Sick of Silos and Limited Communication?
Imagine a rowboat with many rowers. Each rower has two independent oars, which impact speed and direction. In that boat, there is a large barrier between each rower. So, the rowers are limited in their ability to communicate with each other and share information.
In this scenario, even if every rower is rowing hard, what are the chances they are all rowing in synch and in the best line to reach their destination? Or, is it more likely they are rowing against each other and don’t know it?
Now picture that rowboat as a company trying to deliver a product or service. Think of each rower as an employee in the company. The same challenges that impacted the boat can and will impact a company. However, in a company, the quality of information and communication are so invaluable, they often can make or break a company. That’s why it’s essential for every organization to invest and ensure communication and information channels are open and aligned.
Let’s say you asked random members of three departments (sales, accounting, and production) about inventory for a specific group of products. Would they all give you the same number? Would they all go to the same place to find it? What if you asked these same individuals for the profitability of a product line? Would they even have answers? If so, would their answers be the same? Does the quality and flow of information and communication impact cash flow?
Information, communication and money are interdependent and are the lifeblood of a business. They all need to flow well for a business to thrive. When these areas are misaligned, it can cost a business millions of dollars and significant missed opportunities. A fall 2018 study indicated that Fortune 500 companies lose an estimated $31.5 billion per year by failing to clearly and effectively share knowledge across teams — this is the silo mentality. The silo mentality reduces efficiencies, trust, morale, and a company’s culture. Ultimately, it negatively impacts money and cash flow!
In Patrick Lencioni’s book Silos, Politics and Turf Wars, he demonstrates how destructive silos can be. “Silos – and the turf wars they enable – devastate organizations. They waste resources, kill productivity, and jeopardize the achievement of goals.”
At some point, we have all witnessed or felt the repercussions of silos in our organizations. Silos result in low quality, misaligned information and/or poor communication of information, costing companies $100’s of 000’s of dollars as well as weeks and months of time. By measuring quality of information, you’ll have a clearer picture of where your organization falls on the spectrum and what you need to do to remedy your challenges.
Quality is determined by how well employees and management can use it to understand, predict, prevent, produce results, and/or provide direction. When information is of high quality, it is actionable for decisions and choices in a timely basis. When it is of low quality, it requires additional work to make it actionable and therefore becomes less timely, less inherently beneficial, and more costly.
Signs of Trouble
Costly silos are present in both global companies as well as ones with 8-10 employees. Either way, silos prohibit an organization from performing optimally. The relative impact can be detrimental regardless of the size. Here are the most common indicators:
- Measured reduction in efficiency or delivery timeliness
- Increased mistakes and rework
- Proliferation of operational workarounds
- Poor customer service or non-market factor loss of customers
- Missed opportunities around sales revenue and profit targets
- Eroded ability to make quick, confident decisions due to incomplete or inaccurate information in systems
- Demonstrated lack of clarity, consistency and achievement of goals
- Cost per product and/or lead is too high
- Higher employee turnover
When a company’s culture does not foster productive problem solving and transparency, departments begin to focus strictly on their own priorities and needs, not those of their colleagues, and trust erodes. As trust between teams and departments disappears, information is withheld, and operations are negatively impacted. In time this leads to what no company wants: poor employee performance, low employee satisfaction, and poor customer experiences.
How to Move Forward
So, like it or not, the “We have always done it this way” mentality needs to change to foster better communication and information. We have found changing this mentality yields greater than 50% higher improvement and/or return on effort and investment. Ultimately, every organization we’ve worked with expresses their appreciation of their new, collaborative environment, with open, effective communication, trust and accountability.
Some steps to take to align and validate information are:
- Make sure that your data is clean, streamlined and accurate
- Make a simple list of all the data sources that feed into your database
- For each source, determine how frequently they’re updated, and which data fields are supplied from each data source
- Decide which data sources are no longer needed or need to be updated
The secret to refining your communication is in the art of asking clarifying questions. The key to effective clarifying questions is that in order to understand fully, ask questions that Confirm, Clarify, and Expand, so you ensure you have the whole story.
To eliminate the cost of the “silo mindset,” leaders need to take a critical look at their organization and recognize the inefficiencies and barriers. They need to then dedicate resources – and that may require external ones – to create sustainable solutions that are realistic and can be executed from within.
VENN Strategy Group has worked with small and large enterprises across the globe to remove silos and unleash a profitable environment designed for growth. If your organization is experiencing limits due to silos and inconsistencies, we welcome the opportunity to help. Please contact us!