Ending Departmental Turf Wars

This article was written by Chris Penttila of Entrepreneur.com. Chris is a freelance journalist in the Chapel Hill, N. C., area.

Business is good for Michael Cooch, founder of four-year-old Everon Technology Services, a Boston IT firm that serves SMBs. The company's clientele encompasses industries from schools to government lobbying firms to retail shops, and sales are projected to surpass $5 million this year. "We've grown over 100% per year since we started the company," says Cooch, 33. "There's a good market for our services out there."

The competition, however, can get fierce among Everon's 35 service delivery employees, its three sales employees and its one-employee marketing department. The marketing department researches and generates leads and gives them to the sales team, but the service team has veto power over all sales deals and can advise the sales department on how to sell a prospect. The result can be tension -- and sometimes rivalry. "There's a strong back-and-forth between the sales team and the service team," Cooch says. "It's a very competitive group."

Can They Get Along?

Keeping both sides working together is the tricky part. Departmental competition is the ugly underbelly of companies large and small, resulting in product delays, increased costs and dwindling market share as departments vie for domination behind the scenes. Today, the online side of a company can feel it's competing against the offline side. Sales and customer service can go mano a mano, and skirmishes between marketing and R&D are legendary.

Somewhere in the middle is the customer, who loses out when everybody is tending to their own nest, says Tom Kinnear, executive director of the Zell Lurie Institute for Entrepreneurial Studies in Ann Arbor, Michigan. "One major company described the two great enemies [as] functionalism and regionalism. You can add departmentalism to the list," says Kinnear, who encourages senior executives to bring up departmental battles in his executive education courses. "You want sales now, and you want them without the high cost structures that go with the bureaucracy."

Your business will eventually need more divisional structure, but fiefdoms could be an unwanted byproduct without proper checks and balances. In a leaked memo last November, Yahoo!'s (YHOO Quote) senior vice president of communications and communities, Brad Garlinghouse, vented his frustration over the development of insular silos inside the company that were fighting over ownership, strategies and tactics instead of collaborating on projects.

Soon after, Yahoo! announced its reorganization into three operating units to cut bottlenecks, increase accountability and encourage faster decisions. "It sounds like they had become too bureaucratic and too functionally oriented," Kinnear says. "Their systems got in the way."