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Silo Logic

Why sensible people protect their patch, and how to change the pattern.

Colin Price and Sharon Toye · Revised edition, October 2026 · About 25 minutes Download PDF

The argument

Silos become destructive when the parts of an organisation can succeed while the whole fails.

We give people departmental budgets, departmental targets and departmental bonuses. We promote them for building their functions. We require decisions to climb two reporting lines before they can cross the corridor. Then we take everyone to a hotel and ask them to behave as “one team”.

They generally manage it until the taxi home.

The difficulty is that we are asking people to collaborate despite the organisation we have built, rather than because of it. We treat fragmentation as a failure of goodwill when it may be an entirely predictable response to responsibilities, incentives and routines.

That distinction matters. Specialisation is not the enemy. We would like the finance director to understand finance, the engineers to understand engineering, and the risk function to retain the ability to say something inconvenient.

The objective is not to remove every boundary. It is to prevent boundaries becoming barriers to value creation.

The parts can succeed while the whole fails.

Think of silos as a tax on interdependence. The tax is paid whenever work needs several parts of the organisation but nobody can make those parts deliver together. It appears as delay, rework, duplicated analysis and promises that other people cannot fulfil.

Cutting a departmental budget can even increase this tax if the savings remove the people who were quietly holding the system together. It gives leaders a better question: where does cooperation fail, and who pays?

The full paper continues with what to do about it. Continue reading (PDF)

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