Loyal Gonzo readers, it’s getting to be strategic planning time, and everybody is looking for that fresh new idea or spin that will make this year more focused and meaningful. How could we make better use of our time, then, than by visiting our old friends at Cliché Bank and Trust? You remember the folks at Cliché – they never met a slogan they didn’t like. They have embraced every trend and idea that man and banker have come up with through the years. And they are primed and pumped for the 2005 strategic panning meeting.
Our players – CEO Pat, CFO Chris, Retail Ralph, Lender Lois, Marketing Mo, Audit Artie, HR Harry, Tech Tom, and Ops Olga – have been working with each other for several years and can already guess what the other will say. However, no doubt inspired by the recent article my partner Steve Williams wrote on developing new managers (see “The Fall and Rise of Management Training”), they have invited their top management trainee to participate in this year’s meeting as a learning experience. This neophyte manager, a certain Mr. I.M. Gonzowski, is excited, scrubbed, and shaved, with hair combed, shoes shined, industry research done, company reports reviewed, and ready to drink from the cup of management knowledge like a thirsty, lonely frat boy emptying a pony keg on homecoming night.
We join our brave strategic travelers during the early part of day 1.
CEO Pat: Well, I don’t think we need to spend too much time on our mission statement this year, since it took up almost all of 2004 meeting time. I think “We will be the premier provider of financial services in our marketplace and provide a superior return to our stakeholders” is pretty darn good. (Nods all around.) And I hope you all read the book I recommended, “Who’s been eating my Cheese?”, as an initial preparation step (Nods all around). So let’s move on. Gonzowski, you’ve been doing the summary of our management and board surveys and current financials. How about giving us your synopsis of the current situation?
Gonzowski: Well sir, here’s what I would say from the review of the initial 2006 budget. Margin is compressing by about 10-15 basis points. Fee income has grown well, particularly from our “Good for you, Better for us” overdraft privilege program we set up last year. However, that has peaked and the initial 2006 budget looks to be fairly flat on fee income. Mortgage banking volumes look to be down about 20 percent. The initial non-interest expense budget is up 15 percent. Growth can certainly offset some of this, but we have grown internally by 7 percent in the last three years and the 2006 budget would need us to grow both deposits and loans by more than 15 percent in order to work. Sir?
CEO Pat (smiling): Well, Gonzowski, no rose-colored glasses on your nose, eh? But let’s run with it. How do we get the growth we need?
Marketing Mo: Well, the first thing we need to do is change from an order-taking culture to a true sales culture. (Murmurs of agreement.)
Lender Lois: Right. We have got to become more consultative and take advantage of sales opportunities.
Ops Olga: We need to cross-sell and up-sell better.
HR Harry: We’ve got to get the right people on the bus, though.
CEO Pat: With the right onboarding strategy.
Retail Ralph: And create the right value proposition for customers.
Marketing Mo: Be their one-stop shop.
CEO Pat: We need to be relationship-focused, not product-focused.
All: Absolutely. (Smiles all around.)
Gonzowski (brow furrowed): Hmm. I think I see, sir. If we build a sales/relationship culture and create a real customer value proposition, we won’t have to be a market leader in pricing… so ALCO could price to the middle of the market, not near the top… and we could get rid of all the pricing promotions… so margin improves and the investment in the sales culture pays off!
CFO Chris: I like this pricing idea. I still need a million and a half to hit the earnings number the analysts want.
Marketing Mo: Well, not so fast. Sure, sales is a piece of the puzzle, but what about service?
Lender Lois: Right. We have to combine sales with superior service.
Ops Olga: Well, I think we need to set a goal of world-class service.
Tech Tom: Don’t we really need to have customer-centric design to give world-class service?
Ops Olga: Tom, I think you’re really trying to get to the concept of a seamless customer experience.
HR Harry: Well, unless we start to hire attitude and train skills rather than the opposite, service is really a secondary issue, if you ask me.
Retail Ralph: I really think we have to get beyond the concept of service and focus and talk about customer DELIGHT.
(Mo, Lois, Tom, Harry, and Ralph exchange sharp glances.)
…
Audit Artie: It says on the schedule that we’re supposed to have a break now.
CEO Pat: Well, Artie, let’s keep on this for a minute. Gonzowski?
Gonzowski: Um, well, sir I think what we are saying here is that once we have invested in a sales and service culture, THEN we can make management accountable for measurable progress… more customers would have both loan and deposit relationships… customers could be willing to pay a premium for relationships and value… rates can be at market… per-account fees would be higher and less waivers would be necessary… and we can target higher organic growth, better margin and increased fee income per account! Right?
Lender Lois (rolling eyes): Gonzowski, you need to get out of the details and look at the big picture. Sales and service excellence won’t happen without having the right products at the right price.
Operations Olga: With anytime, anywhere delivery.
Retail Ralph: In a way that is transparent to the customer.
Tech Tom: Using integrated delivery.
Marketing Mo: Do we really know our customers? Do we know the 20 percent of our customers that produce 80 percent of our profits? Can we do proactive, organic, one-on-one marketing to them?
CFO Chris: I think it’s more like 90/10. I heard it at a conference last week, Mo. (Glare from Mo.)
Tech Tom: Well, until we treat information as a corporate asset and make it a differentiator, how do we do any of this? And if I recall, Chris, you cut information systems out of the budget last year. (Glare from Chris.)
Ops Olga: Right, Tom. We need to turn data into business intelligence.
HR Harry: So, shouldn’t we invest in people first? They are, after all, our most important asset.
CFO Chris: Well, why should we invest in any of this until we recognize that it’s really about technology, process, and people?
Ops Olga: We have to be high tech, high touch, in other words.
Tech Tom: Well, until we deploy a service-oriented architecture, forget it.
Ops Olga: We need to centralize work but decentralize decisions.
Retail Ralph: That’s all fine, but let’s don’t forget that it’s all about empowering our front-line employees with real-time information and decision-making capabilities. That’s the crux of customer relationship management, after all.
CEO Pat: Don’t you think we have really evolved to customer managed relationships?
CFO Chris: No, now it’s customer experience management. I heard that at the conference, too. (Glares from everybody.)
Lender Lois: With a 360 degree view of the relationship, Ralph.
Gonzowski: Er, Ralph, I thought you said before that it was all about the customer.
(Note: at this point, managers exchange looks that are somewhere between confusion and irritation.)
Audit Arnie: Excuse me, but it says on the schedule that we’re supposed to be doing our Hedgehog exercise.
CEO Pat: Arnie, why don’t you take that schedule and…
Marketing Mo: When are we going to talk about anytime, anywhere delivery?
Tech Tom: With a best of class system environment.
Lender Lois: Sales-driven, too. The right product at the right time.
CFO Chris: Supported by a bullet-proof balance sheet.
HR Harry: And in an environment that rewards our high performers, especially our level 5 leaders.
CEO Pat: The ones that got on the bus.
Ops Olga: You mean like Gonzowski? (Uproarious laughter ensues.)
CEO Pat: Don’t worry, Gonzowski. I think you’ll do fine on your 360 evaluation.
Gonzowski: Sir, could you tell me exactly what a level 5 leader does?
Lender Lois: More than a level 4, I can tell you that.
CFO Chris (getting red faced): All right, let’s cut the crap. I still need $1.5 million. Now, if we need to reduce expenses with layoffs, here is what…
HR Harry (interrupting): Chris, are you talking about right-sizing? Hard to balance that with our goal of being the employer of choice.
Retail Ralph: Chris, we have to invest to grow.
Audit Arnie: Ten minutes to lunch!
CFO Chris: Shut up, you twerps. I’ve had so many chunks bitten out of my rear end by analysts it feels like they’re dogs and I’m the Purina. When are we going to become results driven?
Marketing Mo: Well, when we can matrix market and matrix price, obviously.
Lender Lois: And change behavior.
Tech Tom: And deploy a multi-channel architecture with plug-and-play deployment.
HR Harry: And pay for performance in a success-oriented culture.
Lender Lois: Sales driven!
Retail Ralph: Information as an asset!
Ops Olga: Technology as an enabler!
Audit Arnie: Leading edge, not bleeding edge!
Marketing Mo: Fast follower!
(Note: at this point, Ralph has grabbed Tom by his collar, Lois has thrown Tom’s planning book out the window, and Mo has started checking emails on her PDA.)
CEO Pat: OK, let’s get back on track. Gonzowski, you have been our note taker. Let’s get a summary of what we decided.
Gonzowski: Uh, yes sir. Let’s see. If we get the right people on the bus after we right-size the people we onboarded, build a sales culture, create world class service… oh, sorry, delight… use information as an asset, empower employees with a service-driven architecture, integrate delivery channels seamlessly, bullet-proof the balance sheet to be level 5, and reward the right information-enabled plug-and-play behavior, we can be a premier provider of financial services.
Audit Arnie: In our marketplaces.
Gonzowski: Right. In our marketplaces.
CEO Pat: Good lad! Write that up for tomorrow. In the meantime, until we have this turned into a real plan, everybody re-submit their budgets with a 5 percent increase from 2005.
At this point, our intrepid management team leaves Gonzowski with his notes and heads, with all due haste, to the hotel watering hole. As they disappear from Gonzowski’s sight he calls after them:
“Sir, do you have to be the employer of choice before you can have level 5 management, or do you need level 5 managers in order to be an employer of choice? And exactly how big a bullet do we need to proof the balance sheet against?”
-tr