Originally Published 9.4.2013

One BIG source of process delays, defects, and variations that I always see are walls between departments. This is no surprise since companies usually set up their structures according to functional activities: Sales, Marketing, Operations, Logistics, Accounting, HR, etc. This tried and tested way of organizing people is not really wrong. It makes planning, organizing, leading, and controlling employees more efficient because each employee who performs the same function works as a team and reports to the same manager. 

The problem lies when we start talking in terms of process. Processes produce the products and services that the company sells to its customers, and processes, are almost always, cross-functional. Meaning, for every process, involves at least 2 departments, and the outputs of one department are inputs of another. Since departments work in silos, they usually have conflicting agendas. 

Every department has its own set of targets, metrics, goals, and sad to say personal interests. I have seen it with my own eyes: 

• Sales prioritizing volume while downplaying unnecessary quality;

• Marketing prioritizing speed while downplaying expenses; 

• Logistics prioritizing efficiency while downplaying the need to have allowances in stocks;

• Operations prioritizing speed to satisfy orders in time while downplaying defects and rework resulting in hidden costs;

• Audit insists all thousand transactions of a process conform to a control designed to avoid a repeat of an error that happened only once, due to a special cause, resulting in delays.

And the list goes on and on.

One school of thought to cure these conflicting agendas is to structure an organization according to "process" and not "functions". Advocates of this idea say that this strategy shall make all departments that form a process look to a common goal and tear down the silo mentality.

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