Winning Your Way against Organizational Silos the Strategic Way

Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]

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Staying competitive in the face of increasingly accelerated disruption can be a challenge to 21st-century companies.  Many companies have started to rethink and retool their offerings and operation.  This kind of transformation, however, requires a collaborative effort from all parts of the organization, no matter how different their processes, systems, and cultures have been in the past.

Often, the transformation effort falls flat due to problems that arise when disparate parts of the company fail to work together with a shared sense of mission. Most large companies have divisions, or even groups and functions within divisions, that operate in silos.  This can be for a good reason.  In the knowledge economy, professionals need to work with people who possess similar professional skills to fulfill specific mandates.  Organizational silos can exist to harness knowledge-based skills or specific job functions, or they can be geographic.  In many industries, silos are vital to productivity. But when an organizational transformation is needed, it is a different story.

Silos, during Business Transformation, mean that the very parts of our company that must work together are unaccustomed to doing so, and are even unable to communicate with one another.  They are culturally misaligned, inherently mistrustful, and territorial.  These problems can complicate change efforts, or delay or derail the delivery of their benefits.

Understanding Organizational Silos

Conventional wisdom holds that silos are flawed business construct: a legacy of command and control leadership symbolizing outmoded and inefficient management. But, in truth, silos can help establish boundaries and maintain order.

During normal operation, the positive effect of silos outweighs the negatives. However, during transformation, silos can be stubborn obstacles to creating a more effective path to growth and profitability.  Organizational silos need to be deconstructed during times of significant change to support growth.

Breaking Down Silos: The 7 Strategies

When faced with potential market disruption, siloed companies must take action and break down these silos. There are 7 Strategies to Breaking down Organizational Silos that companies must take. These strategic interventions must be undertaken to achieve change.

Strategy 1: Align leaders

The first strategy in breaking down silos is Align Leaders.  When there is a warring, competing agendas among Leadership and there is confusion among the rank-and-file about what to do day-to-day to enable organizational strategy, then this action is most effective.

Strategy 2: Create cross-functional teams

Strategy 2 is more geared towards encouraging individuals to think future state and collaborate.  Most often, siloed teams struggle with cross-functional problems. As such, there is a failure of individuals from different functions to successfully work together.

Strategy 3: Create clear roles and responsibilities

Creating clear roles and responsibilities is a third strategy that aims to clarify priorities and expectations. It can be a challenge when teams are confused about what are the priorities and expectations. As a result, employees do not know what to do, whom to listen to, or how to balance the demands of a day job with a new company or team needs.

Strategy 4: Co-locate teams

Strategy 4 is co-locating teams. It can be a challenge if the organization is global as well as the teams.  Often, global teams run into complexity with scheduling and limited time together.

Strategy 5: Create Joint Incentives

Strategy 5 is creating Joint Incentives.  A challenge often faced is cross-functional teams do not work well together.  When cross-functional teams do not work together, there is cliquishness that can border on high school lunchroom behavior when confronted with new team members or new ways of working.

Strategy 6: Create a “two in a box” Leadership

Creating a “two in a box” leadership is the 6^th strategy. When there is a single leader, this can create political challenges.  The choice of a single leader coming from one of the silos can appear political and this can generate resistance.

Strategy 7: Clarify decision rights

The 7^th strategy is clarifying decision making rights. This is an effective strategy when consensus is not reached. When consensus is not reached, there can be conflict and when there are two leaders, a standoff can result.

Understanding the 7 Strategies will enable organizations to effectively break down silos. Being able to break down organizational silos can revolutionize organizations to achieve successful transformation. This can be achieved by learning how to balance the effect of organizational silos, as well as knowing how to effectively implement the strategies of breaking these down.

Interested in gaining more understanding of how to remove Organizational Silos? You can learn more and download an editable PowerPoint about Removing Organizational Silos here on the Flevy documents marketplace.

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Want to Achieve Excellence in Organizational Design (OD)?

Gain the knowledge and develop the expertise to become an expert in Organizational Design (OD). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Organizational Design (AKA Organizational Re-design) involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. It includes:

1. The overall organizational "architecture" (e.g. decentralized vs. centralized model).

2. The design of business areas and business units within a larger organization.

3. The design of departments and other sub-units within a business unit.

4. The design of individual roles.

In the current Digital Age, there is an accelerating pace of strategic change driven by the disruption of industries. As a result, to remain competitive, Organizational Design efforts are becoming more frequent and pervasive—with the majority of organizations having experienced redesign within the past 3 years. This has only been exacerbated by COVID-19.

Frustratingly, only less than a quarter of these Organizational Design efforts are successful. Most organizations lack the best practice know-how to guide them through these Transformations effectively.

Learn about our Organizational Design (OD) Best Practice Frameworks here.