Executives regularly complain their departments are not working together well. In some large organisations, executives spend most of the time refereeing disputes between departments. Why does this happen?
A department manager is measured and rewarded on making their department as efficient as possible. Surely this makes sense? If we have eight departments and all eight departments are working at their most efficient, then we assume our organisation will be at its most efficient. It will be at its most efficient if the eight departments do not depend on each other so they can deliver the results that the organisation wants and deliver results for their customers. So this might be true if the departments are independent.
That’s just like a boat race with eight rowing boats each with a single person rowing: the department managers. As long as each department manager rows as fast as possible then eight boats will get across the line as fast as possible, and the organisation gets the best possible result. As soon as we imagine this race, we can also see one of the problems. When all eight departments are at the starting line, they are competing with each other to try to win the race for their department. They don’t care what happens to the other departments as long as their department does well.
However, in all organisations, departments do depend on each other. Departments are not independent; departments are interdependent. So what? Practically what this means is that if eight departments try to be the most efficient, then this costs the organisation time and money. Why? Because unless you’re very lucky, the time and costs that make department one most efficient will not make department two the most efficient. And in turn, this cascades through departments two, three, four, five and eight. In my experience at least one and sometimes more than one department needs to do things in ways which is not the most cost-effective or efficient for their department. Why? Because this is the most efficient way for the organisation.
To be technical for a minute, we can learn from Lean. Lean techniques applied to factories and services show that for at least half of the time between a customer order and customer delivery the order is queuing, waiting for the next step. So if you could bridge the Silos and get your departments rowing in the single boat, then you could probably deliver your orders in half the time. A second implication is that you have piles of cash sitting in the queues of orders waiting for the next step. That’s what accountants call Working Capital, and measure in days of sales.
Let's assume you don’t want to make a radical change like Lean. For your organisation calculate what one day's sales is worth in your organisation.
If you are a JB Hifi with sales of $7,000 Million, one day's sales is more than 130 Million; If you are a medium business with sales of say $365 Million, one day's sales is 1 Million; if you are a small business with $3.65 Million sales, one day's sales is $10,000.
Now knowing what one day’s sales are worth, think about your organisation and your departments. Next time you referee between two departments, ask yourself how likely their behaviour is to create one day's delay between customer order and customer delivery? And now you know how much cash that ties up. If you can bridge the Silos and get your departments rowing in one boat, then you can take that cash out of the business and put it in the bank or invest in something profitable.
Going back to the boat race described earlier, what you don’t want eight departments rowing their own boats in a race against each other. What you want is all eight departments rowing in a single boat. Looking at the organisation this way, it’s clear that if one department manager rows faster than the other seven department managers then this does not help the boat go faster. One manager rowing faster makes it harder for the boat to head towards the finish line.
So, that why you need to: Bridge The Silos and Get Your Departments Rowing in one boat. Look out for another blog where we will give some tips on how to bridge the Silos and get your departments rowing in one boat.