Is it true that the larger your company, the tougher your innovation challenges become? If so, why should this be? It could be argued that more resources, bigger budgets, stronger technology portfolios and greater market access should make companies more successful at innovation. Larger companies usually have a higher number of smart people. They have processes in place that – at least in theory – should simplify the approach to innovation and make it more efficient.
Yet I’ve seen many examples of large companies who seem to make innovation more complex, with people pulling in different directions, thereby wasting resources. One of the root causes is the silo mentality created by the way large companies are organized. Whichever way you slice an organization, whether by geography, business, category, function or a mix of these, you create barriers to the efficient management and execution of innovation. As companies become larger, the organization becomes more complex and the internal barriers get higher.
Innovation projects can be executed (double meaning not intended) in such silo-based companies either through a series of formal handovers, for example from research to development to manufacturing to sales; or through multi-functional teams operating to varying levels of intensity throughout the project. It is rare to see innovation successfully delivered to market by only one corporate function. When we accept that functions need to cooperate, we must also recognize the barriers to such cooperation and start to break them down.
How can this be done?
1. COMMUNICATION. When you are immersed deep in your own function, trying to meet the expectations of your managers as well as yourself, it’s difficult to empathize with the problems of somebody else in another function. But this understanding is crucial to the successful handover of your part of an innovation. That’s why communication is so important. Communication involves sending and receiving a message, so people in silos must be prepared to both proactively inform, and actively listen.
2. MULTI-FUNCTIONAL TEAMS. Even long term innovation projects benefit from multi-functional project teams, where several functions are represented and where different perspectives can be shared, joint decisions taken and barriers removed. A strong, ideally independent project management group is a great asset when it comes to delivering complex projects.
3. SHARED OBJECTIVES. Every senior manager has to deliver their own function’s objectives. These should also include multi-functional project goals, and even better those managers should be rewarded on the success of the whole project as well as their specific responsibilities.
4. REDEFINE AND RECOGNIZE THE HEROES. People are rarely punished for sticking to their role, keeping their head down and getting on with the job. The trouble with this in organizations with many silos is that if everybody did this, no innovation projects would be completed. Success needs individuals and teams to drive projects through; to proactively get out and talk to colleagues in other functions; to “put their heads above the parapet:”; to show entrepreneurial behaviour; in short, to make things happen. These people should be recognized and celebrated as the people who link functions together, reducing the barriers and producing results.
Finally, let’s acknowledge that silos are inevitable in large companies and avoid criticizing something we can’t change. Instead look at ways to reduce their negative impact on innovation, retain functional excellence and still deliver the innovation vital for growth.