19 April 2013
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Breaking free of hierarchical structures, organizational silos

Hierarchical structures and organizational silos are common within modern businesses, but their existence both hampers customer experience and impedes efficiency, according to some. In this post, we look at both issues, and solutions that have been proposed.

First we’ll look at a proposed “cell structure” approach to organizations, and then look at solutions to break the existence of the “silo” mindset while bringing customer-centeredness to an organization.

Questioning the ‘Tayloristic’ model

“The notion of dividing an organization into functions, and then departments, is fundamentally flawed,” says Niels Pflaeging of BetaCodex Network Associates. It’s a sweeping indictment – what’s behind it?

Linking roles and responsibilities hierarchically is the de facto approach to organizational structuring. The existence of a typical org chart, complicated job titles and the concept of ‘managers vs. workers’ all point to the prevalence of this approach. Yet it’s long been criticized as ineffective and damaging to performance. Referred to as the Tayloristic method, it is the situation in which management and workers are strictly delineated, a “way of working” is set in stone, and labor is heavily compartmentalized. The term itself was coined more than a century ago by American engineer Frederick Winslow Taylor.

It found its first application in Henry Ford’s factories, where mechanization and the division of labor created a success story that changed the production of goods for ever after. But – some argue – that model has become outdated.

In 1960, Douglas McGregor, a professor at MIT’s Sloan School of Management, wrote: “It is probable that one day we shall begin to draw organization charts as a series of linked groups rather than a hierarchical structure of individual reporting relationships.”

So what do the alternatives look like then? “Pyramids and chains”, “hubs” and “networks” are all models that break away from strict hierarchy. The latter – a network with a “cell structure” – is promoted as the BetaCodex network, and extensively described in discussed in a whitepaper shared online.

A “cell structure (as opposed to a design based on ‘departments’ and ‘functions’) is capable of interacting situationally, in more diverse ways than functionally divided hierarchies. Even more so, it doesn’t need commands to be controlled – it can be controlled and governed just through ‘market pull’,” writes Pflaeging.

In his whitepaper describing this decentralized leadership network, leadership is (nearly) completely devolved. Further information, including case studies where the model was implemented, can be found in this presentation: “Turn Your Company Outside-In! (part I+II). A Special Edition Paper on Cell Structure Design”.

The danger of organizational silos

According to research conducted in 2012 by customer experience consultancy Beyond Philosophy within the telecoms area, a “silo mentality” is the single biggest factor blocking improvements to customer experience. These silos come about through the desire for managers to own and control their own domains within an organization, but their existence threatens customer experience, among other things.

Quoting John Kotter (whom we covered in an earlier series of posts on change management), Beyond Philosophy’s Zhecho Dobrev lists three dangers created by these silos: (1) they destroy trust that should be built across an organization, (2) they cut off communications, and (3) they foster complacency by allowing employees to pay attention only to their immediate environment.

So what’s the answer to breaking down these silos? Dobrev cites colleague Colin Shaw’s proposal of implementing “CE Councils”, which bring together everyone in an organization responsible for customer experience. It ties nicely with one of Kotter’s recommendations of creating a “guiding coalition”.

Dobrev goes on to connect two more of Kotter’s recommendations to the task of removing the silo mentality, and recalls the changes that American manufacturer Alcoa underwent in the 1980s to implement change and break down silos simultaneously.

Source: “How to overcome organizational silos?” (Zhecho Dobrev @Zhecho_BeyondP, Beyond Philosophy)

Business processes (14), Culture (10), Customer experience (65)

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