Jeff Judy

Jeff's Thoughts - September 1 , 2010

Bank Be Nimble, Bank Be Quick . . .

"The times, they are a changin'," as they say, and the successful businesses, including successful banks, are a changin', too. The ability to respond rapidly to changing business conditions, from consumer preferences to competition to broader economic factors to regulation, confers a significant competitive advantage on the nimble bank.

But what can give you that ability to change directions -- and goals, strategies, and practices -- quickly?

In a word, "culture."

The topic of culture waxes and wanes along with our industry's business cycle. Indeed, that is the first problem, in many banks: they only look closely at their own cultures when they hit hard times and are desperately scrambling to understand what has gone wrong.

The second problem with how banks understand culture is that they focus too much attention on specific values and standards, as their definition of their culture, and too little on the consistency with which staff at all levels, all locations, and in all functions share those values and standards. To my mind, the heart of culture is the agreement, the internalization, the intuitive acceptance of common perspectives throughout the institution. It is this unity of vision, this common understanding of "how we do things around here," that makes rapid adaptation to new demands possible.

We often talk about bank personnel as a team. Think of any athletic team, and you know that when individual players have different values, different objectives, and different ideas about how to win, they are vulnerable to defeat by opponents who have more consistent views, who share both common strategies and a uniform commitment to implement the coach's game plan.

In my terminology, those winning teams have "tight" cultures, meaning that:

In a tight bank culture, similar business situations get similar responses from the bank, regardless of which staff member or location is involved. But more importantly, staff are committed to following the strategic plans, and to implementating the tactics, devised by the bank's leadership. They are not only committed to executing today's strategies effectively and consistently. They are committed to executing tomorrow's strategies with equal zeal, even if they are completely different from what they are doing today.

Paying attention to culture -- assessing it formally, discussing it at the top levels of the organization regularly, and nurturing it explicitly -- pays powerful dividends in fully leveraging strategic thinking and optimal practices. A tight culture is, in fact, the only way to ensure that there is a return on all that planning and strategizing.

Your goals and strategies are certainly part of your culture. Your bank's approach can vary on many dimensions: aggressive or conservative lending, broad market share vs. Individual wallet share, long term relationships or individual transactions, and so on.

But your ability to implement those strategies to reach your goals depends on just one aspect of your culture: whether it is tight enough to rapidly spread change throughout the bank in a short period of time. What type of business you pursue, and how you hunt it down, matters little if you do not have the most essential weapon -- a tight, unified culture -- in your quiver.