Managing Change – Go To A Casino Instead

By Pierre Mourier

The Casino House advantage in Blackjack is about 55% – Essentially the chances of beating the house is 45%.  – That is how people like Steve Wynn can continue to build billion Dollar Casinos in Las Vegas.

But Wait…

Numerous studies on organizational change  success rates (including our own *), show that more than 70% of all organizational change efforts end up failing.  That is a success rate of less than 30%.

So… You have a 50% higher success of succeeding at blackjack than you do at managing organizational change to produce the desired results you are seeking for your organization.

My advise….It’s a no-brainer…..Take the money you are planning on your next organizational change effort and spend that money at the casino instead! Your chances of success are 50% higher? – I mean doesn’t that make sense? – I am not making this up, these are well documented facts! Or perhaps even better….

Dont do anything….

Over time you will save the money spent on either gambling or on organizational change.

But wait….

What if there was a way to improve your chances of success? – And it just so happens there is a way…If, for example, you learn card counting, you can improve the potential for success in blackjack to more than 50%. The only problem of course is that if the casino catches you counting cards they will ban you from the casino.

Now what if there was some legal way?

And yes you guessed it there is!

However it has to do with the less sexy aspect of how to manage organizational change….This is about finding a way that you can increase your chances of success in your next change effort to about 70%.

But wait…

You want 100% change of success you say?  - Well, frankly, I think there are no 100% solutions out there…. Sorry…But there isn’t…Hate to be the bringer of bad news.

But what I can do, is show you a way to increase your chances of implementation success from 30% to 70% that is an increase of your chances by more than 130%!! – Oh, and by the way,….It’s legal!

So here’s the deal…

And believe me this is the ONE real secret to Successful implementation of organizational change.

Find a sponsor who has enough power to wield ALL the resources necessary to implement the project. NOT “some of the resources” – ALL the resources – AND find a sponsor who actually has the intestinal fortitude to SEE THE PROJECT THROUGH TO THE END. Despite organizational stakeholder resistance, threats of resignations, active manipulation and other such common change killers. –

And yes you guessed right again…… in 99% of successful change implementations, that person is the CEO of the organization. – PERIOD. The CEO… not some project manager that the effort has been “delegated” to.

Delegation of  organizational change most often has to do with the delegation of the responsibility for success, but not a delegation of the authority to do whatever is necessary to see implementation through to success.

But wait…

You ask ….”Is it really that simple?”…Well first of all… that is NOT simple. From experience it is not the norm that CEO’s have the capability or the focus to implement change. It just isn’t. They are often busy managing their careers… their boards… their key employees from “the old guard.” “who we must keep because of what they know about the organization” etc.

But I do have to burst your bubble again!

There is actually more to it. Once you have found the right sponsor, that sponsor needs a sidekick who will keep him/her honest and who will tell him/her the truth. And this is where it gets hairy again. If this is an internal person, the person will worried about the career limitations that telling the REAL truth can have and very often rightly so. And if it is an external consultant who is the sidekick, that person will most often be wrapped up in the thoughts of fear of loosing a cash cow client or worried about not being able to sell more work.

So issue number 2…Find the right sidekick!

But Wait…there is more…

Now you have to grab a hold of that list of 10 points or 8 points or whatever, buy that organizational change expert you value so much, (and yes I have my own list *, but there are a bunch of good ones out there). You have to get a hold of that list and actually follow the points. You have to communicate, you have to measure success, you have to change rewards and all of that.

HOWEVER, Getting the right sponsor and the right sidekick alone will increase your chances of success dramatically! – So what are you waiting for?

Not ready for the hard work required?

Go to the Casino !! – I am serious…..GO!

About the Author:

Pierre Mourier is the CEO of Stractics Group, LLC a New York Based Consulting Firm helping clients in the financial services industry achieve dramatic improvements in productivity and profitability through the successful implementation of organizational change. Pierre can be contacted through the web at www.stracticsgroup.com or directly via email at pierre.mourier@stracticsgroup.com

*Conquering Organizational Change – How to Succeed Where most Organizations Fail, by Pierre Mourier and Martin Smith, CEP Press 2001

http://www.amazon.com/Conquering-Organizational-Change-Succeed-Companies/dp/0970952708/ref=sr_1_1?ie=UTF8&qid=1320327995&sr=8-1

Managing Change – Go To A Casino Instead

Managing Change – Go To A Casino Instead.

Bankers, who want to reduce cost MUST consider Cloud Banking now

As process become more and more virtual, and forcing banks to face the need for collaboration among the increasing number of remote and mobile workers. Cloud Banking is not something which is a great thing to have in the future. Cloud Banking is something you need NOW. – Most bankers would agree that a radical rethink of a bank’s processes could yield substantial cost saves. Remote collaboration is part of that picture.

In the United States there was once a company called Blockbuster Video. People would flock to their stores to choose their entertainment for the evening. In droves they came. Blockebuster is now history. Chapter 11. – Boom Gone…just like that!

Where is your bank heading? – Are your branches still packed? – If yes, well good, for now. Will your branches be packed tomorrow? Where are your employees, more and more working in remote locations? – Are you set up for this?

Take a look at this nice little article for 5 considerations you must make when implementing Cloud Banking:

http://www.bai.org/bankingstrategies/operations-and-technology/operations/five-considerations-for-cloud-banking?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BankingStrategies+%28BAI+Banking+Strategies%29

Bankers, who want to reduce cost MUST consider Cloud Banking now

Bankers, who want to reduce cost MUST consider Cloud Banking now.

Citigroup, Wells Fargo May Post Profit Jump on Credit Costs

Citigroup, Wells Fargo May Post Profit Jump on Credit Costs.

Citigroup, Wells Fargo May Post Profit Jump on Credit Costs

But, at some point the banks are going to run out of improvement potential emanating from Credit Cost improvements. – And where to then?

With increasing margin pressures and recent improvements in profitability emanating to a large extent from improvements / reversals in loan provisioning, the pressures to perform and grow remain, but major gains must now come from a radical rethink of costs and significant improvements in productivity.

On an international basis, to achieve 12% ROE from their 2010 starting point, and taking into account estimated additional capital requirements, banks would have to reduce costs annually by 6% on average between now and 2015 – According to McKinsey, September 2011.

Given the fact that only 1 in 50 banks around the world have been able to achieve cost reductions of 4% or more in the 2000-2010 period, cost reductions is still is an illusive internal capability.

Through the effective use of a combination of sharply targeted process improvement and rigorous productivity control, we have seen many examples of cost reductions of 20-30% and in some cases more. 

For Full Article from Business Week see: http://www.businessweek.com/news/2011-10-16/citigroup-wells-fargo-may-post-profit-jump-on-credit-costs.html

Controlling Banking Costs – A Yo-Yo Diet or Fundamental Rethinking of the Cost Base?

Controlling Banking Costs – A Yo-Yo Diet or Fundamental Rethinking of the Cost Base?.

Article about the never ending cycle of lay-offs followed by hiring in banking. Some prescriptions for breaking the cycle.

Controlling Banking Costs – A Yo-Yo Diet or Fundamental Rethinking of the Cost Base?

CURRENT BUSINESS HEADLINES:

HEADLINE 1:

HSBC layoffs: 30,000 jobs to be cut in global overhaul

HSBC layoffs will take effect by 2013. The HSBC layoffs come as the banking group shifts its focus to emerging markets around the globe.

British banking group HSBC said Monday it will cut 30,000 jobs worldwide by 2013 and sell almost half its retail bank branches in the U.S., part of a new strategy to focus on fast-growing emerging markets.

Quote: Christian Science Monitor August 1, 2011

HEADLINE 2:

UBS To Layoff 3,500

UBS announced today that it will eliminate 3,500 jobs over the next two and half years as part of the bank’s cost-cutting efforts.

The bank said it’s looking to save $2 billion Swiss francs by the end of 2013.

Back in July it was reported the embattled Swiss bank would cut 5,000 Jobs. And in June the bank said it planned to axe 500 IT jobs both in the U.S. and in Switzerland.

Quote: www.businessinsider.com  August 23,2011

HEADLINE 3:

Goldman Prepares Drastic New Cuts Ahead Of Rumored Quarterly Loss

Goldman is looking at adding another $250 million to drastic spending cuts announced earlier this summer, bringing the total to $1.45 billion, according to Dealbook.

Cuts were already expected to involve 1,000 layoffs — which now may be closer to 1,200.

Quote: www.businessinsider.com  September 27, 2011

HEADLINE 4:

Standard Chartered layoffs: Standard Chartered Bank laid off Employees to Control The Cost in The First Quarter

Standard Chartered Bank (Standard Chartered) may 4 announced its outstanding performance in early 2011, which showed double-digit growth over the sam period last year, due to the Asian market with more than 10% revenue growth, whereas after employment upsurge in 2010, the cost was Accelerated.

May 4 Standard Chartered Bank said its first-quarter layoffs have been carried out in order to maintain expenditure. However, in 2010, the banks employees increased by 7,000.

Quote: China Financial Daily May 4^th, 2011

 

SOME FACTS:

HSBC Employees 2008-2010

Number of Employees

2008 – 325,000

2009 – 302,000

2010 -307,000

Source: HSBC Annual Report 2010:

Standard Chartered Employees 2008-2010

Number of Employees:

2008 – 80,557

2009 – 78,494

2010 – 85,231

Standard Chartered Annual Report 2010:

IN MY OPINION:

What these facts remind me off the most, is a historically fat person trying to finally get some control of their weight. What happens for the majority of people is that the latest diet fad becomes the their guiding bible for a month or two. They trim 20 or 40 kilos off their frames, they feel better and more energized. Friends and family tell them how good they look. They soon take their eye off the ball and slowly start ballooning to levels that may even surpass where they were before the diet. Next year, their new years resolution (interesting how this coincides with annual report time) is to do it again, yet better, bigger, and differently only to find that the results are embarrassingly similar. The YO-YO dieting program is in full swing.

Welcome to cost control in banking…

How do you prevent the fat from creeping back? – Is that not exactly what the facts above show? – First the new years resolution (we’re going to trim the fat!). But if you look at the two employee tables you will see how the banking YO-YO diet is in full swing!.

So, doctor, what is the prescription for maintaining your weight? – Well most nutritionists and health experts will tell you that it is not a diet that is needed, it is a complete change in lifestyle! Your focus needs to be consistent and controlled eating habits combined with regular exercise with the added occasional splurge. – But that doesn’t sound like much fun does it? – Does it mean that life as I know it is over? I can’t have all the things I like when I want them anymore? And the doctor will tell you that unless you change the way you live in a fundamental way, you will always be on the YO-YO cycle until finally…You have that stroke or your heart gives out.

And what I am here to tell you is that it is exactly the same in Banking!

Unless banks are willing to completely re-think the way they operate, they will forever be on this cycle of adding and subtracting employees almost at will (something that is great for employee morale by the way).

In one of the quotes above it said that the bank in question was trimming the employee count to control costs in the first quarter. Doesn’t that sound like the future mother-in-law getting ready for a spring wedding? What if that mother-in-law had been lean and mean to begin with? She would not have needed to do anything.

So here is the deal…

Banks who want to be around and compete effectively in 5, 10 or 20 years from now, are going to have to start thinking about what REALLY is driving their cost base, and they will have to start taking some very critical looks at the fundamentals of their business models. – They have to critically reshape and simplify the processes by which they satisfy their customer’s needs to become Lean and Mean.

BUT…

Most importantly of all in my view they must CONTROL productivity.

Those of you who are on the personal YO-YO dieting track, have you ever noticed how after your weight begins to go up again on the up-cycle, all of a sudden you become much less interested in getting on the scale every morning. Now if you get on the scale at all, it is weekly or monthly, and generally while you are looking away from the readout! –When you are loosing weight on the down-cycle there are times when you will actually get on the scales several times per day! Interesting right?

Well again, I believe it is similar in banking. Banks who really want to out-perform on costs must have the properly calibrated scale available and get on it often. That is the only way to manage the costs. CONTROL them. This means having frequent conversations about the right metrics that must be available at the right time and then doing something immediately when undesirable performance is about to happen. In the diet scenario it is much earlier to loose a kilo than 50 kilos. So constant vigilance is key.

In this blog series I will focus on key elements of costs as they relate to current events. I will hope to interact with the group here as much as possible. Please feel free to contact me via email to discuss.

Pierre Mourier

New York, October 2011

About the Author:

Pierre Mourier is the CEO of Stractics Group, LLC. – A consulting firm founded in 1996 to focus on helping banks and financial institutions significantly reduce their costs, with operations in Asia and North America. In addition consulting, Pierre was the Country Manager of Retail Banking for Standard Chartered Bank with full P&L Responsibility of what became the 11^th most profitable business in SCBs Consumer Bank globally. He has published widely in the area of performance and process improvement and is the Author of the book “Conquering Organizational Change, – How to Succeed Where Most Organizations Fail.” – He can be contacted at pierre.mourier@stracticsgroup.com or through his firms website at www.stracticsgroup.com

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