My friend and former colleague Davin Granroth recently posted an atricle about avoiding the dangers of organizational silos. In it, he makes some excellent points regarding what the specific behaviors that help identify sick silos, as well as how to fix them.
His major point is that you must put optimization of whole organization ahead of the optimization of the silo you are in. This is 100% completely true and I firmly believe that organizations should hold to this point and arrange themselves in such a way as to encourage this kind of behavior.
The question becomes: How? As humans we are quite individualistic. We desire to take care of ourselves and our own, our inherent self interest makes it easy to see how we can meet our needs, yet it is difficult to see how our behavior impacts other people. I believe that there are three key ways to mitigate the effect of silos and encouraging work groups to optimize for the whole.
Promote a Strong Corporate Culture
A strong corporate identity is essential in optimizing for the whole. By helping people identify as part of a group it is generally much easier for them to make personal sacrifices that benefit that group. If you observe non profits, you will discover an interesting dynamic in how people get things done compared to for profit organizations. In non profits people say “I can do this for you!” This is because people know what the purpose of the non profit is and then self select how to best help.
There are many more parts to corporate culture than just having a strong and well communicated reason for being; for instance Zappos believes that customer service is the key to profitability in markets where outsourcing has made it nearly impossible to compete on price. Therefore they have stringent hiring requirements and constant attention to creating a culture of customer service.
When people are with like minded people, even if those people are fulfilling different job functions, they are more inclined to work together and support each other. It’s far easier to rally people around the call to collecting all the worlds information and making it findable than it is to rally them around profit statements.
Encourage Empathy
This is crucial if you want to truly optimize your company for the whole. Many companies are filled with brilliant people who are excellent at solving problems. They may be engineers, marketers, sales people, or executives. However, if the engineers cannot understand what makes the sales people tick, and have zero interest in it then it becomes very difficult for them to make sacrifices so that the sales people can do their job better. To say “We are not going to increase our engineering budget this year so we can increase our sales staff” and to have that statement met with cheers from the engineers is nearly inconceivable.
However, if you’re serious about optimizing for the whole you will need the engineers to be glad to take budget cuts because they’re overstaffed and need more sales people; or vice versa. The only way to accomplish this is to help people feel both the pain and joy of the other parts of the organization. To do this they need to spend time with those other parts of the organization, which is a very strong argument for cross functional teams.
Build The Organization End To End
This may be seen as the most radical idea from this post, but here it is: You shouldn’t have a sales team, or a marketing team. Instead, you should organize your business based upon end to end business value. Many large companies do this at a high level. General Electric has a home appliances division, which is exists solely to build home appliances. Sony has a home entertainment division. Each of these divisions are smaller sub companies of the parent which exist to provide some kind of end to end value. They provide a value to the consumers by creating products to consume, and they provide value to the parent company by generating revenue.
I believe this model should be replicated at an even tighter level. Create independent teams which are as self contained as possible. Create them with a specific customer in mind (Online buyers) and then build out the team by staffing it with as many people of diverse skills as are necessary. There will have to be some shared resources, but as soon as a team requires it’s own accountant or human resources person one should be assigned to that team.
There should be positions whose sole purpose is to ensure that the people with the appropriate skill sets are hired and invested in; for instance a vice president of engineering may be responsible for encouraging good engineering practices throughout an organization. However, I do not believe that there should be functional managers; only value managers who are responsible for bringing the people together to deliver the value the business needs.
Of course this isn’t very normal. Most businesses evolve in such a way as to say “Well, we have five engineers now. I guess we need an engineering manager who is responsible for all the engineers.” Instead, evolve them into “Well, we have two different distinct value propositions: gaming software and productivity software. Let’s break up into two teams responsible for maintaining these value streams.”
Of course there are many more ways to fight organizational inefficiency; but if you remember to always optimize for the whole you’ll generally do quite well.
{ 3 comments… read them below or add one }
End to End organization is a recipe for creating silos that might not cooperate.
But, this is a great thing; reward the silos with the fruit of their labor and you will see enterprising growth. It may not look pretty, but you will get capitalistic growth.
Forget “the good of the company” preschool communist crap and embrace Adam Smith and creative destruction.
Central planning simply does not work.
The divisions that have created the biggest silos, have created something; real value for the company. Let the divisions that cannot compete can die on the vine.
In short, Silos Aren’t Evil: they are great!
Exactly. Maybe I should differentiate between “value silos” which are based upon end to end value; and “functional silos” which are organized around what the person in the silo does on a day to day basis (selling, coding, whatever).
By decentralizing what is “Good” for the company into smaller self sustainable micro companies creating chains of meaning becomes nearly irrelevant.
Just wanted to throw a story on, regarding your first point about a strong corporate culture. I worked in an IT department for an insurance company. They stated their goal for the year was “Great customer service.” No one in the IT department was able to answer the question of if the customer service was for our internal customers, or our policy holders. On top of which, we had a project management office (PMO,) which was responsible for deciding what projects were worked on.
This led to the entire IT department feeling like they couldn’t contribute to the organization’s goals. We were disconnected from the organization as a whole. That silo feeling happened because company leadership thought of our customer-facing departments, and IT leadership didn’t think how to turn this into something that people could figure out how to apply.
I guess the lesson is: Don’t forget to include all your employees in the corporate culture that you’re building.