Over three decades ago — in 1988 — Phil S. Ensor coined the phrase, "functional silo syndrome” to describe a top down managed organization with vertical departmental silos, characterized by “mistrust” and a lack of cooperation. The negative and destructive impact of “silo” thinking has been known for some time. Yet, while most executives recognize the importance of breaking down silos – they struggle to make it happen.

Given the amount of rhetoric dedicated to breaking down silos, it was shocking to learn from a recent survey that 75% of 1,500 global senior and C-level executives saw different business functions competing against each other instead of collaborating on digitization efforts. This lack of collaboration contributed to 64% of companies failing to see revenue growth from their digital investments. This confirms a direct connection between the lack of success with digital and silo behavior.

Thought leaders such as Dr. John Kotter, have offered advice on breaking down silos and many IT professionals agree that silos hinder collaboration and the ability to align departments behind a cohesive vision for digital transformation. While there are several forms of silos, departmental silos are at the core of the problem. For decades, department heads have put their own department’s needs ahead of overarching corporate needs and hoarded data. In the digital age that “data chicken” has come home to roost and data transparency is compromised. That has been due partly to the lack of common data definitions as well as departments not sharing data.    

Vendor silos and practitioner silos further complicate the digital landscape. The failure of technology vendors to collaborate with one another multiplies the adverse impact of departmental silos. To add to the complexity of the silo landscape, when various expert teams such as the analytics group, the customer experience management team and process improvement groups fail to collaborate, then success with digital transformation is severely hindered.  

How can organizations break down these various silos and set themselves up for success with digital transformation? As with most change efforts, the buck stops with leadership. In 2018, MIT surveyed 1,300 executives in over 750 global organizations, and only 35% said they had the needed leadership capability.  Note that launching yet another reorganization is unlikely to create the needed digital transformation leadership capability. Restructuring is almost always a poor use of management time — and that applies equally to pretty much everyone else in the organization. People find reorganizations exhausting as they attempt to create relationships with new managers, peers and subordinates. New structures consume management attention that is typically in short supply and which should be focused on overcoming business challenges. So, instead of focusing on structure, leaders are well advised to build clarity around a common goal for the digital agenda and create a sense of urgency around it. That’s an essential prerequisite for success with digital. 

Once there’s a common goal for digital and a sense of urgency around it, a company can then focus on collaboration between business departments and IT. Even in so called “normal” times, the lack of cross-function collaboration costs organizations ROI on their IT investments. In these challenging times, cross-functional competition and in-fighting — especially around the digital transformation agenda — could be catastrophic. IT has a critical role to play and needs to overcome some internal challenges too. Decades of conditioning in catering to individual department’s information technology needs has driven the development of deep technical expertise in specific IT domains. Vendors have also perpetuated the practice of responding to each department’s needs resulting in a network of unique apps that don’t communicate well with one another and vendors encourage their own brand of technology innovation each of which comes with its own specific tooling. To add to the complexity, most organizations are good at adopting new technologies — but not nearly as adept in retiring old ones resulting in an architecture that makes digital transformation challenging (to say the least). Several of the issues associated with siloed IT behavior are the result of what has been identified as a fixed mindset — the belief that certain ways of thinking are static or unmovable. 

Since an organization’s ability to create value — for customers and the company — is based on the synergistic combination of people, processes and technology, the silo problem is not owned by technology alone. Researchers at MIT have long argued that success with digital transformation involves a set of elements aimed at improving customer experience and internal operations — recently supplemented by a focus on employee experience and increased attention to business model innovation. Seeing the business from the outside in — from the customers’ perspective — is as relevant and necessary today as it was two decades ago. Similarly, the tenacious attention to improving operations remains an essential component of the needed focus in digital transformation. Advances in technology including sensors, cloud, machine learning, Artificial intelligence (AI) and the Internet of Things (IoT) are enabling the transformation of operational capabilities. 

Seeing the business from the outside in — from the customers’ perspective, tenacious attention to improving operations, and an integrated approach to deploying digital technology is at the core of success with digital.  

Now for the good news! The very same practices that are central to success with digital transformation are also important in breaking down silos. However, executing these is easier said than done.

When it comes to seeing the business from the outside in — or the customers’ point of view, a fundamental shift of mindset is needed. Harvard University professor Dr. Sunil Gupta established in his research on customer centricity that while mapping customer journeys has become commonplace, most organizations are focused on their own products and/or services and fail to truly examine the problems that customers wish to solve. When customers wake up in the morning are they excited about taking out a car loan or a mortgage? Not likely! The customer’s thought process starts with excitement around buying a car or a house — long before they think about the loan or mortgage. Yet, for many banks and credit unions, the first step in their customer journey map is receiving an application for a loan or mortgage. Are you really innovating around your customers? Do your customer journey maps truly reflect the perspective of the customer? Does your company put employees, contractors and customers first, even before profits? 

A similar shift in thinking is needed in improving operations. In many organizations, process improvement is still carried out on a department by department basis. Yet, what is needed to stimulate collaboration, break down silos and scale the deployment of digital tools is to focus on end to end processes such as “order to delivery,” “idea to launch,” and “request to receipt.” In order to boost cross departmental collaboration, the modeling of small processes inside departmental boundaries has to stop. The same applies to launching small improvement projects within departmental boundaries — as that reinforces silo thinking. Instead, companies wishing to break down silos and create the correct context for digital transformation model and improve end-to-end, customer touching business processes. Emphasizing the measurement of quality and timelines is yet another lever in creating focus on what matters to customers and thereby stimulate collaboration. 

An integrated approach to deploying digital technologies is the third tactic that can contribute to success with digital transformation and break down silos too. As Didier Bonnet and George Westerman stressed, “the foundation for digital transformation is a clean, well-structured digital platform — the technology, applications, and data that power a company’s business processes. None of the other digital elements can achieve their full promise without it.” What Gartner calls “Hyperautomation” can facilitate the roll out of technology in an integrated manner. Hyperautomation involves the grouping of various digital technologies in automating an organization’s end-to-end processes. It encompasses digital tools such as low-code business process management (BPM), process mining, robotic process automation (RPA), intelligent machine learning and artificial intelligence (AI) to streamline and optimize many tasks and processes. BPM tools provide the context to model enterprise processes and along with process mining tools can identify the highest opportunity areas to deploy RPA to automate basic, repetitive, mundane tasks. Then, AI and other tools can be paired with RPA bots. Nielsen provides an example of how RPA can be combined with AI and other tools. Here, RPA has been combined with optical character recognition (OCR) to extract information from documents, and with natural language generation (NLG) to create automated summaries of business presentations. Also, some RPA “bots” at Nielsen have been integrated with chatbots (to make phone calls), and with machine learning for text classification. 

It should come as no surprise that brilliant leaders such as Elon Musk and Steve Jobs embraced the “No Silo Rule.” Putting customers first, focusing on the big picture, and working for the good of a company as a whole will serve to breakdown silos — and it will increase the chances of success with digital transformation at the same time. 

Andrew Spanyi is the founder and Managing Director of Spanyi International Inc. He has written 3 books on process management and operational leadership. His thought leadership in these areas is based on nearly three decades of practical experience assisting organizations with large scale change. He is also on the board of advisors for the Association of BPM Professionals.