While many companies feel the need to “break down the silos”, we wonder about the role of digital transformation in the multiplication of silos and we focus on three avenues to decompartmentalize the company. Finally, we are focusing on valuing knowledge as a lever for collaborative innovation.
Heavily criticized today, the silos nevertheless result from historically well-founded organizational choices. They make it possible to dedicate teams to important issues and to optimize their efficiency. : excellence in a process or success in a market. Thus, when Sony adopted a business unit organization in 1993, these entities significantly reduced their costs and increased their margins, to the point that profits were multiplied by 13 in 4 years! This organization also promotes employee empowerment and involvement, by responding to the human need to belong to a tribe whose codes and objectives are shared. Budgeting by department and the budgetary constraints of each manager also contribute to the formation of silos, each optimizing its own objectives at the local level, to the detriment of the overall optimum at the company level.
2. The negative consequences of compartmentalisation
For many executives, moving from selling products to selling solutions – packages of products and services – is a priority in today’s increasingly commoditized markets. However, companies are not always structured to make this change. Knowledge and expertise are often siled, and many companies struggle to leverage their resources beyond these barriers, so that customers value their solutions and are willing to pay for it. Indeed, information circulates little beyond the silo’s borders, the teams do not know how to work together, or even act as rivals. This hinders both learning and the ability to join forces to innovate or to pursue a concerted strategy. These assets have become essential in rapidly changing markets.
A counterproductive consequence of the scientific organization of work, by task and specialized to achieve performance, is the loss of the global vision as well as routine and repetitive practices that do not attract employees. This hierarchical compartmentalization leads to limiting the autonomy and creativity of employees, and therefore does not allow innovation and the development of solutions. Lack of innovation is one of the main symptoms of siled operation in companies.
3. Are ICTs a compartmentalizing factor?
The introduction of ICT (information and communication technologies) has not led to decompartmentalize, but to multiply the partitions. Indeed, information is an issue of power, of mastery of collective action. However, no collective action without structuring the flow of information, whether it is during the organization of a picnic or the conduct of an army on the battlefield. Hence the tendency of management to deny the flow of informal information (rumor, etc.). This tension between the desire for control and the flow of informal information was marked during the deployment of digital technologies for the general public (before companies). The company implemented initiatives to structure informal information flows in the 2000s by formalizing collaboration (processes and tools), then in the 2010s by deploying corporate social networks to create links (and also to see these links).
We thus added layers above the traditional silo, the organization by projects, then the collaborative layer. Which creates a mille-feuilles effect. The employee does not know where he is in the organization, where to look for information, what collective action is and the meaning of this collective action. The employee is overwhelmed with technologies, which induces a loss of reference and a loss of efficiency.
4. Three ways to decompartmentalize the company
This is why many companies feel the need to “break down the silos”, that is to say to lead the entities to cooperate in the service of shared objectives. The work of experts on the subject prompts us to act along three lines:
- Unite teams around common issues, by making entities accountable for clear and tangible shared objectives, by offering agile solutions with horizontal hierarchies that reduce the costs of internal transactions.
- Create links between entities, by promoting the establishment of interpersonal relationships, by structuring the sharing of information, by deploying processes that promote cross-functional collaboration and allow a customer-oriented view.
- Facilitate spontaneous experimentation, empowerment and cooperation. Once teams know each other and pursue shared goals, they are often in the best position to identify how best to unite their strengths.
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5. Knowledge management for innovation
The heart of the company’s activity is the development of services and innovation. For that, you need employees who are subjectively involved, who want to develop their intelligence and promote it with a collective.
This is the meaning of a knowledge management (KM) approach: identifying knowledge, developing it and sharing it within a collective, all in the daily work flow.
Communities are one of the components of a KM approach. They play an increasingly essential role in the innovation process of companies and the way in which they can benefit from it. A community brings together individuals who share a common passion for a given area of knowledge. Regular interactions and the sharing of best practices between members of a community constantly lead to the emergence of new ideas.. This creativity can naturally be seen as a powerful source of innovation for companies.
Should we then decompartmentalize at all costs, or else re-compartmentalize around knowledge, business expertise and experience?
Louis-Pierre Guillaume
6. To go further
- Masterclass: “Collaboration to enhance knowledge” (free)
- CoP-1 Conference: Decompartmentalization and information flow: what type of organization for our companies in the 21st century ? , SKEMA & CoP-1, 21 novembre 2019
- The digital transformation of companies, Aurélie Dudézert, The Discovery, 2018
- Silo Busting: How to Execute on the Promise of Customer Focus, HBR Magazine (May 2007)
- Decompartmentalize silos, BearingPoint
- Decompartmentalize the company, Manager
- Innovation communities, from creative freedom to organized innovation, Benoit Sarazin, Patrick Cohendet and Laurent Simon, Editions EMS, 2017
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