Organisation silos are rarely beneficial to anyone.
The silo phenomenon is most often described as a consistent failure in communication and collaboration between units–teams, sections, divisions, etc.–within the organisation.
Companies easily fall into a trap when trying to respond to silos by introducing bureaucratic measures attempting to remediate the issue. These more often than not further the divide and strengthen the silos, which in turn leads to more bureaucratic measures.
As this happens, company becomes less and less efficient. As profitability deteriorates, internal expenses are moved to the customer, increasing cost. Since this increase is unjustifiable to the customer, they abandon the company to pursue alternatives.
And the dooming cycle continues...
Silos compete for resources in order to deliver objectives they are measured on. For example, product development department might be measured on number of designs made, while sales department might be measured on number of contracts signed.
Two example measures seem innocent enough. Difficulties arise when both departments optimise achieving their objectives, independently of each other. This often leads to divisional "wins" that result with net loss for the organisation at large. That's what we often call a problem of local optima.
It's important for the organisation as a whole to set a clear strategy, so that all employees can easily see how objectives at different levels align and reinforce each other.
That is a first step towards dismantling the silos. The journey is long, but well worth it.
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