Consequences of operating in a silo
Dec. 1, 2014
There are times in your career when you remember every detail of an event or a meeting. It’s not just a passing occasion when a trusted employee walks into your office, shuts the door and tenders a resignation. Or when you stand in the R&D lab and tell your talented, trusted scientists and staff that you are moving on, leaving the amazing team you worked so hard to build. Unforgettable moments to be sure.
On this particularly memorable day, our president and CEO called me into his office. He held out a loaf of our premium white bread and was very unhappy with its quality. He demanded answers.
First, a bit of background. This happened in the mid-1990s when several new breadmaking technologies got their initial exposure to wholesale bakery conditions. They promised greater precision, faster throughput and lower costs, with many of them engineered to make other pieces of equipment redundant, cut clean-up costs and speed changeovers. And their return-on-investment (ROI) glittered alluringly.
But many bakers implemented these new technologies without considering their effect on the product. Trying to run the same bread formula through the new equipment caused nothing but problems. That’s what happened to us, and it happened more than once.
“Sir,” I answered the CEO, “we made changes in the process without understanding the long-term effect on product quality and ingredient costs.” I explained why the new system caused the problems he found in our premium loaf. Still, he defended at length the decision to adopt the new technology. He did not like my answer that no easy fix was available. Finally, I proposed, “What if we asked for a kinder, gentler version of this machine?”
At the time, I wasn’t sure I had been heard. The next day, however, brought a pleasant surprise. The head of engineering reached out to the director of bread product development, and the “kinder and gentler” project started.
A few years later, our company bought a major bread processor in New England. As we integrated the business into our own, it ran into similar problems with its No. 1 selling bread. Again, the difficulty could be traced to a new technology we adopted to standardize a key process. Although no changes had been made in formula, flour supplier or any other ingredient, the product was different. Consumers were not happy.
Both examples illustrate the unintended consequences when departments or companies make decisions in a vacuum — in a silo, to use the contemporary phrase. Take it from the daughter of a dairy farmer, who helped fill the silo on the farm year after year, they are lonely and can be very dangerous places to work in. The same can be said for “corporate silos.”
In short, while the savings, ROI and throughput data concerning a new technology may all indicate the choice is correct, if that decision takes place in the isolation of a corporate silo, it can endanger the whole company.
The definition of “silo mentality” reads: “An attitude found in some organizations that occurs when several departments or groups do not want to share information or knowledge with other individuals in the same company. A silo mentality reduces efficiency and can be a contributing factor to a failing corporate structure.”
I found this a very profound definition that hit close to home.
Corporate silos will lead to unintended consequences. And even when departments go into the project with the best of intentions, such consequences can cause projects to backfire. A solution that solves one or two or three problems but creates another is not a good solution. There are many departments, if not all, in a company that should weigh in when changing a current method or developing a different process for a new or existing product.
So, remember when the equipment salesman — or the ingredient salesman — comes calling with the “Best Thing since Sliced Bread” to think about the unintended consequences of your decisions.
Could this process affect the quality of your iconic brands? Is a process change the best answer to create the new product marketing is requesting? Are you making assumptions that are not proven? Are the right people and departments involved in the discussion and decision-making process? Are you following the Stage Gate process or hiring outside help to help you identify gaps in your thinking? Does the answer “it will be fine” send chills down your spine?
Learning from your mistakes is a great education; however, that approach can be very costly to your company’s bottom line, a product’s time-to-market and your personal sanity.