Silos: Build or Bust

I have worked with many organizations and have often heard “this is the most silo-ed company you will ever see.”  Everyone thinks their company is the worst.  Whether your company is the worst or not does not matter.  What matters is that silos likely cost a company significant money.  Some silos (like a large conglomerate of unrelated companies) make sense, but most do not.  Silos can exist at an operating unit level (product group A or product group B) or at a functional unit level (HR, legal, or marketing).

Silos are formed by a number of factors including:

• Improper elevation of internal competition over external (an assumption that if some internal completion is healthy, then more must be even better)
• Negligence (i.e. being ignored, tolerated, accepted) by top leaders
• Fear of complexity. Various groups can fear the added complexity of working with others and prefer to focus on getting “their” work done.
• Karma (i.e. turnabout is fair play). An example of this karma would be one group deciding to go solo on some decisions and other groups interpreting the action as permission to do the same.
• Inertia of tradition. The excuse that groups have not traditionally worked together (with no ill effects or repercussions) -which assumes the business environment does not change or has not changed.

While there are no silver bullets (and I have no proof that silver bullets really work anyway), two factors must be addressed to bust silos:  intrinsic and extrinsic motivators.  Intrinsic motivation relates to focus on value creation.  High performers want to be part of something big and are generally inspired by focus on the big impact that value creation entails.  Conversely they are often put off by the BS surrounding attention to things that don’t create value.

Extrinsic motivation relates to the concept that you get what you reward.  An organization cannot fault senior executives pursuing their own agenda if they (and their teams) are incentivized to do so through bonuses and corporate prestige/praise.  Appealing to a person’s higher nature (value creation) is one thing.  Appealing to a person’s lower nature (where the wallet is located) is another.

Silos are an enormous cost to organizations for the financial opportunities lost, plus the demotivation silos can cause with high performing individuals.  Take time the time to root out silo behavior and see if you can get that value back in your company.