An interesting thing has been happening in
the marketplace as of late. A study found that
back in Sep. 2008, there were 2,400 media
mentions using the term "Great Depression"
and that the phrase reached its peak in the
news in Jan. 2009 at just over 3,000. Since then, however, media
usage of the term has fallen for the past 3 months in a row. While
there remains quite an imbalance toward the pessimistic, the
term "green shoots" has gone from 8 mentions in Sep. 2008 to 89
as of Apr. 2009. Our point - investor psychology is moving, but it
is doing so at about the speed of the proverbial aircraft carrier
turning around in the ocean.
We bring all this up because no matter how fast your bank is
turning, the fact remains that change is inevitable and the
banking industry is in many ways at the forefront. Given so many
distractions, pressures on performance and other time-sapping
issues to deal with, what can community bankers be doing to
prepare for a business model change?
The first step in examining the business model and finding
things to improve is to take a moment to stop and analyze how
the bank operates, where opportunities may exist and how best
to move forward. Once that list begins to form, put in place a
program to constantly challenge team members within the bank
to continuously improve processes and procedures. Doing that
builds a strong corporate foundation of adaptability and long-term
profitability, even when conditions are severe.
The key to tackling any challenge is to stay focused. It is
important to pick a problem within the business model and then
stay focused until a solution emerges. Changing the business
model is difficult, but it is also necessary to survive and thrive.
Once you determine, say, that funding is the biggest issue, solicit
internal ideas to solve the problem. Sometimes the best ideas
can come from the craziest places; so ask, ask, ask, until you
find an answer. Have white boarding sessions, offer a vacation to
the winner or pay out a portion of the savings that are captured
through implementation to the employee that dreams up the best
solution. Then, once you decide on the best course of action to
modify the business model - focus, focus, focus until the
conversion is complete.
One key way community banks can start this ball rolling down
the hill is to change from a silo structure, where information and
knowledge are hoarded, to one that actively shares. Until
knowledge flows freely across the bank, synergies are not fully
leveraged and ideas will be missing that could solve the problem.
Fight the urge throughout the company to resist sharing data or
information because someone else might find the answer. We
don't have time to waste and it takes a long time to turn around
an aircraft carrier so you have to start early. The sooner
management realizes the problems being faced are complex, the
sooner collective brainpower can be harnessed to solve those
problems. Silos don't help the process, communication is critical
and those who try to control information flows are actually hurting
their own company. Let go, share the information and share
ideas to help your bank move to the next level - you never know
where that next great idea will come from.
We have all been through a situation where immediate
improvements in a business process were required. That solves
the problem, but the fix is usually temporary and strains can
become evident shortly thereafter that require another such fix.
Instead of running from fire to fire with a small bucket, try to take
the time to review the entire business model and ask why things
are set up this way and whether or not there is a better way to do
certain tasks or functions.
Improvement and change take time, which is something
community bankers just do not have. The good news is that
some of the best business model shifts we have seen take time
to execute and are embedded in long-term strategies. Turning
the wheel on the bridge is only the first step toward gradually
moving the ship in another direction. Bankers can begin the
process by focusing efforts on a specific issue/opportunity,
soliciting feedback from others, embracing their perspective/input
and trying to find the "best solution" - not just the easiest one or
continuing along the current path "because it has always been
done that way." Your competitors continually change and your
environment continually changes, so it also makes sense that
your bank will need to change now and then.