NO. 01

Can We Keep Up with Globalization?
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Can You Work without Silos?

“If you find yourself in a hole,” Will Rogers is said to have advised, “stop digging.” And if you’re stuck in an organizational silo, the first step is to recognize the situation. Author Gillian Tett describes why silos are detrimental to global organizations and how to get out of them.

By Ted O’Callahan

Overcoming silos in businesses has been an objective at least since Jack Welch advocated for the “boundaryless organization” in 1990. With the speed of globalization and technological innovation, this objective has only become more important—and more difficult to achieve.

So, 26 years on, why are there still silos that keep organizations from collaborating across boundaries? Part of it is structural. “Silos are necessary,” wrote Neil Smith in Fast Company. While cooperation, communication, and collaboration need to happen across silos, many other functions work better within one. Silos cluster expertise, assign accountability and responsibility, foster independence and pride of ownership, and allow for efficiency within a domain. In Smith’s view, “the goal is not to destroy silos themselves but to eliminate the problems that silos cause.”

Furthermore, the very forces that inspired Welch’s call for a “boundaryless organization” have actually spawned bigger silos. In an interview with Yale Insights, Gillian Tett, U.S. managing editor of the Financial Times and author of The Silo Effect, discussed the tools available to organizations and individuals to address the challenges of a transformed global business environment. “You have bigger, more complex organizations. You have specialists doing skills that very few people understand. And you have company leaders who are essentially incentivized to streamline at all costs,” Tett said. “That's a recipe for companies that tend to be very silo-ized.”

The persistent push for efficiency leads to a focus on existing tasks, precluding the kind of innovation that can develop when colleagues from different areas meet. “If people are incentivized to only think about their own team or their own project,” Tett said. “If they don't have opportunities to actually get out of their own little box, you can end up with organizations which are very myopic, rigid, blind to risks, and blind to opportunities as well.”

That leads to a paradox. “You have these gigantic companies spanning borders that seem to be connecting the world,” Tett explained, but “inside that company, there can actually be as much disconnection as there is actual connectivity.”

Obviously, some structure is critical, Tett said, as is developing deep expertise in the right areas. “If we didn't have a structural organizational system, we would all drown in chaos. And that applies as much to our brains and how we think about the world as it does to large organizations.”

So how do organizations find a structure that is flexible, that supports collaboration and focused work, that encourages efficiency while allowing for innovation? Each company will need its own answers, but the first step may be as simple as a lesson from a children’s book. According to Tett, “One of the first ways for companies to avoid siloes is to actually start by recognizing they exist and openly talking about it, which sounds incredibly obvious, but it's amazing how often company executives never think about the social patterns or the ecosystems or the structures of what they're doing.”

U.S. Managing Editor, the Financial Times; Author, The Silo Effect