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Saturday, July 28, 2012

Who Moved My Silo?

Who Moved My Silo?
When high walls and self-centered actions have a place in your organization (and when they don’t).

Just down the hall, Dr. Joe’s engineering department is just simply not playing fair. His administrative assistant is not in the rotation for switchboard coverage.  Their expense reports don’t have the required receipts attached to them, yet they get paid.  They infrequently show up to the weekly staff meetings.  They go around H.R. when hiring.  Dr. Joe’s casual Friday’s are cringe-worthy.  Information flows into Engineering, but the sounds of crickets come out. How is it that this department is not held to the same standards as everyone else?  Why isn’t the VP addressing this disruptive situation?  Surely, there has been a great deal of grumbling amongst the rest of the department heads.  And now, it’s effecting turnover outside of engineering.   This silo has apparently not kept everything inside its walls.

“Silo” is a pejorative business term and no institution, whether academic, commercial, or non-profit is immune from the silo’s impact.  Despite its relatively recent negative connotation, the silo is not a new invention, and only gets the moniker when others are negatively impacted.  That silo down the hall from your office, didn’t naturally occur.  It was purposely established and while not inside of it, you helped with its construction.  But maybe it’s not a mere silo. 

Building Silos

Silos are a metaphor for closed-loop internal business communication and function.  Resources and communications are held close to the vest.  Silos might be constructed in your organization indirectly as a result of contractual obligations.  The client has contracted for dedicated space/staff/equipment.  Accounting practices may make it easier to limit the number of hands working on a project so as to track the specific FTE’s used on the project/product. Or specific training for the project for very few individuals make that skill set difficult/restricted to pass on.  Example:  Working with radiolabeled compounds may require hours of training by an external source.  Thus when one needs help to get past a bottleneck, there are only a handful of people that can be called upon to assist with the burden. Once that finite skill set is contractually obligated to inhabit a silo, the remaining projects needing that scarce resource will have a difficult time meeting their milestones.

The president of your organization wants to provide the new hired gun with all of the resources he needs to get the job done.  The CFO wants that specialist to be fiscally conservative and share resources.  These are often diametrically opposed actions. One is a silo building action and the other is a silo busting action.

There are Six Irrefutable Laws of Silo’s

1.      A silo will persist as long as it is profitable for the organization.

The hiring director woos a specialist to join the company with the promise of dedicated staff, etc. The length of the honeymoon is dependent entirely upon the profitability, bid success, innovative output or the positive industry recognition gained by the specialist in his silo.,  Performing below promises or expectations, gets a monitored honeymoon with a shortened silo or it may be engulfed into a different silo.

2.      A silo is either a fortress or a prison.

In the obscure 1965 Movie, The War Lord, Charlton Heston’s Saxons occupy a (silo-shaped) fortress in hostile Friesian territory. After some questionable “public relations” decisions their castle becomes their prison as the locals gain control of when the Saxon’s can freely leave their quarters.  Whether a silo is a fortress or a prison depends entirely on which side of the door the key is on.  Similarly, the silo in the department down the hall may be keeping a toxic influence out or it may be keeping a contaminant contained inside.  The hiring practices over in the engineering department may not be appropriate (or legal) but at least they are isolated away from your department.  Conversely, their perspective may be that they have discovered a fast track to expense reimbursements and it might ruin their advantage if they let the secret out and everyone took the shortcut.  If everyone is on your road, it’s not a shortcut for long.

3.      Silos which are contractually established for dedicated resources are impervious to process improvement programs. 

It will not matter that a six sigma program determines a new process that makes better use of labor or equipment.  If that new process involves sharing the government-purchase electron microscope rather than have it sit idle for 3 days/week. Then that new process will be contractually forbidden. Similarly, if PharmaXYZ has exclusively leased 10,000 square feet of laboratory space for their short notice development testing, they will not be a client for long if you utilize that space for BiotechABC for 1 week a month, simply because you did not schedule effectively.

Other organizations are limited contractually to provide dedicated equipment, laboratory space or staff members.  These situations inherently create silos.  Government contracts will create silos of expertise and/or equipment.  Companies which secure government contracts may purchase a specific piece of equipment, eg. Gas chromatograph, to be used for the government project.  When that piece of equipment is idle, it cannot be used on any commercial work, unless it was contractually stipulated to be allowed.   Thus a wall is erected.  Had the equipment been leased on a per sample basis, then it could be used on commercial work.   If the contract is based on FTE’s and the FTE’s were to be Ph.D. level staff then the silo is erected around the Ph.D.’s and therefore cannot be utilized to troubleshoot  commercial project which may be facing a deadline issue. 

4.      Incentive/Bonus programs reinforce silo construction.

Cooperative sharing incentives for localized leadership will expand the diameter of the silo. Incentive programs constructed to turn lack luster groups into profitable ones, which contain no cooperation clause will establish/reinforce “every man for himself” strategies  by the incented one. 

5.  A silo will be replaced by a silo with a different scope of influence.

Sometimes called “realignment”, it may take time for the organization to recognize it that the new organization is just a different configuration of a silo.  Business Development, Marketing, Communications and Social Media units will merge and morph into each other and then subdivide again in varied combinations.  The break up will occur once the silo is recognized as having diminished effectiveness. e.g. Why doesn’t Marketing talk to the Business Development group?  If we put them in the same group they will have to work together.

6.  If the CEO didn't want silos, there wouldn't be silos.

How the entire organization is structured will be a determinant if silos are intentional. Those enviable start-ups are nimble because they operate in an environment where every employee is unselfishly driving towards the same goal and they know they cannot achieve the goal without the collaboration of the entire team. The CEO (COO/President/General/Dean) paints the vision for the organization and assembles the team. When the CEO has not created this environment, at the organizational meeting it will be apparent to the most casual observer whether a departmental update comes as news to the other departments. Retracing steps or rehashing issues are evidence of siloed organizations. 

Silos (sometimes) Have a Place in Your Organization.

Organizations with departments with different funding sources or with strikingly different regulatory requirements are keenly poised to create silos. This does not have to be a negative situation if the entire organization understands where expense  and resource lines must be drawn.  These are siloed organizations by design. Mergers and acquisitions hold the greatest challenge for silo busting.  Maintaining that unique identity of the acquired group must first be determined if that is essential for continued success of the organization.  Otherwise, let the silo busting begin!

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