"Think Outside the box" also means "Think outside Silos"

How have businesses expanded to the point that individual business functions have grown into independent departments? As businesses expand in size and complexity there is a natural tendency to split multifunctional expertise and specialise by grouping similar types of activities within independent departments or functions.

Quite often the driver to group these is the attempt to achieve common practices or standards in delivering the work and thereby maintaining an oversight of the work performed and a modicum of control related to the output consistency and timeliness. In some cases this grouping of similar activities happens as a consequence of the pursuit to achieve a common identity and a focus to achieve perceived operational excellence, optimising the execution of the business function. 

These are all valid reasons, however there are hidden dangers within this and unfortunately we see too many falling victim to what could be described as the “performance” and “human” traps:

• The “Performance” trap: Once we segregate our employees in to disparate groups and locate them in different locations in our pursuit of excellence, organisations often create individual silos that are internally focussed on the needs of the department. The “end-to-end” focus disappears as mangers and their teams get measured on their functional performance. Given the choice between doing the “the right thing” or trying to achieve your activity-based bonus, managers and their teams often go for the money. This is largely based on the (incorrect) assumption that if each department does its best then the company will be doing its best for the customer.
• The “human” trap: creating a standalone function or department of likeminded individuals performing similar tasks results in teams developing their own identity… we are sourcing, engineering, quality, etc. Often, once these departments grow in size and power, it is also not uncommon that they are then centrally controlled by a functional leader who does not necessarily report back into the business unit’s leadership, creating another potential conflict of interest. 

By wanting to excel we effectively create silos and erect artificial barriers to releasing the company’s true potential. Analogous with a production example we have created an environment where activities are grouped which will lead to batching packets of work and pushing these through the process. Similar to a mass production setup!

If this sound familiar don’t be surprised that whatever improvements are made in individual functions, you will get the same result: according to Einstein you have just physically demonstrated what insanity looks like… Ok, got the point so where do we go from here?

Part of the answer lies in regaining the common focus on what we are trying to achieve. Where is the customer value and how can we deliver more of it faster, correctly and with a human touch. This is easily said but difficult to achieve and the challenge should not be underestimated. In fact, for many organisations this would be what we call a “breakthrough” objective: the change that is required will need to impact you and your organisation in multiple levels.  To achieve this, we need to:

• Understand what our common purpose is and what we need to achieve to be successful.
• Visualize the chain of events that deliver this value and the individual needs of each step. 
• Learn to listen again to an external voice and not maintain our dogmatic adherence to achieve departmental targets. 

Once we have achieved the above, teams need to simplify what they do and eliminate functional KPI’s. Alignment can only be achieved if we all have a common goal.  It is quite likely that some organisational redesign will need to happen. In the beginning this could be co-locating departments and lead to individuals at a later stage in a multifunctional customer focused team. This colocation will enable the identification and removal of “non-value added” activities. It is in this close mix of expertise that the entrepreneurial synergy of small close-knit teams can be recreated.

In parallel to potential organisational redesign it is essential that we address the culture of the company and especially the role of management and leadership. We need to ensure that management teams are prepared for the transition from “command & control” to “hearts & minds”.  This should not be underestimated as it often impacts the perceived self-worth and purpose of the management cadre as they are required to release direct control as the teams move along their journey to become self-sustaining empowered teams.

While the above is not easy and can feel chaotic this can be done. Because this is where an entire organisation is changing, it is vital to enrol a trusted partner who has experienced this type of transformation. Most businesses are not in the business of transforming, ie this is not and was never intended to be a core skill. Just because you know how to create new products does not mean you know how to transform. A trusted partner will work with the Senior Leadership Team (SLT) to crystallise clear objectives and articulate actions from the company’s vision by defining a tangible path to achieving the transformation.  Where needed, an action-orientated diagnostic will help the SLT identify the potential and how to achieve it, ie what we call “Your cashing in strategy”.

Something organisation should consider is that setting up and closing down transformations takes time and energy. As the pace of change gets faster and faster it becomes vary wasteful to consider that a company has a “steady state” and “transformation” mode: companies like Toyota, Danaher (https://youtu.be/hjVJumUWEcU) and Ingersol Rand (https://youtu.be/OTQgFRINm4k) understood that the best way to run a company is to always be in transformation mode. In order to stay in this state such organisations have built business systems based on Lean and Agile principles, ie customer centric, end-to-end alue chain based, fast, demand-based and with continuous improvement in mind. This is very much the case for the Simpler Business System (SBS) which has its foundation in Lean, but also takes the best practices from other methodologies (Agile, TPM, SixSigma, NLP, emotional and behavioural coaching) to prepare and guide organisations along their transformation journey. What is key about having a business transformation system is the fact that the whole organisation follows it from the top down. In such organisations you will find a “double the good, halve the bad” mindset, ie it does not matter how good you are because you constantly have to surpass yourself. In such organisation you also find that ambitions are based on aiming to achieve an “ideal state” and by setting ambitious intermediary “future states”. Working “backwards” from ideal state prevents organisations from thinking tactically in terms of improvement target setting.

As companies embark on this type of journey they eventually realise that functions-based organisational designs become one of the biggest obstacle. If the industrial revolution was about moving from craftsmanship to production line thinking, the digital transformation will be about moving from functional to value stream thinking, ie digitisation and technology are just today’s equivalent of what the wheel was back when everything was carried by a human being or animal. 

#transformation #waste #digitaltransformation #businesssystem