Winning is Great

Worrying about losing keeps you winning. Nelson Moss

The subject of corporate culture is so vast that I followed a process of selection, not based on my own criteria but on the criteria of Jack Welch, former chief executive officer (CEO) of General Electric[3] (GE). For information GE has a division called GE Capital which dwarfs many institutions in the financial sector. Jack Welch explains in his first book: “Straight from the Gut[4]”, how he got there but even more so how he changed the corporate culture. In his subsequent book he underlined the ingredients of a winning corporate culture[5]. I followed his line of thought. Bill Gates, chairman of Microsoft Corporation, stated that “Winning” was a candid and comprehensive look at how to succeed in business- for everyone from college graduates to CEOs’. Thus, the selection of winning items which follow is not random.

Why this CEO? I could have selected for instance M. Josef Ackerman of Deutsche Bank, who transformed the bank into an impressive organisation whereby the investment

bank division is now head-quartered in London, United Kingdom. Today, the bank employs more than 100,000 people in 74 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets. With a market share of 21 per cent, Deutsche Bank is the largest foreign exchange dealer in the world[6]. Alternatively, I could have taken the line of thought of M. Ferdinand Piëch[7] who transformed the Volkswagen group into one of the largest car manufacturing companies of the world with prestigious brands such as AUDI, Bentley, Bugatti, not to talk about the world famous Beetle and Golf.

Oh well! I loved the title of Jack Welch’s latest book “Winning” in which he states that winning is great. Not good- great. Because when companies win, people thrive and grow. There are more jobs and more opportunities. My own thoughts have always aimed at determining a meaningful answer to the question: “What is a winning proposition in the banking sector?” or “What is the difference between one bank and another bank?” Besides, the website[8] of GE starts with: “Our culture – At GE, we consider our culture to be among our innovations. Over decades our leaders have built GE’s culture into what it is today – a place for creating and bringing big ideas to life. Today, that culture is the unifying force for our many business units around the world”.

Cameron and Quinn[9] underline that the sustained success of certain companies under study had less to do with market forces than with company values, less to do with resource advantages than with vision. “In fact, it is difficult to name even a single highly successful company, one that is a recognised leader in its industry that does not have a distinctive, readily identifiable organisational culture that is clearly identifiable by the stakeholders. This culture is sometimes created by the initial founder of the firm. Sometimes it emerges over time as an organisation encounters and overcomes challenges and obstacles in its environment. Sometimes it is developed consciously by management teams who decide to improve their company’s performance. Simply stated, successful companies have developed something special that supersedes corporate strategy, market presence, and technological advantages. Although strategy, market presence, and technology are clearly important, highly successful firms have capitalised on the power that resides in developing and managing a unique corporate culture”.

Without any doubt, the purpose of corporate culture is to have a winning culture, not one that pushes its entire staff to the abyss. One can state that ENRON had a specific corporate culture….and ultimately 20.000 people had to look for another job. It was a culture of greed and a lack of ethics, at least with the vast majority of the traders[10]. ENRON’s mission was to trade energy but it gradually changed to trade anything and everything, even the weather . That change was exciting at the time but obviously no one stopped to figure out and explicitly broadcast what values and corresponding behaviours would support such a heady goal. The trading desk was the place to be. Unfortunately, there were no processes to provide checks and balances. It was in that context – of no context – that ENRON’s collapse occurred[11]. This is not what you want!

What does winning imply? What is required to win? Assuming we have the right mission, what makes us stand out? What are the right things to do? What do we need to do to assure that people will participate in order to reach a set of goals? If not, what needs to be improved? How can we get the best out of people? Let us start with the first key attitude mentioned in the book “Winning”.

The candour effect as an essential feature of a successful culture

A key factor of success is what Jack Welch calls the candour effect. “Often people do not express themselves with frankness. They do not communicate straightforwardly or put forth ideas looking to stimulate real debate. They withhold comments or criticism. They keep their mouths shut in order to make people feel better or to avoid conflict, and they sugar-coat bad news in order to maintain appearances. They keep things to themselves, hoarding information. That is all lack of candour and it is absolutely damaging. Lack of candour permeates almost every aspect of business. Lack of candour spawns bureaucracy, layers, politicking and false politeness and false performance appraisals.

When I joined Bank of Amerca as a graduate trainee, we had quite a few presentations. As can be expected one presentation was about the expected attitudes of future members of staff. It was underlined that the founder’s attitude was one of candour and of listening to all the stakeholders. This may seem quite natural nowadays but was quite unusual at the beginning of last century, certainly in banking. One of the messages for the trainees was: “criticism is welcome only if it is constructive”, i.e. openness, candour, adding value was expected. The bank was prone to add that we should be aware that we were acting like ambassadors for the organisation, even in our spare time or with family members.

Criticism should be constructive…this should always be the case and in fact should be part of our own personal culture. Anyone, obviously with a good reason, could contact an executive. The open door policy was part of the culture. Candour was indeed welcome as long as it added value. Candour leads to winning. Openness gets more people in the conversation. More ideas get surfaced. It allows for a learning organisation. Furthermore, candour generates speed. When ideas get surfaced they can be debated more rapidly and acted upon. INTERNET in a magic way can link people to share ideas and uploading enriches every stakeholder.

Why is it than that we see so often the absence of candour? It is a matter of corporate culture! In some companies, people don’t speak their minds because it is simply easier not to. Not being candid is often a matter of self-protection or self-interest, about making one’s life easier. It is precisely what corporate culture should not stand for as it is self-defeating in the long run and erodes business. Last but not least candour avoids cost. Think about the time saved in meetings, off site conclaves! Think about the ideas that are generated thanks to the uploading of information in quality circles or even internal networking.

The cost avoidance as an essential feature of a successful corporate culture

There is an essential difference between cost avoidance and cost cutting. If a cost avoidance culture functions well, brutal cost cutting should not be a necessity, at least in normal business circumstances. “Only by continuously challenging accepted conventions and questioning cost can we continue to lower cost and fares, whilst improving our customer service[12].” It really is a matter of culture. It results in a permanent effort

to avoid waste.

What is waste? Waste means any element or process that is adding time, effort or cost but no value. Waste is the inverse of value. Waste is any non-value added activity. A striking example of waste would be: talent waste because of a demotivated workforce. You will notice how interrelated all the key goals are as well as the key functions of an organisation. Eliminating waste should be part of the culture and should be an everyday practice in order to perform consistently and to improve performance. Eliminating waste increases profits and customer satisfaction! It helps a company to win. A waste avoidance culture will help preventing drastic measures. A waste avoidance strategy starts with the identification of the current principles and beliefs and an assessment of what needs to be changed.

With a prime customer, active in professional training in the financial services sector, we recently launched a seminar called “Avoiding cost cutting through cost avoidance”. Target banks were not interested and stated that they had been avoiding cost for decades. The same banks, we called upon, where notorious for being overstaffed, having demotivated middle management and an evident lack of interest by executive management of the well-being of staff! How much money was being wasted by this situation was, apparently, in the view of the executives or at least the training department not a key issue. A new IT system would be considered as cost, not de-motivation! In the long run, this is self-defeating and certainly not a winning proposition.

In business one has two major levers to increase shareholder value: increased market penetration or decreasing cost. The larger the group of people the more difficult it becomes to control cost. In large units people seldom switch of the lights when they go home! Staffs seldom wonder if what they are doing can be done faster, more simply, better, with less energy. This is a matter of attitude, i.e. of corporate culture. A small company quickly learns this in order to survive as it is easy to spend money but much more difficult to generate a sufficient cash-flow!

Whatever a company decides to do, it entails decisions on cost. Often one of the most ineffective practices of management is budgeting. “Often, when companies win, in most cases it is despite their budgets, not because of them.” The right budgeting process can actually change how a company functions and make winning so much easier! Again this too is part of corporate culture! In line with how things are done and the objectives of the company, budgeting should really focus on what needs to be done in order to become a winning organisation and translate strategy into success.

Finding a way “to do things” as part of a successful corporate culture.

Strategy, strategic, strategically significant, are widely used expressions…but what does it mean? Strategy is all about how to do things so that you get there. I have noticed in numerous seminars that, in general, participants have no real problem in determining what they want to achieve: the difficulties are in how they, and their teams, could do it. Almost invariable the issue is always the responsibility of some other department or lack of communication or lack of clear market knowledge, or lack of interest shown by senior management. There are always plenty of reasons why it cannot be done. Invariably, they almost never relate the causes for inaction to themselves…

The attitude, i.e. the corporate culture should just be the opposite! Whatever the issues, whatever the obstacles, whatever needs to be done, it can be done! It is a matter of attitude and values. In real life strategy should be very straightforward…it is a matter of implementation. It is not a theoretical issue but a pragmatic approach of how objectives should be reached and if it entailschange: how to change attitudes, procedures, and reporting lines, whatever, so that it works! Not all companies are “moon walkers or water walkers” but all companies can try to be better and different tomorrow than they are today.

Jack Welch underlines that: “If you want to win, when it comes to strategy, ponder less and do more”. Strategy is an interactive process, frequently revised and redefined in line with market conditions.

The author suggests three simple steps which are relayed below:

1. First come up with a clear idea of your business, a smart, realistic, relatively fast way to gain a sustainable competitive advantage. The assessment process should be made by a group of informed people.
2. Second, put the right people in the right jobs to drive forward. You get a much better result when strategy and skills fit.
3. Third, relentlessly seek out the best practices, adapt them and continually improve them.

Let me underline point one. There is little doubt in my mind that the major difference between one bank and another bank often boils down to people – i.e. culture and or values – and systems…Indeed, in retail banking at least, products, as well as distribution channels, are hardly a differentiating factor….but people are. I often underline, and make the link here with the opening chapter on branding that many service providers advertise on staff and people skills rather than on the hardware and software needed to provide for the services sold. Look at airlines, you seldom see an advertisement on the quality of the planes or the training of the pilots, but you see advertisement related to on-board care or check in facilities.

Jack Welch adds that: “Strategy is unleashed when you have a learning organisation where people thirst to do everything better every day. They draw on the best practices from anywhere, and push them to ever-higher levels of effectiveness. Without this learning culture in place, any sustainable competitive advantage will not last. Strategy is defining the direction and putting the right people behind it and executing with an unyielding emphasis on continual improvement. Therefore, strategy means making choices”.

You cannot be everything to everybody! The right strategy should lead to the right quality-cost-service combination.

According to M. Welch thinking about strategy entails the following five fundamental questions:

1. How is the
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   playing field right now?

2. What has competition been up to?
3. What have we been up to?
4. What is around the corner?
5. What is our winning move?

“By the time you have a realistic answer to those questions, it should be clear what you need to win and what needs to be changed. Even if you didn’t have a strategy before, this process should help you get one. But either way, you have just begun.”

“Any strategy, no matter how smart, is dead on arrival unless you bring in the right people. Furthermore, strategy and winning also means matching people with jobs! Those people need to fit into the corporate culture, share the values of the group and be as goal oriented as the strategy determines. You should not agonise too long over it. Just set the direction, put the right people in place, work like crazy to execute better than everyone else, finding best practices and improving them every day. You may not run a corner store, but when you are making strategy, act like you do.”

For him it all boils down to be focused on two questions:

How can we beat last year’s performance?

What is our competition doing, and how can we beat them?

Michael Porter[13] stresses the common error to think along either military lines or sporting lines when reviewing strategy. Indeed, a military approach assumes that the enemy is ultimately destroyed, which should not be the aim of any business and is enforced by anti-monopoly laws. Secondly, in business, unlike in many sports there can be various winners. “The essence of strategy is choosing what not to do!”

The right compensation as part of a successful corporate culture

We know that people have different motivating factors[14]. When reviewing this issue during seminars on branch management, the first answer, from the participants from all over the world, is money. We know that money is not the only motivating factor, there are many more such as status, sense of achievement, recognition, responsibility, job rotation, promotion and so on. There is a very long list why staff is pleased or not to work for a given employer.

It seems essential to link compensation (salary and additional benefits) to performance, whilst taking into account the economic environment and opportunities. Promotions should follow the same logic. This goes hand in hand with a culture of accountability and candour! We revert on this key element in the chapter “People are a make or break factor” as it is an essential element of success.

Conclusion

The wonderful thing about winning is not just the money but the fact that for the rest of a career, staff members are associated with great performance. “In the long run, luck plays a smaller role in life than the factors within the control of an organisation or a person. Winning is so much about attitude”. A positive attitude is part of a winning corporate culture.

Ultimately it is the customer who recognises the value generated by a culture, consciously or even unconsciously. In the final analysis, it is the customer who pays the salaries!