13 years, 10 months ago

Observations on Silos

Link: http://businessanditarchitecture.blogspot.com/2010/07/observations-on-silos.html

In this posting Richard Veryard  examines the value of silos and silo thinking in organizations. In some ways silos are necessary organizational mechanisms because they place boundaries on functional activities. However they are also creatures of organizational politics – each silo is headed by “someone important”. At the European  Enterprise Architecture Conference 2010, Alec Sharp  observed that silos have negative connotations and that perhaps we should use the term, “Cylinders of Excellence”. That at least sounds more empowering.

Often, however, the success metrics of a silo are actually in conflict with those of the organization. Well intentioned success metric/motivational policy in a sales team (e.g. “Orders taken in the last week of the quarter will pay extra commissions”) will in all likelihood have exactly the wrong outcome. Commissioned sales force team members are actually incented to do the wrong thing – to sandbag until the last few days of the quarter. This has potential downstream effects. It places extra burden on finance and other back office “systems” (silos?). It doesn’t allow the organization to get a true picture of sales performance through the quarter. Somehow the miracle always seems to occur and some huge deal comes in at the end of the quarter to “rescue the quarter”, keep the investors happy, commission the sales team…

So as architects we should look at the effects of the silos on organizational goals. Moving the silos around is likely to be a bad idea. Powerful people sit at the tops of silos and the only time to effect change at that scale is when new senior management take over. So rather than being perceived as people who are trying to undermine power, enterprise architects need to be seen as people who facilitate the planning and execution of the enterprise.

A fundamental (inside out) question then is, “How do the goals/reward systems in the current silos ensure that the goals and reward systems of the enterprise? are met” In the example above, the Sales silo would argue that it is helping the enterprise meet its goals by making sure that targets are indeed met. However, there is nothing in the enterprise goals that says “at whatever cost to the rest of the enterprise”.

Enterprise architects are fundamentally enterprise level thinkers and thus must be thinking about the enterprise (and possibly the extended enterprise) as a whole. We must be able to understand the implications of conflicts in the enterprise – where Value systems in the silos are either at odds with each other, or at odds with the value systems of the organization as a whole.