Well GonzoBankers, we’re half way through 2004 and you know what that means: time to start planning for 2005. Across the country, bank executives are warming up for “Strategic Retreat Season” – a time for flip charts, colored markers, mission statements, booze and golf. It’s a time to reconnect emotionally with the management team that annoys you so much. It’s logo shirts and commemorative pens, group hugs and promises of a better tomorrow.
It’s also a time when bank executives desperately search for the next big idea. Every year, hundreds of new management books are released, and most of them are just plain stupid. How many different ways can you explain the success of Wal-Mart and Southwest Airlines?
In reality, most of the wisdom you need for this year’s retreat has already been written – we’ve all just forgotten about it. Therefore, it’s time for a quick refresher course in the Top 10 Management Books of All Time. I’m a voracious reader of this junk – so I hope my selections will help warm you up for this year’s strategy discussions. Drum roll please….
#1: In Search of Excellence by Tom Peters and Bob Waterman
This is the big mamu that started the entire management book fad. Published in 1981, this book still provides some of the best common-sense ideas about running a great business. Peters deserves credit for his harsh criticism of the “rational model” in business, the idea that everything is about numbers and earnings-per-share. Instead, Peters convinced us all that business is more about passion and deep knowledge of one’s products and customers.
Buzzword Contribution:
In Search of Excellence gave us the eight guiding principles for business:
Takeaway for Bankers:
It would be a good idea this year to dust off Peters’s eight guiding principles and assess where you organization stands today.
#2: Competitive Advantage by Michael Porter
Harvard guru Michael Porter is my all-time favorite strategist – a thinker who focuses more on the complexities of business than the touchy-feely management junk. In the early ‘80s, Porter introduced the concept of “competitive advantage” and forced us all to answer that uncomfortable question, “What does our company do better than others that is valued by customers and not easily copied?” This simple question is difficult for most banks to answer because they tend to flock competitively. Porter has a clear warning for all the copycats, “Hyper-competition is a self-inflicted wound.”
Buzzword Contribution:
Takeaway for Bankers:
Revisit Porter’s razor-sharp challenges about strategy. What do you do differently than your competitors that customers value? What activities require the most resources to make you unique in the future?
#3: The Innovator’s Dilemma by Clayton Christensen
This popular book was published in the height of the dot.com era, but its message is still highly relevant: Outstanding companies who listen to their best customers can eventually be knocked off by smaller competitors who bring disruptive innovations to the lower end of the market and then scale them up over time.
Christensen’s book reminds managers that allocating all resources to today’s products and customers can be a recipe for death in the long run.
Buzzword Contribution:
Takeaway for Bankers:
During planning, remember to identify the few R&D areas that may not contribute materially to revenue/profits today, but could be strategically critical in the future.
#4: The Tipping Point by Malcolm Gladwell
This recent bestseller can help bankers understand how technology is changing their industry. Gladwell expertly points out how most technologies, ideas and product fads spread like viruses or epidemics. Things in the real world don’t move linearly. Instead, small changes can have big-time effects. Fads can reach critical mass and then “tip” into the mainstream. Just look at the growth of cell phones over the past five years. Will broadband be next? What about bill pay?
Buzzword Contribution:
Takeaway for Bankers:
Bankers need to keep a watchful eye on technologies, products and trends that are not in the mainstream today. Some may be about to “tip”, and bankers should get good at predicting which ones.
#5: Reengineering the Corporation by Michael Hammer and James Champy
Who could forget this one? The management book that ignited cost-cutting across corporate America, even though this was not the authors’ intent. Despite the misuse of the term “reengineering,” Michael Hammer deserves credit for bringing the word process back into the minds of business executives. Simply put, great companies consciously design great processes, and they have process owners who lead these improvements. Many banks are still stuck in the task-oriented environments that Hammer encouraged us to put in the trash heap.
Buzzword Contribution:
Takeaway for Bankers:
Any successful strategic planning session should identify key processes that require improvement and the identification of process owners who will make it happen.
#6: The Goal by Eliyahu Goldratt
This book is actually a business novel centered around UniCo plant manager Alex Rogo, who desperately works to save his plant with the help of a management guru named Jonah. A bit silly, but The Goal drives home one of the most important concepts in business processes: the threat of the bottleneck.
Buzzword Contribution:
Takeaway for Bankers:
Have a heart-to-heart with your management team about where process and service bottlenecks exist in your bank, and then dedicate resources to alleviating the bottlenecks.
#7: The Mythical Man Month by Frederick Brooks
Written in 1975, The Mythical Man Month is the best book on technology ever written. It illustrates that economies of scale do not exist in collaborative work like software development. The book introduces us to “Brooks’s Law,” which states, “Adding resources to a project that is late will only make it later.” He points out that large projects are too hard to coordinate when they are broken up with a traditional division of labor approach. This book has become a testament to the need for small, focused teams to help pull off a company’s most complex projects.
Buzzword Contribution:
Takeaway for Bankers:
Remember that great software is not necessarily created by the largest organizations, and that our own internal projects should be driven by small, focused “skunk work” teams.
#8: The Fifth Discipline by Peter Senge
This management book was loved by the Human Resources folks. It introduced us all to the concept of the “learning organization.” Although it sounds squishy, Senge convinced corporate America that only empowered employees can learn and change. If they sit around and implement commands from atop, they become one dimensional.
Buzzword Contribution:
Takeaway for Bankers:
One of the most critical yet overlooked responsibilities for executives is to design organizations that support the bank’s strategy and can quickly adapt to industry change.
#9: Execution by Larry Bossidy and Ram Charan
This book brings home a key message to business executives: strategy is a bunch of B.S. without execution. Bossidy, a former GE executive, reminds business leaders to be realistic and tough as well as visionary. This book criticizes leaders who think their job is to establish some grand vision and leave execution to the underlings. Instead, Bossidy drives home the point that managing day-to-day with a strong “leadership gene pool” is how companies actually achieve results.
Buzzword Contribution:
Takeaway for Bankers:
For bankers looking to truly execute business strategy, take heed from Bossidy’s simple formula:
#10: Good to Great by Jim Collins
Ha! Thought I left this one out, did you? Of course, I had to include the most talked about management book in recent years. Maybe Good to Great has become a cliché, but this book deserves recognition for a few key messages:
Collins’s book can be boiled down to one word: PEOPLE.
Buzzword and Catch Phrase Contributions:
Takeaway for Bankers
Planning sessions are appropriate times to ask that brutal question:
Do we have the right people on the bus and the wrong people off?
They’re also a good time to build the “Don’t Do” list that Collins recommends, ensuring that non-value activities are taken off the plate while more are being put on.
A+ for Paying Attention
So there you have it, GonzoBankers – 25 years of management theory in 1,500 words. If there’s one thing I hope you take from this summary, it’s that strategy is a lot more than dumb mission statements and CFOs badgering us for earnings. For me, great strategic planning is best summed up by the words of that esteemed CEO of rock and roll, Bruce Springsteen: “It’s about seeing the reality and living the reality, but never losing sight of the possibilities.” Good luck this summer.
-spw