Silos – Overcoming the Enemy of Digital Transformation

If organizations need to learn anything today it’s how to overcome silos. Silos are the number one enemy of productivity and competitiveness, especially in digital transformation. They also seriously threaten the quality of life of employees. An article by  former Navy Seal Chris Fussell ‘The battlefield experience that made me realize the danger of silos and isolated teams’ is a dramatic illustration of this danger.

Why are so many organizations still plagued with all the drawbacks of silos? Because they still adopt a worldview that is out of synch with our times and the new digital age. They fail to understand the complexity of humans interacting with one another, even in digital ways.

In order to navigate complexity, organizations must shift from the obsolete, Newtonian worldview of individual, separate and hierarchical parts. What is the direction they need to adopt? Working towards a systemic and interdependent network. This kind of organization is founded on principles of continuous learning, continuous improvement and continuous innovation.

The new organization for complexity: coordination not functional reporting

We know that the current hierarchical/functional model is inadequate. It creates artificial barriers and does not allow a true understanding of the organization as a series of recurring and non-recurring activities. An organizational structure should therefore be designed to facilitate the orderly management of sets of activities that are continuously created, coordinated, cross-functional, and that evolve in time. There is a precise name for this in English: projects.

A project is exactly this: a network of interdependencies created to achieve in a well- defined time frame a precise goal. A project is a system with a precise duration. A company viewed as a system is therefore a network of projects, and the orderly creation and timely completion of these projects should accomplish the stated goal of the network.

Curing the silo sickness: let’s sum it up

1. A functional structure is not suitable to support the systemic approach to managing organizations in our new digital age. Organizations, by the nature of their work, are cooperative and cross-functional. This is because none of the activities of any company can be performed within the narrow boundaries of a single function.
2. Any plausible template for an organizational structure that can foster cooperative work must also take into account the evolution in time of the interdependencies needed to accomplish any activity;
3. In essence, the management of any organization becomes the management of a network of recurring, orderly and evolving-in-time activities. We call them projects. Control is exercised through ensuring orderly coordination, not functional reporting.
4. The backbone of any organizational effort becomes, then, the ability to manage the network of projects that comprises any organization.
5. The springboard to overcome the paradigm of today’s functional silo structure is the idea of a company seen as a network (with a stated goal) of projects.

How to build the new organization for the digital age

How can we do this on a practical level? By combining the approach of the Theory of Constraints with a purely systemic view based on interdependencies and interactions.

In other words, we do so by:

1. building interdependent processes managed through the control of variation;

2. subordinating these interdependencies to a strategically chosen element of the system called “constraint”;

3. designing the organization as a network of interdependent projects with a goal. See The Organization as a Network of Projects.

Principles, methods and tools

It’s time we stop repeating the mistakes of the past and embrace our new reality of complexity. As Fussell concludes in his article:

I realized just how far we had to go. There was no single person who bureaucratically owned this issue, no standalone order that would force us to collaborate. This would be a culture change, something that would take years…

We live in a digital world that is transforming. We work, increasingly, in a network of networks. We have the science, and thanks to the the contribution of two major management thinkers, Dr. W. Edwards Deming and Dr. Eliyahu Goldratt, we also have the method and the tools. Let’s put them to work.

Contact: intelligentmanagement@sechel.ws
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Intelligent Management, founded by  Dr. Domenico Lepore, specializes in Whole System Transformation, based on the systemic management principles of W. Edwards Deming and the Theory of Constraints. We are trusted advisors to leaders of organizations through our unique, whole system Network of Projects organization design. Sign up to our blog here. Intelligent Management provides education and training  internationally on systemic management using the Decalogue methodology .

See our new books  The Human Constraint – a business novel that has sold in 28 countries so far and  ‘Quality, Involvement, Flow: The Systemic Organization’  from CRC Press, New York, by Dr. Domenico Lepore,  Dr. .Angela Montgomery and Dr. Giovanni Siepe.