Banish the Silos - How I.T. Can Lead Competitive Advantage

The DNA strands of business are most often embedded in processes related to the bits and bytes contained in our information systems. But IT - the department that often has one of the widest fields of view relative to efforts, budgets, changes, and focus - is not strategically leveraged in many organizations, says contributor Ben Blanquera. Here's how IT can add value via a seat at the strategic table.

Learning to see an organization as a system and learning ways to lead an organization as a system are typically not taught in most management degree programs. In fact most management practices tend to undermine the optimization of the system. Typical status quo practices tend to create internal competition and drive fear in to the culture (as Dr. W. Edwards Deming said to drive out fear). The internal competition and fear in turn creates barriers to cooperation among departments throughout the system.

Simply put: systems theory is based on the principle that each organization is composed of a system of interrelated process and people, which make up the system's components. The success of all wokrers within the system is dependent on management's capability to orchestrate the balance of components for optimization of the entire system, not just optimizing sales or operations or procurement or customer service or....

And therein lays a competitive advantage of Deming's body of work and systems thinking, which you can read more about in an earlier series in this column: Systems Thinking and the Three Musketeers.

Namely, if your organization operates as a true system and if the organization is led as a system which cooperates, you have an advantage. Why? Because it is likely that your competitors are merely using accepted management practices which destroy or prevent cooperation and systems thinking.

If the management practices of your competitors have created silos in their organizations, they will have reduced information flow and insight to the rest of the organization as each silo attempts to protect their own turf. That means what is actually happening in their organization becomes opaque to leadership. So not only will you have greater insight into what is really going on in your organization, you’ll be able to move more quickly and effectively because you won’t have the silos protecting their own turf and status quo.

We see the dysfunction of silos and internal competition for resources quite often in the Information Technology (IT) arena. For example, we witness senior leaders jockeying to position their development projects ahead of a projects from other departments. They and others take that competitive approach because they are measured on what they contribute via their own department, not what they can contribute to the optimization of the entire organization. Of course, this jockeying slows down development, creates a great deal of rework and causes stops/starts as power struggles dance continues. People become alienated, cooperate less, and fear that they might be in a losing department. All of this makes the organization less competitive.

Knowing what is really going on is very important in a world in which the system of your business, the DNA strands of your business, is literally all over the map. The global village of business means that success comes from effective coordination of numerous inputs, transformations, and outputs to and from the system –knowing the status of those inputs, transformations, and outputs and making the most of them.

This is true for innovation as well as for competiveness. Are we working on things that will truly make a difference and enhance our competitive position? How much of our treasure is being focused on building new capabilities versus maintaining what we have? Are we applying our resources to the right projects –those which aid in optimizing the success of the whole? Or, are we jockeying for position to protect our silo?

The DNA strands of business are most often embedded in processes related to the bits and bytes contained in our information systems. Hence, IT can play a much more strategic role in the creation of value for an enterprise by releasing change into the environment (though software and enabling technologies). In our technology-enabled world a currency of innovation is the release of new software.

Further, IT departments in our organizations have in their possession the Rosetta Stone that can reveal the pulse of our enterprises. It’s ironic that the IT team -which has one of the widest fields of view relative to efforts, budgets, changes, and focus - is not strategically leveraged in many organizations. Instead, IT is thought of as merely a utility; sometimes as a trusted "supplier". Seldom as an internal strategic, cooperative partner.

To test the theory let’s ask ourselves the following questions:

• What function is typically involved with any business process changes?
• What function has visibility to all the data of our enterprises?
• What function typically leads the project management endeavors?

If you’re like most organizations your answer to most of the questions above is Information Technology.

With that in mind let’s go back to the notion of orchestrating the balance of components to optimize the system and talk about some possibilities that now occur when one can really see and gauge the activities of our enterprises. By leveraging the latent visibility in our IT departments decision-makers would benefit in a variety of ways, including these:

• Provide visibility into where investment in development projects is happening. This would help to ensure that the right processes are being built at the right time.
• Provide granular insight to customer, market, and competitor demand curves that drive organization responses.
• Provide an end-to-end view of where process bottlenecks are occurring.
• Provide a snapshot across the organization of expensive duplication of development projects.
• Provide insights into process architectures to identify opportunities for scalability and agility.

The point here is that IT can add value via a seat at the strategic table. IT can do this by measuring, monitoring, and mining data, not just about metrics, but about activities/development going on (or not going on) throughout the organization. IT’s cross-organizational view can provide senior management with a holistic and systems view of enterprise activity and bottlenecks. Here is one real world example:

"Customer Voice/Data Analytics" is a burgeoning field. Customer call-in data (complaints, warranty questions, level of frustration or joy, and the like) can be mined and used by marketing, market research, sales, product/service development and the like. Yet, too often the voice-of-the-customer nuggets get stuck in the customer service silo even though other departments would welcome having the data. At other times, departments such as marketing do not welcome the data from customer service and indeed are uninterested in the data because it was "not invented here in our department."

IT is in a unique and important position to identify losses (such sub-optimization of useful data) that departmental silos cause. In this case, IT is usually the central node of installing and supporting the customer voice/data analytic software. Thus, IT sees the potential –and could help assure the data is utilized widely. Certainly that would help with competitiveness. Other examples abound.

Systems thinking as Deming described it –combined with a greater use of the IT function for strategic purposes-- would also help address a growing issue in the USA. We have witnessed a lessening of interest in computer science. It may be only a matter of time before other nations experience the same trend and find their base of developers eroding. There are many reasons for this erosion, of course. I postulate that one reason students aren’t being drawn to IT is because more and more IT organizations have been pigeon-holed into operating as utilities, rather than as strategic partners. This makes IT less attractive as a career because the potential to make a difference via IT is lower than it was 10 years ago.

We can help to reverse this trend by recognizing and assuring that IT plays a strategic role. It’s a win-win: organizations enjoy the benefits of having a system-wide view of what is getting done and what isn’t, and can attract more people to the computer science field.

I encourage IT leaders and those people making their careers in IT to study Deming’s Management Method, which not only includes the systems thinking piece, leadership, transparency, and continuous improvement, but also includes looking at data through a new, sharply focused lens. In my experience people in IT really take to Deming because of the sensible rigor of his approach. If Deming were a developer we could say he created "elegant" work –value added, very efficient, very productive, and creative. In fact, many of the Agile Manifesto Software Development Principles are rooted in Deming’s approach.

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Authors’ Note: I wish to thank Kelly Allan for his guidance. He was instrumental in development of this column.

Editor’s Note: The columns published in THE DEMING FILES have been written under the Editorial Guidelines set by The W. Edwards Deming Institute. The Institute views these columns as opportunities to enhance, extend, and illustrate Dr. Deming’s theories. The authors have knowledge of Dr. Deming’s body of work, and the content of each column is the expression of each author’s interpretation of the subject matter.

If you're interested in reading more about Deming and how his "System of Profound Knowledge" can be applied to the modern enterprise, check out our Deming Files series:

Part I: Systems Thinking and the Three Musketeers

Part II: The Trouble with Motivation

Part III: Variation, So Meaningful Yet So Misunderstood

Part IV: How Do We Know What We Know?