Friday, February 07, 2020

Not a Session at Acquire or Be Acquired: Culture

I attended Bank Director's Acquire or Be Acquired conference two weeks ago. The buzzword of the show: Culture.

When Raphael Reznek, CIO of Mascoma Bank, spoke about the biggest challenge to launch online account opening: "our internal culture". When Mike Butler, CEO of Radius Bank, spoke of technology experimentation and implementation: "you have to change the culture in the company". And in a session titled Advice and Counsel for First Time Acquirers, Bob Monroe of Stinson LLP said: "Being able to fit your culture in with the seller's culture is extremely important, because you'll have a flat tire running down the road."

If I asked you to write your definition of culture in the comments, would yours match others? Because when I hear the term, I don't know what people are talking about.

I do recognize that whoever talks of culture, generally thinks their culture is superior to yours. Except Raphael, who at least was reflective about it. I should note that Raphael has not been at his bank very long, and he is not from the banking industry. So it was easier for him to objectively assess the weaknesses in his bank's culture and address them. It is not lost on me that their CEO is also from outside of the industry and relatively new to the bank. 

Mike Butler of Radius, although a lifelong banker, came from outside of the region and implemented a business model and cultural change at his bank with new management and a "fast fail" innovation culture. Mike is from Cleveland. And surprisingly a Yankees fan. In Boston. #resilience

There I go. Culture, culture, culture. What the heck do I mean?

Culture Defined

Merriam Webster defines culture as:

1.  The customary beliefs, social forms, and material traits of a racial, religious, or social group. Also, the characteristic features of everyday existence (such as diversions or a way of life) shared by people in a place or time. Such as popular culture. Or Southern culture.

2. The set of shared attitudes, values, goals, and practices that characterizes an institution or organization. Such as a corporate culture focused on the bottom line.

3.  The set of values, conventions, or social practices associated with a particular field, activity, or societal characteristic. Such as studying the effect of computers on print culture, or changing the culture of materialism over time...

4.  The integrated pattern of human knowledge, belief, and behavior that depends upon the capacity for learning and transmitting knowledge to succeeding generations.


Did you know that "Culture" was Merriam-Webster's 2014 word of the year? Because it was the most searched for term. Meaning so many of you, like me, had to look it up because we had no idea what people meant when they talked culture. In this 2014 New Yorker piece, editor Joshua Rothman wrote: "institutions that drone on about their 'culture of transparency' or 'culture of accountability' often have neither."

Poster Child For Cultural Disconnect

Look no further than Wells Fargo. Their "toxic sales culture" started with Norwest, the actual buyer of Wells Fargo even though they adopted the iconic name when they executed their "merger of equals" in 1998. I have a lot of air quotes in this post. 

In this 2000 CNN Money piece, which I'm confident long-standing Wells execs would wish you didn't click on, Wells is said to have a "flourishing and decidedly 'functional' corporate culture". Driven by Norwest's and the resulting Wells' CEO Dick Kovacevich, who was "obsessed with cross-selling". At the time of the article, Wells averaged 3.4 products per household, and Kovacevich wanted to drive it to eight.

Boom! Fake accounts. 

Do I think Wells' executives wanted the culture that emerged? No. But read the practices that resulted from Kovacevich's obsession. This culture, and the practices that emerged from it, got John Stumpf and Tim Sloan fired. 

Culture Defined Part II

Culture, as I would define it, are the unwritten boundaries that your bank operates under that drives decision making, even when executives or supervisors are not the ones deciding. Meaning that when a branch manager, or a teller, makes a judgment decision, they do so in the context of your bank's culture. 

I think your aspirational culture can be written. And we often see this in strategic plan values statements. But a written description of the culture you are trying to create is meaningless if your leaders don't consistently practice it, hold people (including themselves) accountable to it, and align policies, procedures, and incentives to be consistent with it. Having daily coaching sessions on products sold would be inconsistent with a culture of doing what's right for the customer, right? I'm not smart enough to be the only person that would recognize this.

In kicking off strategy sessions, my firm reviews some inconsistencies we often see between bank practices and strategy. Below is one of my favorite slides.



In 2015 I wrote a post about creating a positive accountability culture. So I am guilty of throwing the term out there. I have never heard a bank state or write that they wanted a culture where employees hated coming to work, or cringed when their boss called them into their office. Yet so often when the boss gives employees feedback, it's negative. In the Navy, we said "one awe sh*t wipes out ten atta boys." That is how a spoken or written cultural aspiration is disconnected from everyday practice.

Psychology weighs in on negative feedback. The Positive Coaching Alliance taught me that in order to fill the emotional tank of players, you should provide at least five positive feedback interactions to one negative feedback to get maximum performance. They called it the magic ratio. 

I grew up in an environment where that ratio was upside down. And I witness it often in banking.

Note that the above slide is meant to highlight what not to do. And, perhaps, with my newfound appreciation for the term "culture", I should change the subheading to Providing Incentives That Are Contrary to Your Culture.

Because your aspirational culture must transcend words. Or it will never be attained.


What is your definition of culture?


~ Jeff


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