The Theory

INTRODUCTION TO SILOS

In The Five Dysfunctions of a Team I addressed the interpersonal and behavioral issues that prevent groups of people from becoming teams. I strongly believe that building a cohesive leadership team is the first critical step that an organization must take if it is to have the best chance at success.

However, even when leadership teams become behaviorally cohesive, they face another challenge, a more structural one, that often thwarts their efforts and creates unnecessary politics within an organization. What I’m referring to are silos.

Silos are nothing more than the barriers that exist between departments within an organization, causing people who are supposed to be on the same team to work against one another. And whether we call this phenomenon departmental politics, divisional rivalry, or turf warfare, it is one of the most frustrating aspects of life in any sizable organization.

Now, sometimes silos do indeed come about because leaders at the top of an organization have interpersonal problems with one another. But my experience suggests that this is often not the case. In most situations, silos rise up not because of what executives are doing purposefully but rather because of what they are failing to do: provide themselves and their employees with a compelling context for working together.

This notion of context is critical. Without it, employees at all levels—especially executives—easily get lost, moving in different directions, often at cross-purposes.

Even the most well-meaning, intelligent people get distracted and confused amid the endless list of tactical and administrative details that come their way every day. Pulled in many directions without a compass, they pursue seemingly worthwhile agendas under the assumption that their efforts will be in the best interest of the organization as a whole.

But as employees notice their colleagues in other divisions repeatedly moving in different directions, they begin to wonder why they aren’t on board. Over time, their confusion turns into disappointment, which eventually becomes resentment—even hostility—toward their supposed teammates. And then the worst thing possible happens—they actually start working against those colleagues on purpose!

This maddening problem exists, to different degrees, in most companies I’ve encountered. And in too many of those companies leaders who are frustrated by the silo mentality mistakenly attribute it to the immaturity and insecurity of employees who somehow just refuse to get along with one another.

But the fact is, most employees have a profound and genuine interest in working well across divisions. That’s because they, more than anyone else, feel the daily pain of departmental politics as they are left to fight bloody, unwinnable battles with their colleagues.

If there is a place where the blame for silos and politics belongs, it is at the top of an organization. Every departmental silo in any company can ultimately be traced back to the leaders of those departments, who have failed to understand the interdependencies that must exist among the executive team, or who have failed to make those interdependencies clear to the people deeper in their own departments.

Thankfully, there is a simple and powerful way for those leaders to create a common sense of purpose, and a context for interdependency: they must establish, for the executive team as well as the rest of the organization, a rallying cry. A thematic goal.

COMPONENTS OF THE MODEL

The model for combating silos—as illustrated in the fable—consists of four components:

• A thematic goal

• A set of defining objectives

• A set of ongoing standard operating objectives

• Metrics

After each component is explained, various examples are provided for better understanding.

THEMATIC GOAL

Definition: a single, qualitative focus that is shared by the entire leadership team—and ultimately, by the entire organization—and that applies for only a specified time period.

To avoid politics and turf battles, executives must establish an unambiguously stated common goal, a single overriding theme that remains the top priority of the entire leadership team for a given period of time (see Figure 1). In turn, this thematic goal serves to align employees up and down the organization and provides an objective tool for resetting direction when things get out of sync.

Before further exploring the exact nature of a thematic goal, it might be helpful to describe what it is not.

A thematic goal is not a long-term vision or, as Jim Collins and Jerry Porras refer to it in their terrific book Built to Last, a BHAG (big hairy audacious goal). Nor is it a tactical metric or measurable objective.

While it is certainly a good idea for companies to have both a vision to motivate people over the long term and a set of tactical objectives to guide their daily activities—and most do—the thematic goal lies somewhere in between the two, and I believe it may well be even more important. That’s because it bridges the two by making the vision more tangible and by giving the tactical objectives more context.

Figure 1. Goal Alignment Structure: Thematic Goal.

Let’s look at the key elements of a thematic goal to understand how this happens.

Single

In an organization, there can be only one true thematic goal in a given period. That’s not to say there aren’t other desires, hopes, and objectives at play, but none of them can be attempted at the expense of accomplishing the thematic goal.

Every organization needs a top priority. When a company is tempted—and most always are—to throw in one or two extra top priorities, they defeat the purpose of the thematic goal, which is to provide clarity around whatever is truly most important. This is best summarized by the wonderfully simple adage, “If everything is important, then nothing is.” Something has to be most important.

Qualitative

The thematic goal is not a number, and it is not even specifically measurable. It is a general statement of a desired accomplishment. It requires a verb, because it rallies people to do something. Improve, reduce, increase, grow, change, establish, eliminate, accelerate.

Now, for those leaders who are disconcerted by the qualitative nature of all this, rest assured that a thematic goal will eventually be supported and clarified by metrics, numbers, and target dates. But this comes into play two stages later in the goal-setting process and should not happen sooner.

Time-Bound

The thematic goal does not live beyond a fixed time period, because that would suggest that it is an ongoing objective. To the contrary, it is a desired achievement that is particularly important during that period, and must therefore be accomplished in a corresponding time frame. That time frame is usually somewhere between three and twelve months, depending on the nature of an organization’s business cycle and its unique situation.

For instance, a university often has a thematic goal with a relatively long time horizon, while a start-up company cannot usually afford to take such a long-term view. Some businesses have fixed costs and barriers to competitive entry that give their thematic goals a longer shelf life, while others can lose momentum or market share almost overnight and are forced to think in shorter increments.

Shared

The thematic goal applies to everyone on the leadership team, regardless of their area of expertise or interest. While it is true that some thematic goals will naturally fit largely within one particular executive’s area of responsibility, it is critical that all team members take responsibility for the goal, and for doing anything they can to move the company—not just their own department—toward the accomplishment of that goal.

That means executives must remove their functional hats, the ones that say finance or marketing or sales, and replace them with generic ones that say executive. They must dare to make suggestions and ask questions about areas other than their own, even when they know relatively little about those areas.

And while that may seem to smack of a lack of trust among team members, it is actually a realization that the most insightful questions and ideas often come from people with a more objective—even naive—viewpoint than is possible for experts who are living and breathing an issue every day.

But a thematic goal, on its own, will leave an organization confused about what exactly to do. And that’s where defining objectives come into play.

DEFINING OBJECTIVES

Once a thematic goal has been set, a leadership team must then give it actionable context so that members of the team know what must be done to accomplish the goal. These are called defining objectives because they are the components or building blocks that serve to clarify exactly what is meant by the thematic goal (see Figure 2).

Like the thematic goal, defining objectives are qualitative and shared across the entire team. And because they define the thematic goal, by definition they will be bound by time. It’s worthwhile to examine the required elements of a defining objective in more detail.

Qualitative

Executives are often tempted to overquantify defining objectives because it gives them a sense of closure and certainty, especially after struggling with the notion that the thematic goal was not quantified. However, assigning numbers and dates to defining objectives only serves to limit the involvement of leadership team members who cannot see how they might directly impact a numerical target. Rest assured, quantification comes into play soon enough.

Figure 2. Goal Alignment Structure: Defining Objectives.

Shared

Even though a defining objective seems to be geared specifically to the member of the leadership team with functional expertise in that area, it is critical that all leaders assume a very real sense of accountability and responsibility for achieving it. And even executives with little or no technical knowledge about that objective can and must play a critical role in ensuring that every angle is explored and every distraction is avoided. It is worth restating here: often the best suggestions and ideas about an issue come from people not closely involved in that issue. They bring valuable objectivity, even naïveté, to the table.

Time-Bound

When the thematic goal is no longer valid, the defining objectives also change.

STANDARD OPERATING OBJECTIVES

In addition to the objectives that provide definition around the thematic goal, it is critical to acknowledge the existence of other key objectives that a leadership team must focus on and monitor (see Figure 3). These are the ongoing objectives that don’t go away from period to period. They vary from one company to the next depending on the industry.

Figure 3. Goal Alignment Structure: Standard Operating Objectives.

Standard operating objectives often include topics like revenue and expenses, as well as other items like customer satisfaction, productivity, market share, quality, and the like. The danger for a company lies in mistaking one of these critical objectives, like revenue or expenses, for a rallying cry. Most employees find it difficult to rally around “making the numbers” or “managing expenses,” knowing that these will continue to be trumpeted as critical over and over again in future periods.

But that’s not to say that a thematic goal cannot involve one of these categories. If a company’s biggest area of focus in a given period is accelerating revenue growth, then that could be the leadership team’s thematic goal. Or maybe in the face of the loss of many key customers, the executive team decides that increasing customer satisfaction is the rallying cry for that period. Fine.

But leaders must resist the temptation to say, “Revenue is all that matters, because if we don’t make our numbers, then everything else is immaterial.” While that may be true in the most literal and extreme sense, it doesn’t qualify as a thematic goal if it isn’t unique to a given period. Instead, call it what it is: a critical but standard operating objective.

When leaders use these standard operating objectives as rallying cries, they create a “boy who cried wolf” syndrome, provoking cynicism and lethargy among employees who say, “Here we go again with the ‘increase revenue’ plea.” Calling revenue a standard operating objective shouldn’t diminish the importance of achieving it. In fact, it sends a message that the effort is always important, but not enough to generate success on its own.

METRICS

Okay, once the thematic goal, defining objectives, and standard operating objectives have been established, a leadership team can now start talking about measurement. But remember, without these other areas, metrics have little or no context. Even the most driven employees—including executives—will not be as motivated for hitting the numbers if they don’t understand how they fit into the bigger picture.

Keep in mind that even metrics are not always quantifiable numbers. Often they are dates by which a given activity will be completed. Trying to artificially assign specific numbers to unmeasurable activities—which is a common mistake among many executive teams—is unwise because it encourages the achievement of arbitrary outcomes that may or may not contribute to the thematic goal.

IDENTIFYING A THEMATIC GOAL

At first glance, deciding on a thematic goal can sometimes seem difficult. The key to finding the right one is to let a team discuss it for a while, without feeling the need to arrive at a quick decision. Oftentimes, a team’s initial guess at a thematic goal will actually be one of the defining objectives that create the context for the goal.

For instance, consider a manufacturing company with a defective product that has caused harm to its customers. A child car seat, maybe. Or a bicycle. The first and obvious guess at a thematic goal might be “fix the product.” However, a better answer might very well be “rebuild our credibility in the market.” Certainly, one of the defining objectives will have to be “fix the product,” but if that is all the company does over the course of the following six or nine months, it’s still going to be in a world of hurt.

So be patient and constantly ask the question, “is this really the thematic goal, or is it merely one of many defining objectives?”

If you’re still having a hard time identifying the thematic goal, you might be overthinking it. Often the thematic goal is deceptively simple. A consultant, who is not so close to the situation, or an employee deeper in the organization, who isn’t so mired in overanalysis, might be the person to give you some perspective.

CASE STUDIES

This section provides fictional but realistic case studies from five different types of organizations to help you understand how the theory might apply in your organization.

Case Study #1:	A worldwide pharmaceutical company
Situation:	After two of its patents for bestselling drugs expired and generic competitors eroded its market share, a pharmaceutical company acquired a sizable, though slightly smaller, competitor in order to acquire a host of early stage drugs in the emerging anticholesterol market.
Thematic Goal:	Complete the merger of the organizations.
Defining Objectives:	Establish a comprehensive strategy for the new organization.
	Create a single, unified marketing message.
	Establish a single look-and-feel (logo, collateral, and so on).
	Eliminate redundant and underperforming products.
	Merge back-office systems and processes.
Time Frame:	Nine months.
Standard Operating Objectives:
	Revenue.
	Market share by product category.
	Profitability by product.
	Employee turnover.
	Adherence to new product development and approval schedule.

Is the proposed thematic goal correct? Who knows? There is no definitive way to answer that question because it depends on what the leaders want to do with the business. This answer certainly seems reasonable, but then again, there could be other answers: acquire additional competitors, cut costs, and so on.

What is certain, however, is that there needs to be an answer of some kind so that executives—and employees up and down the organization—can get aligned and moving in the same general direction.

Only after a leadership team has established a thematic goal and defining objectives (and standard operating objectives) can it then start determining effective measurements. Most organizations I work with are good at measurements. However, assigning numbers to activities too early only distracts from the overall theme and gives people little context and incentive for achieving those numbers.

Case Study #2:	A fast-food restaurant chain
Situation:	Sales are slowly declining as more and more customers are starting to eat healthier food. Fast-food market share is shifting gradually toward alternatives like sandwiches and fresh Mexican food.
Thematic Goal:	Reposition the company for more health-conscious consumers.
Defining Objectives:	Revamp the menu offerings.
	Advertise the new offerings locally.
	Rebrand the company nationally. Redesign the restaurant facilities to fit the new market position.
	Teach employees to understand and promote the concept.
Time Frame:	Twelve months.
Standard Operating Objectives:
	Maintain overall revenue and profitability.
	Maintain quality and consistency of food products.
	Pass all health inspections.
	Contain employee turnover.
	Continue safety and accident prevention.

Again, whether this is right or not depends on the specific situation, as well as on the judgment of the leaders.

Case Study #3:	A two-year-old software company
Situation:	Sales have increased faster than plan, along with the number of employees and customers.
Thematic Goal:	Establish an infrastructure for continued growth.
Defining Objectives:	Install a more scalable and comprehensive accounting system.
	Upgrade the customer tracking system.
	Establish policies and procedures for human resource management and hiring.
	Hire a chief administrative officer.
	Outsource IT support.
Time Frame:	Six months.
Standard Operating Objectives:
	Make revenue numbers.
	Maintain cash flow.
	Retain key customers.
	Achieve positive assessments from market analysts.
	Get positive marketing/PR hits.

Once again, there is no way of knowing what the right thematic goal should be, though this one sounds reasonable. The key is to rally the entire leadership team—and thus, everyone else in the organization—around a single purpose for a given period of time, while simultaneously continuing to operate the company to plan.

Case Study #4:	A church
Situation:	Attendance at weekly services is up.
	Weekly receipts from the collection basket are growing. More and more people are joining the parish / congregation.
Thematic Goal:	Expand to meet demand.
Defining Objectives:	Add more Sunday services.
	Expand facilities.
	Offer more educational programs.
	Increase outreach.
	Grow the church staff.
Time Frame:	One year.
Standard Operating Measures:
	Maintain attendance growth.
	Maintain collection receipts.
	Manage expenses.
	Increase number of people served through outreach.
	Achieve parishioner/member satisfaction targets.

These last two case studies highlight the fact that thematic goals are just as important during successful times as they are during a crisis. Not having a thematic goal when things are good only increases the likelihood that a crisis will eventually occur.

For instance, this church will begin to face dissatisfied parishioners and staff if it doesn’t meet the growing demands that it is experiencing. Its leaders will look back and wonder how they could have failed to capitalize on such a great opportunity.

And in the previous case study, the software company will implode if it doesn’t improve its infrastructure. This will lead to frustrated employees who will have to work twice as hard to do the work of running the company and satisfying customers—which will eventually lead to more and more dissatisfied customers, and a crisis.

Case Study #5:	A university
Situation:	Enrollment is down slightly for the third consecutive year, test scores of entering students are slightly lower, and annual rankings have dropped compared to competing schools.
Thematic Goal:	Restore the school’s reputation.
Defining Objectives:	Upgrade faculty in key disciplines. Launch new scholarship program for top students. Establish marketing program to key feeder schools in region. Hire PR firm. Revitalize alumni magazine and communications.
Time frame:	Eighteen months.
Standard Operating Objectives:
	Maintain overall tuition revenue.
	Manage expenses.
	Reduce number of students transferring out of the school.
	Maintain percentage of graduating students who get jobs or are admitted to grad school.
	Increase graduation rates.

Note that the time frame for this case study is longer than others because a university’s calendar and culture often call for a more deliberate approach to implementation.

MANAGING AND ORGANIZING AROUND THE THEMATIC GOAL

Once a leadership team determines its thematic goal, defining objectives, and standard operating objectives, it needs to keep that information alive in the course of running the organization. And the place where it needs to be reviewed and discussed is during regular (usually weekly) staff meetings.

In another book, Death by Meeting, I recommended that there be no preset agenda at staff meetings, and that it be replaced by what I call a real-time agenda. Establishing a real-time agenda involves two steps, and the process should take no longer than ten minutes.

First, go around the table and give every member of the team thirty seconds to report on their three top priorities for the coming week. Even a team of twelve can do this in six minutes.

Then review your team scorecard, which is nothing more than a to-be-graded list of the items that make up the defining objectives and the standard operating objectives.

Let’s take a look at the fast-food restaurant chain’s scorecard in Figure 4.

Now, the colors assigned to each area are a simple, qualitative assessment based on the judgment of the leadership team members. As heretical as it may seem to allow executives to grade themselves without using hard numbers, the point of the exercise is to tap into the judgment and intuition of the people running the company as to which areas are doing well and which aren’t.

Figure 4. Sample—Weekly Scorecard for Fast Food Chain.

Rest assured, it will be next to impossible for the head of sales to say that revenue is a green if, in fact, it is not. That’s because the CFO is going to say, “Wait a minute. I don’t think I would call it green.” And that’s the point of the exercise, for the team to talk about each of the objectives and come to a general understanding of how they are doing against them.

The job of the leader is to quickly break ties by saying “Okay, let’s call it orange” when people can’t decide if something is yellow or red. Again, the purpose of the discussion is not precision but general assessment of performance. And it’s not hard for most teams to agree on a rating.

Once the ratings have been done—and again, this usually takes five minutes—the team is ready to decide where to spend the time and energy available during the remainder of the meeting. And this would be the time for someone to challenge a teammate who is planning to spend a good chunk of time that week on an issue that is either disconnected from the thematic goal or related to an area that is already doing well. This kind of peer accountability about how team members are prioritizing their precious time and resources is key to an organization’s ability to focus, and it is the thematic goal that provides the context for doing this.

Looking at the scorecard in Figure 4, it becomes clear that the agenda for the fast-food chain leadership team should have two primary topics of conversation: branding and employee development.

On the branding front, it seems that the branding effort is lagging behind advertising and restaurant redesign. Everyone—not just marketing—needs to feel responsible for asking about the situation, for getting clarity around what needs to happen to address it, and for assisting with the branding effort. Some might be able to contribute directly to the project, while others might simply offer up resources from their departments to help jump-start the project. Whatever the case, the key is that they recognize that none of them can succeed if they don’t get this done.

However, this should not be mistaken for permission for individual team members to slack off or fail to deliver on commitments. While they must share responsibility for the thematic goal and pitch in to achieve it, they must also hold one another accountable over the long term for meeting standards of performance.

Employee development is the other issue that the fast-food executive team needs to discuss at the meeting because there are two problems in that area: too many people are leaving the company, and not enough of the ones who are staying are being taught how to represent the company’s new direction. And this is certainly not HR’s responsibility alone.

Everyone, from operations to marketing, needs to be involved in solving the retention and training problem, even if that means slowing the progress in one area (building out the new restaurants) to accelerate another (training the people who work there to understand the new value proposition).

If nothing else gets discussed during the meeting, these two areas (branding and employee development) must be. Needless time should not be wasted on discussions about the new menu or health and safety inspections.

As obvious as this may seem, it is an extremely common problem among many teams. All too often, executives spread their time evenly across all departments and issues, giving equal attention to every topic regardless of where it falls in terms of importance or progress. Meetings become show-and-tell sessions designed to give everyone time to talk about their departments and activities. This only reinforces silos and makes it more likely that critical issues get too little attention from the entire team.

Without the clarity of a scorecard that includes defining objectives and standard operating objectives, it is extremely difficult for them to avoid this. And without the existence of a thematic goal, it would all be impossible.

THEMATIC GOALS AND LONG-TERM CONTEXT

When a thematic goal runs its course and is largely accomplished, an organization must then come up with another, and then another. This raises the question, Shouldn’t all of this be part of a longer-term strategic direction?

The answer is yes, but with some important caveats.

Too often, leaders of organizations choose one of two extremes when it comes to planning.

• They have no real long-range plan and make decisions reactively according to their short-term needs. Or . . .

• They have a detailed and analytically elegant three- or five-year strategic plan, which is designed to eventually roll up into a grand, all-consuming long-term goal.

And while I suppose it is better to have too much detail and information guiding decision making and prioritization rather than too little, it is nonetheless a problem that can lead to the same kind of flailing experienced by companies with no strategy at all.

Why? Because successful organizations achieve a delicate balance between predicting what is going to happen over the long term and responding to unexpected circumstances along the way. This calls for a planning approach that provides the right amount of context without unnecessary restrictions.

A thematic goal provides that context because it exists within the framework of six to twelve months, a time horizon that most businesses can accurately manage. Beyond that, organizations find that their plans become irrelevant or stale. Shorter-term goals, on the other hand, the kind measured in days or weeks, don’t provide enough time for leaders and their employees to get their hands around something difficult.

Does that suggest the abandonment of weekly metrics? Absolutely not. But they should be established within the context of longer-term thematic goals.

And what about three- and five-year plans? They’re fine too, as long as leaders don’t artificially preserve them if they’re no longer relevant—which is often the case in a dynamic market—and as long as they don’t take the place of thematic goals.

As for BHAGs, every organization should probably have them. Like a core purpose, something else that Collins and Porras describe in Built to Last, they can give leaders and employees a sense of why they get out of bed in the morning. But they don’t provide enough guidance about what people should actually focus on once they get to work.

Consider that executives can be in solid agreement around a BHAG and still find themselves constantly working at cross-purposes. Take, for example, a community hospital whose BHAG is to be the best little community hospital in the world. Even if every leader of that hospital is completely committed to that BHAG, there is a great likelihood that silos will rise up within that hospital as executives with different responsibilities and interpretations of how that BHAG should be achieved lead their departments in different directions.

It’s the thematic goal that ties it all together. Without it, the BHAGs lose connection to day-to-day activities, and weekly metrics become arbitrary and lifeless numbers that seem to serve no purpose other than their own.

A final thought about this. When a thematic goal is clearly established and communicated, employees should be able to look up from their work at any given time and see how they’re contributing to an outcome that is far enough away to give them the ability to succeed, but not so far away that they cannot imagine ever being finished. They should be able to see how the company’s long-term vision connects to its short-term objectives.

MAKING MATRIX ORGANIZATIONS WORK

Why matrix organizational structures became so popular I’m not really sure. There is certainly an element of flexibility and collaboration suggested by them, but in reality they are forums for confusion and conflict. They have certainly not contributed to the breakdown of silos; they’ve merely added an element of schizophrenia and cognitive dissonance for employees who are unlucky enough to report into two different silos.

But the matrix is here to stay, and so it is critical that we understand how to make thematic goals work within it. Happily, it turns out that a thematic goal is exactly what is needed to transform a matrix reporting structure from a tool of confusion to one of collaboration.

The real problem with matrices is that they put employees in difficult—maybe impossible—situations by asking them to please two different leaders who are not aligned with one another. By achieving clarity about the number one priority in an organization, and by clearly identifying the defining and standard operating objectives that contribute to it, companies will give their employees far less reason to fear being pulled apart at the seams.

And if an employee does start to feel some pull, it is a great opportunity for the leaders in charge to identify a crack in their alignment. Like a canary in a coal mine, a confused or conflicted employee can be a sign that the thematic goal and defining objectives aren’t being communicated effectively, or more important, aren’t being used to manage the organization from above.

GETTING STARTED

The first step a leadership team needs to take toward establishing a thematic goal and identifying its related components is to carve out enough time to discuss the organization’s priorities. I can’t imagine doing this effectively in less than two hours.

In some cases, a team will have to go back and clarify its overall purpose and strategy ahead of time in order to provide the context for identifying the thematic goal. So, as much as a full day might be advisable.

And for those who wince at the notion of spending yet another precious day sitting in a conference room while e-mail and other to-dos pile up back in the office, know this. Every executive team that I’ve ever taken through this exercise has come away with a very real sense of clarity and accomplishment. In most cases, it’s as though the members have given themselves permission to stop paying attention to the noisy, extraneous distractions that plague them and focus on what truly matters.

Consider the time and energy that will be saved by providing your team with a unifying sense of purpose, by giving them an understanding of how everyone contributes to that purpose, and by making it easy to get employees throughout the organization rowing in the same direction.

Heck, that just might be worth two days. Good luck.