As a point of clarity, there is another silos definition being used in the SaaS market. In this definition, a silo exists when a SaaS company sells its offerings to a group or division within a particular enterprise without selling to the entire organization. In other words, one division might be using a specific customer relationship system independent of what other divisions of the company might be using.
For a SaaS company, these silos might be considered inroads to the larger enterprise and aren’t necessarily bad. To an enterprise business, having one division using a management SaaS offering independent of other divisions shouldn’t be considered a positive thing – it can lead to the type of silos this article discusses. Such silos create barriers to information sharing within the enterprise as disparate systems fail to share information with each other.
Why do organizational silos exist?
So, why do silos exist? To quickly recap part 1 in this series, organizational silos are created within a company primarily due to a lack of clearly defined goals for the company, and a lack of communication of those goals throughout the company, allowing individual departments or groups to ‘find their own way’ of doing things. They are also created when there is a lack of urgency to obtain any particular corporate goal, giving group leaders the time to focus inward on their kingdoms. Inevitably, it is usually a failure of leadership that allows silos to form and exist. It starts, and ultimately ends, at the top.
Let’s address each of the causes of silos discussed in part 1 of this series on Silos and Turf Wars, and ultimately talk about ways to break down silos in the workplace and prevent them altogether.
Common causes of organizational silos
1. Organizational silos created by a lack of team mentality
When leaders have no real sense of urgency to reach corporate goals, or don’t necessarily agree with those goals, they tend to develop a loyalty to their division, group, or team that supersedes their loyalty to the company. Personal gain and status can become the driving force behind leaders. Those leaders will be much more focused on fighting for resources and protecting their ‘turf’ than on making decisions that are right for the overall goals of the company.
From my experience, this is actually the natural state that companies and leaders fall into. It is generally caused by a lack of clarity or commitment at the leadership level of the real goals of the company; from not having intermediate and urgent goals for the company, not creating complete buy-in to those goals, and not enforcing those goals with compensation and incentives directed at the goals.
In my series on Why Teams Fail, I talk about how to create an environment in which trust, communication and decision making are done in such a way as to create the camaraderie, emotional investment and complete buy-in to the decisions regarding the company goals that are necessary to prevent silos. When executives are allowed to believe that their particular group or role are more important than progress toward the corporate goal, they are going to make decisions that benefit their group without much regard for the effect on the rest of the company.
Think about the following statement: “I think the marketing department deserves a larger portion of the overall budget this year.” Whatever follows that statement can determine if silos exist in that particular executive environment.
If this statement is part of an overall discussion about the intermediate goals of the company, and the marketing executive follows the statement with a description of how more marketing dollars will help achieve the overall stated goal of the company, then all is good. More than likely, that’s not what follows. It’s more likely, “Marketing got the shaft last year and Engineering got way more budget than we did, so we deserve to get more this year,” or something equally as defensive. Again, this seems to be the natural state within most companies. In this case the marketing executive is making the case that marketing deserves a larger budget, not that marketing should have a larger budget, because it gets the company closer to its stated goals.
Here is where you might ask, “But doesn’t more marketing budget result in greater sales?” Sure, maybe, but what if increasing sales isn’t the foremost goal of the company at that time? Certainly, in a company that hasn’t really focused on goals other than the obvious, never ending goal of increasing sales, this is the case; but as we will discuss, having a rather unfocused and nebulous goal like this can lead to silos in the workplace.
Every executive has their own idea of how to increase sales, and more than likely their department is the most important. This is a rather specific example, but you can see how the lack of a more defined target can lead to multiple self-focused definitions of what is needed.
2. Organizational silos caused by losing focus of company goals
As with the example above, and indeed most of the examples I show in this article, if a department, division, or executive has a lack of understanding as to how their particular responsibility fits into the bigger picture, then they are going to be more concerned for the health of their specific group and not about the company progress. Ultimately, it’s all about teamwork and communication – and it starts at the top. A lack of clarity around where the company is going and how it intends to get there again starts at the top.
I have seen this a lot in my career, in fact, I’ve been the architect of the situation way back at the beginning of my career. With a young executive team, it isn’t always apparent that creating, debating, and ultimately embracing specific shorter-term and more urgent goals is important. After all, increasing sales seems to be an important mantra, even though it isn’t well defined.
It’s easy to get everyone to agree on that as a goal, and after all, isn’t consensus important? I’m being really facetious here. This all goes back to my series on Why Teams Fail, and how the lack of the executive relationships that those articles define creates the lack of understanding about the goals of the company and the role each department plays. I will come back to this in a bit.
3. Organizational silos caused by competing for resources
To keep using a very simple example, when the goal is simply to increase sales, every executive is left to define their role. And funny enough, usually that executive determines that their group is the most important and thusly needs the most resources. Given this environment, the battles for budget and headcount begins.
With a lack of goals, size of the kingdom and executive status become the driving force behind the resource battle. Nobody wants to be the VP of the smallest group. Certainly, the VP of Engineering is more important than the VP of Sales for without products there can be no sales. Certainly, the VP of Sales is more important that the VP of Engineering for without sales there is no company. You get the picture. We will solve this in part 3 of this series on Silos and Turf Wars.
4. Organizational silos caused by bad relationships
With clearly defined and committed medium-term corporate goals, resource decisions can be made based on what is right for the company, and based on what will drive the company to achieve the stated goal. This requires a tremendous amount of maturity on the part of the executives, which is why establishing a functional executive team is first and foremost on the list.
5. Organizational silos caused by lack of communication
In the most extreme examples, we get into the information is power situation in which one department doesn’t let other departments know what they are doing. Information can be used as a tactical weapon when certain data is only revealed, when it is most advantageous to the information holder. If the bad relationships between leaders exists, any occasion to make one executive look bad by revealing some critical piece of information at the most opportune time will be taken advantage of. This is more common in larger companies where fiefdoms are created. Government is another great example of this.
In the final entry in this series on Silos and Turf Wars, we discuss steps you can take to prevent or eliminate silos from occurring the workplace.
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