Silos are traditionally associated with global conglomerates, companies so vast that whole divisions will often not communicate, or even not be aware of each other’s existence. It’s an extreme, yes, but it’s happening in blue-chip companies right now.
The problem with silos is that they make businesses inefficient. For example, situations arise where a division in one country is replicating the work of a division in another country; or the people selling in one division aren’t even aware another division offers a product or service that dovetails perfectly with their own.
It’s important that we understand silos can still exist in regular start-ups and SMEs.
The reason for this is that silos aren’t just physical entities but can also be knowledge-based. For example, if people in a broker or lender aren’t aware of what their colleagues with different roles are doing then that is a silo and can cause problems.
For us, the one major silo threat we’ve always set out to avoid is business development managers and underwriters not communicating. And not just not communicating, but also not being aware of what the other does and how they think.
It’s not difficult to imagine a case where one of these ‘siloed’ lenders’ BDMs informs a broker that a deal is very much done, only for said deal to be knocked back with a firm ‘no’ by the credit team because it doesn’t meet the company’s risk criteria. Not only is this inefficient, but trust is eroded too.
To counter this, we ensure that all new BDMs spend time with the credit team and are taught to think like underwriters, even to the point of understanding the mechanics of risk at a reasonably deep level. This makes it far more likely that the deals presented back to us will meet our criteria, and the BDMs effectively become an extension of the credit department, improving efficiency.
And it’s not all one-way traffic. Every underwriter should also spend time out on the road with the BDMs and understand what they do and the challenges they face — in short, they must think commercially. They can then be more flexible and make decisions grounded in real-life scenarios.
What’s also important to be on top of is the fact that silos have a habit of re-emerging, especially as companies grow and employ more people or branch into new areas. When that happens, it’s vital that everybody is informed about what the new people or departments are doing, and how they can both benefit from and add value to them for the greater good of the business.
The moral of all this is that the more people that know about the roles of their colleagues, and the more knowledge that is shared across a business, the more likely it is to run efficiently, because everyone is on the same wavelength.
