By now the benefits of collaborating across organizational departments are pretty obvious. Cross-functional teamwork is viewed as the elixir that enhances innovation, productivity and employee engagement. No wonder companies embrace any structure or strategy that reduces organizational ‘silos.’ What is less obvious but more insidious is the downside: When we too tightly embrace the ideology of the ‘boundary-less organization’ we unwittingly sow confusion and ambiguity.

I recently worked with a consumer goods manufacturer who for years tried breaking down the walls between their operations and quality control functions. This was reasonable: at the time things had gotten so bad that people spent more energy figuring out how to not ship products than finding ways to satisfy their customers. Fortunately, their initiative successfully reduced mistrust and lack of cooperation between these functions and helped the company return to its prior level of revenue growth and profit. But they went too far.

Failing to recognize their different product lines’ unique requirements, they unified, standardized, and centralized functions, decision-making and staff. This blurred distinctive product identities and diluted brand equity in the marketplace. And product directors who lived for their brands became disillusioned. Ironically, as the boundaries came down the product directors felt more controlled. Several key senior execs left.

As seasoned product directors left, operational matters started falling through the cracks. Fuzzy role boundaries led to inefficiencies and higher costs. Lots of ‘all for one, one for all’ propaganda contributed to staff cynicism and lower engagement levels.

The Human Resources group spent a lot of money and time training managers to hold people accountable for results, mainly because they had dissolved true accountability through constant reorganizations and confusing new procedures. For example, a new centralized project management office was formed that acted more like the secret police than a supporting function. Ambiguity led to finger pointing, which led to mistrust, which led to bad results, etc.

In this company’s case, the dogma of the boundary-less undermined smart, strategic management. As the maxim goes, ‘if everybody is responsible for everything no one is responsible for anything.’

I am not arguing that reducing barriers to communication is a bad thing, nor am I maintaining that collaboration is unnecessary in this complex fast paced world. But I do believe that we needn’t be hamstrung by a creed that clamors for organizations sans borders without deeply considering the consequences.

Rather, leaders need to be thoughtful before weakening the individuality of groups that take pride in their work and in their professional identities. More important, if leaders hope to improve productivity they should help people clarify the three R’s: roles, responsibilities and rules of the road. And, as far as organizational boundaries go, its also true that good fences make good neighbors.