In this article I’d like to explore the benefits of silo thinking and silo management. For too many years we have been labeling organizations and groups of people as silos. And then we find ourselves fighting that which we have labeled as such in the first place.
Here’s a reality check: How successful have we been so far? Let’s think of a different approach, shall we?
Where it all started
Since the 1990′s silo thinking has been pinpointed as enemy number one of successful change efforts. The term silo stems from Business Process Reengineering (BPR) a school of thought that was very popular and still remains influential today. Management guru’s like Michael Hammer and James Champy advocated transversal process thinking and top strategy thinkers like Michael Porter talked about optimizing the value chain. The bottom line is that business processes – and not business functions – drive results.
For instance, in the context of ERP implementations, Michael Hammer, the founder of business process reengineering, stated that the root cause of SAP failures lies in disregarding some features of the functional organization, where each business function is a silo on its own. He called this situation Process Fragmentation.
Departments in a functional organization are separated from each other. Their knowledge about the end-to-end business process and the customer’s needs is determined by the information that is captured in their own systems. In this organization, any sales representative would be glad to take a customer order, but when it comes to informing the customer about the production schedule, the sales representative is unable to answer. The production data is captured in the production-management system. The walls between the castles also make the production manager unable to say when the order will be shipped. In a functional organization, that’s not his job. Nor will the sales representative be able to tell the customer when his last returned order would be refunded. That information is safely shielded within the accounting system.
What the BPR Prophets Promised
The proponents of BPR told us that process reengineering would be the end of silo’ed organizations. There would be no boundaries anymore between departments and business units. Over the past decades millions have been invested in ERP systems with that specific goal in mind: to optimize processes and at the same time abandon silos.
More specifically, it was predicted that:
- Jobs would drastically change as a result of the different information that was going to be available in the transversal ERP systems;
- Organizational boundaries would fade away as process thinking makes it possible to peek right through the organizational functions;
- Vertical communication and information flows would be eliminated and replaced by horizontal ones in function of the process;
- The authority would move to the people on the floor, as they get access to a universe of data.
What Really Happened
Processes became standardized, that much is true. Most big companies now run systems that force people in a certain workflow. Information flows across departments and they are all connected to the same system.
But all the other benefits that were promised such as broader job descriptions and a flatter organization are still missing.
In fact, quite the opposite has happened: automation by means of ERP systems has rarely led to flatter organizations. Instead we see new silos appearing that are aimed at controlling, measuring and maintaining the processes that have been put in place… ON TOP OF … or even worse IN SPITE OF the organization that was originally there.
Somehow silos seem to have persisted and we still find ourselves fighting them. It is the number one objective of any change program or cultural effort: to abandon traditional structures and to create more flexible process-based units. But it almost never happens; we exhaust ourselves fighting against traditional structures and in the end we even forget what we were supposed to implement in the first place.
There is Wisdom in Silos
So if fighting silos doesn’t work, then how about working with the silos? Just in the same way as there is wisdom in resistance, we could be looking at why they persist. Let’s take a few steps back – let’s UN-label silos as bad and allegedly working against business processes.
Bear with me… here is what this little inversion exercise results into for me:
1. Psychological Safety
Unlabeling silos as bad also means that we un-label – if only for 60 seconds – the functional organization as a set of ‘comfort zones’.
The word comfort zone has become too loaded with negative connotations – when in fact it stands for the something we all need. As humans we need a context of psychological safety to perform well. We simply cannot make sense of changes when we don’t have a safe context to rely on.
Development psychologists will tell you that this innate need for psychological safety begins early in life in our mother’s womb. Gradually, as we grow up the womb is replaced by other things in our life – but our nature doesn’t change all that much: we all need a surrogate-womb. My part of the organization, my department, my floor, my team, … these are in the first place expressions of the psychological safety we need.
2. Silos are shared pools of meaning and understanding
Once we feel safe in a group or in a relationship we will be vulnerable enough to share meaning and to create a common understanding about what is going on. I am referring here to a concept that is used in the book Crucial Conversations (*). According to the authors two good things happen when the Pool of Shared Meaning swells.
- More information means better decisions can be made. The IQ of the group goes up with the addition of more information.
- More information from more people encourages “buy-in.” Buy-in means people are engaged in finding answers TOGETHER…and will be more willing to work to find solutions.
By default, a silo is designed to do just that, and as a result people will start to bond around this shared pool of meaning. This is how culture is made, so we shouldn’t be surprised that a silo is a hard thing to break.
3. Silos are the most optimized way of getting things done
But there is more… The hierarchical structure that we find in most organizations always comes into existence through the collaboration of smart people who connect a market potential to concrete business benefits.
What results is a fine-tuned structure for getting things done in a stable fashion. That structure – however small – is an hierarchy. Even the most flat organizations in the world (such as W.L. Gore, which is generally regarded as the example of a flat organization) will recognize that hierarchy is nature’s way of getting things done with a group of individuals.
Awkward? Not at all. Evolutionary biologists will confirm that this is part of our genes; it’s just a proof of us being humans.
4. Business Processes cannot thrive without Silos
This may sound a little stupid but it’s true. Think about it as the railway-ties for the railway tracks of the business processes.
Let’s not forget that we can only talk about business processes whenever there is a company that has performed so well that it risks to become the victim of its own success. Here is a radical statement: business processes could not exist if there would not be a functional organization to hold them in place with an opposing force.
Business processes rely on the specialization of each silo and it takes a bit more than a good ERP platform to make them work. This is what I see every day.
So instead of fighting silos in your next project, why not trying to realize the intended benefits WITH the silos? What would it be like if you could share the benefits case of your project in the shared pool of meaning of the silos that you touch with your project? To what extent would that change your plan and your approach? To what extent would you be able to negotiate the opposing force that you will be needing in order to keep your transversal initiative on track?
(*) Crucial Conversations: Tools for Talking When Stakes Are High (by Kerry Patterson, Joseph Grenny, Ron McMillan, Al Switzler
