Silos Are Dead! Long Live the Silos!
Guest post by Intellyx Principal Analyst Charles Araujo

Nothing unites any group of people like a common enemy. And since the move toward digital transformation began - and IT transformation before it - a favorite common enemy has been organizational silos.

It has been an oft-repeated mantra that in order to execute a successful transformation of any kind, the organization must break through the silos that have been the source of dysfunction and obstruction.

Everyone could agree that silos created unnecessary separation, protectionism, and bureaucracy. No one would dare argue that having rigid silos were somehow good for the organization.

Silos were, therefore, the easy target. They became the mantle onto which leaders could lay all past transgressions, and, in so doing, they became a convenient artifice to allow the leader to proclaim the dawn of a new era of integration, collaboration, and communication.

Silos are dead!

Except they never quite died, did they? In spite of all the talk, silos have persisted. They now just have different names. But the danger remains just as real, and their negative impact grows more significant every day.

All New, Old Silos
The problem is that in spite of the all the posturing, no one really wants to kill silos. Silos have become a way for people to identify themselves - particularly when they are trying to set themselves apart in a positive fashion.

So while there may be a common acknowledgment that the traditional silos and their use as a functional management paradigm are a hindrance, we're far from killing silos. Rather, an entirely new set of silos are simply rising to take the place of the old ones.

The most egregious of these new silos has come in the form of the bimodal IT concept, which has promoted a blatant segmentation between the supposed ‘old IT' and the new. Worse, bimodal IT has perpetuated the worst aspects of siloed mentality, cementing the idea that one part of IT was progressive and part of the future while the other was slow and stuck in the past.

But while bimodal may be the most blatant form of a new silo, it is far from the only one. Almost every new approach, strategy, and technology is ripe for creating all new, old silos. Whether it be DevOps, microservices, IoT, big data, or cognitive platforms, every new technology opens the door for some team or group of people within the organization to adopt it as the source of their new identity in order to segregate themselves from the rest of the organization.

On the one hand, this siloed mentality makes sense. The adoption of a new approach or technology requires new skills and specialized domain expertise.

Inevitably, people who embrace the new approach or technology become zealous believers and then naturally start forming formal or informal groups with other like-minded adherents.

Eventually, the organization codifies these specialized capabilities into an organizational function and poof! - we have a new silo. But the problems with silos don't go away just because people have rooted them in some modern technology.

Our Old Nemesis: Tactical Specialization
The reason that organizational silos have continued to persist is that even as everyone talks about digital transformation being this fundamental transition in the way organizations operate, few people seem to actually believe it.

Under the banner of digital transformation, organizations have changed the technology they use, where they deploy it, and how they manage it. They have created new organizational functions, new roles, and new titles. In some instances, they have even changed the metrics and how they measure their performance.

But few organizations have actually changed how they fundamentally structure themselves or how they operate.

This fact is certainly true within IT, but it is just as true throughout the entirety of the organization. Sure, everyone talks about the need to become a ‘digital enterprise' and how every company is now a technology company, but beyond all the talk, not much has actually changed.

Rather than taking a strategic, holistic, and systemic approach to transforming the organization, business and IT leaders have settled for incremental and tactical approaches. As a result, these so-called transformations have centered on our old nemesis: tactical specialization.

The history of IT - and really, the history of the modern enterprise organization - is joined at the hip with the idea of tactical specialization. Nearly every organization in existence has structured itself around the idea that they must create centers of specialization in order to create operational efficiencies. This idea is as old as the Industrial Age - and now just as obsolete.

For organizations to truly transform, they must finally break through this inbred siloed mentality and strategically reshape and restructure themselves to compete in the digital future - a future in which it is not efficiency, but rather agility, speed, and customer-centricity that create value.

Two Old Ideas to Create the New Digital Enterprise
Making this much more fundamental transformation is fraught with risk and challenges. That's why so few have dared to take it on.

But while re-envisioning how an organization operates requires courage and political capital, enterprise leaders don't have to make it all up. In fact, the inspiration and playbook for such an organizational re-imagination already exists in two fairly well-established concepts: design thinking and systems thinking.

A cadre of both business leaders and academics have already written volumes on these two topics - and each deserves in-depth study - so I won't get into their specifics here. (Although if you're looking for a place to start, you should begin with Stanford's d.school design thinking virtual crash course and Peter Senge's seminal book on systems thinking and creating learning organizations, The Fifth Discipline.)

These two ways of ‘thinking' are critical for organizations that wish to authentically transform themselves, because they demand a reorientation of the entire organization.

Design thinking shifts the organization away from an internally-focused and process-centric orientation to a human and customer-focused, value-oriented orientation.

Likewise, systems thinking forces an organization to change the operating perspective from one of functional efficiency to a holistic perspective that assesses efficiency and effectiveness only at a systemic level, where the enterprise operates as a complex system of systems.

The Intellyx Take
As enterprise leaders apply these two approaches at an organizational level, it becomes almost impossible to accept either mere incremental ‘transformation' or the continued existence of silos. Instead, the natural outcome of applying these principles at an enterprise level is the emergence of an entirely new set of organizational characteristics.

This new ‘Digital Enterprise' will be inherently customer, value, product, and project-centric. As such, functional organization by technical specialization will be inefficient and no longer sustainable.

Instead, the organization will manage its human, capital, and contractual resources dynamically to deliver its products, projects, and value to its customers. To do so, teams made up of internal employees, partners and, in many cases, customers, will self-organize (to varying degrees) to ideate, conceptualize, develop, and bring a product or service to market - and then disband just as quickly after it has run its (much shorter) course.

To be frank, these new methods of structuring and operating are largely untested and still in experimental stages within those brave enterprises willing to lead the pack. As they continue to test these ideas over time, however, the best new approaches to structuring and managing organizations will emerge.

However such transformation turns out, one thing is clear: the structure of those organizations that not only survive this period of rapid disruption, but which thrive in it, will look nothing like the industrial age dinosaurs that are the standard today. They will be fluid, dynamic organizations that are entirely oriented around the customer and operate at a systemic level.

And there is one other thing you can count on: there won't be a silo in sight.

Copyright © Intellyx LLC. Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Leaflet.

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