Leadership: In My Own Words

With all of the scholarship on leadership, what could I add to the conversation? I have my ideas. And if we reflect on the decline of our industry, an honest in-the-mirror assessment of bank leadership merits discussion.

In 2004 I wrote an article for a banking industry association entitled Lead Like Lincoln. The article identified three traits that were critical to Lincoln's success: Vision, Communication, and Commitment. Ten years later, I stand by those traits.

At this stage of the post, I could cite studies, books, and management luminaries on what makes great leaders. Instead, I will give you my slightly varnished view, straight from the gut. Slightly varnished because I grew up in Scranton, where directness has greater value than tact. Not always an admirable trait for a consultant, or a leader.

A great leader has a vision for the future. This is particularly important and challenging in rapidly changing industries like technology and media. It was not particularly important in slow moving industries like banking. 

But that has changed. The greatest banking leaders can see their bank several years into the future, and organize resources around making that vision a reality.

A great leader is humble. As with any general statement on leadership traits, there are exceptions. Say what you will about Steve Jobs. Humble he was not. But hard charging, egotistical leaders can only move an organization so far, and to a certain size, before the ego starts to become a liability. Recall that Jobs got fired from the company he founded. Not an easy task to accomplish. 

The humble leader, on the other hand, takes counsel from his/her people and understands that no human being is all knowing, or even close to it. A great leader does not judge his/her importance by an org chart or the size of paycheck, but by the happiness of their people (sum total of all of their people, not just keeping an individual happy) and the purpose of their work. 

A great leader does not fear failure. Failure is the lesson plan for success. Avoid failure, and the leader understands that their company is destined for the ash heap of irrelevance. In banking, failure is clearly a dirty word when relating to the overall bank. But the most innovative and sustainable business models in our industry are moving farther away from business as usual into less tried and true paths. If there was ever a need for great leaders in banking, now is the time.

A great leader has great followers. When the Navy trained me on leadership, an early lesson was that before becoming a great leader, a sailor must be a great follower. So before assuming leadership, a future leader supports their current leader, working with purpose for the betterment of the company, with no interest in highlighting shortcomings of their leader or those around them in order to move them up the organizational ladder.

Surrounding yourself with great followers implies hiring those that can step into your shoes, or that have such potential and you are dedicated to ensuring their development. Great followers are smart, motivated, humble, forward looking, and care about their colleagues and the company. 

Great followers give the leader informed information and opinions, and if the leader, after careful reflection, decides to go against the follower's recommendation, the great follower charges forward lock-step with the leader.

Poor leaders don't want great followers for fear that they can easily slip into the leader's shoes. Great leaders cheer their followers and prepare them to slip into the leader's shoes.

Great leaders are committed. If a vision is worth pursuing, should it be abandoned when obstacles rear their inevitable head? Weak leaders cut their losses. Great leaders forge forward.

Great leaders are likable. By this I don't mean liked by everyone at all times. They can make the difficult decisions, counsel employees, and be firm when necessary. But if a leader must motivate employees to challenge their boundaries and create great companies, employees must believe in the man or woman. 

Can a person with wavering honor or integrity, or is generally a jerk get the entire company to move as one in a direction that has great risk yet may lead to great reward for a sustainable period of time? 

I think not. 

What are your thoughts on leadership in financial services?

~ Jeff

Bankers: Are We Passing On The Tough Decisions?

"One of our problems is our long-term employees", said a banker to me. I have heard this so often that it probably applies to a significant percentage of Jeff For Banks readers. In an era of unprecedented industry change, if your employees embrace change like a cat embraces water, you might have a problem.

In my life, I have experience in two industries: banking and the US military. Well, I've also been in the newspaper business (paper boy), a top chef (Mickey Dee's), gasoline distribution (Hess boy), and food service (college caf worker). But I wouldn't exactly call a job designed to earn beer money or to bolster my eight track tape collection experiences worth reflecting on. Note the paper boy gig was not for beer money.

But in both banking and the military, employees resisted change, and leadership balked at making tough decisions. Tough decisions are not limited to employees. More broadly, tough decisions involve identifying a clear path, one that may be different than your current path, and allocating the resources to effectively succeed. This reminds me of one of my favorite quotes by Chris Lowney:

"The best business leaders I knew distinguished themselves, in part, by a willingness to focus energy, resources, and effort. The wishy-washy tried to cover their bases by doing and pursuing a little bit of everything, clearly fearful of committing to the wrong path. In the end, they succeeded only in diluting already scarce resources and scattering their focus to the point of inefficiency. Great managers, on the other hand, made tough either-or choices that directed effort and talent toward a limited number of objectives."

- Chris Lowney, former Jesuit and JP Morgan investment banker, and author of Heroic Leadership.

The above quote is part of nearly every speech and class that I teach regarding strategy. Why? Because it speaks to a significant challenge in banking. We mis-allocate resources and fail to make tough decisions daily. And it's putting our future in jeopardy. 

The most difficult decisions involve people. Technology and customer preferences have changed the epicenter of banking success from back office, transaction facilitating personnel to front-line, customer facing employees. But back office personnel are gripping old school ways with white knuckles. They use terms like regulation, compliance, policy, procedures as key reasons for holding their sway and allocating resources to their department. But are most transactions processed in bits and bytes versus the old way of moving paper from one inbox to the next? Then why have we not modified processes and shifted resources towards strategic priorities? The sergeants that run our support centers and resist change... tough decision.

Front liners have their habits too. How many FTEs do you have per branch? I challenge you to sit in one or two branches for a few hours. What are those five or six FTEs doing? Could they be spearheading a direct mail campaign to local businesses? Making follow up phone calls to those they recently sent direct mail? How about calling single service customers, or calling the branch's most profitable customers to ask "how are we doing serving you"? The resistance to doing this is monumental and confounding to me. If your branch employees aren't doing this... tough decision.

How about the tortoise pace in developing products or product packages to distinguish you in serving your niche? Don't have a niche that dictates resource allocation?... tough decision.

I once had a CEO tell me that they should keep a branch to maintain a presence in a particular town. The branch was losing a quarter million a year. If you are losing a quarter mil, do you want to be in that market? Tough decision.

In my career I have faced tough decisions. And I admit to making some painfully slow, especially when people are involved. I am not proposing dispensing of our humanity when making tough decisions. But when our very survival is at stake, you have to ask yourself if you have what it takes to make the tough decisions, or have somebody else, such as a buyer, make them for you.

Are you making the tough decisions?

~ Jeff

Lead Like Lincoln

Historically low interest rates and the recent poor economy highlighted the importance of leadership in community banking. History has provided us great leaders to emulate and Abraham Lincoln is perhaps without equal. In my opinion, he demonstrated three critical qualities of leadership.

Vision - Burt Nanus in his book Visionary Leadership contends that vision is inherently idealistic and represents a "mental model of a future state of the... organization." George H.W. Bush brought attention to this key leadership quality when he declared he lacked "the vision thing."

Lincoln was a great visionary. What made his vision great was its singular simplicity; preservation of the Union. Consider this statement from 1862: "If I could save the Union without freeing any slave, I would do it-- if I could save it by freeing all the slaves, I would do it-- and if I could do it by freeing some and leaving others alone, I would also do that."

Communication - A vision is only introspection without the ability to communicate it and rally stakeholders behind it. But helping others understand the vision is not enough. The purpose of communication is to motivate others to act.

Lincoln was not sowed from the cloth of privilege. He was a simple man that was able to connect with most Americans using simple anecdotes. Presidential historian David Abshire commented: "This genius of Lincoln's words and ideas -- derived from the Bible, Shakespeare, Bums, and Bunyon -- lent an historic quality to his rhetoric and persona."

Why was Lincoln such a great communicator? His messages were simple and easy to understand. How many speeches, presentations, meetings and sermons have we endured that we have little or no recollection of? The reason is simple; the message wasn't simple.

You may remember Edward Everett, a great orator of the 19th century. Chances are you don't. At the consecration of the most storied battlefield in our nation's history, Everett delivered a long-forgotten two-hour oration. After him, Lincoln approached the podium and delivered the Gettysburg Address.

Commitment - Having vision and effectively communicating it does nothing in itself. Commitment is the doing. Many leadership experts contend that people follow committed leaders, not a vision. Divorce vision and commitment, and all that you have is an idea... an idea with no disciples.

To preserve the Union, Lincoln shelved the Constitution when the nation that held it as law was in jeopardy. Said in one of Lincoln's memorable anecdotes, "By general law, life and limb must be protected; yet often a limb must be amputated to save a life; but a life is never wisely given to save a limb." Putting aside the Constitution to use any indispensable means to preserve the Union demonstrated Lincoln's commitment to his vision.

As time passed and Lincoln's commitment was clear, tenacity and courage infected every level within the Union ranks. At the outset of the war, military commanders were not clear about Lincoln's commitment to preserve the Union. General McClellan exemplified this confusion by not pursuing Lee's army after initial successes in Virginia.

Near the end of the war, Lincoln's commitment was clear as General Sherman was burning Atlanta. Followers witnessing Lincoln's degree of commitment put forth the great effort necessary to achieve success, although the risk of failure was great. Why take the risk? Because a great leader will not yield, will not relent, and will not quit.

Abraham Lincoln was by no means a perfect leader and it was not his flawless leadership that categorizes him as one of history's greatest leaders in times of crisis. Rather, it was how he adapted to the crisis situation by first formulating his vision, then articulating it, and lastly standing by it at all cost. Indeed, for all these reasons, Lincoln was one of history's greatest leaders.

~ Jeff

Note: This has been reprinted from the February 2004 Pennsylvania Association of Community Bankers newsletter.