The culture of a company is a powerful thing. Entering a large corporate environment and you understand movement will be slow and unwieldy. Everything will take longer than it should thanks to the red tape and bureaucracy. Talking about a startup environment and it is the wild west. You are empowered to think of solutions and immediately execute. Things are fluid and agile and fast. Many people find it hard to keep up. One is on one side of the spectrum, and one is on the other side of the spectrum. All other styles fall somewhere in between.
Nothing lasts forever
Large companies get complacent in their bureaucracy and fall behind more nimble, youthful companies. Startups can get too wild in their solutions and fly off the rails. Stuff happens. Large, corporate giants tend to be more conservative and stable with deeper pockets to manage the ebb and flow of the changing markets. But, even they will fall as customers adapt to new technologies and changing tides. Customer loyalty is less important in today’s world.
Who is Failing?
Sears, JC Penny, Gander Mountain, are all failing companies. Nordstrom even struggles to adapt to the online market. Retail, in general, have faltered and profits have dipped drastically with the swarm of competition and online shopping.
We live in a time that industry changes are happening faster and larger companies are still slow to adapt. It is a great time to be alive if you are interested in company turnarounds as companies either die or a leader steps in and turns them back into the giants they once were.
IBM got complacent in the late 80s with their servers and business model. Younger competition rose as an alternative with newer technology and better service. IBM, for years, failed to pivot their way of business until Louis Gerstner stepped up to the plate and tore down the culture of the company and rebuilt it anew. He turned a large, failing technology company into a powerhouse again (read his book, Why Elephants Can’t Dance).
Nissan was a pillar in the Japanese economy. In the late 90’s its culture was stagnant and compartmentalized. Days before it filed for bankruptcy Carlos Ghosn CEO of Renault waded into the chaos. He took this giant failing automotive company and tore through its culture, righting the ship. A monumental task not only because Japanese culture is very strong, but also because he had to make it work with French teams in Renault and together they turned Nissan back into the monster it is (read Shift for more details).
More recently, look to GM. The company was failing. The government had to bail it out earning the moniker Government Motors. These were dark days for GM. They owed the government A LOT of money. They got nailed for the largest (at the time) recall for their failed ignition switches (Volkswagen and Takada air bags eventually took the prize for largest recalls or brand destruction). Enter Mary Barra, the first female CEO of a major global automaker.
She took a failing company with a severely damaged brand and turned its reputation into one focused on safety. New, stylized vehicles came out with new energy, new branding, and new focus. They paid off the government loans, and they rebuilt the strength of the brand. It is youthful, and it is stable and will be successful moving forward. She did it by tearing down the culture and rebuilding it with new expectations.
The banking industry is amid the winds of change. Customers are leaving in droves. Banking is one of the most conservative industries in the world. It must be when dealing with people’s money and their reputations themselves. Unlike the auto industry or tech giants like IBM, this change is affecting all the banks, not just one or two companies. The cultures of Wells Fargo, Chase, Bank of America, and US Bank are all similar in ways. It is deeply ingrained and slow to change.
All Like One and One Like All
Out of the companies that created the turnarounds mentioned above, what do they have in common? Throughout time, human nature turned these companies into fiefdoms. Communication breaks down between departments, then whole divisions. Sure, they still receive missives from the Ivory Tower, but individually, from the region level all the way down to the branch levels, they isolate themselves and consolidate their holdings. Much like the German princes from the medieval ages, there is bickering and competition with little cohesion and communication.
While the big banks are not failing, they are fading as competitors slowly pass them by. IBM did not fail overnight, it faded for years with occasional band aids temporarily staunching the bleeding. In the end, it took the massive outside force of repetitive failures, loss of customers, and a strong leader to make the changes it needed to.
In banking, which CEO will take the reins and tear down its deep-seated culture to rebuild it? Can they break down the metaphorical walls and build highways between the fiefdoms for communication and trade? This might seem like an incredibly insurmountable task, but there are many examples of huge monoliths who have already done so. I hope it happens sooner than later, the idea of a major top 10 bank failing only to be picked over by its rivals is disconcerting at best.