Summer is approaching, and a timeless ritual in banking is about to begin – the strategic planning retreat! After careful statistical peer analysis, GonzoBanker has found that the typical management retreat features these common elements:
3. An expensive resort setting where management can passionately discuss the need for cost control
While these retreats are promoted as opportune times to turn off the cell phones and reflect on the company’s future, they are characterized by many bankers as “boondoggles”.
“We never decide anything,” one executive recently confided to me. “We just toss out the same old issues and agree to keep talking about them when we get back to the bank.” Most bankers feel they are too busy and stressed out to spend 2 – 3 days deciding nothing. It’s too bad. Done correctly, a strategic planning retreat is the best way to focus management on what really matters.
So this year, whether you visit a TPC golf course or Bubba’s Fishing Lodge, do your homework to make the retreat worthwhile. After facilitating these events for more than 10 years, I offer the following best practices:
Amazingly, banks do very little pre-work for these expensive events. A one-page agenda is thrown together, and planning activities center around room reservations. (“Non-smoking King and the fish for dinner”) To beef up the discussions, the CEO should ask each senior manager to lead a prepared segment of the agenda. For instance, the CFO can come with a summary of how Wall Street views the bank. The head of Marketing can report on current trends in the customer base and the bank’s market demographics. The CIO can come with a summary of significant technology trends and what the bank’s vendors plan to do about it. This type of pre-work makes the planning discussion more specific and more productive.
The key to a successful planning session is to balance high-level strategic discussions with low-level tactical talk. First of all, don’t make management feel like idiots – forget the exercise where you join hands and share your fears. Also, slap managers senseless if they start a lengthy discussion about signage for the new uptown branch. Keep discussions strategic, but also keep them real and relevant.
As a facilitator, I have found that confidentiality goes a long way in getting the more sensitive issues on the table. A survey prior to the event can be used to put these issues on the agenda without starting a management brawl.
Dilbert creator Scott Adams defines a mission statement as “a long, awkward sentence that demonstrates management’s inability to think clearly”. Across the country, banks waste countless hours debating whether their mission statement should include the term “premier provider” or “superior provider” – what a damn shame. Here’s what to do: have a hard-nosed debate about the real strategic issues and then revisit the bank’s mission statement at the END of the event. It’s a great time to ask, “Have we decided anything that has fundamentally changed our mission?”
A few guest stars during portions of a planning event can head off inbreeding among the management team. One of my favorite clients has a stock analyst come in each year to hammer on the bank. While it’s not particularly fun, it brings the hot winds of the market into the session, and it motivates management to do a better job. (“We’ll show that suspender-clad know-it-all!”) Another client brought in an executive from outside the banking industry to talk about innovative recruiting and sales force management practices.
The worst strategic planning retreats are steeped in insincere politeness. “We need to pull together as a team,” brags Dan in Retail, while everyone knows he’s secretly bashing Charlie in Operations. The best strategic planning events acknowledge executive differences, sometimes even using humor to bring them out. My partner Carl Faulkner recalls an event where the head of Marketing arrived dressed in a tuxedo accompanied by flashy showgirls. He walked to the front of the room and announced, “I want to dispel any rumors you are hearing about Marketing wasting money – it’s absolutely not true.”
One of the most effective exercises I have seen in strategic planning is the Today/Tomorrow comparison. It’s fairly simple: describe the bank today in terms of financial performance, size, employees, geographic reach, technology, etc., and then spell out how the bank should look in three years. This exercise brings out some great debate among management and easily drums up the strategies required to make the “Tomorrow” picture a reality.
Many banks seem confused with the definition of strategy. I often hear statements like, “Our strategy is to improve fee income.” Wrong! Fee income is an objective, not a strategy – it’s a “what” and not a “how”. Strategy is all about the “how”. To focus management on true strategy, I like to throw out the following question: “What does the bank do better and different than our competitors that is highly valued by our targeted customers?” Answer that question well and you’ve moved past Step 1 in developing a real corporate strategy.
The success of a strategic planning event hinges on whether important decisions are made and agreed upon by the entire team. Near the end of the session, it’s a good idea to throw out the question, “What decisions have we made and what issues remain unresolved?”
It is also critical to end the planning retreat by developing an action plan that identifies strategic initiatives with responsibilities and deadlines. For each strategy identified, it’s also important to ask, “How will we measure success with this strategy?” This process ensures that management creates a specific scorecard to gauge its progress at next year’s planning update.
Finally, all the initiatives thrown on the wall need to be prioritized. Large quantities of golf and booze often inspire management to put more items on the list than it can humanly implement. So don’t feel bad if you need to pare down that to-do sheet. As Harvard Professor Michael Porter once famously remarked, “Strategy is about deciding what NOT to do.”
So there you have it: 10 simple ways to transform your management retreat from boondoggle to best practice. Here’s hoping your bank’s session will be Mongo Gonzo this year! And remember… wear sunscreen.