You'd be forgiven for thinking that the silos we have in most organisations today, that we love to rail & struggle against, came about as a purely natural evolution.
Well, they have been in existence for centuries, but they were also actively encouraged for 'growth' (as opposed to the 'constraint' that we now perceive them as). And our silos were a known (but fair) consequence of the need to specialise for growth in an industrial age.
Let's take a quick tour of history...
Adam Smith (1723-1790) is a hugely interesting individual. He was a Scottish Economist, Philosopher, Author, Pioneer of Political Economy and a key figure in the Scottish Enlightenment - a period in the 18th & 19th Centuries marked by great intellectual and scientific accomplishment.
In his book, widely known and abbreviated as the 'Wealth of Nations' he describes an important concept - the division of labour, and its necessity to drive economic growth.
The division of labour was crucial to embed the specialism required of the workforce in those days to speed up production and create efficiency. This concept was what enabled the Victorian factories to grow so rapidly in the 19th Century with the enablement of assembly line technology.
This concept was also considered so significant that it earned Adam Smith a coveted position on the £20 note of the United Kingdom
And as you can see, he is quoted for the very topic in the middle of the note "The division of labour in pin manufacturing: (and the great increase in the quantity of work that results)".
How about an example:
In the 1700s a master shoe maker is extremely successful making shoes. A his business grows he hires more people and teaches them to make shoes. Over time he finds that his people are good in some areas and less good in others - quality of work and speed of delivery becomes an issue.
So the shoe maker specialises his team. He puts one employee in charge of leather, another on laces and the other on the soles. By doing this he allows them to become highly competent in the manufacture of their component. This reduces wasted time from employees constantly switching roles, and also reduces the likelihood of errors because the employees will be more effective at delivering a more straightforward and consistent part.
Unwittingly, these specialisations started the first silos.
Over time, and as the shoe business grew, investment into the product areas allowed for improvements. These brought extensions to the silos as employees became less and less transferable into working on other parts of the shoe - it was no longer that for 'efficiencies' sake they shouldn't move, it was now a case that they weren't capable in the other area and couldn't move. The silos became hard lined.
All this time, no one has asked if the customer planned to run a marathon or go to a ballroom dance. This translates clearly to Financial Services where the same products and services have been tarted up with new technology through the last couple of decades to no great progress of innovation.
Take a look at Account Statements - they started as a Passbook, then they were Printed and posted, then put online, then made available on mobile and tablet. The statement is the same service... talk about 'dressing up mutton as lamb'. Dressing up the same product/service in a new technology doesn't equate to a sufficient leap that will safe guard against disruption.
FinTechs have recognised this failing and are starting to create new solutions - but only in one specific field at a time.
Truly, and holistically, Digital Banking we haven't seen yet.
An organisation (and to a certain extent an industry) that has existed for a long time will find that these silos are all the more engrained. But whilst 250 years 'by your side' is great, it's not an excuse for failing to revolutionise the Financial Services value proposition.
“Institutions will seek to preserve the problem, for which they are the solution” - Clay Shirky
Within Financial Services many of the practices that we see in Branches or Retail Customer Services are considered Good. But it doesn't take much to look beyond Financial Services and see that the same treatment, applied just about anywhere else, would be considered extremely poor.
Here is what it would look like if we run a pub like it was a bank:
To overcome silos, reinvent banking and see the traditional & trusted brands of Banking survive, a new way of thinking is required - a bigger look at behaviours, mindsets and outlooks to join disruption rather than avoid it (because you can't avoid it!) - but that's for a different post.