Directors' Compass
November 2018 Issue 

From The Findley Reports



Last month we began writing a series on a book written by James Kerr titled, Legacy, What the All Blacks Can Teach Us About the Business of Life. The All Blacks are the national rugby team from New Zealand and have been the proverbial powerhouse in the rugby world. In fact, the All Blacks are the most successful rugby team in history and have been called the most successful sports team ever. In the professional era, they have an extraordinary win rate of over 86%.

As banks face challenges with regard to the direction of the industry, even though things have been great for the last few of years, we believe this is a good reminder of the importance of working together as a team and implementing the right leadership principles. We also recognize that if directors, management, employees and their stakeholders, who are so critical to the success of the banking enterprise, do not work together, then performance results will likely result in a failure instead of a win.

Having played rugby in college through my mid-40s, this was an interesting read on the leadership principles the All Black utilize. But they can also be quickly adaptable to the banking space. A rugby team has 15 players who work together towards a common goal - to win. In Legacy, James Kerr focuses on 15 principles working in the same way: each has a role; each a responsibility; and each a position on the field. These 15 principles are as follows:

1. Sweep the Shed – Never too big to do the small things that need to be done.
2. Go for the Gap – When you’re on top of your game, change your game.
3. Play with Purpose – Ask “Why?”
4. Pass the Ball – Leaders create leaders.
5. Create a Learning Environment – Leaders are teachers.
6. No Dickheads – Follow the spearhead.
7. Embrace Expectations – Aim for the highest cloud.
8. Train to Win – Practice under pressure.
9. Keep a Blue Head – Control your attention.
10. Know Thyself – Keep it real.
11. Sacrifice – Find something you would die for and give your life to it.
12. Invent a Language – Sing your world into existence.
13. Ritualize to Actualize – Create a culture.
14. Be a Good Ancestor – Plant trees you’ll never see.
15. Write Your Legacy – This is your time!

Many banks want a legacy, and we believe that starts with understanding these principles and having the discipline to implement these principles as they move forward.

The First Five

Last month we began with the first five – what I refer to as the core scrum (a term that rugby players will know). Over the next two months we will deal with the last ten. However, a quick refresher on the first five is as follows.

I. Sweep the Shed - Character

Leaders are never too big to do the small things that need to be done. Kerr emphasizes that after a game, it’s the leaders of the team who sweep the shed and put it back to the condition they want it to be in. The All Blacks themselves are tidying up after themselves, sweeping the sheds, doing it properly so no one else has to. No one looks after the All Blacks. The All Blacks look after themselves. It is all about character.

Kerr emphasizes, “Ethos is the Greek word for character. Descended from the same root as the word ethics. It is used to describe the beliefs, principles, values, codes and culture of an organization. It is the ‘way we do things around here,’ the unwritten (and sometimes written) rules, the moral character of a particular group of people. It is the place we live, our certitude and rectitude, our base.” Our values decide our character, our character decides our value, and a value-based purpose-driven culture is the foundation for the All Blacks’ approach and should be the foundation for your bank.

What are your critical values? Have they been recently discussed among the board and management? While several value-words can be utilized, such as integrity, sacrifice and determination, the real question is, “How do you bring those to life?” That’s the critical element for leadership: not just words, but actions!

Character is critical in creating the legacy, what you want to leave behind. For boards and managements, it’s also an essential strategic question. What do you want to leave behind from the standpoint of your banking enterprise?

Character means sweeping the sheds. No one is ever too big to do the small things that need to be done.

II. Go For The Gap - Adapt

“Go for the gap. When you’re on top of your game, change your game.” This also means Adapt! This makes sense today, because so many banks are at the top of their game, but what will that mean on a going-forward basis? This is the time to change the game. Change your bank when you are at the top. This is actually a good process in creating strategic plans.

One thing to recognize in the banking world, momentum swings faster than we think. One moment we are on top of the world, the next falling to the other side due to regulatory, economic and other related matters. When we are at the top of our game, it’s time to change our game. But for many, these changes are not drastic, but rather tweaks. A tweak is a change. But with all change, the key is not losing momentum.

You either adapt or you lose, and sustainable competitive advantage is achieved by the development of a continuously self-adjusting culture. Adaption is not a reaction, but a continual action, so plan to respond.

Go for the gap. When you are on top of your game, change your game.

III. Play with Purpose - Ask “Why?”

Kerr states, “The person with a narrow vision sees a narrow horizon. The person with a wide vision sees a wide horizon.” Leaders connect personal meaning to a higher purpose to create belief and a sense of direction. This focus is: What is the cause? What is the purpose for your bank? Why are you here?

Much of it begins with the question, “Why?” Why are we doing this? Why am I sacrificing myself for this project? What is the higher purpose? Those that have purpose and can communicate the purpose are the true banking leaders.

IV. Pass The Ball – Leaders Create Leaders - Responsibility

Leaders create leaders by passing on responsibility and creating ownership, accountability and trust. The critical focus is how leaders set objectives and parameters, and how they set up a process by which to pass the ball, handing over responsibility for implementation and detail. Leading by creating leaders. Shared responsibility means shared ownership. A sense of inclusion means individuals are more willing to give themselves to a common cause.

By arming staff with intention, leaders can enable their people to respond appropriately to changing context, without losing sight of the tactical imperative. Leaders create leaders. They arm their subordinates with intent and then step out of the way and let them do their job.

Pass the ball and always work to create new leaders who can bring people together and make a difference.

V. Create the Leaning Environment – Leaders Are Teachers

Create a learning environment. Leaders are teachers. Looking at several of the greatest coaches ever, they were teachers first. But teaching also means having the discipline to learn oneself.

“Excellence is a process of evolution, of cumulative learning, of incremental improvement. Enlightened leadership promotes a structured system for the development of the team, combined with a tailored map for the development of the individual.”

We live in a world right now where the banking of ten or fifteen years ago is completely different from where it is today. It will also be different in the next five to ten years. We have to learn new ways in order to stay relevant and effectively lead.

It is important that boards and managements have the right influences and are always creating an environment where anybody who touches their institution is welcome to bring ideas, learn and become masters. Do you encourage learning and always looking for new ways? Consistent exceptional banks have a leaning environment, always!

The Second Five

While the first five principles make up what I consider “the core of the scrum” for a rugby team, the next five are the locks and scrum half that are critical in managing the game.

VI. Whanau – No Dickheads – Follow the Spearhead

Kerr emphasizes that the All Blacks focus on one purpose - one goal. In Maori mythology, Whanau is symbolized by a spearhead, a image derived in turn by the flight formation of the kawau. A spearhead has three tips, but to work properly, all the force must move in one direction. For the All Blacks this is the being of a team and the essence of a successful organization.

We know of examples of bank management and boards where one individual may have all of the qualities and leadership capacity, but is not a team player. No matter how good that one individual is, if they are out of sync psychologically with everyone else, the team will never achieve the harmony needed to win and to achieve Premier Performance.

Kerr emphasizes a quote from Rudyard Kipling, “For the strength of the pack is the wolf, and the strength of the wolf is the pack.” This emphasizes the importance of a strong chain, and the idea that if there is a weak link it will negatively impact the financial performance and the success of a bank or any business enterprise. Being a team begins from inside, with high standards coming from within.

Kerr emphasizes that no one is bigger than the team, and individual brilliance does not automatically lead to outstanding results. One selfish mindset will infect a collective culture. An old Arab proverb states it’s better to have a thousand enemies outside the tent than one inside the tent. We all know what that means, and often the energy utilized to deal with the enemy within is so much greater than the enemy outside.

When we have looked at institutions that experience trouble on a consistent basis, we normally find that there is not consistency on the board of directors or the management team. Everybody is pulling in a different direction, and they all have different concepts of what is success and what is the direction. They are not a spearhead, and in All Black language, they have allowed “dickheads” to enter into the team.

Kerr emphasizes that one disaffected or selfish individual affects the group; remove them and the group will cohere and heal. This is consistent with language utilized by Jim Collins in his book, Good to Great, where he talks about the importance of understanding who gets on the bus or off the bus. His research shows that good-to-great leaders begin by first getting the right people on the bus and the wrong people off the bus and then figure out where to drive it.

Consistently successful banking institutions and great leaders on boards and managements understand the importance of being united, not pulling against one another. While it’s okay to have differences of opinion, once a decision is made, the group must be united from the standpoint of direction.

Follow the spearhead - have the right people on the team.

VII. Expectations - Aim for the Highest Cloud

Kerr emphasizes that inspiring leaders use bold, even unrealistic, goals to lift their game and send their world into existence. They tell great vivid epic stories about what is possible for themselves and their teams, and soon their world repeats the story back to them. He emphasizes that it’s important to judge yourself with high expectations. If we aim for the highest cloud and miss, we will still hit a lofty mountain. In reviewing budgets and strategic plans for a number of banks, I have seen quite low performance plans that do not aim for high performance. In fact, they are what I have referred to as sand bag budgets, where management under promise and over deliver, thinking that means something better for their bank. Why not strive always for the best you can be?

Kerr emphasizes that successful leaders have high internal benchmarks. They set their expectations high and try to exceed them. We see this in all great ballplayers. We see it with some of the most successful banking institutions, where their CEOs have high expectations in financial performance and they are able to communicate that dream and vision to not only the individuals within their organization, but also to other stakeholders. However, it is also important to recognize that setting high expectations recognizes that you have to overcome the fear of failure. What if the bank does not perform? We cannot allow the fear of failure to inhibit performance. But for most, if you’re actually honest with yourself and the fear is used it as a motivating factor to prepare, you can harness the energy to achieve success. For many the key is to understand that there is a world of difference between fear of feedback or failure and harnessing the fear to a positive effect. By embracing the fear of failure, we can lift our performances. If we never aim for the highest cloud, we may be safe, but the performance will never be up to true expectation.

We always to want our banking institutions to set high expectations and the same applies to boards of directors as to what they can deliver. We have emphasized over the last several years that we live for the future. The type of bank we must be to is a consistent, Super Premiere Performing bank.

Those are expectations worthy of embrace.

VIII. Preparation – Train to Win

Kerr emphasizes, “the way the sapling is shaped determines how the tree grows; therefore, preparation is key.” In business, training is often seen as a soft option and limited to the occasional away day. However, effective training is intense, regular and repetitive. For world class results, it should be essential for the culture. For the All Blacks, it is not the physical but rather the psychological aspects of randomness, unpredictability, and constant questioning, combined with pace and physicality which stress the brain and test decision-making capacity. Mastering anything, a sport, a skill, a craft, or a business is achieved by practice. Practice is enhanced by intensity.

In our banks we see this in the importance of management and directors preparing for board meetings, preparing for training sessions and preparing for strategic planning meetings. Too often, they come unprepared, not wanting to embrace the changes that are necessary for the organization. A lack of preparation often shows a lack of caring. Board and strategic planning meetings, as well as other management-related meetings, should be an intense discussion with regard to the direction of the bank, and management should be prepared for that conversation. Too often they are not.

How well do you train and prepare?

IX. Pressure – Keep a Blue Head - Control Your Attention

In today’s banking world there continues to be substantial pressure, pressure from the regulatory agencies, pressure from shareholders, pressure from customers, pressure from employees and pressure from the board. Sometimes individuals under pressure have their attention diverted or stray off track. If you are diverted, you have a negative emotional response and unhelpful behavior; this means you’re stuck and possibly overwhelmed. However, if you are able to keep your attention on track, you have a situational awareness and you execute accurately. You are clear headed, able to adapt and not overwhelmed.

Kerr emphasizes the importance of a blue head as compared to a red head. A red head means tight, inhibited, results-oriented, anxious, aggressive, overcompensating and desperate. Blue head means loose, expressive, in the moment, calm, clear, accurate and on task. Kerr emphasizes that bad decisions are not made through a lack of skill or innate judgment, they are made because of inability to handle pressure at a pivotal moment.

We have to recognize that when pressure comes we need to have a blue head and return to the fundamentals or basics. Kerr emphasizes that pilots in times of pressure use a mantra of aviate, navigate and communicate, while ski patrol and paramedics use a mantra in first aid situations assess, adjust and act. Wise leaders seek to understand how the brain reacts to stress and practice simple, almost meditative techniques to stay calm, clear and connected. The importance here is clear thought, clear talk and clear task, and they are often differences between success and failure.

We have all been around individuals who have red head personalities and others that have blue head personalities. Who do you want to follow? Who makes the best decisions?

The important aspect of keeping a blue head is controlling your attention. One of the best mantras from Kerr is, from listening comes knowledge, from knowledge comes understanding, from understanding comes wisdom, and from wisdom comes well-being. Not a bad mantra, and consistent with one of my favorite scriptures, “Quick to listen, slow to speak, slow to anger.” That is a blue head.

Are we a blue head or a red head? The most successful banking institutions have leaders that are consistently leading with a blue head. They see the issue, they control their emotions, and they make the appropriate decision.

X. Authenticity – Know Thy Self, Keep It Real

Knowing thy self has been a consisted topic in the “Director Compass” as well as the “Professional Corner” over the last several years. The best leaders remain true to their deepest values, they led their own life and others follow. They walk the talk.

Authenticity, according to leadership writer Lance Secretan, is the alignment of head, mouth, heart and feet. It is thinking, saying and doing the same thing consistently. This builds trust, and followers love leaders who they can trust. Kerr focuses on a simple equation. Honesty equals integrity, equals authenticity, equals resilience and equals performance. Kerr emphasizes that authenticity is the mark of a true leader. It begins with honesty and integrity. Honesty allows us access to our truest vision of ourselves, and when setbacks occur, it gives us strong foundations.

Integrity means that our thoughts and words and deeds are as one in alignment with our core values of purpose, beliefs and behaviors. They all flow in the same direction. In Kerr’s book, integrity is a model for honoring our word, and to the degree that integrity is diminished, the opportunity for performance is diminished. If integrity is a central leadership tool, then everyone on a team does exactly what they say they will do. Clarity, certainty, productivity and momentum are the results. Integrity gets the job done. If our values, thoughts, words and actions are aligned, then our word is our world. By being our word, we can make it happen.

Honesty, integrity, authenticity are core values that we see in a number of banking institutions. However, we don’t always see all banking institutions, as well as our leaders, walking the talk. Those institutions who can stay true, inclusive of their leaders, to their visions, and are authentic, are those who will have consistent performance.

Kerr emphasizes the difference between authenticity and bad faith. Bad faith occurs when peer pressure and social forces combined have us disown our own values. It is an accommodation we make with society to fit in, a psychological selling out in which we forsake our own freedom and self-expression for the conformity of the crowd. The worst is when we stand between our self and ourselves. It stops us from knowing our true nature, which causes problems. We see this too often in bending to pressure to take action that we know is not best in the long-term.

An authentic life focuses on the concepts of honesty and integrity. High performance teams promote a culture of honesty, authenticity, and safe conflict. These are critical components of a highly functional team as determined by Partick Lencioni and something we have written about for over twenty years.

Sometimes leadership principles are very simple and can be expressed in a few words. However, understanding what those principles are and implementing them into your bank is another matter. Let’s learn and move forward and, with that, create a successful banking enterprise, much like the All Blacks.

                                                                                         Gary Steven Findley, Editor


Last updated November 2018

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