Editorial
The Gist
- Maintain “unified accountability” for customer outcomes. Although intricate organizational structures may become inevitable, avoiding siloed operations is crucial for maintaining accountability toward customer outcomes.
- Seamless handoffs between departments are vital. Taking inspiration from the aviation industry, the precision of handoff procedures between air traffic controllers exemplifies the preservation of customer-centricity during transitions.
- Achieving efficiency through specialized tasks should not compromise customer experience. Business operations methodologies exist to strike a balance between cost optimization and customer satisfaction.
Boeing's recent setbacks with the 737 Max 9 aircraft have once again thrust the company into the spotlight, shedding light on critical lapses in its quality management practices, potentially exacerbated by organizational silos. The Federal Aviation Administration's decision to suspend further production of the aircraft underscores the perils that even iconic brands face when prioritizing efficiency over all else. Boeing, once renowned for its engineering excellence, has witnessed a decline in its reputation due to a shift away from its historical commitment to quality.
In a bygone era, Boeing's meticulous quality management practices during the production of the Boeing 777 exemplified a commitment to excellence. For instance, the decision to place heads of software engineering on the aircraft’s test flight underscored the clarity of accountability for quality — since software played a new and critical role in the Boeing 777’s flight controls.
However, with the 737 Max, Boeing opted to outsource software testing to offshore contractors at $9 per hour, eroding the accountability for outcomes. This deviation from a culture of "skin in the game" accountability serves as a cautionary tale of the dangers of organizational silos.
Related Article: Your Silos Are Showing in Your Customer Experience
Unified Accountability Across Organizational Silos
Rather than critiquing efficiency goals or complex organizational structures, this discussion aims to prompt reflection on the risks tied to fragmented accountability. Maintaining "unified accountability" for outcomes is crucial, even amid organizational complexity.
To understand how that is possible, let us use the example of an industry which still continues to be a model for how to operate with extremely high reliability, despite a highly fragmented organizational construct — the aviation industry. Yes, I realize this sounds counterintuitive given the Boeing example, not to mention the high probability of a bad customer experience these days due to increased flight delays. But when viewed in the context of the incredibly complex organizational model in the aviation industry, a pattern emerges. It is a model for maintaining high reliability despite organizational complexity.
If you think that the business processes in your own company are complex, try running an operation globally that moves 5 billion passengers every year, in roughly 25,000 commercial aircraft, via 15,000 airports located in 195 countries. And do that with over 99.999999% reliability.
And just to make things interesting, do it in a decentralized organizational construct where laws, standards and procedures are not as tightly controllable as within a single company. There is no single CEO-like entity and no hierarchy for single accountability. That is the context of the aviation industry, and it spins up lessons for other organizations who want to operate efficiently and effectively across organizational silos.
Related Article: 5 Signs Your Organization Is Too Siloed
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The Insidious Effects of Organizational Silos
Let us dive into the murky waters of organizational silos — those insidious barriers that can wreak havoc on a company's efficiency, collaboration and ultimately, its customer reputation. Once you get to a certain size in the organization, you do need some practical sub-division of teams. But complex organizational sub-units are not all insidious organizational silos.
The siloed effects arise when the sub-units start to act at cross-purposes with the overall business goal. The issue is not just with information hoarding and lack of communication. It is in the loss of clear accountability for customer and stakeholder outcomes.
Also, as a known phenomenon, functional processes — finance, human resources, sales etc. — become ineffective with time as they operate in silos when the company grows. Siloed organizational goals start to trump customer outcomes. Recall how the U.S. Federal Bureau of Investigation faced significant challenges in the aftermath of the 9/11 attacks. The lack of information sharing between different divisions hindered its ability to prevent the attacks. This tragic example demonstrates how silos can have real-world consequences.
How the Aviation Industry Ensures Unified Accountability
Complex organizational designs can thrive as long as they uphold unified accountability for outcomes, emphasizing customer focus, agility and innovation. The aviation industry's success in minimizing hand-offs across fragmented structures and defining customer-focused unified accountability provides a blueprint for efficient and effective operations.
The industry directly employs more than 11 million people with varying capabilities around the world. They operate everything from ticketing to airport operations, to aircraft maintenance, to luggage and food services. The fact that such a complex, decentralized, sprawling operation delivers reliable (albeit not always likable) results is interesting. It achieves this by designing its business processes for clear handoffs and accountability.
For instance, there is clear accountability for customer outcomes at each step of the passenger's journey — the check-in agent for checking in, the gate agent for boarding, the pilot for in-flight travel and safety, the Air Traffic Control (ATC) for cross airspace safety and so on.
In other words, while there are hand-offs from one organization to the next (e.g., the gate agent for boarding to the pilot for travel), there is always a single point accountability at each stage for the customer. That is despite the constraint of involving workers from more than half a dozen companies each time. That’s unified accountability. You do not fragment or silo accountability for customer and business outcomes, even if you have different organizations handing off during execution.
Related Article: Fixing the Persistent Data/Content Silo Problem Once and for All
How to Balance Efficiencies With Customer Experience
Achieving a balance between efficiency gains from siloed specialized teams and unified accountability requires a strategic approach. The aviation industry's use of the five-stage model for improving business operations efficiency presents a guide for unified accountability for customer outcomes, offering valuable lessons for replication:
- Fix non-standard processes: This is the starting point. Imagine what might happen if there were different steps for each country or each airline when it came to handling Air Traffic Controllers (ATC) control transfers. That’s the first step in improving processes.
- Synchronize siloed processes: Imagine if ATC activities were standard but siloed off from other aviation processes, such as airport gate management. Handoff errors would result. This step addresses that.
- Execute End-to-End (E2E) processes consistently using technology: Assume that terminal check-in to gate management to ATC processes have been synchronized, but that executional discipline is spotty. We must address that via automation and operational improvement. Boeing has done this too, as mentioned in a CMSWire webinar on employee experience.
- Add robust fail-safe designs to E2E process execution: Assume that processes from terminal check-in all the way to ATC are run well. However, if no fail-safe procedures are designed for the rare situations where problems occur, there will be occasional blowups. That is because while processes are efficient E2E, there is no Unified Accountability for an employee to circumvent or fix perfect-storm-type issues.
- Design roles for unified accountability of outcomes: At this stage, employees are empowered to achieve near-zero defects and to constantly evolve processes for process excellence.
Unified accountability is not simply good for customer experience; it’s also great for business. A study by McKinsey — one that is specific to the business-to-business (B2B) area — suggests that businesses that optimize the quote-to-cash (QTC) process for end-to-end accountability significantly outperform peers. Their growth, marked by the addition of new accounts, expansion of existing accounts and higher retention rates, underscores the transformative potential of scaling from efficiency to effectiveness through unified accountability.
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