Strategy, Legal & Operations

Why silos damage your business and how to stop them

Within a business context, a silo is defined as a department, system or other kind of process that operates in isolation from the rest of the business.

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Within a business context, a silo is defined as a department, system or other kind of process that operates in isolation from the rest of the business.

This might not be full isolation. It might be that just one key function is blocked off from the rest of the business. However, silos of any kind can destroy businesses from the inside out like a kind of rot.

They’re not always bad. A “skunkworks” idea-generation department, for example, can benefit from the walled-garden nature of silos.

However, in most instances silos are not only undesirable but also dangerous to the health of the business. They can impede growth because they limit employee actions within the business – and they limit how staff respond to customer needs.

Research from Econsultancy/IBM showed that nearly two thirds of businesses believe siloed organisational structures are one of the main barriers that have to be dealt with when building a joined-up view of the customer journey.

Identifying silos

Identifying a problematic operational silo is often obvious but that’s not always the case. If you want to turn detective, here are some clues and giveaways to watch out for, along with potential solutions.

Rapid business growth

Lots of new people might enter a business when it grows and especially if that’s rapid growth. In an ideal scenario, every new employee would go through an onboarding procedure to not only welcome them but also connect them to the rest of the business (especially senior staff). However, this might not happen for all kinds of reasons.

As such, fertile conditions are created for operational silos to come about, especially if management already has its hands full with the growing business so can’t pay full attention.

The new employee isn’t to blame in a situation like this. They’re most likely attempting to complete their job description in the most effective and efficient way possible.

It’s just that they don’t see the full picture of the business, and therefore the rest of the business doesn’t necessarily benefit from them as it should.

The solution to a problem like this can be as simple as reviewing lists of new employees and ensuring a retroactive onboarding procedure is in place, or creating workflow templates for new employees at a managerial level so they know to fit in with the business practices.

Bedded-in colleagues

It’s often a single colleague, particularly at the lower management level, who can be behind the enforcement of departmental operational silos within a business.

While we mention above that new colleague engagement can be a cause, it’s also true that engagement with older colleagues should be examined to uncover calcified processes or assumptions that no longer suit the business objectives.

For example, if a business has grown or perhaps expanded via acquisitions then a business process that once seemed ideal might now be antiquated.

It pays to ensure each colleague is required to regularly review their processes and methodologies, probably as part of a periodic review with their own manager.

Nobody enjoys having their work processes inspected in this way, but this is why many businesses encourage a culture of exploration and innovation. This means nobody is afraid to constantly polish the diamond – even if it might appear to be already shining brightly.

What colleagues say

A key manifestation of operational silos within business will be colleagues blocked from knowing or doing something they need to. As such, detecting the presence of an operational silo can be as simple as listening to those perturbed voices.

This could be via an informal process of asking around, or something like an anonymous suggestion box where people can constructively suggest improvements to all work processes.

Managers can also be asked to solicit feedback from colleagues on processes, with the explicit goal of identifying operational silos.

Avoiding operational silos

Identifying and removing operational silos is entirely unnecessary if they can be stopped from arising in the first place.

Creating a mission statement within business has attracted an unfortunately cynical and weary reaction among many employees, but the fact remains that it’s vital for all employees to be aware of a clear statement about what’s important to the business and where the business wants to travel to.

This is an effective barrier against silo creation.

Asking department heads and managers to check their processes against the mission statement can therefore be a way to avoid operational silos arising.

However, another key way to avoid operational silos lies with intelligent use of information technology and in particular ensuring there’s no hindrance to the flow of data around your business.

For example, it would be ideal if those managing the sales team were easily able to access the data from manufacturing in order to check stock levels.

You might already have systems in place for sharing data across departments but ask yourself how up to date the information is when it’s shared, or how easily accessible it is.

For example, if the sales department has to specifically request the manufacturing data in the form of a report then it might take days, weeks or even months to be sent over – and it will always be old data when it arrives.

This means managers can’t be truly responsive, and might therefore miss opportunities or fail to spot problems in good time.

Essentially, having to create reports in response to crucial data requests is yet more evidence of operational silos.

There are a handful of basic tests for information technology which, if put into place within your business, will make the creation of operational silos much more difficult.

Use as few discrete systems as possible

While it’s not uncommon for different departments to use software specific to their needs, it’s not acceptable for them to arbitrarily do so simply because it serves their needs best.

For example, while the sales and marketing departments might utilise a CRM, there are add-on packages for CRMs that manage inventory.

Because the same platform is being used, there’s no impedance to the flow of data between the two departments. In fact, basing the entire company’s technology on a single platform such as a CRM and/or a finance package is a powerful way to avoid operational silos arising.

Get on the cloud

A lot of software nowadays exists within the cloud, including accounting software, which is to say both the application and your data live online. The benefits of the cloud from an operational viewpoint in avoiding silos is that data is seamlessly shared without anybody having to do anything.

Indeed, a single version of business data will exist such as in the above example of CRMs and associated add-ons. Put simply, as a side effect of the way it works, cloud computing reduces the ability for operational silos to even come about in the first place.

Editor’s note: This article was first published in August 2018 and has been updated for relevance.

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