How to Break Down Functional Silos

Editor's Notes

• #3: Presenter’s Introduction
• #4: Silos is one of the most common challenge we hear when we talk to clients and one of the main reasons organizations restructure in the hope of creating alignment and eliminating them.
• #5: For today’s discussion, I’m going to talk about the negative effects silos have on an organization, -c- We’ll explore the root cause of this challenge and–c- and Ill share three rules that can help eliminate them. Let’s start with a negative effect on to the external customer or client.
• #6: Silos can make a company appear to be multiple companies. One company we worked with had different product lines that the customer experienced each business unit as a separate company. Another had their services set up by region which was how they were structured. Those regions were the silos and customers that had their own businesses in different areas, had challenges because things were never consistent among the regions. A number of these effects on the customer, were caused by how the silos were effecting how the organization was operating.
• #7: The first effect is on the cross-functional business processes that ultimately serve these customers. In a cross-functional process, each function owns a sub-process that makes up that cross-functional process. We worked with a client once that had a cross-functional process in which each function decided what it needed and at the beginning of the process a development team was developing products it thought the organization needed to deliver the strategy, at the middle of the process a sales team was making commitment to customers that created new products that didn’t exist by merging a number of things and at the end of the process the implementation team was trying to implement solutions in which they didn’t have enough time or information to do so. It created havoc in the organization because at the end of the process, the function that was serving the customer was so overwhelmed, things were late and other customers were being neglected as a result.
• #8: Another effect silos have is the hoarding of resources between functions. When silos exist, each leader of their area is thinking first about their goals and then the cross-functional goals. They have the authority from the organizational level to do what they need to achieve their goals and so they focus on that first. –This begins to show that silos are often a symptom of something else going on. And these Silos absolutely effect individuals.
• #9: First, the individual is pulled in too many directions because different functions need something from them because their priority is important.
• #10: Additionally, individuals are overloaded with work. They have priorities from the different functions and everything again is a priority. They are juggling all of these things at once and dropping the ball on some of them.
• #11: As result of these two things and many more effects, individuals at the end of a day, week, month however long they have been effected by this, individuals often feel a sense of failure since they can’t deliver everything that is expected. I’ve opened up a short poll – can you tell me how many of you have felt at least one of these impacts personally. Now let’s explore how silos along with these organizational and individual effects can effect cross-functional teams.
• #12: One of the impacts we see silos create for teams is difficulty planning for their projects.
• #13: With that case study and for many other teams, we see sub-optimized teams. When there’s conflicting priorities among the team members it creates competition within the team which is never good for a team. Since teams have difficulty planning, they aren’t working in the most effective and efficient way. When processes are sub-optimized work can’t get done. Basically, teams have a very difficult time achieving the goal it is accountable for.
• #14: As I said before, one of the go-to solutions to try and address these silos is to restructure. Like moving from a centralized sales team to a regional one and then often back. Which isn’t solving the real problem. The real problem is identified by looking past what’s happening to get at the root cause.
• #15: Let’s assume we’ve got this fictitious company HAL, inc. HAL can be any organization that has to market and sell products or services. If you’re from a not for profit organization, imagine these functions were Fund Development and Programs. One reason silos exist is because strategy is deployed down through the vertical hierarchy. Sales has its goals, Marketing has its goals, HR has it it’s goals, Fund Development, Programs, etc. And when each area has it’s own goals, the effects we saw earlier ensue: conflicting priorities, sub-optimized processes and so on.
• #16: As a result of that decomposition and ownership by the functional area, governance (at the strategic and operational levels) happens within the vertical or functional units. This is typically done through staff meetings where decisions are made within the function and often the consideration of downstream impacts doesn’t typically happen until the decision is made and they are ready to move forward. Operating in the silo.
• #17: This is often happening because each functional leader is accountable for what happens in his function - for fulfilling his goals. This results in the leader lining everyone up in the function to focus on what's important to the function or business unit and once again causes competition: Hoarding of resources, conflicting priorities.
• #18: What all these things are saying is that vertical areas, whether they are functions or regions or programs are seeking to optimize themselves. And the root cause of this operational approach and subsequent silos is an outdated Management Operating System.
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• #22: If you want to eliminate silos, then leaders need to deploy strategy down through cross-functional steering councils who oversee a horizontal segment of the organization. Not within the functions. Right now, most organizations are doing governance within the vertical dimension in the silos– setting goals and priorities and making decisions. This needs to shift –c- into the horizontal dimension - the cross-functional dimension - so that governance happens by a team consisting of the key stakeholders of a horizontal segment of the business. The first step in doing this is change their mindset of what exists in the horizontal dimension as opposed to the vertical one.
• #23: We use horizontal mapping to reveal the horizontal dimension and shine the light on the key segments of this dimension that have stakeholders from across the organization On this map we see Suppliers and the inputs they provide to the organization. The work which gets done through what we call operating projects and process (which will show the teams we would work with), the products and services the organization offers and the customers. Now, if you work in a nonprofit organization – sometimes the ‘customers’ are clients or users of the service versus the people who actually pay you. Then we add the vertical and horizontal dimensions together, and you have a matrix organization… And everyone in the organization is working either directly or indirectly to serve your external client or deliver your strategy/mission, products and/or services. This is a start in helping them realize that having authority over a function and making it the best function in the organization doesn’t serve the most important parts of the organization and it helps to set the stage for other changes that need to happen to eliminate silos.
• #24: The next thing to change is how priorities are set. When organizations allow functions or programs to prioritize within the function, there is no doubt silos.
• #25: Update the system so leaders prioritize cross-functionally, within the horizontal governance steering councils. Cross-functional prioritization across the organization is key to breaking down the silos and ending competition as it puts everyone on the same page.
• #26: Finally, I’d like to talk about the accountability system. This is a pivotal system for driving leadership behavior, and most organizations have a system that feeds the silos. The systems we see today make each functional leader accountable for only what happens in his function - for only fulfilling his goals. This results in lining everyone up in the function to focus on what's important to the function or business unit first and either everything else is 2nd or 3rd or 4th. .
• #27: In the matrix accountability system we use three types of accountability. Organizational Accountability is a person’s first accountability is to the organization as a whole - and then they have accountability to the teams they participate on which we call Team Accountability and finally there is their individual accountability for their own goals. The shift in a matrix system is that Organizational takes precedence over team and team takes precedence over individual
• #28: When leaders maintain the mindset that they need authority to get things done, then it follows that leaders with direct reports have more power and so you see leaders trying to keep resources in their function so they have the authority to tell them what to do or they add dual-reporting to give authority to someone else. If you consider why silos exist, this authority based mindset is underneath the way things are operating, since the person with the authority is making decisions for their part of the organization.
• #29: This means that you need to develop Collaborative Leadership Skills.
• #30: To become a great collaborative leader, you need both a toolbox of collaborative tools. Such as Collaborative Planning, Decision Making, Problem Solving, Solution Definition, Brainstorming, etc. These are team-based tools (not templates) that get a team to co-create the outputs of the team. That output could be a project plan, a decision, a status report, a solution, etc. And you need collaborative facilitation skills and techniques to engage a group in the process, get all the voices heard, resolve conflicts and lead to consensus. Let me share a case study related to a project here. Here is where I want to share my case study. We worked with a large retail client. They had both online and retail stores and had locations across the world. One area was developing a new system to support the organization with a new strategy. The project was to take 18 months and deliver a solution that would support short term and long term needs at a cost of over 8 million dollars. The internal customer of the system (the individual that would ultimately be accountable for ensuring they system is running and maintained) contacted us with concerns that the project was not going well. Here’s what I heard: I have 5 functions that are part of this project. Our IT function has determined without any input from anyone, what it is they will deliver. They have prioritized it into their portfolio of work and decided they would be done within 10 months. The Marketing team wasn’t considering the project at all right now, as they figured it wasn’t important to them until they actually had a system to work with. They had this prioritized later in the year. They have no idea what will be happening in 10 months. The Business Analyst teams had allocated resources to this project as well as two others, and so when meetings where held, they were often unavailable because another team had booked them first with a major priority. These analyst worked separately with the business functions and IT and no one had a clear view of what every end user needed from the system. From the project perspective, she was the only one who had any idea what the pieces of the project were, because everyone had emailed her their plans. Sound familiar? Things were not going well. Each function had their deliverables, they planned them out and lots of work was happening. But there was conflict in the team with disconnects about who was doing what, when things were needed and where requirements needed to come from. We came in and brought together the team to plan out this project. They all thought they had an idea of what the final deliverable, and quickly realized that they were all thinking about only what their function was providing. I had them work through tools together to clarify the scope and map out the deliverables in a way that focused on the different processes. By doing this, we defined what needed to happen to finish each stage of the end-to-end process and connected the team outside their silos. They worked together, built consensus, worked through things that weren’t clear and made commitments to each other. All without authority. By the end of the 2 days this team had a new view of their project, a new plan and worked through that plan together regardless of where they reported to.
• #31: When you need to lead and work without authority, the mindset you bring to the role needs to be an Empowered Adult mindset. Why? Because if you’re in this state of being, you able to lead a group without needing authority, you can stay neutral, not needing to control what is happening. And EA leaders don’t take things personally so they can help the group manage conflict.
• #32: A lot of people equate authority as meaning control – Especially in the boss relationship in which the leader controls what the direct report does and wants to control the decision. When you have controllers, then you will have controlled states of being who are the people who feel victimized by what’s happening. But when you have Empowered Adults, you are able to start to focus on the applying the first two rules I spoke about.
• #33: So, if you make changes to your operating system you’ll finally be able to eliminate silos, and get people focused and cooperating on the work that delivers your products, services and mission. Or, if you’re leaders are not ready to make broader organization changes, begin at the team level and get your teams to eliminate silos within projects, by using tools like the organization we helped.
• #34: I would now like to open up the floor to questions. If anyone has questions about anything we’ve covered today, please raise your hand or enter your question in the chat box.