Silo-Made Problems: Why Efficiency in One Department Can Derail the Whole Business

The Cost of Silos: A First-Hand Experience

When I was working at Pick n Pay in the Online Shopping department, I led the operational element of the online shopping experience from when a customer placed an order (and it was confirmed in our system) to when it was loaded onto a vehicle, which was my responsibility.

Managing this operation meant balancing efficiency, accuracy, and throughput across multiple teams. One of the key areas identified for improvement was our picking process. My managers challenged me with a clear KPI: increase picking productivity while maintaining accuracy—in other words, pick more items per hour with the same or fewer resources.

On the surface, it seemed simple. If we could increase the speed of picking orders, we’d be able to fulfil more deliveries in a shorter time. This would reduce costs, improve turnaround times, and allow us to deliver to more customers utilising our current facility.

So, we went to work. We analysed inefficiencies, redesigned product layouts, and implemented changes that allowed us to triple our picking productivity. The numbers looked incredible—higher throughput, reduced labour costs per unit, and a seemingly more efficient operation. It felt like a major win.

Until the cracks started to show.

Success, right? Not quite.

While picking was now faster than ever, it created significant bottlenecks elsewhere in the operation:

• Staging Area Overload: Orders were now flowing into the staging area at an unprecedented speed. But the system wasn’t built for that kind of volume. Suddenly, pallets and totes began piling up, blocking access routes, overwhelming our staff, and causing unnecessary delays. The space that had worked fine before was now a bottleneck we hadn’t anticipated.
• Logistics Delays & Errors: The faster picking process meant that logistics teams had less time to sort and load deliveries properly. As the volumes increased, the picking team handled it with ease but the increased efficiency led to challenges in loading the orders. Deliveries were being loaded in a rush, leading to misplaced totes, incorrect stacking, and loading errors that impacted delivery accuracy. The faster pace also meant that last-minute quality checks were skipped, resulting in more incorrect orders reaching customers. What should have been a streamlined process had now turned into a scramble, where teams were fighting the clock rather than ensuring accuracy.
• Increased Product Damage: We had condensed packing into totes to optimise space, but in doing so, we unknowingly increased breakages and damage. The added density put fragile items under more stress, leading to a higher rate of damaged products on arrival. Totes that were once manageable became harder to handle, increasing the likelihood of drops and mishandling. The goal was to improve efficiency, but in reality, we were trading speed for quality, compromising the very service we were trying to enhance.

Instead of delivering a higher-quality product faster, we had optimised one piece of the puzzle while damaging the overall system.

The real problem? The KPIs we were chasing weren’t aligned.

The problem wasn’t the effort. It was the misalignment of what was being measured:

• Picking Team → Measured on speed (items picked per hour)
• Logistics Team → Measured on on-time despatch (minimising loading time)
• Customer Service → Measured on accuracy & damage rates

Each KPI made sense in isolation. But together? They pulled the business in competing directions, creating operational friction instead of efficiency.

We had optimised a single piece of the puzzle while damaging the overall system.

This is exactly how silos form in organisations. And if leaders don’t actively design their business to work as one unit, these problems become inevitable.

Why Silos Form (Without Leaders Realising It)

Silos don’t appear overnight. They emerge as companies grow without intentionally structuring themselves to prevent them.

In the early days, when teams are small and nimble, alignment is easy. Communication is direct, leadership has a line of sight across the entire business, and decisions happen collaboratively. Everyone is focused on a shared goal, and there’s little room for conflicting priorities.

But as businesses scale, complexity creeps in:

• More layers of management are introduced.
• Teams specialise and become more focused on their own functions.
• Leaders at the top become further removed from daily execution.

At a certain point, the leaders setting the strategy and working on the business can become disconnected from the teams executing the work inside the business. The natural response? Departments start to optimise for their own success rather than the company’s collective success.

Then, bureaucracy sets in. Instead of founders and early-stage operators working toward business growth, you now have career managers whose progression depends on hitting department-specific KPIs—even if those targets come at the expense of the bigger picture.

It’s not that they’re acting maliciously. But when leadership structures don’t deliberately create a golden thread that connects strategy to execution, silos become inevitable.

Here’s why it happens:

1. Unclear Roles & Visibility Gaps

As businesses scale, responsibilities become fragmented, and the golden thread that connects teams to the company’s overarching goals starts to fray.

Employees default to local optimisation—they focus on their immediate tasks and direct goals without understanding how their work impacts others. Without clear visibility into the bigger picture, teams unintentionally create operational friction.

Real-World Example: The Finance vs Procurement Battle

A company’s finance team is tasked with reducing costs and improving cash flow. One of their strategies? Delaying supplier payments to stretch working capital.

Meanwhile, the procurement team is responsible for maintaining reliable supplier relationships and ensuring product availability. But with payments delayed, suppliers begin prioritising other clients, leading to stock shortages and production bottlenecks.

Each department is simply doing its job. But because their objectives aren’t aligned, one team’s success is another team’s failure.

The result? Frustration, inefficiencies, and blame-shifting—classic symptoms of a siloed organisation.

2. KPIs That Create Conflicting Priorities

When leaders set performance targets in isolation, they create a tug-of-war between departments, where teams are competing rather than collaborating.

Instead of working toward a shared company objective, each team is measured on its own isolated success—even if it negatively impacts other teams.

This problem becomes more pronounced in larger organisations, where managers are evaluated on their department’s performance rather than business-wide impact. To move up the ranks, they need proof of success within their domain—even if that means pushing problems downstream.

Real-World Example: Sales vs Customer Success

A high-growth SaaS company sets aggressive targets for their sales team:

• Close as many deals as possible.
• Offer discounts and incentives to hit monthly numbers.

But the customer success team is measured on retention and customer satisfaction. They inherit unhappy clients who were oversold or misled during the sales process.

• Support tickets spike.
• Retention rates drop.
• Revenue churn increases.

This is a textbook example of KPI misalignment: Sales optimised for short-term volume, while Customer Success was responsible for long-term retention. Without KPI alignment, the company effectively created its own revenue leak.

3. Growth Without Re-Evaluating Organisational Design

Every business starts with a structure that fits its current stage. But as companies scale, enter new markets, or expand their teams, the organisational framework must evolve.

The problem? Most businesses don’t redesign their structure frequently enough. They hold onto legacy processes, outdated reporting lines, and inherited team structures, leading to bureaucracy and inefficiencies.

In a smaller business, people wear multiple hats, and collaboration happens naturally. But as an organisation scales, work becomes more compartmentalised. Teams that once worked seamlessly together now operate independently, and the distance between decision-makers and execution grows.

The Fix: The 12–18 Month Rebuild Rule

To avoid stagnation, leadership should redesign the organisation on paper every 12–18 months and ask:

1. “If we had to build this business from scratch today, what would it look like?”
2. “Do our current roles and teams align with where we are headed?”
3. “Are departments structured to collaborate, or are they creating friction?”

By proactively realigning roles, responsibilities, and reporting structures, companies prevent silos before they have a chance to form.

4. Ambiguity Leads to Siloed Thinking

Humans are wired to fill in the gaps when structure is missing. If communication is unclear, or roles are poorly defined, employees will interpret their responsibilities in ways that make the most sense to them.

This results in:

• Informal power structures – where influence is based on relationships rather than clarity.
• Territorial behaviour – where departments protect their own processes instead of collaborating.
• Mistrust between teams – as priorities shift and objectives compete.

In smaller teams, these gaps can be filled easily—leaders are hands-on, and employees can seek direct clarity. But in a larger organisation, where there are multiple layers between strategy and execution, these gaps turn into full-blown silos.

Real-World Example: The Leadership Vacuum Effect

In many growing companies, executives set a vision but fail to translate it into clear, actionable direction for teams. Without clear guidance, managers and employees create their own interpretations of company priorities.

This leads to:

• Different teams working toward different definitions of success.
• Confusion over who is responsible for what.
• A reactive, rather than proactive, approach to solving business problems.

This is why processes and frameworks matter. Without structured alignment mechanisms, people will naturally work toward their own best interests instead of the company’s best interests.

How to Spot a Siloed Organisation

Silos don’t announce themselves—they creep in gradually as businesses scale. At first, everything appears functional: teams hit their targets, KPIs are being tracked, and operations continue. But under the surface, inefficiencies start piling up, decision-making slows down, and cross-team collaboration becomes a constant battle of competing priorities.

If these signs sound familiar, your organisation likely has a silo problem:

1. Departmental Blame Culture

When departments start deflecting responsibility, it’s a strong indicator that teams are optimising for their own success rather than the company’s success.

Instead of solving problems together, you hear phrases like:

• “That’s not our problem—it’s theirs.”
• “We did our part, but they didn’t follow through.”
• “Operations messed up the handover, so Sales is getting all the blame.”

Blame culture thrives in misaligned organisations where teams are rewarded for department-level success instead of collective business outcomes.

Real-World Example: Marketing vs Fulfilment in E-Commerce

A fast-growing e-commerce company launches a massive discount campaign to boost revenue. The marketing team smashes their targets, bringing in 20% more orders than expected.

The problem?

• The warehouse team wasn’t informed ahead of time.
• The fulfilment team didn’t have enough staff to process the influx of orders.
• Shipping delays and order errors spike, leading to angry customers.

Instead of recognising the misalignment, Marketing blames Fulfilment for being slow, and Fulfilment blames Marketing for not giving them a heads-up.

A siloed organisation creates a system where teams compete rather than collaborate—and customers pay the price.

2. Slow Decision-Making

In an aligned organisation, decisions are made efficiently because information flows seamlessly across teams. But in a siloed organisation, even the simplest decisions get stuck in endless loops because:

• Different departments hold critical pieces of information but don’t share them proactively.
• Leaders lack full visibility, forcing them to request more meetings and reports.
• Processes aren’t standardised, leading to bottlenecks when cross-functional teams need to collaborate.

Real-World Example: The Never-Ending Approval Process

A mid-sized enterprise software company wants to launch a new product feature. The product team develops the feature, but before they can roll it out, they need approvals from:

• The compliance team checks regulations.
• The legal team to sign off on policies.
• The marketing team prepares campaigns.
• The customer success team to plan onboarding.

Each department works independently, with no centralised system to track progress. Emails go back and forth, meetings are scheduled (and rescheduled), and a simple decision that should take two weeks drags on for three months.

When decision-making becomes slow and reactive, silos are usually the culprit.

3. KPIs That Don’t Make Sense Together

When KPIs contradict each other, departments unknowingly pull the business in opposite directions.

Instead of driving alignment, misaligned KPIs create tension between teams, where success in one area actively harms another part of the business.

Real-World Example: Customer Support vs Finance

A company sets two key targets:

• Customer Support must reduce response times and improve customer satisfaction.
• Finance must cut operational costs by reducing headcount in non-revenue-generating departments.

At first glance, both KPIs seem reasonable. But cutting costs in customer support while expecting faster response times is fundamentally contradictory. The result?

• Customer satisfaction drops because support teams are overworked.
• Escalations increase, causing even more inefficiencies.
• Both teams underperform, despite hitting their department goals.

KPIs should cascade down from the company’s strategy—not exist in isolation. Otherwise, businesses end up optimising for numbers instead of meaningful success.

4. Duplicated Efforts

In siloed organisations, teams unintentionally work on the same initiatives separately, leading to wasted resources, duplicated work, and misaligned execution.

Instead of leveraging shared knowledge, departments reinvent the wheel in isolation, which slows down progress and increases inefficiencies.

Real-World Example: The Two Marketing Teams

A global B2B software company has two regional marketing teams—one in the US and one in Europe.

Both teams:

• Launch their own product marketing campaigns without coordinating.
• Develop their own materials, content, and sales enablement tools separately.
• Use different agencies and freelancers, doubling costs unnecessarily.

After months of wasted effort, leadership finally realised both teams were working on nearly identical campaigns—but using completely different messaging and positioning.

Instead of pooling their knowledge and aligning on a unified campaign, they duplicated work, wasted budget, and confused customers.

Recognising these signs is the first step, but awareness alone won’t fix the problem. If silos are left unaddressed, they become deeply ingrained, making cross-functional collaboration nearly impossible. Preventing silos isn’t about quick fixes—it’s about designing the organisation to function as a cohesive, aligned unit from the start. Here’s how to do that effectively.

How to Structure an Organisation to Prevent Silos

A well-structured organisation prevents silos before they even form. Instead of trying to fix misalignment after the fact, businesses should design for alignment from the beginning.

Here’s how:

1. Design the Organisation from the Top Down

Most organisations approach this backwards—forcing new objectives onto an old structure instead of designing the structure to meet the objectives.

Instead, leaders should:

• Define the business goal: Where do we want to be in 12–18 months?
• Build the ideal structure: What roles and functions are required to achieve that goal?
• Then, assign people: Fit the right people into the right roles instead of designing roles around the people currently in the business.

If you had to design the business from scratch today, what would it look like?

2. Align KPIs Across Departments

Before finalising KPIs, cross-check them across departments to ensure they don’t create unintended conflicts.

Ask:

• “If we hit this KPI, does it negatively impact another team?”
• “Are we incentivising short-term gains that hurt long-term success?”

KPIs should be structured so that each department’s success contributes to the company’s overall objectives—not just their own isolated targets.

3. Use the Function Accountability Chart (FACe)

Verne Harnish’s ‘Scaling Up’ methodology provides a powerful framework for role clarity and accountability.

Every function in the business should have:

• A single person is accountable (not a committee).
• A clear performance measure.
• Alignment to company-wide priorities.

?? Resource: How the Function Accountability Chart (FACe) Works

4. Reinforce Alignment with Tools & Communication Frameworks

• Regular cross-functional check-ins (to surface misalignment early).
• One-to-one leadership meetings (to maintain visibility).
• Collaboration tools (dashboards, shared KPI tracking, and internal knowledge bases).

Alignment isn’t a one-time exercise—it’s a continuous process that must be reinforced through structured communication.

Final Thoughts

Silos aren’t just an operational inconvenience—they are a symptom of misalignment at the leadership level. Left unchecked, they create inefficiencies, internal friction, and ultimately, a business that fights against itself rather than working as a unified force.

Preventing silos isn’t about forcing teams to collaborate—it’s about designing collaboration into the way your organisation operates.

That means:

• Aligning KPIs across departments so that success in one area doesn’t undermine another.
• Regularly reassessing organisational structure to ensure teams evolve alongside company objectives.
• Building systems that encourage visibility and eliminate ambiguity in roles, responsibilities, and priorities.

The best businesses don’t just scale—they scale with alignment.