dna-7 - silos and bottlenecks - whitepaper

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T.E. Commercialize Innovations LTD | US + (914) 307-8016 | www.dna-7.com | www.twitter.com/dna7hq

SILOS AND BOTTLENECKS

Tracing the Cause and

Improving Collaboration

A Systematic Approach

http://www.dna-7.com/

http://www.twitter.com/dna7hq

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Table of Contents Abstract and Methodology 03

The Strategic Decision on Structure 04

CASE STUDY 1 Healthy Collaboration through Defined Responsibilities

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CASE STUDY 2 The Path to Collaboration; First Stop - Change

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CASE STUDY 3 When Change Goes Awry 11

Conclusion 15



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Abstract

Organizational ailments do not form overnight. In most cases,

they are not designed out of malice, but are a by-product of

less-than-thought-through good intentions or just the product

of many small decisions, which accumulated over time.

Aligning the goals of different departments and getting on a

path of institutional collaboration is often harder than perceived

at first. In order to truly address organizational problems,

uncovering their origin is imperative.

Silos, bottlenecks, lack of communication between

departments, and turf wars are usually a symptom of a deeper

structural and/or cultural problem in the organization.

In this white paper we will demonstrate how a systematic

approach can tackle organizational misalignment. We will

identify how proper (or improper) leadership and employee

alignment creates silos, and negatively affects knowledge

sharing and collaboration.

Methodology

We will examine three case-studies of small, well-established

companies. The companies are a part of a growing community

dedicated to gather data about collaboration alongside other

talent and performance analytics.

Through the implementation of DNA-7’s unique organizational

intelligence within these organizations, detailed visualization of

the communication flows with the company were produced,

allowing us to better understand and analyze the effects

structure has over collaboration.

In order to create the maps, employees had to answer five

questions in an online survey. DNA-7’s algorithms then

processed the results to create the data and visualizations we

based this analysis on.



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The Strategic Decision on Structure

One of the very basic cultural decisions organizations have to make as they are formed — and more so as they scale up —

is how to build a hierarchical system that most effectively supports the company’s goals. The structure should support

both internal and external goals, and is normally backed up by performance and compensation programs to ensure its

sustainability.

Management theories have discussed in length the effects structure and hierarchy have on collaboration. It is widely

agreed that strict hierarchy creates turfs. Turfs have a tendency to become silos, and the assumption therefore is that strict

hierarchy hinders collaboration. That was our assumption as well in this Whitepaper. What we have found, however, was

slightly different - hierarchy has an effect on collaboration, but it is not necessarily the existence of hierarchy or lack

thereof, but rather how hierarchy is perceived by managers and employees. Collaboration proved to be considerably better

in places where both managers and employees understand their relationship and there were no battles over employees

between managers or disagreements on roles and responsibilities.



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CASE STUDY 1: Healthy Collaboration through

Clearly Defined Responsibilities

Family-owned equipment importer creates a healthy collaborative

culture by clearly dividing responsibilities



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Having been around for almost 60 years, in its current

incarnation, the company is led by a sister and brother since

1999.

As we can see in the image below, responsibilities and

hierarchy are clearly defined between the co-CEOs. One is

responsible for all Sales and Support teams, while the other is

responsible for Operations and Administration, including HR

and Finance.

Circled in green, you can see the co-CEOs. The grey lines leading

downward show hierarchy relationships with other employees and

managers.

Because of the increased segmentation and separation of

team members who are working for a co-CEO lead

organization, it is often believed that this kind of structure

encourages silos within the organization. But this is not the

case in this organization.

In the image below we can see the two parts of the

organization well integrated. Only 8 out of 28 (29%)

employees working in Operations and Administration did not

have working relationships with the Sales and Support teams

(mostly bookkeepers and drivers). On the other side, only 13

out of 73 (18%) employees working in Sales and Support did

not have working relationships with Operations and

Administration

Another concern in these types of organizations is whether

employees from the two separate but connected parts of the

organization can work with each other to reach larger

organizational goals.

Employees, in this case study, reported they needed more

work relationships with each other to accomplish company



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goals and directives. In the image below, the green lines

indicate the missing working relationships between the two

parts.

It is interesting to note that only employees who already have

working relationships with the other part of the organization

want to build more working relationships with colleagues led

by the other co-CEO. This tells us there are very little, if at all,

bottlenecks in creation of said working relationships.

Another way to look at communication is distance. In this case,

the average distance an employee has to go in order to reach

other employees in the organization is 2.16 employees, while

only 2 employees (out of 100, i.e. 2%) have to go more than 3

steps to reach the rest of the organization. A distance of less

than 3 steps indicates effective communication between

employees.

In this case study, the co-CEO structure has not created silos,

and in fact, helped facilitate healthy communication inside the

organization. It was clear through the survey that employees

are not looking to bypass their CEO to get their job done.

In conclusion, in this organization, leadership has been stable

for 15 years. The distribution of responsibilities and roles are

clear both to employees and to the co-CEOs. There are no turf

battles, no real silos, no bottlenecks, and employees generally

understand the processes and don’t try to reach the other

CEO if they are not getting their way with their direct CEO.



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CASE STUDY 2: The Path to Collaboration;

First Stop - Change

Software Company in the financial sector hopes to improve collaboration after

disbanding co-CEO structure



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The company was formed in 1999 and in recent years has

seen a massive growth in its business and manpower.

The image below shows the hierarchy of the company’s

leadership. Over half of the leadership reported they are

managed by both CEOs, while the CEOs viewed the

distribution in a clearer way, aside for the IT team, which

apparently does not report to anyone in the organization. A

dotted line indicates that only one side reported a hierarchy

link, while the other side did not reciprocate (the green arrow

tells us who reported).

Circled in green, you can see the co-CEOs. Circled in red are different employees and

managers who reported both co-CEOs are their direct managers.

Formally, the structure is clear to the CEOs. In reality, both

CEOs are working closely and giving assignments to teams

managed by the other CEO, making it unclear to their

employees who they should be reporting to.

In the image below we can see that the two parts of the

organization are barely integrated. 14 employees out of 18

(78%) in the Service teams have no strong working

relationships with anyone in Development & Operations. On

the other hand, 85 out of 91 employees (93%) of Development

& Operations employees have no strong working relationships

with Service teams’ employees. The numbers show an

overwhelming lack of collaboration, but the network map

shows it even better.



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Interestingly, collaboration seems pretty weak across the

entire organization and not just between the two sides. Many

employees have only 2 or 3 working relationships. However,

when they were asked to indicate what working relationships

the need to be more effective, the results were not as

surprising and showed there are many missing relationships

and opportunities in the current structure.

Many employees, from both sides, who have no current

working relationships with the other side, want to form those

relationships. Why can’t they seem to form these

relationships? What is stopping them? There is no

geographical gap between employees or other physical

barriers to collaboration. The only explanation left is corporate

culture.

The average distance an employee has to go in order to reach

other employees in the organization is 3.71 (over a 1.5 steps

more than the previous organization we analyzed), with only

11 employees (10%) within the effective distance that is

needed to convey messages.

The challenges the organization is facing are two-fold. The first

is transitioning the leadership to a functional state. The second

is significantly improving collaboration and reducing distances

between employees. Shorter distances allow employees to

have better accessibility to resources and knowledge. Both

challenges are naturally tied to each other and without a

significant change in the leadership, we do not believe they

can improve collaboration.

Following the analysis, the company embarked on a process

of change. One of the CEOs was moved to the position of

Chairman of the Board and the other CEO assumed all

responsibilities of a sole CEO. They still have a long way to go

if they want to change their corporate culture to one that

encourages more collaboration, but the first step there has

already been made.



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CASE STUDY 3: When Change Goes Awry Global manufacturer struggles with poor collaboration following a

leadership change



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This manufacturing company has been operating for roughly

60 years. Recently, due to old age, the founder took a step

back and left the company in the hands of his son and son-in-

law. Formally, the son-in-law oversees all local operations and

sales, while the son is responsible for the global operations

and sales. In practice, the company’s structure is rather

chaotic.

The image below shows the real structure of the organization’s

leadership:

Circled in green, you can see the leaders. Circled in red are different

employees and managers who reported both leaders are their direct

managers.

No employee has two agreed managers, where both the

manager and the employee agreed on their hierarchy relation.

Quite a few employees reported that both leaders are their

direct managers. There is a lot of confusion among employee

as to whom they report to.

This is probably caused by lack of communication and

improper information flow from members of the team as well

as between the leaders who are co-leading the efforts of this

company.

In the image below, you can see the dynamics of this

organizational structure and what type of communication flow

it creates. We see that unlike the formal distribution of

responsibilities, three global employees are in fact working

under the local management and not under the global

management.

In any organization, rogue hierarchy should raise concerns of

possible execution problems and inability to manage

performance.



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When we look at collaboration between the two parts (image

below), we can see just how poor the communication is. 9 out

of 16 (56%) employees from Derek’s part have no working

relationships with Stephen’s part. 23 out of 31 (74%)

employees from Stephen’s side have no working relationships

with Derek’s part.

It is no surprise, then, that the organization was experiencing

severe problems with information sharing and long response

times for customer inquiries. Employees have very few paths

to gain information from their colleagues.

The average distance an employee has to go in order to reach

other employees in the organization is 2.62 employees, while

12 employees (out of 48, i.e. 25%) have to go more than 3

steps to reach the rest of the organization.

This organization is half the size of the first organization, yet

employees have to go, in average, through 0.5 more

employees to communicate with their colleagues. In this

situation, it is extremely difficult to convey information and

goals to the entire organization, and a lot of knowledge is

getting lost or distorted in the process.

It is easy to see that the dual leadership here is not working

properly. Employees and managers alike are not sure which

leader they need to answer to, which in turn creates friction

and leaves the employees working in closed silos. Information

and knowledge sharing suffers, and it is extremely difficult to

convey messages and goals across the organization.



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Align or Disband

Duel-leadership or co-CEOs structures are usually in the

group of decisions called “deciding not to decide.” This

structure is common with start-up companies and family

companies for reasons that are usually personal. This

immediately creates friction if the leaders are not as

competent. Normally, as these companies scale up, they

disband this structure and transform to single CEO.

For other organizations which have decided to appoint co-

CEOs, it is vital to make sure roles and responsibilities are

clearly defined between the leaders and as a reflection - to the

entire organization. This is true from senior leadership to the

last of employees who have no direct interaction with the

CEOs. For employees, understanding exactly how the route of

recognition, compensation, and promotion works will reduce

friction and encourage employees to work together and

collaborate.

A co-CEOs leadership structure has the potential to create a

plethora of problems, such as long paths of delivering

information, silos, bottlenecks, negative atmosphere, and

more. These, in turn, make it even harder to fix the problems

once management realizes they exist.

In these situations, the recommended solution is to

consolidate the entire leadership under one CEO and not try to

fix the current situation. Re-aligning the entire organization

under the co-CEOs structure is not going to fix the turf battles

and open the silos, at least not in a reasonable time.

If organizations decide to keep the co-CEO structure, they

need to create a dual top-down/bottom-up program. On the

leadership side the company must create clear roles and

responsibilities. On the employees’ side, management needs

to build compensation programs that will encourage

collaboration and engagement with their colleagues. If the

leadership is diligent and the co-CEOs are honest in their

attempts to make it work, the organization can turn around.



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Conclusion

“No man is an island,” write English poet John Donne, and

was very right indeed. Communication, structure and culture

are just as crucial, if not more, for a company’s success as the

ability of its employees as individuals.

While there are many reasons that affect collaboration, poor

definition of roles and responsibilities definitely seems to have

a very strong negative impact it. Insecurity as to whom an

employee reports to creates friction with managers and

colleagues alike, and pushes employees towards

communicating within close silos alone - safe where they are

less likely to make a communication mistakes.

Currently, the realm of HR mostly looks at individual

performance. Whether it is HR analytics or quarterly reviews,

what is assessed and optimized is the employee. However,

the formal and informal structure tells us a lot about why some

people flourish in certain situations and shrivel in other

situations. This can then be used to better place employees in

situations where they are more likely to flourish.

Considering most employees are competent for the role they

were hired for, poor performance can often be seen more as a

symptom than a problem. The vague concept of social

integration can now be measured, quantified, and optimized,

to boost performance for high and low performers alike, and to

create a healthier working atmosphere.



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About DNA-7

DNA-7 is a global leader of organizational and leadership intelligence solutions. Based on more than a decade of research in

organizational network analysis and complex systems, DNA-7 simplifies organizational network analysis via a short, fact-based

survey, which employees can take in minutes to deliver a real-time network map and 25 indices of organizational and collaborative

health.

Founded by Efron Razi and Pinhas Yehezkeally, PhD, DNA-7’s mission is to bring the science of organizational network analysis to

the art of Human Capital Management. DNA-7 simplifies what formerly took 100s of hours of skilled interviews and analysis into a

cloud-based solution that costs a fraction of the time and money.

DNA-7, New York

460 Park Avenue South, Floor 12

New York, NY, 10003

DNA-7, Beersheba

78 Hadassa St., Floor 2

Beersheba, Israel, 8422127

Tel: +1 (914) 307-8016

[email protected]

www.dna-7.com



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dna-7 - silos and bottlenecks - whitepaper

Leadership & Management