PROFITABILITY BLOG

In Praise of Silos within Companies
21 Jun 2016

In Praise of Silos within Companies

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categories: Business Simulations, Experiential Learning

I’m about to write what will be regarded as heresy in many quarters: I will argue that the much-derided silos that make up most of our big corporations, do have some merits. Bring on your social media abuse…

In my role as a Director of ProfitAbility, I am often briefed to come up with training programmes to help break down the silo mentality and build cross-functional teams. And that certainly works for many operations, especially those involving high levels of creativity and project work. But when I look at major FTSE 500 corporations, most are still more stratified in their structure – and thank goodness for that. I don’t especially want my bank’s audit silo to lose its focus on the essential operating ratios of the business, for example.

This is one case where people have a clearly-defined function and they are directly accountable for its performance and their own part in it. They understand their objectives, and in a well-run organisation it is possible to measure and reward their performance in the role appropriately.

At the other end of the spectrum we work with companies where LEAN and Sprint processes are in play and people work all hours to deliver new projects on time and to innovate ahead of others. There can be elements of competition internally, as the teams vie to contribute the most value and originality. Design, IT, Production, Engineering, Marketing – they can all play their part within a team.  We help them, through the medium of a bespoke business simulation programme, to make the diverse mix of skills and personalities within a team blend into an effective unit.

But let’s get back to the more traditional structure, because it is not going away any time soon, and see how it can actually be reinforced: how can we build the better mousetrap?

Leverage Collaboration together with Internal Competition

My answer is to invoke the art of Bridging Silos.  Retain the benefits of internal competition, but develop a collaborative ethos across the organisation that can be called upon to create greater value for shareholders in clearly assessed and defined business opportunities.

Easily said – but to make it happen requires a change in peoples’ mindset: and a change in the corporate culture. We all know that the problem with silos is that they tend to have their own objectives and these may be at odds with the overall good of the company. To come back to my bank analogy, the audit team may be doing such a good job in building up super-strong reserves that they are not leaving enough budget for Marketing to be able to compete in the new market for added-value bank accounts; and there is consequently a net loss in account holders (which soon reverses the positive trend in liquidity).

In such a case, we create experiential learning programmes that start with us interviewing the top level of each silo and learning how the overall corporate strategy impacts and involves that function. We design the business simulations accordingly to subtly allow participants to change their mindset about collaborating with people in other silos; they buy into the strategy and convince themselves that this is indeed the right way to go.

The resulting feedback may lead to management realignment – in one big project that I handled there was a problem with the department heads, who ruled their silos as fiefdoms and resented any people being ‘out of line’ by reporting directly to higher functions. The CEO actually demanded the feedback reports from the frustrated business simulation participants and as a result, realigned the rewards for the heads of department – henceforward 30% of their bonus would be based upon measures such as employee engagement and customer satisfaction.

Finally, we work on any issues that people have in forming a Constructive Relationship. It is very hard to collaborate with someone who is not amenable or has a bad attitude. We concentrate on showing people how to give constructive feedback to each other about the way that they performed and behaved. Such openness can be highly beneficial in changing attitudes towards colleagues.

A Forum for Collaboration

We recently held a very successful Forum on the topic of Optimising Cross-Silo Collaboration, and as a result of excellent feedback we plan to hold a further event later in the year. If you are interested in attending, please contact me to be added to the list of potential participants.

Mark Haenel is a Director of ProfitAbility

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