A Chronic Challenge with Manageable Solutions

By Andy Friedman, Executive Chairman
O.D. Consulting

In recent years, as the phenomenon of complex organizations becomes more pronounced and interdependence between organizational units grows, we find ourselves increasingly assisting clients in enhancing collaboration between these units. In other words, we help them address the well-known challenge of the “Silo Effect.”

Understanding the Silo Effect

A “silo” within an organization occurs when departments, teams, or business units operate in isolation with limited communication between them. As a result, information does not flow freely, collaboration breaks down, conflicts arise, and performance objectives are compromised. This leads to reduced flexibility, innovation, and efficiency within the organization.

Senior executives we work with consistently identify the Silo Effect as one of the most detrimental phenomena impacting organizational effectiveness and the ability to achieve strategic goals. This issue transcends industries, sectors, and cultures.

It is evident that the more an organization operates in a competitive environment with immediate performance pressures, the more severe the Silo Effect becomes. This challenge is particularly prevalent in complex organizations structured as matrix-based or multi-layered systems.

The root of the Silo Effect often lies within senior management. Therefore, analyzing executive interactions is a key step in diagnosing the problem and formulating a comprehensive solution.

As an organizational consulting firm committed to breakthrough performance and data-driven interventions, we have conducted extensive research on this issue. Over the past few years, we have surveyed and interviewed approximately 30,000 employees across various industries in Israel, revealing findings consistent with a recent Harvard Business Review study.

Five Primary Manifestations of the Silo Effect

Our research identifies five primary manifestations of the Silo Effect:

1. Lack of Shared Goals

Arises when organizational objectives are misaligned, leading each unit to focus solely on its own targets without considering cross-departmental impacts. For example, a sales team launching promotions without consulting production, resulting in unforeseen costs. We categorize these as systemic silo challenges.

2. Unclear Relationship Definitions

Often, stakeholders lack clarity or agreement on the nature of inter-unit relationships. Questions such as “Are we in a supplier-client relationship?” or “Who is responsible for delivering key outputs?” frequently arise. Defining shared objectives helps clarify these relationships and align all parties toward a common goal.

3. Ambiguous Authority Boundaries

Many organizations struggle to delineate clear lines of authority and responsibility between units. This leads to territorial conflicts, where one unit perceives another as overstepping boundaries. These conflicts, sometimes driven by genuine ambiguity and sometimes by strategic positioning, are termed territorial silo challenges.

4. Expertise Hoarding

Occurs when certain departments consider themselves superior or more sophisticated than others and withhold critical knowledge. For example, a development team refusing to share insights with process design teams, thereby stifling innovation and efficiency. These are classified as elitist silos.

5. Defensive Silos

Emerge when units or managers fear that sharing information might undermine their status, budget, or autonomy. For instance, a factory resisting automation and production transparency due to concerns about closure, thereby restricting overall resource management. These are categorized as defensive silo challenges.

It’s important to emphasize that our proposed solutions are not based on one-time experiential events but rather on foundational interventions developed in collaboration with key stakeholders—those who contribute to the problem. We operate with the understanding that a deep-seated issue cannot be resolved with superficial, one-off initiatives, nor can it be outsourced to HR for quick fixes.

All our solutions are built upon an initial structured dialogue among stakeholders, aiming to establish trust, foster open communication, and navigate the process through three critical stages:

• Problem Identification – Recognizing the organization’s unique Silo Effect and determining which of the five manifestations is present.
• Solution Framework – Selecting targeted activities to address the identified challenges.
• Implementation Strategy – Developing practical approaches to apply the solutions effectively.

Five Key Intervention Strategies

1. Aligning Objectives Across Units

How to implement:

• OKRs (Objectives and Key Results) – Setting shared goals alongside clear success metrics.
• Cross-Departmental KPIs – Establishing performance indicators that measure success through inter-unit collaboration.
• Incentivizing Collaboration – Implementing reward structures that prioritize teamwork and shared achievements over individual department success.

2. Building Trust and Defining Collaborative Work Standards

How to implement:

• Creating a Shared Work Code – Establishing agreed-upon rules, behaviors, and operational procedures to enhance cooperation.
• Agile & Cross-Functional Teams – Integrating representatives from multiple units into working groups to resolve conflicts in real time.
• Leadership-Driven Transparency – Senior leaders fostering a culture of openness and cross-unit appreciation.
• Job Rotation and Shadowing Programs – Encouraging employees to gain exposure to other departments’ critical processes through structured exchanges.

3. Establishing Secure Knowledge-Sharing Infrastructure

How to implement:

• Knowledge Management Systems (KM) – Ensuring seamless information access and storage.
• Collaboration Platforms – Leveraging tools like Slack, Microsoft Teams, and Trello to facilitate real-time teamwork.
• AI-Powered Dashboards – Utilizing artificial intelligence to analyze organizational trends, detect inefficiencies, and drive learning from past successes.

4. Redesigning Organizational Structures to Facilitate Collaboration

How to implement:

• Smart Matrix Structures – Embedding cross-functional collaboration into the organizational framework.
• Task Forces – Assembling short-term project teams with members from various departments.
• Agile Management Methods – Applying principles from software development (Scrum, Kanban) to improve cross-unit communication and efficiency.
• Dedicated Bridge Roles – Appointing employees to connect departments and mediate conflicts:

1. “Connectors” – Employees who identify conflicts, facilitate resolution, and strengthen interdepartmental relationships.
2. Organizational PMOs – Project managers ensuring seamless collaboration between departments.

5. Cultivating a Collaborative and Trust-Based Culture

How to implement:

• Servant Leadership – Training managers to model transparency and collaboration.
• “Lunch & Learn” Events – Hosting informal sessions where employees present cross-unit projects.
• After Action Reviews (AARs) – Conducting structured debriefs post-project to evaluate collaborative successes and failures.
• Collaboration Surveys – Measuring interdepartmental engagement and satisfaction.
• Internal Benchmarking – Comparing unit performance to identify and address disparities.

The solutions we propose have been successfully implemented in numerous organizations. Breaking down silos is not a one-time fix but a continuous process requiring executive commitment, cultural shifts, and advanced technological integration. Organizations that proactively manage inter-unit collaboration benefit from enhanced agility, accelerated innovation, and superior business performance.

We would be delighted to support you in this journey!