Publications & Resources
June/July 2007
Focus: Leadership
Breakthrough Leadership: Guiding Community Banks in the Next Decade
By Geri Forehand
In my 30 years of banking and consulting, leadership represents the single consistent key to success in all of my client financial institutions. Not just leadership - every executive officer is by default a “leader” in his or her institution - but breakthrough leadership. Breakthrough leadership goes beyond the traditional ways of leading an organization in operations, community involvement, and mentoring. Breakthrough leaders in western region banks, like Dick Kovacevich of Wells Fargo, Linn Wiley at Citizens Business Bank in Ontario, California, and Clint Arnoldus of Central Pacific Bank in Honolulu, not only embrace change, they seek it out, and they help others to seek it out, as well.
Today’s banking environment mandates change. Organizations might continue to survive if they continue to work the way they always have. But they will not thrive doing things “the way we’ve always done them.” It is breakthrough leadership, leaders who want to change and to encourage others to change, that will lead the industry into the next decade.
Breakthrough leaders will focus on an idea that is not in the mainstream. These ideas are what George Day, professor of marketing at the Wharton School calls “BIG ‘I’ innovation - ideas on the cutting edge that most of the industry has not even considered, let alone put into action. And those leaders will believe in those “Big I” ideas, then encourage, persuade, even convince others in the industry to be comfortable with that next level of change. And what I believe that change entails is moving banking out of the commoditization business it has become into a fully customer-focused industry.
Moving from a commodity focus to a customer focus will require a huge shift in thought for most community banks. Specifically, that shift will involve the marketing function. Marketing has historically been perceived as a support function in most financial organizations, and that support function has been relegated to a lower level position in the management team. Breakthrough leaders have re-focused and elevated the marketing position so that the Chief Marketing Officer has a substantive position at the executive level.
At this executive level, marketing is no longer the “soft” touch of promotional items and the occasional mailer. Breakthrough marketing is evolving into a scientific, quantitative research approach that allows a financial institution to truly understand its prospect base and its customers and to truly deliver a “total customer solution.”
Developing a total customer solution will require a new customer focus, a corporate culture based on service. Keep in mind that every community bank believes its value proposition derives from its focus on service, and that service, they believe, results from their having the “best people” in their market.
Let’s be honest - not every community bank in the market has the best people. It’s not possible for every bank to have the “best people.” So the answer that we have traditionally fallen back on, “We’re the best because we have the best people,” is truly not valid for most organizations.
Which returns us to that newly elevated marketing function that can reliably and accurately measure service. The breakthrough marketing department will understand and implement quantifiable service measures, such as degree of accuracy in transaction processing, e-mail and telephone response time, external customer surveys, and other measurable gauges. If a bank can tell that it has a high rating on any of these quantifiable measures, then it can confirm that it delivers a high degree of service.
So how often do we see breakthrough leadership? If you look at these measures of marketing as an executive function that can quantify measurable service levels, it is an unfortunate fact that roughly 5% of today’s banks possess breakthrough leadership.
While it is true that leadership is almost an inherent trait - in other words, not just anybody can be a leader - even those banking executives who are not by nature breakthrough leaders can still cultivate key characteristics that lead to change.
Look toward the customer as the focus of the future. Understand that you need more than “gut level” instincts about your service levels, and that statistical marketing information represents the way to gain that understanding. Make change a positive in your organization by encouraging innovative ideas, even those that may seem to be on the “bleeding edge.” Reward those officers and even the front-line staff who bring new ideas to the table. And remember the bottom line - breakthrough leadership ultimately leads to growth and profitability.
Geri Forehand, CPCM, is director of strategic services for Brintech in Atlanta , Ga. , and is a Certified Professional Consultant to Management. He can be reached at 800-929-2746 or GForehand@Brintech.com.
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