The Silo Effect: The Peril of Expertise and the Promise of Breaking Down Barriers

As the world has grown more complex, there is a need to specialize in different areas. Unfortunately, specialization often leads to silos. People spend most of their time working with others with similar responsibilities and expertise. They don't communicate well with those in different parts of the organization. This can lead to farcical outcomes.

Sony was the leader in portable electronics, with products such as the walkman and discman. The company also owned a major record label. They seemed primed to dominated the market for portable digital music players. There was excitement when they announced their first player. Then they announced another incompatible player.  Neither had access to Sony's music catalog. Three silos in the company each defended their turf, leaving the market open for Apple to dominate. Instead of silos, Apple had a singular mission, with a focus on fewer products.

There are also cases of siloization in other fields. During the 2009 financial crisis that had arms with bets in the opposite directions. Parts of the company had predicted a collapse of the home mortgage market. Meanwhile another part was buying up these same securities. 

Some companies go to great extents to break down silos. Facebook trains everyone together and then lets them choose the group to work on. The company also encourages hackathons and switching groups. Part of this comes from a goal to increase collaboration as the company grew beyond 150 employees. The Cleveland Clinic rearranged practices from "speciality focussed" to "patient focussed" care to help reduce silos. In Chicago, data analytics helped focus police activity where it was needed, leading to a decline in violent crime. (The crime went back up after this was stopped and each precinct went back to the old ways of doing things.)