The Silo Effect

**Author:** Gillian Tett

**Estimated Reading Time:** 45 minutes

**What You'll Learn:**

Why smart organizations make terrible decisions, how invisible mental walls create financial disasters and missed opportunities, and what you can do to break down the barriers that limit your thinking, your career, and your organization.

**Who This Book Is For:**

Anyone who has ever wondered why large organizations seem incapable of learning from their mistakes, why experts miss obvious problems, and how a few individuals manage to see opportunities that everyone else overlooks.

In the autumn of 2008, as the global financial system teetered on the edge of collapse, a strange question hung in the air. How could so many intelligent people, working in some of the world's most prestigious institutions, have failed to see what was coming? The warning signs were not hidden in obscure documents. They were visible to anyone who cared to look. Yet the people whose job it was to look did not see them. Gillian Tett spent years investigating this question. Her conclusion was unsettling. The problem was not a lack of intelligence or information. The problem was the way we organize ourselves. Modern life is built on specialization. We divide the world into categories, create departments to handle each category, and hire experts who know everything about their narrow slice of reality. This approach has produced extraordinary progress. It has also produced a dangerous blindness. When people work inside specialized departments, they stop seeing the connections between their work and the work of others. They develop their own language, their own rituals, their own ways of measuring success. They become trapped inside what Tett calls silos. The word silo originally referred to the tall towers used to store grain on farms. Each silo holds its contents in isolation, separate from everything around it. The metaphor is apt. Organizations build silos to store information, people, and power. Each silo becomes self-contained. Each silo develops its own culture. And each silo eventually loses sight of the larger system it belongs to. Tett brings an unusual perspective to this problem. Before becoming a financial journalist, she studied social anthropology. Anthropologists spend their careers studying how different cultures organize reality. They examine the rituals, symbols, and classification systems that shape how people think. When Tett turned her anthropological lens on modern organizations, she saw something that most management consultants miss. She saw that the way we classify the world determines what we can see. The 2008 financial crisis was not caused by a single bad decision. It was caused by a system of classification that prevented people from seeing the whole picture. Bankers in one department created complex financial products without understanding the risks. Regulators in separate…