The Silo Effect Page 3
Similarly, when investigators dug into the reasons that the CIA and other intelligence services failed to foresee the threat posed by al Qaeda in 2001, they found a pattern where individual departments hoarded data and did not share it across the group.34 When reporters in Britain investigated why the National Health Service has made so many disastrous decisions over the procurement of IT systems between 2008 and 2011, it emerged—once again—that the managers who were ordering IT systems in one department had not consulted with anyone else.35 When there was an outcry over the computing glitches that dogged the launch of healthcare.gov, the insurance website that the administration of President Barack Obama launched in late 2013, a similar pattern emerged. Although individual computer experts working for the program had been aware that the website faced severe problems for a long time, their messages had not been passed across to the teams managing the political campaign. Nobody in the White House had fully understood what the specialist “geeks” were doing, because the work seemed so technical and complex.
Perhaps one of the most striking—and sad—examples of silos, however, emerged when the Obama administration launched a program in 2009 to offer homeowners help with their mortgages after the Great Financial Crisis. The theory behind the plan sounded sensible: the banks were supposed to offer struggling homeowners a reduction in the monthly mortgage payments if they met certain criteria (say, having a job). But there was a crucial, tragic catch: the financial companies were so fragmented in how they organized themselves that when some bank departments started trying to help a mortgage borrower by reducing their monthly payments, the team offering mortgage relief often failed to inform the department that was in charge of implementing foreclosures. That had terrible consequences. When the banks’ foreclosure teams saw that mortgage borrowers had reduced their payments, they sometimes assumed that the borrower had defaulted and seized the house. In those situations, instead of helping mortgage borrowers, the White House plan sometimes ended up harming them—because of the silos. “It was terrible,” Austan Goolsbee, a key Obama adviser, later explained. “No one imagined silos like that inside banks. The silos were so strong they did the exact opposite of what [everyone] expected. It was completely crazy.”
CULTURE VULTURES
So is there any way to avoid the “craziness”—or blindness—that silos can create? This book argues that the answer is: yes.
And in the pages that follow, you will read a series of stories that show both the perils and promise of silos, drawn from government, corporate, and nonprofit sectors. The narrative is divided into two parts. The first section covers three tales of individuals and institutions that have been overwhelmed by silos in slightly different ways. Chapter Two relates the story of Sony, a company that once enjoyed wild success, but then became so fragmented that it missed chances to innovate, triggering its decline. Chapter Three recounts the tale of UBS, a gigantic bank that was so beset with silos that the top managers completely failed to see that a timebomb was ticking inside its books, because some traders had been buying securities linked to subprime U.S. mortgages. Chapter Four explains how a sense of tunnel vision and tribalism among economists working in places such as the Bank of England and the Federal Reserve prevented bright people from seeing how the financial system was spinning out of control before 2008. In numerous professional fields and institutions, people become trapped by the silos they inherit, not just in terms of how organizations are structured but also, most importantly, how people think. What happened to the economics profession before 2008 illustrates that trend.
But the second part of the book is more optimistic, since it narrates the stories of some individuals and institutions who are trying to overcome silos in their minds, lives, and organizations. In Chapter Five, I tell the story of how one computer geek in Chicago embarked on a dramatic career change, jumping across professional silos in a manner that inspired him to launch a striking experiment inside the Chicago Police Department.
Chapter Six turns to Facebook, and explains how the social media company has tried to prevent itself from succumbing to the silo curse with some fascinating experiments in internal social engineering. This story can be read as a good counterexample to the tale of Sony, not least because the Facebook staff have developed their internal silo-busting experiments precisely because they did not want to end up in the same situation as Sony or other giants such as Microsoft.
Chapter Seven explains how doctors in Cleveland Clinic, the gigantic medical center, have tried to fight the curse of silos with another tactic: encouraging specialists to deliberately question how they classify the world, and imagine different taxonomies. Instead of just accepting the normal classification system in medicine, these doctors have turned their taxonomies upside down. In that sense then, the chapter is a good counterpoint to the story about the economics profession in Chapter Four, since one problem that beset economists (like most specialist professions) is that the experts did not examine how they mentally organized the world, but just assumed that their taxonomies were self-evidently correct.
Chapter Eight takes a different tack. It tells the story of how one hedge fund, BlueMountain Capital, has made money by taking advantage of the silos in the financial system around it. That illustrates a key point: one person’s silo can be another’s opportunity, and one institution’s loss can be another’s gain. The tale of BlueMountain, then, is a good counterpoint to the tale of UBS and other big banks, since it shows that individuals who are willing to take a joined-up view, or look at silos in perspective, can enjoy big advantages compared to rivals. Silo-busters can be innovative. They can sometimes spot new business opportunities. Savvy silo-busting investors can make money.
These stories are not meant to be comprehensive. I know there are innumerable other examples I could have chosen to illustrate the perils and pitfalls of silos. However, I focused on these particular eight tales to streamline the narrative and make it as easy as possible to follow. It is important to stress, though, that these narratives should not be read as fully finished tales of “success” or “failure,” but just as snapshots of stories that are still in progress. The perils associated with silos can never be permanently defeated. Mastering silos is a constant battle, because the world around us is constantly changing, pulling us in two directions. We need specialist, expert teams to function in a complex world. But we also need to have a joined-up, flexible vision of life. Mastering silos requires us to walk a narrow line between these two contradictory goals. It is hard.
So how do we deal with this challenge? One place to start is to recognize that silos exist and to think clearly about their effects. And I believe that a discipline that can help us to frame the analysis and debate is anthropology. This is not a field that normally springs to mind when people think about silos. On the contrary, when people have written about silos, they have usually done so by drawing on two bodies of research: management consultants, who offer advice on how institutions can organize themselves better; or psychologists, who study how our minds work. However, silos are fundamentally a cultural phenomenon. They arise because social groups and organizations have particular conventions about how to classify the world. Sometimes these classification systems are explicitly defined. New York’s City Hall has official, formal structures that stipulate how each department and team is organized and sits in relation to each other, in a hierarchy. However, the conventions that we use to classify the world are often not officially defined or spelled out. Instead, they arise out of a dense set of rules, traditions, and conventions that we have absorbed from our surroundings, often in an unthinking way. Many of the really important patterns we use to classify the world, in other words, are inherited from our culture. They exist at the borders of conscious thought and instinct. They seem natural to us, in the same way our culture appears “normal.” So much so, that we rarely even notice them at all, or even think about the fact that we have formal and informal classification systems that shape how we respond to the wo
rld.
However, cultural anthropologists do think about these classification systems—a great deal. That is because anthropologists know that the process of classification is fundamental to human culture; indeed, our taxonomies are our culture. Sometimes anthropologists study these cultural patterns in non-Western settings. Indeed, the anthropologists who are famous in popular culture today tend to be those who did their research in places that seem exotic to modern Westerners: people such as Margaret Mead (who studied youth and sexuality in the Samoan Islands), Franz Boas (Eskimos), Claude Lévi-Strauss (Amazonian myths), or Clifford Geertz (cock fighting rituals in Java), and so on. But not all anthropologists work in non-Western contexts. On the contrary, many modern anthropologists now work in complex industrial settings, too, where they also study the cultural patterns that shape twenty-first-century societies. “Anthropologists are culture-vultures; but not in the way this phrase is usually used,” as Stephen Hugh-Jones, a British anthropologist, explains. “For anthropologists ‘culture’ is not a matter of refinement of tastes or the intellectual side of civilization; it is the commonly-held ideas, beliefs and practices of any society of any kind.”36 In that sense, the discipline can help to shed light on how we classify the world, and why we create silos.
So before we turn to the stories of how some institutions have been mastered by silos, and mastered them, this book starts with a detour. Chapter One explains why anthropology can be useful in terms of making sense of the modern world—and its silos—by telling another story, that of Pierre Bourdieu, a French anthropologist-cum-sociologist. Bourdieu started his life doing research in Algeria during the horrors of the Algerian Civil War. But he later switched tack and did a series of provocative analyses of modern France and other aspects of the Western world. At first glance, this may not seem to be obviously connected to the tales that I relate in this book about complex institutions. (And if readers just wish to read about tales of institutional failure or success they should skip this part and go straight to Chapter Two.) But Bourdieu’s research illustrates some of the defining traits of cultural anthropology and shows why using an anthropological lens can be useful, irrespective of whether you define yourself as an “anthropologist.” Even—or especially—in places such as New York’s City Hall, UBS, the Bank of England, or Sony.
PART ONE
SILOS
1
THE NONDANCERS
How Anthropology Can Illuminate Silos
“Every established order tends to make its own entirely arbitrary system seem entirely natural.”
—Pierre Bourdieu1
IT WAS A DARK WINTER’S evening in 1959 in Béarn, a tiny village in a remote corner of South West France. In a brightly lit hall, a Christmas dance was under way. Dozens of young men and women were gyrating to 1950s jive music. The women wore full skirts that swirled around them, the men sharp, close-cut suits.2 On the edge of the crowd, Pierre Bourdieu, a Frenchman in his thirties with an intense, craggy face, stood watching, taking photographs and careful mental notes. In some senses, he was at “home” in that dancehall: he had grown up in the valley many years earlier, the son of peasants, and spoke Gascon, a local dialect of French that was impossible for Parisians to understand. But in other senses, Bourdieu was an outsider: as a precociously brilliant child, he had left the village two decades earlier on a scholarship, and studied at an elite university in Paris. Then he traveled to Algeria, serving as a soldier in the brutal civil war, before becoming an academic.
That gave him an odd insider-outsider status. He knew the dancers’ world well, but he was no longer merely a creature of this tiny environment. He could imagine a universe beyond Béarn and a different way of arranging a dance. And when he looked around at that hall, with that insider-outsider vision, he could see something to which his own friends were blind. In the center of the hall, there was light and action: the dancers were doing the jive. That was the only thing that the villagers wanted to watch, or would ever remember from that night. Dance halls, after all, are supposed to be all about dancing. But “standing at the edge of the dancing area, forming a dark mass, a group of older men look[ed] on in silence,” as Bourdieu later wrote. “All aged about thirty, they wear berets and unfashionably cut dark suits. As if drawn in by the temptation to join the dance, they move forward, narrowing the space left for the dancers . . . but do not dance.”3 That part of the hall was not what people were supposed to watch; it was being ignored. But it was nevertheless present, as much as the dancers. “There they all are, all the bachelors!” Bourdieu observed. The people in that hall had somehow divided themselves and classified each other into two camps. There were dancers and non-dancers.
But why had that separation occurred? Bourdieu had received a clue to the answer a few days earlier, when he met up with an old school friend. At one point, the man had produced an ancient prewar photo, depicting their classmates as children. “My fellow pupil, by then a low-ranking clerk in the neighbouring town, commented on [the photo], pitilessly intoning ‘un-marriageable!’ with reference to almost half [the pictures],”4 Bourdieu wrote. It was not intended as an insult, but as a description. Numerous men in the village were finding it impossible to find wives, because they had become unattractive—at least as culturally defined by local women.
This “unmarriageable” problem reflected radical economic change. Until the early twentieth century, most of the families around Béarn were farmers, and their eldest sons were typically the most powerful and wealthy men, as they inherited the farms according to local tradition. Eldest sons were thus considered catches for local women, particularly compared to the younger sons who often had to leave the land in search of a living. But in postwar France, the pattern had changed: agriculture was declining and the men who could leave the farms were seeking better paid jobs in town. Many young women were moving to the cities in search of work. The older sons, who were tethered by tradition to the farms, were being left behind. On a day-to-day basis, the villagers did not articulate that distinction. But the classification system was constantly being expressed and reinforced in a host of tiny, seemingly mundane, cultural symbols that had come to seem natural. To the villagers in Béarn it seemed obvious that 1950s jive music, full skirts and tight male suits, were a cool, urban phenomenon; if you could dance, that signaled that you were part of the modern world, and therefore marriageable.
What really intrigued Bourdieu, though, was not just why this economic change had occurred, but why anyone accepted this classification system and the unspoken cultural norms. This distinction between marriageable and unmarriageable men—or people who could or could not jive—had not been imposed in any formal manner. Nobody had conducted a public debate on the matter. There were no official rules in 1950s France that banned farmers from doing the jive or stopped them from learning the dance steps, buying a few suits, and just jumping into the ring. But somehow those men were banning themselves: they had voluntarily placed themselves in a social category that indicated they “could not dance.” And the implications for those men were heartbreaking. “I think of an old school friend, whose almost feminine tact and refinement endeared him to me,” Bourdieu observed, noting that his friend “had chalked on the stable door the birthdates of his mares and the girls’ names he had given them” as a sad protest against his “unmarriageable” state and lonely life.5
So why didn’t the men protest against their tragic state? Why not just start dancing? And why didn’t the girls realize that they were ignoring half the men? Why, in fact, do any human beings accept the classification systems we inherit from our surroundings? Especially when these social norms and categories are potentially damaging?
A POSTWAR DANCE HALL in Béarn lies a long way from Bloomberg’s City Hall, in terms of geography and culture. Marriage strategies do not have much in common with banks. But in another sense, French peasants and New York bureaucrats are inextricably linked. What these two worlds share in common—along with every society that anthropologists ha
ve ever studied—is a tendency to use formal and informal classification systems and cultural rules to sort the world into groups and silos. Sometimes we do this in a formal manner, with diagrams and explicit rules. But we often do it amid thousands of tiny, seemingly irrelevant cultural traditions, rules, symbols, and signals that we barely notice because they are so deeply ingrained in our environment and psyche. Indeed, these cultural norms are so woven into the fabric of our daily lives that they make the classification system we use seem so natural and inevitable that we rarely think about it at all.
Insofar as anyone can tell, this process of classification is an intrinsic part of being human. It is one of the things that separate us from animals. There is a good reason for that: on a day-to-day basis, we are all surrounded by so much complexity that our brains could not think or interact if we were could not create some order by classifying the world into manageable chunks. The seemingly trivial issue of telephone numbers helps to illustrates this. Back in the 1950s, a psychology professor at Harvard named George Miller studied how short-term memory worked among people who operated telegraph systems and telephones. This research showed that there is a natural limit to how many pieces of data a human brain can remember when it is shown a list of digits or letters.6 Miller believed that this natural limit ranged between five and nine data points, but the average was “the magic number seven.” Other psychologists subsequently suggested it is nearer to four. Either way, his conclusion also contained a crucial caveat: if the brain learns to “chunk” data, by sorting it into groups—akin to the process of creating a mental filing cabinet—more information can be retained. Thus if we visualize numbers as chunks of digits we retain them, but not if they are a single unbroken series of numbers. “A man just beginning to learn radiotelegraphic code hears each dit and dah as a separate chunk. [But] soon he is able to organize these sounds into letters and then he can deal with the letters as chunks . . . [then] as words, which are still larger chunks, and [then] he begins to hear whole phrases,”7 Miller explained. “Recoding is an extremely powerful weapon for increasing the amount of information that we can deal with.”