Industryweek 14097 Silos

Why Do Silos Form and How Can We Knock Them Down?

June 10, 2014
Strong leadership, a common strategic vision and a focus on meeting customers' needs are required to change the culture to one of teamwork and cooperation.

Imagine a basketball team whose players never pass, never set screens so a teammate can get open and focus purely on shooting the ball to run up their own stats. The chance that this team will win is extremely low and the players will grow to resent and despise each other. One might say that these players are in “silos” and have no interest in anything but their own success. How might things change if these players decide to put their team’s success above their own accomplishments?

Silos, usually formed around company functions or business units, are one of the more common reasons for internal company processes to falter. An order from a customer might cross a dozen functional barriers before the product or service is provided. If there is even a slight chance that a problem will occur at each of these hand-off points, then the probability of total process failure increases greatly and the customer will suffer.

This seems to be fairly well known within many companies, yet the silos still exist and in some cases, the walls of those silos get thicker every day.

Silos can form over time for many reasons. I suggest that the majority of the silos begin to form because of a rivalry (real or perceived) between company leaders. This can be driven by how the leaders are compensated and by the metrics used to measure their performance. If there is a history of promoting the manager whose function performs the best, then there are two ways to win; either lead your functional team to do better than all of the others or point out the faults of your peers in order to tear their function down (more likely a combination of both).

It is interesting how often this bickering and backstabbing leads to the decision to bring in an outside person to fill the open position.         

Another reason silos form is due to a lack of knowledge and understanding about what happens in the other functions. I have led many process mapping sessions where we will invite people from other functions to participate. It amazes me how little the people outside of the function being mapped understand what transpires to get the process completed.

Circle the Wagons, Point the Fingers

“Oh, now I understand why you need two days to complete that task,” someone from outside that function might say. “I just thought you were being lazy or trying to make my life more difficult.” If these process mapping sessions are not happening, then the other functions will think the worst and the silos begin to form.

Also, if there is a culture of trying to find who to blame when a problem occurs, then all of the functional leaders will circle the wagons in order to keep the finger from pointing in their direction. More time is usually spent on coming up with alibis in this type of culture instead of focusing on fixing the issues. It is also difficult to get improvement initiatives started since the leaders will not want to admit that they have problems for fear that their image might get tarnished.

The illustration below is based on a true story and may shed some light on how much damage silos can do to your company’s performance.

Carl sat at his workbench by the machine he ran for the past 15 years. He had his head in his hands and looked like he had just learned that his best hunting dog had died. Mary, one of Carl’s co-workers noticed and decided to go find out what was happening.

“What’s wrong Carl?”

“Oh, hey Mary,” said Carl. “I was just invited to a three-day meeting they called a Keezen, or was it Kaazen… some Japanese word that probably means ‘let’s find a reason to fire Carl!’”

“I wouldn’t worry too much,” said Mary. “Things are starting to change in our company. Remember the project we did with Doug a few months ago? He seemed to be sincere in wanting our help to fix some of the many problems around here. And I just heard that they promoted an engineer, I think her name is Janet, over in the plating department because she did such a good job of getting the employees involved.”

“A few things have changed for the better,” admitted Carl. “But we have a long way to go in my opinion. They tell me that this meeting is being called because of all of the quality defects that are occurring in my machining center. I just know the finger is going to point at me. I only have a few more months until I can retire. I don’t need all of this stress.”

“I also heard that they are shaking things up at the top and just brought in a new V.P. of engineering,” said Mary.

“Yeah, I heard that too. But the new guy has been on board now for over a month and I have not seen him out here on the shop floor one time,” said Carl with a sigh. “It looks like the wars between manufacturing and engineering are still as hot as ever.”

Carl’s meeting started a few days later. It did not take long before a couple of the Design Engineers started hinting that all of the quality issues were a result of poor performance by the machinists. This started to get Carl’s blood boiling.

“Look!” said Carl. “I did not come here to be insulted or accused of wrongdoing. I have been a machinist for longer than you engineers have been alive. My quality record was outstanding until just a few years ago.”

“What do you think changed?” asked a participant from finance.

“I don’t really know,” said Carl. “All I know is that the dimensions we were being asked to meet became all screwy.”

“Wait a minute,” said one of the design engineers. “Don’t you dare try to put the blame on engineering. You guys in manufacturing are paid to hit whatever dimensions we specify. If you can’t do that, then maybe we need to find better machinists!”

“In the training we had last year, we learned that manufacturing is the internal customer of engineering. Do you treat all of your customers like this?” said Carl.

“He is right,” said the new V.P. of engineering as he walked into the room. “Hello Carl. My name is Jim Duncan. I could hear the debate from down the hall and thought I would come in to introduce myself. I have been meaning to come out on the shop floor but had an illness in the family that has taken me away from work for the past several weeks.”

“Oh. Sorry to hear that,” said Carl. “Are you sure you would be able to find your way to the shop floor?”

“Yeah, I think so,” said Jim with a smile. “I actually worked my way through college as a machinist.  So, I think I know my way around machining centers pretty well. Of course, I could always learn more and I have heard that you are one of the best.”

“Ehh… thanks,” said Carl, now showing some embarrassment.

“I am also planning on having my design engineers spend more time out on the shop floor so they can get first-hand knowledge on what their internal customers think about their drawings,” said Jim as he looked at the design folks. “Carl mentioned that something had changed a few years ago. Any idea what he might be talking about?”

“He is probably talking about a process improvement we made a while back,” said one of the design engineers. “In fact, our manager got a nice promotion to one of our sister divisions because of the improvement. We started 'scaling' our drawings. This took a lot of time out of our process.”

“Scaling… What is that,” said one of the participants.

“We design a part and then quickly crank out similar part drawings by increasing or decreasing all of the dimensions by a certain percentage. Works really well for us,” said the design engineer.

“Well, it kills us in manufacturing,” said Carl. “Picture someone drilling a hole that is 1 inch in diameter. The next part is 8% bigger, so that hole is now 1.08 inches. There isn’t a cutting tool that meets that dimension. So, we either have to drill the hole a little smaller and hand ream out the rest or get the next biggest tool and grind it down to 1.08 inches.”

“Doesn’t that ruin the cutting characteristics of the tool if you grind it down?” asked Jim.

“Yeah, and it leaves a lot of metal slivers in the hole that we have to clean out by hand,” said Carl. “Of course, this adds greatly to the chance that we end up with a quality problem.”

The next day, the team spent time on the shop floor and started to analyze how much money 'scaling' saved engineering and cost manufacturing. They discovered that the added cost in additional manufacturing time and quality issues was more than 10 times the savings in engineering.

“Wow, we had no idea how much trouble this was causing you,” said one of the design engineers after spending several days on the shop floor with Carl. “Let’s go through the drawings together and try and figure out which dimensions need to fit the standardized tooling.”

“Really?” said Carl. “Engineering would actually do something to help manufacturing improve? Maybe things are changing around here after all.”

About that time, the head of manufacturing walked by with his entourage of assistants. “What are you design guys doing on my shop floor? It is bad enough that those quality people took Carl away from his machine for a three-day meeting, but now you have to stand here and keep him from making parts? Next time you want to talk to one of my people, you better come through me!”

“Or, maybe not,” thought Carl.

Stay tuned…

There is a cartoon that illustrates the impact silos have on a company. Picture a large row boat with four men, two at the front and two at the back. The boat has a hole in it and the front of the boat is filling quickly with water. The two men in the front are frantically bailing the water out of the boat as fast as possible. One of the men in the back turns to the other and says “I sure am glad the hole is not at our end of the boat!”

How to Dismantle Silos

What these two men fail to grasp is that if the boat sinks all four will be in trouble. The same can be said about company performance. When one function struggles, the entire company could suffer since the customer’s needs are not being met. So, what can be done to try and knock silos down?

First, the company leaders need to examine how they interact with each other. What signals are they sending to their teams when their direct reports witness them in meetings?

One leadership team I worked with enjoyed making jokes at each other’s expense in their meetings. “We are just having fun. It helps us break the tension and reduce stress,” they told me.

The feedback I got from their direct reports was that their leaders clearly hated each other and that the company had thick silos as a result. So, company leaders need to assume that their every move and comment is being closely watched by their employees and that their direct reports are sometimes influenced more by what the leaders do than what they say.

Next, the evaluation and promotion process of the company leaders needs to be examined. How much credit would a company leader achieve by helping out a peer? When the selection committee decides who will be the next person in charge, does it take into consideration how much help this person provided to other business units or functions? Does this person focus on understanding and meeting his or her customers' needs (both internal and external)? And, is he willing to change his own process (even with the possibility of making it more difficult) in order to help the overall company improve?

Finally, the organizational structure may need to evolve. It might make sense to have a “focus factory” type structure where a portion of engineering, manufacturing, planning, and procurement all work on the same team and focus on a specific product or process.

This dramatically cuts down on the finger pointing and bickering. Instead of trying to figure out which function to blame when there is a problem, the team comes together and gets to work on how to fix the process so the problem never returns. It is also easier to focus on the customer when everyone is working together to achieve the same strategic goals and vision.

Silos usually are listed as one of the top reasons for poor company performance (along with a lack of communications). They can be difficult to knock down, especially if there is a long history of infighting and lack of trust. It takes strong leadership, a common strategic vision, and a focus on meeting the customer's needs in order to change the culture to one of teamwork and cooperation. However, if a company leader is rewarded purely for his or her own performance or begins to lob blame at peers, the silos will quickly be rebuilt.

So, if the company’s president or CEO wants to tear down the silos, he will need to examine and possibly change every aspect of how business is done. And like the basketball team that puts the team’s goals over personal gains, the company will have a better opportunity to win.

John Dyer is president of the JD&A – Process Innovation Co. and has 28 years of experience in the field of improving processes. He started his career with General Electric and then worked for Ingersoll-Rand before starting his own consulting company. Dyer can be reached at (704)658-0049 and [email protected]. Linked In Profile: He is on Twitter: @JohnDyerPI

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