Strategy Acceleration Simulations

Accelerating Strategy Execution Out Of Business Silos

Accelerating Strategy Execution Out Of Business Silos

Although there is a steady emergence of technologies and other innovative business practices designed to unite and encourage collaboration, the threat of business silos is still genuine. Almost every organization has experienced both positive and negative effects of business silos. Organizational silos often occur when departments or units within your company form barriers to prevent the free flow of knowledge and information.

Organizational silos may come with some benefits, such as providing direction and focus. They may also permit the creation of organizational-subcultures, which can accord a sense of culture, pride, and belonging that the corporation might not be able to provide. In most cases, silos tend to separate the front-line workers and high-level employees. Business silos may form due to lack of direction from the top management team or the absence of a formal communication channel.

While organizational silos may have their benefits, they also have some drawbacks, which can affect an organization negatively. By forming departmental or unit barriers, the free flow of information is curtailed. This can make employees start being resistant to change, make communication impossible, and lead to the brewing of turf wars between departments. Due to the dangers associated with silos, most leaders are finding ways to break them down. Many companies have started using strategy acceleration business simulations to help speed up change within organizations.

The Dangers of Business Silos

  1. Misplaced Priorities

When various groups or units in the company fail to work together or share knowledge and information, there is no consensus on what company goals or objectives should be the priority. Uncoordinated efforts can lead to time wastage, as well as the inability to meet the goals set by an organization. Business silos lead to the creation of sub-structured units that prioritize their tasks, forgetting that they are not the core roles of the larger company. Just because a course of action makes sense to your department doesn’t mean that it might necessarily help the company grow.  Silos blur the vision of departments, making them concentrate on their endeavors and forget to accomplish goals that represent the larger organization’s interests.

  1. Potential Reduced Morale

Organizational silos restrict the free flow of knowledge and information. If employees are not furnished with enough information, their motivation level drops. Additionally, two departments might be working on a project, and due to the rivalry and turf wars between them, they might fail to share vital information that is critical to the success of a project. This might lead to employees failing to meet the set objectives, something that might affect their morale. Having several silos in an organization makes communication ineffective, and it can make employees lose focus and feel bored and demoralized.

  1. Goals and Vision Alignment Challenges

Organizational vision and goals help employees know what they are required to do to steer the company in the required direction. However, when business silos get into the picture, they undermine the coordination and collaboration of departments, which is critical in the formulation of company strategies and initiatives. Additionally, when information isn’t shared as expected from the various departments, leaders might make decisions that can negatively affect the performance of a company. Conversely, the lack of shared vision may also lead to a lack of trust, cohesiveness, and confidence among employees.

  1. Mass Work and Effort Duplication

When there is ineffective communication, and limited visibility across the organization, members in the same department but different units can end up doing the same work. This can lead to wastage of time and resources for the company. In such a situation, adequate sharing data and communicating with each other could have helped save time and effort. Duplication means that two employees will rake in a salary for doing the same job, something that is unacceptable, especially for organizations that are trying to scale their resources.

  1. Broken Customer Experience

Business silos implication can extend even to the organization’s customers. This is where customers start receiving low-quality services and products or being treated like prospects. For example, think of an online company that has been affected by silos in a way that their marketing and sales departments don’t communicate or exchange information. When you buy something from the said company, the marketing department will still bombard you with messages like a potential customer since they aren’t aware that you’re already their customer.

  1. Increased Likelihood of Errors

Organizational silos can also increase the chances of employees committing errors. For the completion of tasks, workers from various departments in a company need to work together. For instance, when formulating marketing strategies, both sales and marketing departments need to make their contribution. However, if they are not talking or sharing ideas, it may result in a disastrous strategy that doesn’t incorporate the views of relevant stakeholders. Additionally, the lack of communication can make it harder for superiors to check and correct errors committed by junior staff.

  1. Data Analysis can be a Nightmare

When business silos exist in an organization, it means that every department is responsible for storing its data. This can pose significant problems when it comes to data analysis. This is because information may be stored in multiple formats, some of which might be inconsistent with the standard. Additionally, analyzing tons of information that exists in various forms can be time-consuming. Individual storage of data is something that should be discouraged in any organization at all costs.

  1. Erosion of the Organization Culture

While one benefit of business silos is to provide a sub-cultural pride for employees, its existence can jeopardize the larger organization’s culture. When you have a situation where various units in a company are working independently, people can be more focused on creating a culture within their group and forget to appreciate the culture of the entire organization. People may fail to submit the necessary information to the required authorities, thereby undermining the various doctrines that are enshrined in the organizational culture.

Final Summary

Although silos have come with some benefits, they can pose a serious risk to any company, whether big or small.  However, with the ever-changing business landscape, it would be suicidal to let silos crop up in your company. This is because they can lead to erosion of the organizational culture, blurring corporate vision, reduction of employee morale, increase the likelihood of committing errors, and even affect the customer experience. On a positive note, global companies are successfully utilizing business training simulations to accelerate their corporate strategy. Utilizing one of these tools is not overly difficult and needn’t be complicated. They are effective tools to help accelerate your corporate strategy.


Want to talk about using a business simulation?

Click the button to learn more about using business simulations:

Scroll to Top