This choke point may be slowly killing your company

There are a growing number of excuses available to leaders for failing to reach their objectives. Many are extremely reasonable and based on external factors beyond their control. Reasons such as economic conditions, new competition, regulatory variables, seasonal influences, digital disruption, global volatility, consumer confidence, political instability and others are all true.

The question great leaders ask themselves however is not about reasonability, it is a question of responsibility.

As my old mentor used to say,

“You are not responsible for your circumstances; you are response-able in the face of your circumstances.”

Bain’s Jimmy Allen shared some interesting and related research with us at the International CEO Forum from his series of books with Chris Zook about the differentiators of the highest performing companies in the world (click here for more on this topic). They found that

“when companies fail to achieve their growth targets, 90 percent of the time the root causes are internal, not external.”

This is great news… of sorts. If the problems are largely internal, so too are the solutions. However blaming external causes is a sure way to ensure we never learn what we can do to turn things around.

Jimmy calls these internal causes ‘choke points’ and one of the biggest choke points large companies face relate to organizational silos.

Silos are the wonderful (sarcasm) outcome of well-intentioned organizational systems and processes ironically used to drive high performance and growth. However,

the only place silos belong are on a farm. 

Silos are great for storing grain, terrible for driving gain. Silos stop people sharing their insights, expertise, knowledge, relationships and ideas. As management sage and author of the One Minute Manager says…

“None of us is as smart as all of us.”

But many companies fail to reach their potential because they are really a collection of silos and the power of 'all of us' is never harnessed.  Patrick Lencioni summed it up well in his book Silos, Politics and Turf Wars;

“Silos – and the turf wars they enable – devastate organizations. They waste resources, kill productivity, and jeopardize the achievement of goals.”

One of the best examples of this is the Sony iPod. 

"The Sony iPod?" I hear you ask. "There never was a Sony iPod."

Exactly.

If there was one company that should have brought out the iPod before Apple it was Sony.

• Sony had been the world’s most successful consumer electronics company
• Sony was all about miniaturization starting with the transistor radio in the 50's
• Sony had the Walkman brand... THE brand for portable music
• Sony had the music rights
• Sony had the global reputation for music reproduction excellence
• Sony even had the solid state storage technology – minidisc, memory stick Walkman, Vaio Music Clip, and
• Sony foresaw the integration of devices and content, explaining why they bought CBS Records and Columbia Pictures.

So why did Sony not create the iPod?

There are a few reasons but one of the main culprits was silo’d thinking. As a long time massive fan and early adopter of all things Sony I wish that were not the case.

But we can all learn from this example, as has Sony. 

So how can you test the ‘silo quotient’ in your organization?

Test 1 - Do you have a clearly articulated and compelling company purpose? A lack of alignment and silo-ism can be a sign of an ambiguous or uninspiring purpose or too many company objectives.

Test 2 - Ask your c-suite leaders who their team is? If their first answer is the people that report to them as opposed to their peers on the executive team you could have a problem. Remember a fish rots from the head. If the top team is not thinking like a team that will reverberate throughout the entire organization.

Test 3 - Measure the percentage of cross functional internal promotions in your organization. Aim to double it if it is any less than 10%.

Test 4 - Do you have cross functional teams working on your company’s most critical projects? If not it is never too late to ensure all departments are represented to break down group think and increase group buy-in.

Test 5 - Do your performance systems measure cross-functional activity and do you reward for it? If not start. Sony might rule the world, not Apple, had this been the case.

Finally it is worth noting that the most stubborn silos are not the ones that exist between departments, but the ones that exist between our ears. 

Although it is true that "we see the world not as it is but as we are" it can also be argued that the world is what it is because of how we see things.

Silos are an example of this. They are the collective manifestation of how people in a company think. They don’t actually exist outside our minds. 

Again this is great news… of sorts. No matter what the external systems, structures, processes, legacies and circumstances in the organisations we work in, we are each response-able in the face of those circumstances. We do have a choice. The fastest way to get rid of the silos in your company is for your leaders to sharpen their tools and cut down the silo'd thinking in their minds.

Please find below links to my previous monthly posts.

• Australia: The distrusting country
• The most damaging four letter word to use at work is @#*!
• Finding your moonshot
• Sleeping your way to the top
• How to supercharge your influence
• How to be a master of mental Aikido
• Time to terminate HR?
• Too busy or not too busy. Is that the question?
• Who inspired you in 2017? My top ten!
• The missing link of high performance
• The future belongs to people with this skill
• Lessons from loss
• Good Grief
• 20 reasons why corporate wellness programs get sick
• Australia is still lucky... but for how long?
• Change management has become a joke!
• Are you ready for the third age?
• What matters most in a post-truth world?
• Never waste a good crisis
• Your best bet yet for a year of success
• What will your New Year's Evolution be?
• Are you ready for the 'gig economy'?
• Are you working with an energy vampire?
• From counting people to making people count
• Five novel tactics for better leadership
• Mid year reviews: Ubiquitous but ridiculous
• Talent pipelines are broken
• Australia: The innovation immigration correlation
• Time to reimagine HR
• The secret to successful disruption: The innovation colony
• How to survive and thrive in the supermatrix
• The biggest predictor of career success is...
• The secret to high performance is not what you think...
• Where are you on the digital vortex?
• Diversity does not equal inclusion
• How to catch and hold the rebound expat
• The e-factor is the new x: the ultimate growth multiplier
• Are you working with a waste of space?
• Iron Man needs you!
• Collaboration: the new super skill
• Leading innovation from the Australian subsidiary
• Insurgent or incumbent: the key to a future every company wants is...
• Why the talent war is over
• How 'the other GDP' is causing a talent crunch

Rich Hirst is a Director of Gartner's International Executive Forums, providing a range of services specifically and exclusively for the most senior executives in the Australian operations of foreign-owned multinational corporations.  

International Executive Forums operate three peer groups: the International CEO Forum with close to 3o0 CEO members; the International CFO Forum with around 180 CFO members; and the International HRD Forum with some 160 HRD members.

In addition to our peer group services, we also provide a range of opportunities for our member companies to develop their up-and-coming talent through a series of events with a particular focus on women and emerging executives. For more information please call +612 9955 2848.