkman.

In 2001 Apple launched the iPod and has since dominated the portable music player market. Sony failed to take a significant share of a market it once led with the Sony Walkman.

False assumptions:

Silos are very good at perpetuating myths based upon inaccurate perceptions that circulate without being challenged in an individual business unit. This is because a silo mentality encourages people to become over-reliant on information circulated from within their own department.

I experienced this one time when I challenged why the term “CAPTCHA” was being used in content aimed at customers. The response that came back was they had checked with their team (all web developers) and they all felt their friends and families would understand the term. There was zero awareness that perhaps their team and even their close friends and family were not representative of a typical customer.

This level of overconfidence in the knowledge held within the silo can reduce willingness to interact with other business units and limit opportunities to share knowledge and expertise.  Employees may therefore become isolated and feel dissatisfied which can have serious consequences for staff morale and retention. This can damage efforts to improve the customer experience and often leads to complacency which can be disastrous for CRO.

Limited customer insight:

Image of online surveys

To understand user expectations and experiences it is critical that data and insights are combined and processed from sources throughout the organisational structure. If data is not freely shared and combined with insights from other units the opportunity cost can be huge. It significantly limits the value of customer data to the organisation and individual departments as connections and insights are not fully uncovered.

With CRO this is often characterised by one piece of market research or insight being used to push through an update based upon subjective opinions. This can create conflict between teams as one piece of information should never be used in isolation to support a change in the customer experience. Such a culture can seriously damage the customer experience and reduce conversion rates.

Blame culture:

A fragmented approach to organisational change programs such as CRO caused by the dominance of individual silos creates a blame culture and can result in complacency. When CRO related targets are not met the temptation for some departments is to blame other areas of the business rather than take responsibility for their own failings.

A blame culture discourages collaboration because such initiatives can threaten a person’s career or credibility within their own department. In CRO it is important to encourage people to prove themselves wrong by creating online experiments to challenge existing best practice.

This is often how innovation happens as if we don’t take risks we are unlikely to create anything new and transformational. However, to identify improvements in the customer experience it is essential that people from different areas of expertise work together in a collaborative and trusting environment.

Groupthink:

When all think alike, then no one is thinking - Walter Lippman - The danger of groupthink

Small teams drawn from a single business unit have been found to be prone to make poor decisions due to their tendency to suffer from what psychologists call groupthink. Companies often believe that by recruiting the most talented and smartest people they can prevent poor decision making. The opposite is often true as small homogeneous groups suffer from a lack of diversity, insufficient independent thinking and a desire for conformity.

 “Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise.”  – James Surowiecki, The Wisdom of Crowds

People in such teams are also often over-respectful of senior people and so don’t sufficiently challenge ideas from these team members. Diversity is important because homogeneous groups become more cohesive than diverse teams and as a consequence they become more reliant on the group for ideas and support.

This insulates the group from external sources of information and makes group members more assured that the group consensus is the best solution to the problem.

 “Suggesting that the organization with the smartest people may not be the best organization is heretical, particularly in a business world caught up in a ceaseless “war for talent” and governed by the assumption that a few superstars can make the difference between an excellent and a mediocre company. Heretical or not, it’s the truth, the value of expertise is, in many contexts, overrated.” – James Surowiecki, The Wisdom of Crowds

Of course many large organisations insist on recruiting the brightest minds from the top universities. However, this restricts both racial and cognitive diversity which enables homogeneous groups to form.

How do you break down silos?

CRO needs to be an agile process to allow teams to respond to new customer knowledge and insights from the multitude of sources available to a customer focused organisation.

Collaboration is essential to enable knowledge and data to be delivered to where it is needed. It is vital to any organisation that seeks to improve profitability by improving the customer experience and conversion as no single team can optimise the user experience on their own.

To break down organisational silos to develop a strong CRO culture it is necessary to begin at the top of the business and change old working practices. The key strategies to create a more collaborative approach to CRO are:

CRO needs board level buy-in:

If you look at the companies that have most successfully implemented a CRO strategy such as Amazon, Booking.com and Skyscanner.com, they have people right at the top of the organisation who are passionate about CRO and take ownership of developing a supportive culture. Skyscanner for instance recently promoted their chief experimenter to become Director of Experimentation.

Having a board level manager in charge of CRO gives the strategy the profile and support needed to build a culture of customer focus and experimentation. A junior manager would never have the clout to try and optimise the product as well as web content.

Agree a unified vision for CRO:

 

Image of Amazon signIt is important to have a single unified vision for the company to retain focus and ensure consistency of objectives within the leadership team. Amazon has a very strong and clear  vision as follows:

“Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.” – Source: The Balance.com

The focus on customer centricity gives clear direction to all employees so that everyone can relate the vision to their own job. This helps CRO because people can see the relevance of optimisation to the company’s vision and their own individual and departmental goals.

Set a common goal:

Silos often cause conflict because individual business units set tactical goals and objectives that can discourage collaborative working. To avoid this problem the leadership team need to set out a single goal for the company that they can all agree on and is their number one priority. For example Amazon’s Jeff Bezos said;

“It is the company’s goal to make it irresponsible to not be a Prime member.” – Jeff Bezos

This should be clearly communicated to all employees so they can understand how they can contribute individually to achieving the goal. This assists CRO because having a clear goal makes it easier to identify a relevant success metric for experiments to be evaluated by.

Agile product management:

To facilitate collaboration across individual business units it is necessary to form product management teams that draw expertise from a diverse range of areas of expertise. For CRO this means having teams which include developers, UX designers, marketing specialists, experimenters and product managers to develop hypothesis, build tests and implement successful ideas.

Identify why trust has broken down:

It’s important to understand the reasons for a lack of trust and get people to recognize the problems that silos create before implementing solutions.  Changing a culture of working within silos has to be planned to reduce resistance and obtain co-operation. For CRO this means frequent communication and workshops to engage people throughout the business.

Flexible communication solutions:

The growth of global teams can prevent knowledge sharing and timely decision-making. Further, the use of email, phone and real-time messaging services has created a virtual workplace that fragments communications and reduces face-to-face interaction.  Business process management and resource planning software can help break down silos walls and allow people to work together on shared goals and encourages the exchange of information and ideas.

Let go of CRO:

One way of killing collaboration in CRO is not being willing to let go and allow others in the organisation to have some autonomy. Sure, there is a need for oversight and co-ordination, but beyond that it is necessary to trust people to follow the agreed framework for CRO.

It is important to get people across the business trained up to add their input and expertise to the CRO program. Your UX designers should provide wireframes for your ideas, copywriters content, and your own developers should be best suited to building experiments. Sometimes it can help by bringing in a CRO agency to co-ordinate this process, but in the long-run it is perfectly possible to create all the necessary expertise within most organisations.

Conclusion:

Finally, to understand how well CRO is being implemented ensure you build in feedback and monitoring systems to evaluate how well your strategy is working. CRO is a change management process and so adoption will take time and is rarely universally successful. However, as gaps or problems are identified you have the opportunity to review your approach and try new ideas.

Beware of vanity metrics, such as number of tests per month, which often don’t closely fit the desired outcome. This can result in  the cobra effect which can lead to unexpected and unwanted behaviour. Look out for these behaviours and adjust targets accordingly as some people do try to play the system.

Thank you for reading my post and I hope you found it useful. Please share using the social media icons below if you like this post.

You can view my full Digital Marketing and Optimization Toolbox here.

To browse links to all my posts on one page please click here.

  • About the author:  Neal provides digital marketing optimisation consultancy services and has worked for  brands such as Deezer.comFoxybingo.com, Very.co.ukpartypoker.com and Bgo.com. He uses a variety of techniques, including web analytics, personas, customer journey analysis and customer feedback to improve a website’s conversion rate.
  • Neal has had articles published on website optimisation on Usabilla.com  and as an ex-research and insight manager on the GreenBook Blog research website.  If you wish to contact Neal please send an email to neal.cole@conversion-uplift.co.uk. You can follow Neal on Twitter @northresearch, see his LinkedIn profile or connect on Facebook.

Are Implicit Techniques The Future of Market Research?

Why is market research so poor at predicting future behaviour?

Why is so much money wasted on traditional methods of research, such as focus groups and questionnaires given that they are such poor predictors of human behaviour? People are notorious for saying one thing, but doing something completely different.

The main reason why traditional research is often so poor at predicting behaviour is because it seeks answers from our conscious and rational brain. However, studies from psychology and neuroscience indicate that a majority of our decisions are made by our automatic and mainly subconscious mind (see System 1). People can’t articulate what drives their behaviour because they don’t have full access to those deep and hidden mental processes.

Image of difference between System 1 and System 2

Perception is not reality!

Whether we like it or not, people don’t have a strong grasp of reality. Our brain maps our perceptions, not reality. This means that our perception of reality is different from others as we experience the world according to our own unique filter of biases and cultural and moral influences.

Many of our decisions are also influenced by other people. Although some of our internal drivers are genetically embedded, others are culturally directed. Our brains naturally reflect our culture because norms, customs, traditions, fads and superstitions are reflected in our neural circuity which determines much of our behaviour.

We also copy the behaviour of others. This is either intentionally because we think we can benefit from the behaviour or unconsciously because our brain is influenced by what other people are doing.  I have summarised most of the key influences on our behaviour in the diagram below. This demonstrates how complex human decision making processes are in reality. They do not reflect the rationality of the economic model most of us were taught at school.

Image of behavioural economics decision bucket

Why do people use flawed methods of research?

Many marketers continue to ask for focus groups and other traditional methods of research because they are quick, easy and cheap to use. There may also be an element of that’s all they know about. Humans are certainly very good at turning a blind eye to their ignorance.

There is also a certain amount of herd behaviour here as people see others using traditional methods and automatically assume they must provide value and generate insights. Agencies also make a lot of money out of traditional methods of research and so it’s not always in their interests to suggest more valid ways of doing research.

Whatever the reasons though, what marketers should by now recognise is that most traditional methods of research are deeply flawed and unlikely to predict future behaviour. So what should marketers used instead? Are there affordable methods of research that can access the subconscious brain?

What are the alternatives?

 

There are a number of research techniques that can access or offer insights about how the automatic and subconscious mind responds to marketing activities. These are generally referred to as implicit or indirect research techniques as they don’t rely on direct, deliberate, controlled or intentional self-reporting. As we can see from the table below there are relatively few methods that are truly implicit..

Neuroscience:

There are two kinds of neuroscience research techniques, functional magnetic resonance (fMRI) and EEG. fMRI uses a powerful magnet to monitor changes in the brain’s blood flow in response to stimuli and gives access to deep parts of the brain such as the reward centre. However, fMRI is mainly used in academic research because it’s expensive to use and participants have to lie completely still in a large machine.

Image of table showing different types of research and whether they are implicit techniques

Electroencephalography (EEG) involves placing a cap of electrodes connected to the participant’s scalp and measures electrical activity from the synchronised activity of thousands of neurons. This allows researchers to analyse which areas of the brain are active at a specific time and then match this activity to audio and visual stimuli.

EEG though allows respondents to retain mobility during the research process and is much less expensive than fMRI. EEG cannot access deep into the brain to where the reward centre is located, but it can identify instinctual emotions such as excitement, joy and sadness through changes in activity. EEG can also help in areas including;

  • Perception – EEG can track which regions of the brain are activated when see an object and improve the visual look of an object for optimal perception.
  • Attention – EEG can help identify which object elements and features grab our attention.
  • Motivation – EEG can track whether people are drawn towards a stimuli or try to avoid it.

EEG technology is the fastest growing neuroscience technique and is used by organisations to evaluate advertising campaigns, packaging and product design.

Biometrics:

Biometrics are techniques that measure the body’s physical response to a stimuli. Biometrics monitor bodily functions such as heart-rate variability, skin conductance, respiration and eye movement. This allows researchers to identify unconscious responses to marketing activity that self-reporting would never be able to accurately measure. These techniques can be used to measure emotional arousal to help improve website design, advertising campaigns, packaging and new product development.

Galvanic Skin Response (GSR):

GSR monitors the electrical conductance of the participant’s skin as this changes in response to emotional reactions. GSR is often combined with eye tracking to identify the intensity of emotional responses and also the specific asset or message that triggered the emotional reaction.

Eye-Tracking:

Image of faces showing emotion on different devices
Image Source:

People can’t control where they initially look on a screen and so measurements of gaze can provide useful insights about the effectiveness of different designs or marketing messages. Eye-tracking technology uses a web cam or a video camera to monitor eye gaze and movement to identify areas on a screen which draw visual attention.

Eye tracking is software that uses a web cam or a video camera to monitor eye gaze and in some cases biometric responses to visual content. This generates heat maps of eye gaze to show where visitor attention is drawn to on the screen. This can provide valuable insights about the effectiveness of different designs and whether users are noticing important messages or assets on page.

Increasingly eye-tracking software now includes facial coding technology to identify the emotions a user is displaying in response to marketing material. The software uses vision algorithms to map key landmarks on a person’s face and machine learning algorithms analyse pixels in those regions to classify facial expressions according to common emotions.

Eye-tracking company Affectiva provides such technology for gaming apps. This integrates into user interfaces to allow developers to make their apps adapt to the emotional responses of users in real-time. However, research by Nielsen discovered that when facial coding is employed in isolation it is a poor predictor of sales. This is why it’s important not to rely on a single method of research because it is only giving you one piece of the jigsaw.

Heart Rate Monitoring (ECG):

A participant’s heart rate can be tracked with an electrocardiograph (ECG) machine to monitor a person’s physiological response to marketing efforts. The assumption here is that changes in a person’s heart rate are symptomatic of unconscious emotional responses that people do not have full awareness of.

Affective Priming and Implicit Association Test (IAT):

These research methods measure implicit reaction times in response to priming participants with words, images or sounds. By priming respondents with a specific word or issue it helps makes a corresponding concept more accessible.

Implicit reaction time tests (IRTs) measure intuitive, gut reactions and subconscious reactions to brands, packaging, new product concepts, adverts and other marketing communications without the biases of conscious rationalisation and social influence inherent in traditional research methods.

Research by Steinman and Karpinski (2009) found that implicit not explicit attitudes towards the brand GAP forecast engagement and purchase intentions. Further, Brunel et al. (2004) found that implicit techniques can identify attitudes towards brands that explicit methods are unable to show (e.g. variance by race for brand preference was shown by implicit research, but not explicitly).

Image of Implicit Association Test

The Implicit Association Test (IAT) is one of the most popular methods of implicit research. It measures how quickly participants sort words or images into categories every time they are primed by a stimulus. The IAT uncovers the strength of respondent’s feelings by measuring how each prime affects their mental processing speed and accuracy.

Implicit Research Agencies:

There are many research companies that offer implicit research methods to understand subconscious drivers of behaviour. At the forefront of applying implicit research techniques are new companies such as Sentient Decision Science, but established providers such Nielsen have also developed a suite of implicit research methods.

Eye-tracking companies like iMotions combine eye tracking with EEG, GSR and explicit research feedback to deliver insights to improve marketing content and user experience designs. Marketing consultancy firm Beyond Reason have developed their own model of implicit motivations and use a form of the IAT to identify the subconscious drivers behind brand loyalty.

Psychological motivations drive attention and much our behaviour.
This motivation model is the intellectual property of BEYOND REASON.

Will Implicit Techniques Replace Explicit Methods of Research?

Implicit research techniques can help us better understand subconscious drivers of behaviour. But whilst focus groups are certainly past their sell buy date, other explicit research methods (e.g. one-to-one depth interviews or surveys) can still offer useful insights when carefully designed.

It’s important to recognise that System 1 and 2 don’t work in isolation and they often respond at the same time to our marketing efforts. Further, observational techniques don’t suffer from the same flaws as self-reporting studies and should be employed when appropriate. Controlled experiments such as A/B testing also allow us to understand how users behave in reality to sometimes very subtle changes to the user experience.

So, whilst implicit research techniques are certainly a step forward in understanding underlying human motivations, they are often most powerful when combined with observation and explicit feedback. Having a sound and well thought out research design should always be your priority rather than being prescriptive about the techniques to be used.

Asking direct and often stupid questions is often the biggest problem with explicit research. Avoid asking people to predict the future as if they were any good at forecasting they would be multi-millionaires. A collaborative approach to research where employees work alongside customers and prospects to explore problems and needs is likely to be more insightful than the traditional structured questionnaire approach.

Thank you for reading my post and I hope you found it useful. Please share using the social media icons below if you like this post.

You can view my full Digital Marketing and Optimization Toolbox here.

To browse links to all my posts on one page please click here.

  • About the author:  Neal provides digital marketing optimisation consultancy services and has worked for  brands such as Deezer.comFoxybingo.com, Very.co.ukpartypoker.com and Bgo.com. He uses a variety of techniques, including web analytics, personas, customer journey analysis and customer feedback to improve a website’s conversion rate.
  • Neal has had articles published on website optimisation on Usabilla.com  and as an ex-research and insight manager on the GreenBook Blog research website.  If you wish to contact Neal please send an email to neal.cole@conversion-uplift.co.uk. You can follow Neal on Twitter @northresearch, see his LinkedIn profile or connect on Facebook.