Thawing the frozen middle (how to change the bank)

I sometimes think I’m too harsh on the financial community, with my continual banter about core systems change, lack of digital leadership, inability to see how critical digital is to their future and the impact FinTech is making on global financial structures. I sound like a broken record and rarely post praise of banks. But I have posted praise for some like JPMorgan, Goldman Sachs, BBVA and DBS. In each case, I can see a committed leadership team not just investing in digital transformation, talking the talk, but ensuring that it happens by walking the walk. The CEO and their direct reports in each case are crafted of a strong balance of Fin and Tech, and they have been working at grass roots level to change the bank.

The thing is, after these guys, the list gets thinner. USAA and Capital One maybe; the Polish and Turkish banks, yes; quite a lot of the firms in China, especially Ant Financial but also China Merchants Bank; Equity Bank in Kenya for certain; and Banco Original amongst others in the Southern Americas. But the list thins out and starts to identify smaller players than the megabanks of this world. This is clearly because changing a small- to mid- sized bank for digital transformation is far easier than turning around a national, regional or global giant. In fact, I’ve seen quite a few individuals who have had amazing success at digitalising a small bank, only to be hired by a big bank and get swallowed into the pantheon of resistance. It is like moving from being a big fish in a small pond, where all the other fish follow you, to becoming a small fish in a huge ocean and all the other fish just want you to be eaten.

It reminds me of a line from an old 1990s Tom Peters video where Mike Walsh, the manager at the Union-Pacific Railroad company said: “the organisation either wears you out or waits you out, but either way you’re out”. So true.

Anyways, back to my opening words, I get criticised sometimes for not giving constructive advice to banks about what to actually go and do. Now I have given this advice. It is clearly here in the blog and in my books. It just doesn’t appear to be much positive advice as I spend most days trying to get a fire started under the management team of these big banks.

So today, I thought I’d give some constructive advice and it goes back to the words of Maile Carnegie at ANZ:

“Increasingly, most businesses are getting to a point where there are people in their organisation who are no longer experts in a craft, and who have graduated from doing to managing and basically bossing other people around and shuffling PowerPoints. That frozen middle will resist change like death. It exposes that they have no skills any more. Figuring out how to deal with the frozen middle, once you have the boss’ support, is the big thing. If they’re not going to become craftsman and learn anymore, they need to move on.”

This is so true. It reminds me of when I was involved in marketing some software for reconciliations and exceptions management. The company believed they had actually mastered the automation of Corporate Actions – paying dividends, mergers, acquisitions, equity buy-backs and such like. However, the sales people were lamenting the fact that the target decision-maker for such software was the Chief Operating Officer who, more often than not, would not sign off on such software as it would mean losing a lot of the people who make up their empire. There’s an issue for you: empire building. If a person has climbed up the organisation and got to the point where they are managing one, two or three hundred people or more, the idea of cutting a swathe through that mass of minions is often a political one, and hard for the person to take when it shows how powerful they are.

The frozen middle. The managers frozen between climbing higher, keeping their power base or losing face and being exposed for their true skills, or sometimes lack thereof.

I’ve blogged about these things a lot, but my constructive advice is that if the leadership team of a bank or any other institution wants to really make digital transformation happen, the first thing you’ve gotta do is unfreeze the middle. That is what walking the walk is all about. It’s going around the organisation, explaining the digital transformation that is happening and seeing if people follow the lead by watching them. It’s not just presenting the change, but looking over shoulders and pushing the change through the frozen middle that is resisting it.

OK, yes, you can now move my cheese.