Siloing is regularly identified as one of the main barriers businesses face to innovation and growth. A silo mentality can be defined as one where different groups or departments of an organisation do not share information, skills or knowledge with other groups or departments in the organisation. This can be due to interdepartmental competitiveness (ie wanting to produce better results than other departments), fear of criticism or merely a lack of mutual trust.
26/08/2015, latest thinking
Studies have shown that this unwillingness to collaborate among departments leads to reduced productivity as each department would need to gather relevant information separately when others might have it freely available or would need to source skills for a particular job that aren’t within the department but may be available in one adjacent. Many organisations nowadays put a lot of work into promoting inter-departmental collaboration and reducing silos in order to achieve greater productivity and a better aligned workforce.
The silo mentality also provides a significant barrier to SMEs, even ones who may not have large or different enough departments that siloing is a significant risk. This is because SMEs often lack the breadth of resources in order to compete with larger organisations. An SME with a silo mentality will accept this as a limitation and try to find niches which resonate with their main business capabilities, whereas collaborative SMEs will find other SMEs to share their knowledge and resources with and will together be able to compete for a larger share of the market.
The analogy with the prisoner’s dilemma serves to show exactly why siloing can be so limiting for businesses and to take an original approach to illustrating the rationale and setbacks that come from siloing. This dilemma explores why two individuals might choose not to cooperate even if it is in their best interests to do so. Two people, A and B, are accused of a crime and are told the length of their sentence may be reduced if they accuse the other person of having committed the crime. The prison sentences they may face are outlined in the table below:
Here, if prisoner A stays silent, he could stand to do 1 year or 3 years in prison depending on prisoner B’s actions, however if A decides to accuse B he is looking at a sentence of either 0 years or 2 years. It therefore appears to A that it is in his interest to accuse B and similarly it is within B’s interest to accuse A, leaving both teams in box 4. Click here for a fuller explanation of the dilemma.
This position is comparable to the silo mentality in businesses, although while years in prison is a negative and therefore should be minimised, productivity is a positive and should be maximised. If one looks at two departments within an organisation, whether they choose to share information and skills or withhold them and compares the various outputs, one gets a similar table:
Of course quantifying the output can be more difficult, but it’s clear that box 1 is a much better position than box 4 and while box 3 may be better for A, it’ll be significantly worse for B – worse even than siloing as they’ll be giving away their resources without getting anything in return. Again therefore if A looks at their outputs in boxes 3 and 4 and compares them with their outputs in boxes 1 and 2, it seems clear which approach A should take to maximise their efficiency. This is a stance many teams take toward collaboration – wondering why they should dedicate their resources to the other team when they have their own outputs to focus on. Again, the analysis is predicated on the assumption that each team aims to maximise its own output. Just like in the prisoner’s dilemma, this often leaves both teams in box 4.
However there is another element that is crucial to this dilemma. It has been shown that if the dilemma is repeated an indefinite number of times, the prisoners will eventually reach one of two equilibriums whereby they will always act in the same way: either they both continually accuse each other as before or they both remain silent through every iteration. While the former is much safer for the individuals, the latter actually produces the best outcome for both prisoners over time. If the prisoners were to accuse each other, they would have 2 years each, whereas if they decide to keep silent then they would only have 1 year each per iteration. This yields the best overall result for both parties. The other options, box 2 and 3, are unsustainable as neither prisoner can keep accusing the other and not expect to be accused back.
Extrapolating this to teams within an organisation, the opportunities to collaborate are similarly indefinite. As with the prisoners, neither side is likely to sustain a relationship with one side benefiting and the other losing out. This leaves an equilibrium with both teams in silos not sharing resources or one where both teams openly collaborate.
With both the prisoners and the teams, the difference between box 1 and box 4 is a matter of perspective. A prisoner or team that looks at how they can make things best for themselves will inevitably look at maximising their fortunes regardless of what the other party decides. If team B does a favour for team A, team A would, in this mentality, ask whether they stand to gain anything by doing a favour back or whether they ought to just keep working on their output now with this added boost. They would do well with that task, but they would never expect to receive team B’s help again.
However prisoners and teams that end up in equilibrium in box 1 look beyond the individual elements and look at what is best for both parties. In this scenario, the view of the prisoners is how the two of them can best minimise the damage done by the judiciary body sentencing them and the view of the teams is how best to improve output for the organisation as a whole. When the view shifts from ‘what is best for me’ to ‘what is best for us’, both sides end up in the best overall position with minimal years or maximal output. The only way for each side to improve its own position is by taking advantage of the other side, which is short-sighted and unsustainable and the reaction of the other party would likely leave both sides in a far worse position.
Tags: Business Support , Organisational Performance