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Silos Stymie Strategy, So Why Do We Build Walls?

Paul Ritchie is Practice Director and leads the PM College program. Mr. Ritchie has presented on initiative leadership to multiple global audiences, including the PMI Global Congress, the PMI Europe and Asia Regional Congresses, as well as SAP’s SAPPHIRE and ASUG conferences. He also has published a number of articles and is the main author for the award-winning Crossderry Blog. He is on Twitter @crossderry. 

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Everyone hates silos. The PMBOK® Guide positions the functional organization as the lowest form of organization. We have study after article after post demonstrating that silo-driven dysfunction underpins many of our organizational ills. The “Why Strategy Execution Unravels” (Harvard Business Review, March 2015) article I highlighted in my last post makes this clear: strategy misalignment and organizational barriers go hand-in-hand. Misalignment and silos are the top two causes of strategy execution failure (failure to align, 40%; coordination amongst units, 30%). “It is known,” as the Khaleesi would say.

So why do organizations persist in building these efficient, but constrained, structures? It is often the side effect of success, mixed with our instinct to preserve what worked. Gillian Tett lays it out quite nicely in a recent interview with Talent Management magazine.

[W]hat happens is different teams become incentivized to protect their success from the past. If they had ridden to glory on the back on a particular great product idea or geographic location or business niche, the leaders of that team have every incentive to say, ‘Actually, this is going to be our team. We don’t want to collaborate with everyone else.’

This approach has upsides. Functional structures are a great way to optimize what works. They provide recognition, clarity, and opportunity for staff. There is great excitement and purpose as the organization rides the wave of success. The problem happens when that wave subsides, and the next wave begins to swell. Again, here is Gillian Tett:

So, what tends to happen is an organization has a structure, which is set up to accommodate a world that existed 10-20 years ago, and it doesn’t really reflect the world as it is today, and it doesn’t really reflect the way that businesses and products and technologies can change.

Strategy execution leaders are on the front lines of this two-front challenge. First, our organizations fear moving away from the functional structure that brought them success in the first place. While initiative leaders must be comfortable with influencing across functions—often without authority—our stakeholders are paralyzed by doubts and inertia. This phenomenon is one of the reasons our leadership offering—e.g., Strategies for Effective Stakeholder Engagement, How to Lead A Team, Mentoring Workshops—place so much emphasis on knowing oneself and knowing one’s colleagues before engaging.

The second front is subtler, because it is often a product of successful collaboration. In many ways, it is an echo of the “success” phenomenon Tett identified. Once an organization has fought through its silos and executed its strategy, what is it tempted to do? It is tempted to reorganize itself into functions that relentlessly optimize and reinforce that success. In other words, we find ourselves fighting the same turf battles repeatedly.

There is evidence that this second front is stubborn indeed. Our most recent portfolio management research looked at the “silo mentality” across State of Portfolio Management 2013,” PM Solutions Research Studyproject and portfolio organizations. As you would expect, those organizations with higher levels of maturity in a key strategy execution skill—project portfolio management—had less of a silo mentality. Nevertheless, over one-third of these high-maturity organizations still saw silos.

My next post will talk more about how to fight silos, but the first lesson is clear: you and your organization cannot expect silos to disappear. Cross-functional strategy execution is a long-term commitment, or it will not work.

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