What causes tunnel vision in organisations?
In late 1999, Nobuyuki Idei of Sony stood up to address the majestic Venetian ballroom in the Sands Expo and Convention Centre in Las Vegas, writes Gillian Tett, in one of her many gripping stories in this new book called The Silo Effect
. Once a year in November, the titans of the computing and electronic world gather here for the Comdex trade fair. Some 20 years earlier, the Japanese firm had launched Sony Walkman, which changed how millions listened to music. Following its success with radio and televisions in the 1960s and 1970s, it had introduced camcorders, digital cameras and video recorders in the 1980s. In the 1990s, it had jumped into computers and had also bought into a vast music and film empire—generating hits such as Star Wars and Stuart Little.
Idei called out for Steve Vai, a wild-haired guitar virtuoso, on to the stage. Vai casually pulled out a little device, the size of a packet of chewing gum. This was the latest Sony invention: a digital music player called the Memory Stick Walkman. The same company that had changed how the world listened to music back in 1979 by launching the Walkman was attempting to repeat the same trick, writes Tett.
But then something strange happened. Idei stepped forward and waved another device, narrates Tett. It was a Vaio MusicClip, a pen-sized digital audio-player. This device too recorded music. Sony had just offered not one—but two—digital Walkmans. This seemed odd. When consumer companies launch new products, they tend to keep the presentation simple, to avoid confusing customers (or their own salespeople), writes Tett. Soon after, the company produced a third offering, known as the ‘Network Walkman’. Years later, when some of Sony’s own leaders looked back on that day, they realised that it had been a sign that a once-successful company was sliding towards disaster, points out Tett.
The reason Sony unveiled not one, but two different digital Walkman devices in 1999 was that it was hamstrung by silos: different departments of the giant Sony empire had each developed its own, different digital music devices. None of these departments, or silos, was able to collaborate with each other, or agree on a single product approach. The different digital Walkman products, thus, competed with each other and cannibalised each other, writes Tett. That, in turn, made the products far weaker than anything that Sony had produced before. The products failed. In walked Steve Jobs and took away the market for portable digital music with iPod.
Gillian Tett blames Sony’s decline on metaphorical silos (a structure for storing bulk materials, usually grains, in different ‘compartments’). And also to the fact that regulators failed to see the 2008 crisis. Silos blindsided the Swiss banking giant UBS, leading to a gigantic $30-billion loss. A trained anthropologist, who is now the US managing editor of Financial Times, Tett’s thesis is that while the world is more interlinked, as a common system, than ever before, our lives and minds remain fragmented. Large organisations are divided, and then subdivided, into numerous different departments, she writes. These often fail to talk to each other—let alone collaborate. Professions are increasingly specialised, understood by a tiny pool of experts. Silos proliferate.
Silos have an important function. We live in an incredibly complex world where information, data, roles and actions need to be structured into separate spatial, social and mental boxes. Silos help us to tidy up, classify and arrange our lives. Otherwise, there would be complete chaos. But this also encourages turf wars, duplication, communication barriers—all leading to wasted resources and overlooked costly risks.
What is the way out? Tett gives the examples of collaborative practices at Facebook that is determined to avoid the fate of Microsoft and Sony. The famous Cleveland Clinic promotes cross-disciplinary collaboration by trying to reclassify its activities according to body parts instead of dividing medicine into doctor specialities. The New York administration has used data sitting in different dark corners of vast offices to detect patterns of building fire in poorer districts. However, the problem with this thesis is that the word ‘silo’ is not robustly defined. Also, the causes of failures in Sony, or Bank of England, could be many, including silos. Blaming it on silos alone could be fallacious. Nevertheless, this book is an interesting read.