The APQC Blog

Why Are Silos So Detrimental?

I recently spoke with Ron Ross, Business Rule Solutions, LLC, to discuss operational silos and why they develop, their impact on organizational effectiveness, and the role of process management in bridging the gap between them.

Why do organizations develop organizational silos in the first place?

If you are responsible for a function, you naturally want to control it. Your group becomes the in-group; everyone else the out-group. Maintaining clear boundaries is perceived to reduce friction. Hierarchy just seems easier. Information passes upward; control and command downward.

It’s easy to fall into the trap. Organizations have often tended to reward efficiency more highly than effectiveness. Efficiency can be measured on a very narrow scale and is something that managers can control on their own, without regard to wider implications. Incentives skewed only toward efficiency tend to encourage silos.

Effectiveness, in contrast, needs to be measured on a broader scope. Achieving it seems harder because it requires greater collaboration. Unless deliberately encouraged, organizational schemes that optimize effectiveness tend not to arise spontaneously.

Why are silos so detrimental to organizations?

Silos probably were necessary when all information and knowledge was based on person-to-person communication and pencil-and-paper. But digital takes us way beyond that point. The instant accessibility we take for granted today changes everything, not the least of which is customer expectations. It changes the game for optimal organizational and governance schemes.

Put simply, the effect of silos is to optimize locally, often to the detriment of the end-result. They result in product components that aren’t interchangeable; data and knowledge that aren’t reusable. The result is unagile organizations where management always seems to be fighting fires.

Innovation tends to be another casualty. Creativity is most likely in open marketplaces, but silos effectively act as closed marketplaces. Meaningful innovation can easily stagnate.

What are some symptoms you can use to tell if your organization has silos?

I’m often struck that customers and third-parties seem to have a clearer view of an organization’s operational challenges than staff inside the company does. Why? Because external parties are often forced to interact in disorganized and disjointed ways with different parts of the organization to receive value-add and resolve problems. It’s almost as if heavily siloed organizations try to outsource their integration issues to outsiders. Just think about the last time you yourself were a customer and had a hard time reaching the right party to resolve your issue.

Another frequent symptom is internal communication problems. Do different parts of the organization seem almost as if they spoke different languages? Not likely to be very effective.

Perhaps the most telling symptom of silos is simple finger-pointing. That’s a sure sign that parts of the organization do not appreciate the role and significance of others in producing end-results. Imagine yourself in the same lifeboat together. That’s not a time for finger-pointing, but rather for all to be pulling together as a team.

What role does process management play in addressing organizational silos?

Removing silos and eliminating their ill affects requires getting everyone on the same page. A process perspective is basic in achieving that. The focus needs to be on what end-value is being created, and everything required collectively to produce it.

Several steps need to be taken in that regard. First is to recognize there are no silver bullets; a deliberate engineering approach is required. Second is to understand what techniques are needed.

Understanding, modeling and evaluating the organization’s value chain is foremost, but not in itself sufficient. You also need to understand and address the communication and knowledge dimensions of the problem. And you need stand ready to bust business policies that are falling short in promoting optimal end-results. Fortunately, there are proven techniques to address each and every one of these challenges.

For more information on this topic, join us on Tuesday, September 10th at 11:00 a.m. CDT for “Value Chains, Policy Busting and Concept Models-Key Engineering Techniques for Escaping Silos”, where Ron will discuss how organizations can move beyond silos.

Or join Ron  and other process management experts who will be speaking at APQC’s Process & Performance Management Conference October 3-4.

For more process and performance management research and insights, follow me on twitter at @hlykehogland or connect with me on LinkedIn.