Organizational Silos (Functional Silos)

Adam Smith division of labor

Silos are compartmentalized operating units isolated from their environment, leading to inefficiencies in overall organizational collaboration.
Adam Smith introduced the concept of division of labor, which emphasized breaking down tasks into specialized roles to increase efficiency and productivity.
In functional silos, this division of labor can be taken too far, where departments work in isolation, losing sight of the overall objectives of the organization.
While division of labor promotes specialization, it can lead to inefficiencies in communication and coordination when departments don’t collaborate, as is the case in functional silos.

Horizontal Silos

Organizations are divided into departments like Accounting and Human Resources.
This reflects the concept of breaking down complex tasks into smaller, manageable ones that can be assigned to specific groups.

CEOs and Presidents focus on long-term strategy, midlevel managers on tactical issues, and lower-level management on daily operations.
Functional grouping often promotes a narrow focus on improving a specific department, leading to intraorganizational friction and misalignment with the organization’s broader goals.