A business exists to provide value to the marketplace through the services and products it delivers to customers. When a company has only a few people, it operates as a small team of generalists who can handle a wide variety of tasks and responsibilities. As a company grows and adds more people, it is natural for specialization to take place—instead of everyone pitching in everywhere, people (or groups of people) begin to own specific functions of the business. This is when departments begin to form.
Departments are areas of specialization within the organization. They exist to provide focus on specific areas when the organization becomes too large for every employee to be involved with every aspect of the business (which typically begins when there are between 20-40 people). Together, these department structures form the larger structure of the organization.
As the company continues to grow, it may decide to further specialize. What was once a Business Development Department, for example, becomes three separate departments: Marketing, Sales, and Customer Service. A general Operations Department becomes more specialized based on different Revenue Groups. Support Services organizes into a Human Resources Department and a Finance Department.
This is the beginning of the enterprise—a business that is organized into functional teams and departments. The sub-structures of teams and departments are held together by common mission and values. The strength of each department contributes to the overall health of the enterprise.
While it is necessary for a business to establish departments as it grows, those same departments can become silos—isolated groups that aren’t aware of, or concerned with, how they work together. The Marketing Department is completely focused on performing the marketing functions of the organization. It isn’t concerned with what’s going on in the Finance Department or the Human Resources Department, and vice versa.
This natural tendency to focus on the immediate needs of one’s department can work against the success of the enterprise. Due to daily challenges, needs, and opportunities, departments can become self-focused and lose sight of the big picture. The outcomes of this silo mentality are a lack of cooperation and hoarding of information. What works for one department might make things difficult for another. Departments begin to compete for resources without understanding or even caring about the needs of the enterprise.
Enterprise Thinking is when the leaders, managers, and staff move away from thinking only in “function-centric” terms and instead show concern for and deference to the entire organization. This perspective takes into account the reality that each department exists only for the purpose of contributing to the enterprise’s success. If the enterprise fails, the departments are no longer needed. This is not to say that departments should stop thinking about their needs, but that they think of their needs in the context of the health and success of the enterprise.
The concepts from this article were taken from Interdepartmental Planning: Focusing resources beyond department silos. Available through The ReWild Group and Amazon, the book explores in-depth this and other concepts while providing illustrations to help business leaders incorporate the ideas into their organizations. Get your copy today, and don’t forget to download the free workbook that serves as a companion guide to the book.