Innovation Despite the Silos

The winds of technological and geopolitical change have reached gale force and businesses everywhere must adjust their course or risk sinking. Some changes, such as price adjustments, supply-chain moves, or new marketing approaches, require insight and agility. But others demand major redesigns of processes, strategy, or even business models: genuine transformations that depend on system-wide innovation.

Despite an enormous business literature on innovation and change, the success rate for system innovation remains low. Even well-funded efforts often fade as “programs of the month,” leaving little durable impact. A recent MIT study found that only 5 percent of generative-AI initiatives created measurable value. Avoiding these costly failures requires more than good ideas or smart teams. It calls for a disciplined, organization-wide approach that transcends the mechanics of any single project.

Why System Innovation Fails: The Silo Problem

Innovating systems in large organizations requires that information, decisions, and changes move freely across boundaries. Silos are natural features of scale and specialization, but they also fragment accountability and obscure system-level trade-offs.

The standard prescription is “collaboration,” yet most companies - if they address silos at all - stop at forming a cross-functional team and declaring victory. True collaboration means more than attendance at meetings. It requires the right structure, authority, and incentives so that the team can actually deliver the required change for the organization.

Effective System Innovation Requires Teams, Not Committees

System innovation succeeds only when cross-functional teams are designed and empowered to deliver. Innovation cuts across functions, geographies, and hierarchies, demanding joint decisions, coordinated execution, and unified change management. None of this happens automatically. It requires intentional design, clear accountability, and sustained executive sponsorship.

1. Build a True Cross-Functional Team and Make It Their Primary Job

Many “cross-functional” teams fail because they are part-time efforts layered on top of full workloads. System innovation cannot be done on the side. Executives must explicitly budget time and resources for members to contribute meaningfully. When participation depends on discretionary effort, progress stalls and momentum quickly fades.

2. Give the Project Leader Authority and Organizational Standing

The project leader must have the credibility to work across functions and levels, or report directly to a senior sponsor who does. Too often, the project leader lacks organizational standing and credibility vis-à-vis other functions. Without recognized authority, even routine issues can easily become irresolvable. A senior sponsor or executive steering committee can keep the effort moving and ensure decisions stick.

3. Assign a High-Potential Leader with a Clear Career Incentive

Choose a project leader who has both capability and motivation; ideally a high-potential executive for whom success will be career-defining. Visible advancement opportunities motivate more effectively than short-term bonuses, which seldom correlate with long-term project success. Treat this as a pivotal leadership assignment, not an administrative duty.

4. Make the Team Accountable for Both Design and Implementation

Too many teams disband after delivering recommendations, leaving others to wrestle with the implementation. The same group should stay responsible for early execution to maintain ownership and continuity. Involve implementation leaders early - first as reviewers, later as integrated members - to spot barriers while they can still be addressed.

5. Establish Governance That Enables, Not Delays

Structure matters. Effective governance prevents conflicts from festering and ensures timely decisions. A steering committee should probably meet at least once a month to resolve open conflicts before they linger or escalate. Project management teams typically meet at least once a week to review progress and align workstreams, while individual workstream teams convene as needed to drive execution and learning. This cadence ensures alignment without bureaucracy. The goal isn’t more meetings, but faster learning and faster decisions.

Few Organizations Get All of This Right

Each of these elements may seem obvious, yet rarely are they all implemented on a single project. In more than three decades of system-transformation work, we have rarely seen all disciplines applied together - a key reason system innovation is so difficult, and why those who master it gain lasting advantage.

Organizational Enablers of Lasting Innovation

Even the best-designed cross-functional team will struggle without the right organizational scaffolding. Business anthropologists Briody and Erickson found that collaboration alone was insufficient. Durable success required five reinforcing conditions: leadership buy-in, evidence of benefit, work-process change, work-practice change, and structural change.

1. Leadership Buy-In

Leadership support may seem obvious, but it can be hard to sustain in a siloed organization. Some units will bear more pain than others, and some leaders may believe their areas are already performing well. Effective system leaders demonstrate “lateral agility” - the ability to think and act with an enterprise-wide mindset that reflects multiple functional perspectives.

2. Evidence of Benefit

Change is costly. A system innovation must deliver tangible improvement to earn credibility. Teams should design for measurable early wins - the corporate equivalent of a start-up’s “minimum viable product.” Quick, visible “proof of concept” builds confidence and unlocks further investment.

3. Work-Process Change

Work processes define the idealized flow of work. If underlying processes are not re-designed, people will invariably revert to old habits. Real improvement required incentives that rewarded system optimization instead of local performance.

4. Work-Practice Change

Work practices are the actual day-to-day tasks people perform. System innovation requires changing how that work is done, shifting daily activities to new ways of working so the innovation can become a lasting habit.

5. Structural Change

Large organizations are usually well adapted to today’s business environment. Incentives, roles, and networks reinforce the status quo. Embedding system innovation requires adjusting those structures - not perfectly, but sufficiently - so that the new way of working is easier than the old. With the right support and metrics, people will refine the details themselves.

Leading Change Across the System

System innovation demands sustained vision, determination, and focus from leadership – and disciplined execution from empowered cross-functional teams. It is not easy work, but the payoff is substantial: a durable competitive advantage over less agile incumbents and untested upstarts alike.

In today’s environment of continuous disruption, the organizations that learn to innovate despite the silos will be the ones still standing when the storm subsides.

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Elizabeth K. Briody and Ken C. Erickson. “Success despite the Silos: System-Wide Innovation and Collaboration,” In Maryann McCabe, ed., Collaborative Ethnography in Business Environments. London, UK: Taylor & Francis, 2017: 26-59.

Aditya Challapally et.al., “The GenAI Divide: The State of AI in Business 2025,” MIT NANDA Project, 2025.