There are many issues associated with the silo structure. For details I refer to the Curse of the silos series. But here’s a list to summarize the major issues:

The simplest but still profound way of dampening the negative effects of the silos is to give people the KPI one level up in the hierarchy. The problem with most KPIs is it allows people to control meeting the targets even if it is at the expense of someone else.  Moving targets one level up forces people/teams/departments to work together to meet the targets.

It is a culture hack because it doesn’t fundamentally solve the issue, but it does expose a flaw in the organization’s design. By exposing everyone to the dysfunction you might trigger a change in mindset which eventually allows for a structural solution. It is particularly powerful at the level of the executive committee. Because if the CFO is not merely responsible for the financial result, the CSO not only responsible for sales results, the CIO not just accountable for IT, then they just might become capable of being accountable for the results of the company as a whole first and their respective area second. And truly work together. What a message would that send towards the highly politicized decision-making that prevails in many organizations!

The journey of identifying the organization’s purpose together can be a fraternizing matter on its own.

A traveler came upon a large work site in the center of a village. He had been traveling for many days, and he was eager to talk to anyone who would engage with him. He walked up to a worker at the site and asked, “Sir, may I ask what you are doing?” The worker scowled a bit and said tersely, “I am cutting stones.”

The traveler decided he would find little conversation there, so he moved on to another worker. When he asked the same question, the worker paused for a moment and explained that he was cutting stones so he could support his family. He had a wonderful wife and two small children who depended on him to provide them with food and shelter. They chatted about the project and the village for a few minutes, and the worker turned back to his large pile of stones.

The traveler moved to a third worker and asked the same question: “Sir, may I ask what you are doing?” The worker put down his tools, stood quite tall, looked the traveler in the eye and said with a warm smile, “I am building a cathedral! It will be the tallest and most magnificent structure for miles around. Its beauty will delight people for centuries to come. The stone I am now working on will go near the front door where people will enter for shelter and kinship. I will probably not see the final product, but I know my work is part of something very important.”

Most of the issues associated with silos have to do with not understanding the consequences of local actions across the silos. This is caused by the fact we optimize only the processes within our own silo; we measure only the results in our own silo; we set goals relating to work being executed in our silo only; and we keep communication within the boundaries of our own silo. Some steps you can take to counter the effects of the silos without actually removing them have to do with cross-silo organizing.

Leadership acting as a bridge

Some leaders feel comfortable maneuvering within the boundaries of their silo. Others have a wider curiosity. Find the latter. Find leaders who believe in the companies purpose as if it were their own and who realize it can only be achieved by working together. Incentivize them to broaden their network across the silos and act as bridges between departments. These ‘integrators’ can encourage someone with a local initiative to collaborate with the right people in other departments. The integrators job is to create doors and windows in the walls between silos and act as guides how to deal with other departments beyond the formal chain of authority.

Cross-silo liaisons

A more formal approach is to provide liaisons who provide as a linking pin between departments. A liaison is department B’s representative in department A, responsible for improving communication and transparency between the two departments. Be sure to appoint people who neutral and nonjudgmental. 

Note that the liaison is not supposed to have formal authority. He or she is not speaking in behalf of the department represented. Otherwise they will quickly become bottlenecks of communication and lose trust from the guest department. The liaison should not be a choking point of communication, nor a formal communication channel. He should facilitate people from different departments to just talk to each other instead of ignoring each other or resort to formal lines of authority.

Build cross-silo capabilities

Skills and knowledge are fluid in a complex world. The skills we need today can quickly become obsolete tomorrow. We need people who feel comfortable gaining new skills all the time. Benefit from their mentality in stimulating cross silo capabilities. Even if people are specialized in the work of their own silo, they should be trained to know enough to effectively work together with other departments. If you understand the needs of someone who needs the outcome of your work as input you are less likely to optimize the work for your own benefit at the expense of your internal client.

Onboarding programs can play an important role in this by introducing people to all parts of the organization, instead of just their own department. It might even be a good idea to create cross-silo trainee groups.  Job rotation programs are another way of building cross-silo capabilities.

What is a value stream?

While the organization is vertically organized in silos, value flows horizontally across all involved silos/departments. Each department is responsible for a part of the total process that delivers an order or creates a product. They then hand it over to the next in line. It’s these hand-offs that are partly responsible for the delays and hence long lead times we experience in most organizations. It seems unnatural. Why did we design the organization in a way that lies across the way value flows towards our customers in the first place? The answer is that in a stable, predictable environment grouping people by function, which is the rationale behind silos, makes sense. They can learn from each-other more easily. It would still lead to local optimization but because the outcome of the processes as a whole are always the same it is easier to optimize them. In a volatile environment however, we need close collaboration by anyone involved in the process to get the results we want.

A value stream is all the activities and people involved in the process from idea or order capture to cash receipt. It’s like a virtual overlay on the silo structure depicting the flow of work, information, and communication across all who are involved in delivering value to the customer.

SAFe

SAFe (Scaled Agile Framework) is a framework for scaling agile software development. Although SAFe also targets Systems engineering, hardware development, its roots and most of its examples lie in software development. An important artifact in SAFe is the value stream. SAFe recognizes the potential delays if people are collaborating effectively and seeks a way to group teams of teams in a way that minimizes lead times and maximizes the speed of learning. 

SAFe’s concept of the value stream is applaudable and the popularity of the framework can certainly add to a transformation that reduces the issues with silos. There are two issues that prevents SAFe from being a breakthrough solution at the moment: The first is that SAFe makes a distinction between operational value streams and development value streams. The first are identified to be able to define the latter. Unfortunately, it is only the development value streams that SAFe supports in its framework. Development value streams contain the R&D work needed to support the operational value streams.

Although it is possible to extend the use of the value stream concept in SAFe, this is a missed opportunity for SAFe. The second issue is that SAFe proposes virtual value streams. It’s a bit of a matrix format in which people work together in a horizontal value stream but still report into a vertical silo structure. Although starting this way is certainly easier, SAFe does little effort to stand up for a more permanent structure that dissolves many of the physical silos. Nevertheless, I have overheard practitioners dream of the day there would not be a separate IT and Sales department anymore because of the adoption of SAFe.

Virtual Value Streams

Structuring the organization according to the flow of value seems to make a lot of sense. Any other measure might contribute to dampening the negative effects of silos but the question remains if they are not only stop-gaps in the end.

Working in value streams, even if only virtual ones, has a lot of advantages. It becomes much easier to oversee the entire picture. People from several departments work together in a value stream on a common goal using common measures. This streamlines communication and collaboration, and it reduces waiting times because involved departments no longer optimize locally. It also stimulates supporting departments like facility management, legal, and procurement to help achieve actual business goals, because the involved employees have to achieve the common value stream goals first and the department goals second. 

The challenge of designing value streams

A challenge becomes the identification and design of the right value streams. In some organizations they can easily follow the lines of products and services. But it is not always that easy. Let’s take a bank for example who have product lines like loans, mortgages, etc. But the customer probably wants a unified view and experience across all services. So how dou you design the value streams? If a product has multiple customer segments, should you split the value stream along customer segment lines? If value streams have a lot of interdependencies, we create new problems. If a value stream does not have the authority to organize the work the way they deem fit for serving their customer’s purpose, for example because of mandatory centralized systems they lose some of the means and drive to be able meat their targets.

Busting the silos – organizing in psychical value streams

A disadvantage of virtual value streams is the addition of complexity in the organization design caused by the matrix structure. The silos are still there if you draw the org chart, but most members of the departments are long-term members of a value stream first. There are also practical issues like line managers still being responsible for an employee in terms of compensation and appraisals while he or she has hardly any authority over the work the employees does in the value stream.

Virtual value streams might allow a smoother transition towards psychical value streams. At some points the virtual value stream structure will start to ache and as long as you are transparent on this, this is a good thing. It will provide signals which practices to change first in a gradual move towards psychical value streams. Plus, it will tell when it becomes time to take off the training wheels and take the plunge. For some organizations it might be better to just rip off the band-aid and transition towards psychical value streams at once.

Challenges in psychical value streams

Many questions need to be answered when moving towards a value stream structure:

Bibliography

List of notes and sources we reference from.