How much is a cultural problem for a big business? Let’s look at the CBA, and its culture problems which have seen its share price fall from about $82 to $69 since the Royal Commission exposed something rotten in the Commonwealth Bank.
To put a dollar figure on the bank’s cultural crisis, its market cap has dropped from $150 billion to $122 billion. That’s a $28 billion speeding ticket for its culture crash!
You could apply the same figuring to its loss of brand. Now the company will have to spend a truckload of dollars to rebuild the brand through the usual channels of advertising and public relations.
And the ultimate test for the new CEO, Matt Comyn, will be around whether he can change the bank’s culture to make people love and trust the brand. Of course, few banks have achieved that, though in the 1980s and 1990s, Jim Sweeney at St. George worked so hard on the ex-building society’s culture that they were able to create an ad that saw a BBQ crowd stop partying when a guest admitted to working at a bank! However, the punch-line was “I’m with St. George!” and instant relief reigned over the BBQ. That ad has gone down as a classic Aussie ad.
Of course, cynics might doubt the message but at the time the ad worked because a lot of people believed the unique selling proposition that St. George was indeed different. And I reckon a big part of it was the personality and heart of the leader who helped to build the brand — big Jim Sweeney — who was taken from us far too early in his valuable life.
During the week on my Money Talks program on Sky News Business, I interviewed Kurt Winrich, who is a US fund manager from Laguna Beach, California. He is a co-founder of WCM Investment Management, which has a reputation good enough to attract $US39 billion of other people’s money. Their skills are in picking quality companies from all around the world.
They look for solid companies that have a “moat” around them, which can guard against the barbarians at the gates in troubled times, such as the GFC.
Touring Australia, talking about a fund they manage on behalf of Contango Asset Management (the Contango Global Growth fund or CQG), the appropriately-named Winrich says his team of some of the smartest guys in most rooms search for companies with great cultures. He says a cultural competitive advantage for a company translates into a growing bottom line and strong share price growth.
This is a story that Matt Commyn and all our bankers have to take on board post-Royal Commission, not only for customers’ sakes but also shareholders!
So what’s the lesson for us? And how do we make money out of this culture crunch for our banks?
If you’re in business, Jim Collins, author of the best-seller Good to Great puts a lot of faith in the calibre of the leaders of his nominated great businesses and the kind of culture they created.
Collins says he often saw “disciplined people who engage in disciplined thought and who take disciplined action” in great companies.
“This is the cornerstone of a culture that creates greatness,” he writes. “In a culture of discipline, people don’t have jobs but responsibilities. When you blend a culture of discipline with an ethic of entrepreneurship, you get a magical alchemy resulting in superior performance.”
When I re-read Jim’s observations/lessons, I instantly think of Richard Branson and Virgin, Steve Jobs and Apple, Jeff Bezos and Amazon and a guy called Tony Hsieh, who started an online shoe business called Zappos, which was so good that Amazon bought it for close to a billion dollars!
Tony’s book was significantly called Delivering Happiness — a path to profits, passion and purpose and he insists his success is a result of the culture of the people he had working for him.
Create a culture club
Zappos.com was not Tony’s only business success. In 1996, he co-founded LinkExchange, which was sold two years later to Microsoft for a cool $265 million. He had some time and even tried his hand at playing poker in Las Vegas but realised he loved business building.
He was courted by a guy who was smart enough to realise that 5% of the US shoe market was serviced by mail-order catalogues. And this was a $2 billion slice of a $40 billion market! These customers could easily buy their shoes on the Internet so Zappos.com was created to pioneer selling shoes online.
Tony pinpoints the clincher for his success story was how he virtually systemized the culture in his business. He was able to build a great disciplined culture, which is not only a business lesson but has to be a life lesson for aspirational individuals, as well as leaders of families and teams of people.
Imagine plotting a plan to build a great culture — it sounds so obvious but who has ever thought about it truly, madly, deeply? (Couldn’t resist that old movie title.)
Be happy to the core!
He argues your company’s culture is your brand and as he wrote: “Our employees know that our number one priority at Zappos is our company culture.” He actually asked his staff to help establish the company’s core values that determine the culture.
Thirty-seven values were eventually trimmed to 10 important ones, which he says explains the company’s success.
And while many key things in the business have grown organically out of what Hsieh and his team found worked for them as a workforce, as a group of people together each day and as a business, he said “a few things we did were more purposeful and planned.”
Be part of your community
For example, employees had to walk through a central reception, even though the building where they work had many entry and exit points. He wanted to increase the interactions of his team to build a better sense of community. He obviously thought that you can create a better business via a system that creates a better life experience for the people in the operation.
Ten of the best!
Unifying everyone are the 10 Core Values of Zappos.com and here they are:
- Deliver WOW! through service.
- Embrace and drive change.
- Create fun and a little weirdness.
- Be adventurous, creative and open-minded.
- Pursue growth and learning.
- Build open and honest relationships with communication.
- Build positive team and family spirit.
- Do more with less.
- Be passionate and determined.
- Be humble.
What is interesting is that Hsieh linked the personal growth of the individuals of his team to his company’s growth. So a core value such as “pursue growth and learning” looks so much like a personal thing but when you throw in “do more with less” it suggests you could be creating a smarter worker, who looks to save on costs for the business. A more profitable business results and better wages can be paid and the employee is more qualified for promotion. That’s win, win, win!
These people don’t have jobs but have responsibilities, which, as Collins told us, comes out of a disciplined business.
Consider reading more
Hsieh had a library of great business books at Zappos.com because he wanted to inspire and educate his team and leaders are learners.
In a world where not enough people are reading the right stuff, you might give yourself a competitive advantage in creating a great career, a brilliant business or a wonderful family by exposing yourself, your team and your family to the best that business has thrown up.
And isn’t it a nice thought that great core values — a great culture — could be at the core of success? A commitment to creating a great culture for your business, your family and even for yourself as an individual could be the innovation you really need to pursue.
Good luck with that.