The Absence Of Values In The Credit Crunch Meltdown And Why They Are Really Needed

As the credit crunch unwinds and we can better see how much toxic debt resides where, the question comes to mind, how did these organisations values inform the behaviour and decisions of the relevant executives? Predaptive’s trawl of the publicly available data indicates that virtually all of the UK and US banks involved have at some time either spoken about or published material about their values (what they believe in and stand for) or their culture (the behavioural norms that inform their actions). This turn tends to be largely rhetoric rather than anything of real substance.
Let’s take a common term used – Integrity. How should integrity translate into practical action? You can’t talk for long about integrity without coming to trust, perhaps a bank’s most important asset. For a bank to jeopardise its trust with customers, commercial or retail, would be as crazy as a doctor making diagnoses for personal rather than patient gain, but that’s the equivalent of what the banks did.

They did not behave illegally (so we assume), and seemed to stay within regulatory boundaries, but not within any kind of meaningful values framework. What were the belief systems these banking executives were using to inform their strategy? Well, now we know. How to make the most short term money (with personal bonuses to match), by leveraging their capital base many times over. Like a drunken dancing, it only makes sense whilst you’re doing it, looking at it from any other context looks ridiculous and unsustainable. And when most of your peers are also doing it, affirmation that you look cool is easy to come by.

UK Savers made a simple assumption when they put their money into Icelandic banks. That all banks’ risk policies and governance procedures were the same, so savers put their money with the Icelandic banks simply because they offered the best rates. The banks weren’t working to a values framework and neither were the savers.

There has been a lot of speculation that ethical banking will do well post-crunch. Yet this ethical definition is usually taken to include their policies around environmental and exploitative practices. In the future it will be worth testing their values on a much broader basis connected to their fundamental way of doing business, caveat emptor indeed.
What this demonstrates is there is the market space to create a real competitive differentiation. To be a commercially focused, values driven organisation, by demonstrating the public rejection of certain types of lending and related financial instruments.

Commuting For Success

Commuting has always been a time consuming experience, but with fuel prices at their current levels and congestion in the UK leading to delays it now takes up more time and money, so how can you make the most of your commuting time?
You can always read work papers and mentally plan for the day ahead or reflect on the issues you’ve encountered, but what if you want to make good use of the time without turning it into part of your working day?

We took an informal survey of some of our most successful customers and here’s what they told us about Commuting For Success:

  • I’m using my time on the train to read, not another pile of contracts, but all the novels I wish I’d read years ago. I could save them up for when I retire, but I’m really enjoying escaping into other worlds, other lives. It’s surprising how much I learn from them that I can apply to everyday life.
  • My iPod has transformed my commute. At first I couldn’t see the point in shutting myself off to listen to music, but I’ve discovered I can download audiobooks which I find inspiring, the commute seems shorter and I feel smarter.
  • I’m loving Radio 4. I drive for hours every week and used to listen to a few favourite CD’s, but now I learn something new everyday, whether it’s something I thought I’d be interested in or not.
  • I’ve started shunning the Metro and shelling out 80p on a newspaper. I can read the news on the way in, getting myself in a business frame of mind. I save the supplement for the way home, it helps me relax and think about more social and arts related things before I get home.
  • Brain Training helps me switch my brain on in the morning, whether it’s Nintendo or the crossword, doing something abstract helps me get thinking and I feel far more alert and creative when I get to work. Super Mario is more of a trip home treat!

What are your active learning commuter tips?

Taking Yourself Seriously

Job titles can be a contentious area in organisations, whether people feel they make people too status conscious, or whether they feel titles provide a clear signal to colleagues about the structure and hierarchy they matter to individuals.
An interesting trend is for people to choose their own titles, whether from a set of HR approved options or completely without restriction. This can be revealing as the titles people choose for themselves give an insight into how they view themselves and their role. A salesperson that chooses a title of Relationship Manager has a different perspective on the role than a New Business Manager. Someone in Customer Services who calls themselves an Administration Assistant sees their responsibilities differently to someone choosing to call themselves a Customer Champion.

If a comic book store employee chooses to call themselves Lord High Emperor of Checkout it’s mildly amusing. If a theme park employee wants to be a Fun Manager that’s probably acceptable to colleagues and customers alike, but the impact on customer perceptions of job titles is an important consideration in the free choice of titles.

Customer Service Princess is fun in a shop aimed at pre-teens, but less well received at a hotel reception when your booking has been replaced. People are more likely to take a Personal Banking Executive seriously, and feel that that Executive will take good care of their finance than the more whimsical Money Wizard, which may sound like a lot of fun right up to the point when you want to speak to their supervisor before signing any documentation that will affect our future.
Job titles may reflect an individual’s personality and that of their employer, but they also need to signal their worth to customers.

How To Use Four Tools Of Competitive Advantage To Consistently Beat Your Rivals

Organisations that can consistently outperform their rivals whether the economy is doing well or not achieve this difference not because of luck, but rather because of deliberate actions in particular areas.
In this article we look at 4 of the key areas, and take Tesco as our example in how they effectively deploy these four different (but overlapping) areas of focus.

Firstly, the ability to challenge current industry orthodoxy. To do things that run contrary to what everybody else is doing at the time. Tesco moved into non food areas more aggressively than anybody else, indeed at a time when Sainsbury’s were going in the opposite direction (since reversed). Challenging existing normal practice makes you distinctive, and from distinction comes differentiation. They are currently doing the same thing with their US West Coast expansion with a very different supermarket format. Of course there are risks to this approach, but always having a basket of new ideas in development increases the chance of one or two becoming the new market standard.

Secondly, Tesco were able to get close enough to the thinking of their customers to be able to indentify their unarticulated needs. Every business is answering articulated needs, this is about giving expression through your offering to needs customer didn’t know they had, until they see it. Customers wanted the ability to buy a range of quality priced items. Before Tesco introduced their Value and Finest ranges people had to go to different shops to achieve this. Why? Because people thought that’s what they had to do. And marketers said you will get brand contamination if you put expensive and cheap next to each other. Tesco looked at this and said surely it would be more convenient for our customers to do more of their shop in one store. The key was making the different ranges prices points match the corresponding quality point. The Finest range had to be clearly superior to warrant the extra money.

Thirdly, to recognise the unseen assets you have and use them in new ways to develop competitive advantage. Tesco’s loyalty card scheme is now worth £100s of millions; was not built as part of a consortium, will not be outsourced because it’s recognised as a hugely effective way to track and predict buying behaviour. They would sell stores before Clubcard.
Lastly, exploiting trends before anybody else. Having a vision for the sector you are in, from developing a point of view around how the industry will need to change, and then building your strategic response. When the planning law changes meant that building superstores was going to be difficult, Tesco were one of the first to look at the fragmented local, corner shop market, buying up chains and indentifying sites. They saw that to grow they were going to have to develop new store formats and the local stores also gave them the chance to serve to urban, repeat shopper rather than the weekly family shopper.

How is your competitive advantage being developed? To discuss or for further information please contact us.