Some fascinating insights into the the strategy of Bank of America. A national franchise, vs state by state. This is s consequential statement given that Bank of America have a similar number of customers as the population of UK – 55 million customers.
McGee: We’ve been running this business, consumer and small business, as a national business for about five years now. The decision that we faced at the time was whether to become a national franchise or, like most of the other large banks, run it market by market, state by state, etc.
Source: BAI Online | Banking Strategies | September/October 2006 | Investing in the Franchise
To Bank of America, strategic clarity is “making a difference for customers” by providing a consistent level of service and responsiveness across the company’s vast coast-to-coast franchise
The quotes just get better and better ….
We also made the decision to run a more integrated business. We’re different from almost anybody you’d compare us to in that our distribution channels — banking centers, online services, call centers, mortgage sales force, etc. — really work with the product groups in an integrated fashion, with the customer in the center. Most of our competitors run those businesses as silos — the card business is run as a silo, the mortgage business, etc. We’ve run a very integrated model for a long time, and that’s also helped us prioritize against the things that mattered for customers and for our teammates.
And this quote is as memorable as any … again remembering how big they are:
Q: How do you reduce complexity on the frontlines? You’ve got so many products, so many different divisions and services. Do you tell your branch people to focus on just a few?
McGee: We have tended to focus on a few products that we think are the most important for customers and drivers of growth. That doesn’t mean that associates don’t do other things. But it’s easier when you give them a context for what’s important for the customers and what’s important for the shareholders.
It wasn’t always popular at the beginning to do that because some associates might have been focused on other things. But, all of us have learned that if you can prioritize and simplify, the entire boat rises. If you try to be everything to everybody, then no one does well.
The ability to develop a laser like focus down to every front line employee, is a strategic advantage.
Q: Who is that single point of accountability?
McGee: We have five people who run our almost 6,000 stores, and four of the five are responsible for the high growth markets and the fifth the community markets, wherever they may be across America. Under each of them are region executives, the people the product groups are really accountable to—to get the right product, the right process and have that mutual accountability.
Five people – 6,000 branches (stores) – wow! I know banks in with 1,000 branches, and 15 – 20 people responsible, without counting the SVP’s, VP’s, directors, & senior managers who also are involved.
Finally the positive aspect of dynamic tension:
Q: So, the dynamic tension comes in the discussion and give-and-take between the product groups and the regional executives?
McGee: Well, it’s not at all dissimilar to the classic retail market. You take any retailer and they interact with product manufacturers who want shelf space. The retailer has an accountability to put the product in the right space and sell it. But the retailer will hold the manufacturer accountable if the product does not deliver to the specs ordered and at the price point.
We are very much emulating that dynamic tension. It’s very different from having a head of cards who is only thinking about his or her bottom line. We have an integrated team that really has the new and existing customer as the focal point. So in our company, you have to be very good at running your business or area discipline, but you have to be equally good at balancing that with what’s the best thing for our customers in our enterprise.
That’s why you’ve seen a lot of innovation coming from us in the last couple of years, such as Keep the Change, Mortgage Rewards, Business 24/7 and Safe Send. Take Keep the Change, for example. The reason we were able to do that is, first of all, we spend a lot of time talking to customers. One of the things Six Sigma has taught us is to be very disciplined about the voice of the customer.
Relevance to Bankwatch:
The article is worth reading. Its a standard bearer for how to organise, and implement across a (very) large organisation. You are probably smaller than Bank of America, so no excuses.
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