Silos are Murdering your Business

The silo effect is everywhere in business. If you’ve never heard of the concept and have some strength to lift off the rock you’ve been living under, here’s the deal: for decades (centuries?), we’ve organized business according to functional expertise. That, in turn, creates silos. Silos are essentially departments. So you’ve got marketing, sales, IT, operations, etc. The Silo Effect is when leadership of each department begins (a) believing their department is the one that truly matters to the business and (b) only communicating within their own department.

30-40 years ago, The Silo Effect was a problem – but it wasn’t necessarily a company-killer. Now it’s closer to the latter. See, a few different things happened along the way. First off, digital tools exploded — insert oft-seen quote about Facebook getting to 500 million users in 1/5th the time it took to build the highway system here — and as a result, everyone technically needs to collaborate with IT.  Then, because of those same digital tools, the sales funnel changed about 127,893 times — so now sales and marketing need to collaborate more with each other and other departments. Then we started creating business models that were based less on tangible assets, as seen here:

A lot changed in a short period of time, and as all this was happening, there was a generally greater push towards ‘collaboration’ and/or ‘teamwork’ in business environments, even though no one really wants to collaborate as much as we think they do.

When you factor everything here together, The Silo Effect can be pretty deadly to a company that’s still chasing it. What can be done? Well, a bunch. But first: a funny story!

The Silo Effect: A touch of humor

Normally this idea about The Silo Effect refers to whole departments, i.e. marketing, operations, etc. (As I said above.) I actually worked in a place once that had silos within silos, which is a really brutal version of The Silo Effect. Here’s what I mean: within marketing, there was a team that did e-mail marketing, a team that did social media, a team that did content production, and a team that did the overall business strategy for the website.

Four teams. All individual silos. Those teams almost never spoke to each other. I should know, baby! I was on one of the teams, and aside from vaguely sitting near 2-3 other people, the teams never collaborated. Four silos, within the broader marketing silo. Now, if content ain’t talking to social, how effective do you think the social sharing is? If business of the digital side ain’t talking to e-mail marketing, how logical do you think those processes are? See my point here? The Silo Effect is bad when it’s just departmental. When you start going deeper, it makes you want to crawl under your desk and suck your thumb all day.

The Silo Effect: Why does it happen?

I could write 90 million words on this, but it will bore everyone, so I won’t. I actually got canned from a Teach for America mini-gig back in April ’14 and before I headed to the Memphis Airport (that’s where I was canned), I wrote this blog post on silos — then I went and got drunk at the Memphis Airport, so that was an interesting day of my life. I digress.

The main thing to understand about silos, and thus about The Silo Effect, is that it’s really all about psychology. It’s not really about work or the tasks or the projects. See, people need to self-identity, and that happens a couple of years into your career. You may end up shifting industries and job roles 19 more times because that’s the modern economy, but a lot of people like to be able to say “I’m a marketing guy!” or “I’m a crack data guy!” or the 2016 buzzword hell version “I’m a growth hacker!” (Gag.) In-groups and out-groups are very powerful. That’s a lot of how humans organize our thoughts, so … that’s the underlying deal with The Silo Effect.

The other aspect — also psychology — that you need to heap onto this is that work is, at best, a fraught exercise in not looking totally incompetent. On top of that, you want to seem somewhat relevant. That’s why most people run around telling you how much work they do, instead of anything quality they accomplished. Quantity > quality, because quantity is hard for others to question your role.

This ties back to The Silo Effect because silos, for the most part, can be nurturing places. You know who your boss is. You know who their boss is. You know your teammates — the superstars and the slackers. This makes you feel comfortable, which increases relevance and decreases fears of incompetence. So you’re a sales guy, baby! And you know your team!

** Cue ominous music **

But now some executive came along and wants you to collaborate with IT on a big project. “It’s a $16 million revenue play!” someone bellows. But you don’t know IT. They dress weird. They fire Nerf guns at each other. These aren’t the sales guys you’re comfortable with..

… so what happens? Usually The Silo Effect takes hold and you run back to your comfortable little corner of the organization and do the things you understand and chase the targets you know and hope this IT Project can be done with a couple of poorly-contextualized e-mails.

This is how we mostly design what some have dubbed ‘collaboration.’ It’s really just The Silo Effect and people racing in circles from meeting to call and Point A to Point B, all the while with some managers screaming about “a sense of urgency” on this project. It’s great to watch in real-time.

Final tier of The Silo Effect problem: how people are judged and compensated. Look, I hate to break it to you, but if you’re a Type-A target-hitter running a department, you care about (a) how that department is evaluated and (b) how you’re evaluated, because that ties into bonuses, scratch, perks, and opportunities. Executives often try to foist projects on department heads and then the project bombs, and the executive yelps about why it happened. Here’s the simple reason it happened, sir: the project wasn’t tied to that person’s ability to get more from you. As a result, they half-assed it. It’s that simple.

At that company I referenced in the funny part above, they constantly tried to combine a team called ‘consumer’ with a team called ‘marketing,’ even though the two teams did exactly the same sh*t in reality. Finally, right before I left, the teams were combined, so someone got the message. But before they were combined, here’s what happened literally every week: the CEO created a new idea and handed it to the head of consumer. He did absolutely nothing with it. The CEO bellowed about problems and everyone ran around in circles. Much fraught stuff happening. And why? Because the head of consumer could care less. The project isn’t what he was measured on, even if it wasn’t coming from his boss — and he knew it too. (Smart guy.)

Life lesson: when execs say “what’s measured is what matters” — i.e. The Spreadsheet Mentality — they’re talking just as much about their own careers as the bottom-line health.

So how do we break down The Silo Effect?

It’s hard — all change is hard — but here are some ideas:

That’s a start. There’s obviously a lot more to it — and each organization, like each family, has its own unique set of issues and challenges — but that’s a humble beginning.

The Silo Effect: A solid quote

This is from an article on Wharton’s website about smashing down The Silo Effect at a big company. Note this part:

So what did we do? I said the first thing we need to do is to create a structure where people can talk. I always believed if you cannot collaborate around your ideas, you cannot create. That means communication has to be, first and foremost, the platform. We had nothing but silos. Each brand was a company. They were so silo-driven that they had no standard email exchange. Different business cards, different email service. It was like the United Nations — the countries didn’t talk. United of nothing.

Two solid aspects to that quote:

  • If you can’t collaborate, you can’t create (and, uh, if you can’t create, good luck with growth modeling)
  • The United of Nothing — isn’t that a pretty solid way to describe most places, work-wise?

Any other thoughts on The Silo Effect?

My name is Ted Bauer. Want to be friends?


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