About 15 years ago, in my brief exposure to the banking industry, there was a lot of concern and curiosity about how the Internet was going to affect the banking business. Based on what's happened over the last 15 years, it's hard to remember that the commercial use of the Internet was in it's very early days then.
Although ATM's were already present, the idea of on-line personal banking or self-directed investing through platforms like eTrade was almost unknown. In one session, several of us were trying to convince a group of bank leaders that the Internet would have a transformative effect on their business model. After some half-hearted attempts to convince us people really enjoyed standing in line at brick-and-mortar banks for routine transactions or paying high brokerage fees for information that was readily available to everyone, one man summarized the problem. I'll paraphrase from my memory.
"I've been in the financial services business for my entire career. I started out as a repo man repossessing cars off of hockey lots at 4 in the morning. I know enough about the financial services business to believe that you guys are probably right, but here's my problem. If I'm to be a banker in this new world I have to change the way I think about just about everything. It requires building of skills and capabilities neither me nor any of my staff have right now. I'm 55 years old and I don't have time to build a whole new skill set. This Internet thing will take some time to develop and in the meantime the bank is going to continue to need me and people like me. I'll leave electronic banking thing to others, and count on the bank to take care of me when they don't need guys like me anymore"
His story is the essence of the leadership challenge. It's not enough for a visionary leader to say "We're not in the railroad business, we're in the transportation business" or "We're not in the soft drink business we're in the liquid consumables business" or "We're not in the motion picture business, we're in the entertainment business". Seeing the business in a completely different way also often means a completely different skill set and collective capabilities. Building those capabilities doesn't happen magically because the leader describes the business differently and it's not often easy for a workforce to pivot to a new model. In Part III of this series on Discontinuous Change, I'll explore what the leader can do to make the kind of shift required.
Although ATM's were already present, the idea of on-line personal banking or self-directed investing through platforms like eTrade was almost unknown. In one session, several of us were trying to convince a group of bank leaders that the Internet would have a transformative effect on their business model. After some half-hearted attempts to convince us people really enjoyed standing in line at brick-and-mortar banks for routine transactions or paying high brokerage fees for information that was readily available to everyone, one man summarized the problem. I'll paraphrase from my memory.
"I've been in the financial services business for my entire career. I started out as a repo man repossessing cars off of hockey lots at 4 in the morning. I know enough about the financial services business to believe that you guys are probably right, but here's my problem. If I'm to be a banker in this new world I have to change the way I think about just about everything. It requires building of skills and capabilities neither me nor any of my staff have right now. I'm 55 years old and I don't have time to build a whole new skill set. This Internet thing will take some time to develop and in the meantime the bank is going to continue to need me and people like me. I'll leave electronic banking thing to others, and count on the bank to take care of me when they don't need guys like me anymore"
His story is the essence of the leadership challenge. It's not enough for a visionary leader to say "We're not in the railroad business, we're in the transportation business" or "We're not in the soft drink business we're in the liquid consumables business" or "We're not in the motion picture business, we're in the entertainment business". Seeing the business in a completely different way also often means a completely different skill set and collective capabilities. Building those capabilities doesn't happen magically because the leader describes the business differently and it's not often easy for a workforce to pivot to a new model. In Part III of this series on Discontinuous Change, I'll explore what the leader can do to make the kind of shift required.
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