“The Silo Effect” Book Summary

Dear Readers, 

Today I will be summarizing “The Silo Effect” book which was written by Gillian Tett. The book is about the silos which are found under several organizations that form barrier for the people to exchange information thus the companies fail to create more value than they can.

The process of classification is an intrinsic part of human brain that helps us to understand things easier and it makes us to remember the memories better. Since we are surrounded by several happenings, to react fast, the classification helps us a lot. 

However it may end up with undesired consequences if the classifications under the companies getting bolder and broader. Moreover, we use some patterns to organize our lifes but they are a function of nurture but not nature. 

During decades after the World War II most large organizations were running under great bureaucratic structures. But starting from 1990s, a new thinking was started to be applied to the companies. Management consultants were confident to tell the executives that it is better not to run the organizations under single grid but as a collection of different, enclosed, accountable units. The idea was about building silos which will have their own targets and will be more transparent, accountable and efficient. 

Sony has gone through this path but Apple rejected it. Steve Jobs’s opposition was mainly because of the people who will be dependant on the previous successes and will not be open for new ideas. After Jobs passed away, the successor Cook has continued this policy saying that “We don’t want separate P&Ls but one single P&L for the entire company.” 

Sony understood that they were not on the right track. They have made a CEO change and the new CEO started to build a structure which doesn’t depend on the silos. The most important success was with the PlayStation unit but the others didn’t follow them. He understood that the silos have created successful products before and this yields the staff to defend their silos more. 

In the UBS case, it was very hard to pass information between the departments which eventually resulted with no information sharing between the departments. 

After the start of the big mortgage crisis which began in 2008, the Queen Elizabeth asked a very simple question: “Why did nobody see the crisis coming?” Nobody had tangible answer for that. However, after serious inspections it was understood that lots of people had understood separate pieces of the picture, but nobody had been able to take an overview and see that a crisis coming. People were doing what they have paid for, but nobody could have seen the whole picture and join it up. 

Furthermore, the most important reason why the policy makers were so blind was the entire system was fragmented. Macroeconomists had looked at economic statistics but ignored the finer details of finance. Banking regulators had watched individual banks but didn’t look at the Nonbanks. Some financiers working in the private sector banks had been experts how the shadow banks worked, but they didn’t speak with economists in the central banks. 

Facebook after examining the problems in the silo based companies tried to expand their business not depending on silos. They understood that eventually they will come to a point where they must decide how they will grow. Before that, they tried to maintain the communication between the people in different departments. They knew that many Silicon Valley companies disappeared due to their rapid expansion. 

Although Facebook was a good example for defeating silos, they started to see themselves in danger due to being a single giant silo against other companies.

According to the book the silos can be broken down by using or applying the following ways:

The successful companies started to work with the people who are even working under silos can travel in a mental sense if not physical sense, that set people free from silos. If nothing else, it enabled them to imagine a different way of living, thinking and classifying the world. 

Some of the companies worked on more transparent and colliding architectures where the people run across each other. This had increased the engagement and interaction between them. 

They tried to apply Hackathons or Bootcamps where different people coming different functions become the same team member. 

The employees were put under rotation programs so that they begin to understand what the other department or unit stands for. 

The companies started to apply collaborative payment schemes whereby they didn’t force separate groups under the organization to compete with each other. 

The data sharing among the staff was increased so that they all started to benefit from data. The data owners didn’t continue to insist on resisting data sharing. This enabled everyone to interpret information.

Some of the companies assigned cultural translators (not accounting for more than 10% of the staff) who are able to move between specialist silos and explain to those sitting inside one department what is happening elsewhere. 

The companies started to question whether their classification systems on the organization were outdated or not. 

Lastly, they understood that as anthropology states there are always better ways or models where the humans can live. Therefore, the successful organizations always question to find better ways for them.