How Sony squandered its resources and lost out on billions

 You don’t always need to live something firsthand to learn a lesson from it. In this series, we investigate interesting business failures and apply the lessons to marketing.

In the 90’s, the Sony Walkman dominated the mobile music industry. Conventional wisdom was that Japanese technology had surpassed America’s…. you know this setup.In 2001, Apple released the iPod and the music industry has never looked the same since.

Now that we are on our 4th Steve Jobs movie, it is natural to think that the iPod was an unprecedented leap forward gifted to society by a rogue genius. But Silicon Valley ingenuity only tells part of the story. The other half of the story focuses on Sony.

Why didn’t Sony produce a successful mainstream MP3 player first?

Answer: The Silo Effect.

You see, Sony had great prototypes for the next-generation MP3 player. By the late 90’s, they realized that to crack the mainstream they needed to design a better user interface. One that the average consumer could easily and intuitively use.

Sony invested significant R&D resources to improve their design. But they made a big organizational mistake: Sony tasked multiple departments with designing the new product. Executives running these departments all wanted to be the hero, who produced the winning design. In theory, competition is healthy.

In actuality, Sony’s internal competition stymied progress and squandered resources. The desire to win led to political infighting. Different teams working on the very similar components did not collaborate, duplicating efforts as they fought for recognition. These different departments were operating as silos, hindering innovation.You might have guessed the outcome. Apple is worth 42 times more today than it was in 2000. Sony, to the contrary, lost half its value since 2000.

Sony failed big time. Apply these lessons to your marketing team so you won’t.

When your Marketing team is siloed, it’s bad for business. Typical consequences include conflicting messages to customers and ineffective campaigns. Often, siloed marketing can be worse off than no marketing at all.

Your Marketing department is particularly susceptible to the silo effect. More than most teams, it requires frequent and substantive collaboration with other departments to be effective. If Marketing is walled off from Sales, Products or even another Marketing team, they are not getting the information they need nor sharing their plans with others.

Avoid these all too typical examples of marketing silos:
  • No feedback loop with sales on effectiveness of marketing content
  • No input from sales on what customers are concerned about most
  • No input from sales to product team on customer adoption roadblocks
  • No insights from product team on how product will evolve in the future

Preventing silos from forming is easier said than done. The most important deterrent is building a culture of collaboration, where your team checks their egos to focus on the larger, collective goal.

Unfortunately, this is not enough. Silos can form even within organizations that have a great culture. It’s natural, when you segment responsibilities some cohesion is lost.

Our advise: actively monitor cross-team communications to reduce your risk of a silo forming and create a system of checks and balances among departments.

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