Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.
Banks Must Become Resilient to Continuous Disruption
Banking will never return to the way things were done in the past. Continuous disruption is the new norm. The mission is to become more resilient and to benefit from the change that surrounds us.
How can banks and credit unions navigate the intentional evolution of financial services while continuing the existing execution of engagement with customers? In other words, creating new business models from within what already exists.
I am excited to have Brant Cooper, author of the book, ‘Disruption Proof’ on the Banking Transformed podcast. He will discuss the 5 elements required for organizations to be able to deal with accelerated change today and in the future.
This Episode of Banking Transformed is sponsored by FIS
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You have to read The Global Innovation Report from our partners at FIS. From embedded finance and ESG to crypto, decentralized finance and the metaverse, FIS pinpoints the trends you need to watch – and explains how innovation can give you an advantage, in good times and bad.
Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, Owner and CEO of the Digital Banking Report, and co-publisher of The Financial Brand.
Jim Marous (00:22):
Banking will never return to the way things were done in the past. Continuous disruption is the new norm. The mission is to become more resilient and to benefit from the change that surrounds us.
Jim Marous (00:35):
How can banks and credit unions navigate the intentional evolution of financial services while continuing the existing execution of engagement with the consumer? In other words, creating new business models from within what already exists.
Jim Marous (00:50):
I'm excited to have Brant Cooper, author of the book Disruption Proof on the Banking Transformed Podcast. He will discuss the five elements required for organizations to be able to deal with accelerated change today and in the future.
Jim Marous (01:04):
There once was a time when change and disruption was evolutionary. You saw it coming, you could prepare accordingly. This is obviously no longer the case. In fact, as mentioned in Brant Cooper's new book, Disruption Proof, change has become more unpredictable, more complex, and certainly more chaotic.
Jim Marous (01:23):
Preparing for inevitable disruption requires a brand-new mindset. So, welcome to the show, Brant. Let's start with two very fundamental questions. First, is the pace and degree of business disruption bad? And secondly, can an organization truly become disruption-proof or simply, somewhat disruption-ready?
Brant Cooper (01:47):
Great questions, Jim. Thanks for having me. Is it bad? Boy, I don't know. I guess, I'm not sure I have a strong opinion on that. It's inevitable. It's the way it is. So, I guess, it depends on whether you're looking at things like optimistically or pessimistically.
Brant Cooper (02:03):
I think that what change brings is opportunity. And so, I guess, I would put it this way: there's endless opportunities. There's endless opportunities for us to create value in the world, for us to improve what we're working on, to make things better. But it's hard and I'm not sure it's embedded within us to be ready for that sort of constant change.
Jim Marous (02:30):
And then the other part, can you become disruption-ready or disruption-proof?
Brant Cooper (02:34):
Well, we could be a lot better at it. So, I think it's not a bad goal, but no, I don't think so. Because if it's unpredictable, then ... just looking at the pandemic, people knew that a pandemic could happen. People knew that a pandemic was likely to happen at some point in time, but I don't think that we really could have been completely prepared to deal with what actually came.
Brant Cooper (03:09):
So, we could be better prepared. Can we be totally prepared? Are we always going to be prepared? No way.
Jim Marous (03:14):
And it's interesting because when you look at it, I agree with you , I think it's perspective — your ability to be prepared or willing to look at the opportunities of change is really a perception issue, and within an organization or as an individual.
Jim Marous (03:30):
And I think that's a very interesting perspective overall to say within any disruption, there's something good. We saw that a lot of organizations, a lot of people, I wouldn't say benefited from the pandemic, but certainly, adjusted to it accordingly, which is really quite good.
Jim Marous (03:50):
And then when you think you've caught your breath a little bit from the pandemic, all of a sudden, economic uncertainty becomes almost, in a certain way, more damaging or more frightening than the pandemic did, except from a health perspective.
Jim Marous (04:03):
So, what's interesting is one of your early premises in your book is that most businesses don't need to innovate. Can you explain that a little bit?
Brant Cooper (04:14):
Right. So, it became very popular, eighties, nineties, two thousands, that companies needed to do breakthrough innovation or disruptive innovation. And this was really brought to the fore by Clayton Christensen, whom I respect a lot his work.
Brant Cooper (04:30):
But I think that era is over, to be honest. I think that if you're not a technology company, you don't really need to worry about yourself, your organization doing breakthrough or disruptive innovation. Most companies don't need to invent new things. They just need to deal with new technology inside their own processes and when interacting with customers, and updating their products and those type of things.
Brant Cooper (05:00):
So, I think that the way people understand innovation, most companies just aren't required to do that. I think incremental change is fine, and I think that an innovation mindset is totally key, and all of these same organizations must have an innovation mindset. It's just that what they're producing is not what many would call "innovation."
Jim Marous (05:30):
It's interesting because in the banking world, I think the way I look at it is that organizations trying to do that next big thing, innovation, it becomes way too slow. I mean, as I mentioned to you before the podcast, I was fortunate enough to visit Shenzhen, China in a company called WeBank, which is the biggest digital bank in the world. And they thrived on iterative innovation.
Jim Marous (05:51):
Basically, they took great pride on the fact that they went from ideation to implementation in 14 days. Well, you can't create a big blast innovation in 14 days, but that iterative process is really quite beneficial to an organization.
Jim Marous (06:08):
You also discussed in that whole concept of innovation that organizations don't necessarily benefit from developing a separate part of an organization that is that new innovative division or organization. Can you explain that a little bit?
Brant Cooper (06:26):
Yeah, sure. So, I think that this came out of the great recession where entrepreneurialism boomed and startups became very hip again. And I think a lot of organizations said "Hey, we need that." And so, they formed these innovation labs and these innovation teams.
Brant Cooper (06:44):
And again, I think that they were assigned the task of doing breakthrough innovation. And so, they go into their canvases and they're looking at all the different boxes, and they're trying to figure out, well, how might we change this aspect of our business model to prepare ourselves for 5 or 10 years down the road?
Brant Cooper (07:03):
And I don't think that they're going to able to do it. I think that the idea that a company can assign four or five teams, put them in a lab and say, "Okay, go figure this stuff out" really flies in the face of what's actually going on in the economy, where you have literally thousands of startups trying to figure out what that next big thing is.
Brant Cooper (07:30):
And so, there's just no way (I don't care what the budget is) that four or five teams are going to go figure out what the future holds compared to thousands of startups, most of which are going to fail what they're trying to go and figure out.
Brant Cooper (07:46):
And so, I think the very premise of those labs was wrong. And I think a lot of companies understood that very quickly. And so, those labs did what we called is innovation theater. And so, what they're really showing off is the number of squirt guns they have, not the number of patents that they've developed.
Brant Cooper (08:06):
And as a matter of fact, there's a very large European bank that had one of the best innovation labs that I ever saw. And it was very hip, it was very glitzy on their fifth floor or something like this. And they interacted with startups, and they had their open floor plan and all the rest. And yet, meanwhile, I was also a business customer to some of their backend systems.
Brant Cooper (08:34):
And those backend systems were 30-years-old and clunky, and hard to use, and didn't really provide me any value. As a matter of fact, we had to quit that whole thing with that particular bank. And so, to me, that was really when it dawned on me, is that these companies actually aren't focused on improving their efficiency or their efficiency or their value creation or any of these thing that really is what the word innovation means.
Brant Cooper (09:00):
Instead, they're just kind of showing off this lab. And so, again, I think the mindset is important. They need to face down uncertainty and they have to try to figure out how to improve. And what you're talking about in China, that continuous iteration, that becomes your competitive advantage as opposed to hoping that you're going to invent something down the road.
Jim Marous (09:24):
Well, it's interesting too, because the continuous iteration, especially in banking, becomes somewhat easier to absorb mentally and in your gut. What happens also is that when we see organizations split their organizations, what tends to happen becomes an us versus them.
Jim Marous (09:41):
My wife was in retail, and retail was notorious for moving from store-based to digital, and then they became enemies of each other thinking that one was going to unwind the other, when in fact, they could coexist, and in fact, better to coexist.
Jim Marous (09:55):
We see organizations right now, still today that continue to divide or not integrate both parts of the good and bad, the living and the dead. And what happens is, in some organizations, the big monolith, existing or legacy organization pretty much squashes the innovation side, because it's a threat to their existence in many cases.
Jim Marous (10:21):
It's interesting too, in the banking industry especially. There's a thought that you can almost invest your way into modernization. When you're looking at digital transformation, is it about technology or is there something bigger than that?
Brant Cooper (10:36):
Well, it's like the technology's important, but there's not a lot of uncertainty around the technology, which I think is why people gravitate towards the technology side of things because it's very scientific to be honest.
Brant Cooper (10:50):
And especially if you're buying the technology from another company, it's pretty solid, it's been tested — and so then you have your own processes for integrating that technology into your products, and that's sort of really what digital transformation is.
Brant Cooper (11:03):
As well as, like in the banking example I gave: updating your systems and processes, your back office functions. But I think that what's ignored often when we start going down this technology path is the human side of it. So, it's understanding what are the needs of our customers and different stakeholders — customers, users, what are their needs and how do we best satisfy those needs?
Brant Cooper (11:34):
So, I think banking is always such a great example because I think that they cover sort of this wide range of legacy, plus trying to be on the cutting edge of technology. And you can see a lot of people in the financial sector now going like, "Well, this blockchain is coming, we should really figure out how to leverage blockchain. Let's build a blockchain app."
Brant Cooper (11:57):
And so, should you be aware of blockchain and what that technology might do, and what startups are doing and what venture capitalists are investing in? Yeah, you better be aware of it. Do you have to actually go in and apply it the next couple of years? No. Do you ever have to apply it? Well, only if it actually allows you to address the needs of your customers better than your existing technology.
Brant Cooper (12:22):
And so being aware of those type of things coming down the pipe is super important. But when we focus on just the technology (we have to go build something blockchain), then we're totally ignoring what are the needs of our customers.
Brant Cooper (12:37):
And that's really what should be driving organizations, is what are the needs that we can address and that we're best at addressing that our competitive advantage gives us a step ahead of anybody else, including startups that might be building some sort of app.
Brant Cooper (12:53):
You have to leverage your strengths in addressing your customer needs. And at some point, in time, that maybe includes cutting-edge technology.
Jim Marous (13:06):
It's interesting. One of the foundations of your book is that you introduced the importance for organizations to be RAD (Resilient, Aware, and Dynamic). You've already mentioned how important it is to be aware and have an awareness not only of what your customer needs are, but what your capabilities as an organization are.
Jim Marous (13:28):
When you talk about the resilient and dynamic part within the context of awareness, what exactly are you talking about there and how do organizations become more resilient, aware, and dynamic?
Brant Cooper (13:42):
So, resilient is an interesting word. It always brings to mind to me, a palm tree in a stormy environment. So, its roots are super strong, clinging to the cliff or the hillside. And there's a lot of strength there, yet when the storm comes, it's able to flex and bend in the wind.
Brant Cooper (14:08):
And so, I think that organizations, large, existing, legacy organizations have a lot of core capabilities, differentiation, expertise that sort of establishes that strength. Yet, in a world of continuous disruption — and just to be clear; by that disruption, I don't mean just startups creating new technology, I mean things like the pandemic and supply chain issues and ransomware attacks, and the big quit, and all of these things that just tend to ripple across our economy endlessly nowadays.
Brant Cooper (14:51):
So, you have to be flexible in order to weather the storm. And so, that's really what the resiliency is. The dynamic side is (and this is what helps you become resilient) that you have to build the capability of change into the organization.
Brant Cooper (15:08):
And so, if you're aware, if you are aware of changes that are going on — you were in China in 2020, January of 2020, if you start to become aware of Chinese factories closing and these other things that were going on there before it had hit the West, that awareness actually is perhaps an opportunity but it's also something that you could bring back just to help your organization. But once you have that new information, you have to be willing to change.
Brant Cooper (15:40):
So, if you can imagine Nokia in 2015 has a five-year plan for the handsets that they're going to manufacture, 2017, the iPhone comes out. 2018, the iPhone takes over the world, and 2019, 2020, your Nokia is still producing the handsets that were in your five-year plan.
Brant Cooper (16:00):
So, that's a problem. So, we have to build this ability to take action when we've learned something new.
Jim Marous (16:07):
So, you talk within that whole concept of being a RAD organization, that you have to have the 5 Es of disruption. You have to have empathy, exploration, evidence, equilibrium, and ethics. We can certainly have a podcast over every single one of those Es.
Jim Marous (16:27):
If you were to prioritize, and I don't know if you can, because I can make a case on anyone you pick that another one's more important. But what would you rank these or how would you put these in the context of each other?
Brant Cooper (16:42):
Yeah, so the 5 Es are what I describe as the behaviors that need to happen all across the organization. So, sort of gets out of that silo mindset that we were talking about earlier for innovation. And so, I think that the top priority to me (and maybe it's just because I love it, maybe this is a bias answer), it's exploration.
Brant Cooper (17:01):
And so, I think that the exploration is sort of that innovation mindset that I was talking about. We're facing uncertainty, so we have to let go of how we did things yesterday and go learn how to become optimized again. Go learn how to solve the problems, go learn what the customer needs are, and how they've changed.
Brant Cooper (17:23):
And so, this exploration behavior, which is incorporate some of the empathy and running experiments, and leveraging insights plus data as the evidence, so they all start connecting up. But it's really this idea that exploration is really going to make us more efficient in our execution.
Brant Cooper (17:46):
And so, there's sort of these innovation memes that again, I think came out of really the heart of the industrial age, where an organization really was supposed to just execute — execute, work harder. The moment you ran into troubles, do a bunch of layoffs and just kind of push everybody to execute a little bit harder.
Brant Cooper (18:09):
And yet, if you're in a period where change is constant, executing harder, you're going to fail. So, if you try to execute through uncertainty, you're going to fail. And so, you have to build in this learning mode, this exploration mode before you just rely on the execution. And the amount of uncertainty that you face dictates how much exploration you need to do.
Brant Cooper (18:36):
So, if you actually have to go and update your marketing plan or trying to find a new market segment, then maybe the uncertainty is relatively low. But if you're actually trying to figure out again, how you're going to leverage technology to create new products, then your uncertainty is larger, so the amount of exploration that you do is larger.
Brant Cooper (18:59):
And so, it's not that everybody needs to throw away their execution engine and just go and explore, it's creating that balance of exploration and execution, and that exists all across the enterprise. It's not one group's job to do exploration. Everybody has to do it wherever they face uncertainty.
Jim Marous (19:18):
Well, it's interesting too, in the book, you talk about all five of these. And it's interesting because in each one of them, it really focuses to a degree, on listening skills as opposed to the doing skills. We, as you said, we tend to do things for the sake of doing things. If we keep moving, we'll be okay.
Jim Marous (19:37):
When sometimes sitting back and listening and being aware be it empathy and evidence and ethics even — you're in a better position to be resilient, to be ready as it were for the change that's happening. And I think if we look at the pandemic simply as an example of a time when those people that did best probably increase their awareness skills to say what is going on, and how can I adjust to it? As opposed to simply being worried about what's going on and continually running faster.
Jim Marous (20:16):
What's interesting too, and I think you bring this up in the book pretty well, is that these are not just top-down traits. This is not just something that is talked upon on high to say you have to have empathy, you have to explore ... it's really also somewhat bottom-up traits as well, correct?
Brant Cooper (20:33):
Yeah, I think the bottom up is super important. So, I think that all legacy organizations tend to be hierarchical, command and control. I think most of these leaders now understand that we're kind of in a different world. And so, they want change, but they tend to implement the change sort of in that same old school way.
Brant Cooper (20:59):
And you can't really get change behavior by top-down mandate. You actually have to start bottoms up. So, you need the top to buy in. You got to fund it, you go to get training, you got to do these things that support the change that you want to see. But the actual change that happened in my case, I think in my book, represented by those 5 Es, you have to learn it, you have to practice it, you have to practice it over and over again, and you become better.
Brant Cooper (21:30):
And you actually start what I call training up managers that actually are managing teams that are operating in this way. They have to learn new skills. And so, you have to invest in that. And so, I think it totally is bottoms up, but it's sort of a pincer move. You need the top-down as well.
Brant Cooper (21:51):
And again, I actually think most leaders understand that. I just think that they often hire the same big consulting firms that actually are facing the same exact issues as they are. And so, it's easy for them to grok at a conceptual level, I think it's hard to implement. And there's no doubt about it. It is difficult.
Jim Marous (22:17):
Well, and it's something that I look at more and more for the banking industry, in that we hire trainees and then we do rotation to have them learn the way we do things, which seems to be counterproductive in a sense, where you go how are you going to get new ideas in if you keep on showing people how we've done things in the past. But success is kind of like the enemy of this whole process, isn't it? Because until you're not successful anymore, there's not the pain of not doing change.
Jim Marous (22:46):
So, you have a situation that the banking industry from one institution to another haven't had very many down years. They've had lower years, but not down years. Certainly, not years they haven't made money. As a result, there's leadership that says, "Guys, why fix it? It's not broken." And that creates its own challenge, doesn't it?
Brant Cooper (23:13):
Yeah. I mean, I think that that's true. And we've worked for with some banks and some of them sort of ... I think a lot of them recognize the need for moving fast and this agility and that sort of thing. But what was always interesting to me that I observed is especially the wealth management side of banks couldn't care less about what we were up to.
Brant Cooper (23:39):
As long as you're making money, hand over fist, the last thing you're going to worry about is that sort of change. But on the other hand, the early adopters, the leaders, the ones that are going to be paving the way will get that they can start adapting and moving quicker.
Brant Cooper (23:56):
Capital One is another company that I think invested in that sort of change. And you can look at even the quality of ... maybe this is a little bit old, this story, but I think that the quality and the ability to roll out good mobile apps in the banking industry was not consistent across the industry.
Brant Cooper (24:17):
You definitely had those banks that actually did a great job with their mobile app, and those that it took them a while to catch up. But that's also a great example of digital transformation. That mobile technology's been around forever.
Brant Cooper (24:33):
And so, again, some of the companies are able to go like, okay, we're going to adopt this digital technology and that's going to put us ahead of the field. And then you had other ones that are going, "Okay, I guess we got to do it now too."
Jim Marous (24:45):
It's funny, Brant, that when we do research for the banking industry, one of the questions we ask is, “Can you digitally open new accounts?” And 85% say yes. And then we dig a little bit deeper to say, “Okay, are you opening accounts digitally or are you doing things in a digital way?” And we find there's a vast difference.
Jim Marous (25:07):
A 15-minute process of opening a new account on a mobile app is not digitally, it is simply doing things on a digital platform, what you used to do on a branch platform. It's certainly not where it needs to be.
Jim Marous (25:23):
It's interesting when you look at organizations globally, what organizations, knowing that a year from now, we may look back and say, "Boy, were we wrong on this," but what organizations right now do you think are really positioned well for what could be just more and more change going forward?
Brant Cooper (25:44):
Yeah, so just straight from the banking industry, to me, the organization that was sort of leaps and bounds, but ahead of others was ING in Europe. And they really took the lean innovation stuff that we taught them, as well as some of the agile principles, they took them seriously and really reorganized their whole bank, the whole structure of the organization in order to be truly more closer to customers.
Brant Cooper (26:17):
And this includes both retail and wholesale, but they were truly customer responsive, and they were very fast at adapting. And I think there's a couple of stories in the book about how not everywhere, but a couple of countries in particular, they were able to respond to their customers during the pandemic extraordinarily fast.
Brant Cooper (26:42):
And so, one of the fun things about the book, to be honest, Jim, it's very unusual for a business book to be able to say, "Listen, this is our hypothesis on what you should be doing." And actually, be able to then look several years later at, "Okay, here's the organizations that did that and actually benefited when they ran into a disruption. "
Brant Cooper (27:07):
And ING is actually one of them that implemented this empathy development and running experiments and understanding customers deeply and leveraging evidence and being agile. That started in the mid-2000-nteens, whatever you call those years. And so, when the pandemic hit, they were able to respond pretty darn quickly.
Brant Cooper (27:30):
What's interesting too, is that like a lot of large companies, they looked to the digital leaders to try to get the human side of digital transformation. So, they looked at Spotify and Amazon and Google and Zappos, and some of these companies that actually talk about how teams work, the dynamic part of it, and how they move quickly.
Brant Cooper (27:56):
Because those institutions, like ING, recognized that there was a human side. That technology itself wasn't going to suddenly make a company digital as you put it so well with that mobile app.
Brant Cooper (28:13):
And so, I think that ING's number one. I think that in other sectors, there was Gerber Technologies that I mentioned in the book, there's a company called Humanetics that's doing work like that now. So, it's hard for me to know ... Roche has been very active in this realm.
Brant Cooper (28:41):
A lot of it really driven by digital transformation. I mean, it's so funny to me, we started this conversation about innovation labs, and one of the questions I asked when writing a blog post about this, is why did the innovation labs not lead the digital transformation efforts of their companies?
Brant Cooper (29:00):
I mean, to me, that is sort of the hallmark failure of innovation labs. They should have been the ones that were seeing it, implementing it, pushing it. And yet, most companies have now sort of accelerated into the digital transformation side of the business, and it's not using their innovation labs.
Jim Marous (29:21):
That's a great example, because I know a couple of very large financial institutions that said that their innovation labs were nothing more than showcases for the investor public. The real innovation was done within the brand system in back offices that were working to transform the organization from within as opposed to a showcase.
Jim Marous (29:42):
And it's interesting because sometimes those organizations are very big, do it well because they have money. But it's still a mindset. I mean, I look at what Bank of America's done with Erica, their digital engagement platform and some of the other things they've done.
Jim Marous (29:58):
Sure, they have a lot of money. But the reality is if you look at Bank of America over not only the pandemic, but back to 2009 and 8, they were the organizations that did the best from a profitability and from a readiness standpoint because that was their mindset. Not just because they could invest their way out of it. It certainly had helped.
Jim Marous (30:21):
But it's also, you talk about legacy organizations. You discuss in your book the importance of looking backwards within your own existing organization before charging forward. The don't leave the baby for the bathwater, whatever the saying is — that don't throw out the baby with the bath water — that you also have to look at what your existing organization is as part of that whole being ready for disruption. Why is that so important?
Brant Cooper (30:53):
Well, I think that there's often a DNA that exists inside these older organizations that a lot of the … and more recent employees going back probably several decades now, but are unaware of.
Brant Cooper (31:14):
And so, I remember doing a talk at Corning, and I was waiting in one of their lobbies before I was doing the talk. And I looked at the posters, I looked at the history of running experiments. I looked at the history of actually failing when they sort of assumed that a technology was going to be leverageable in a particular way and they were wrong, but they were able to pivot and use the technology in a different market.
Brant Cooper (31:42):
And I was just sitting there, and I ended up using it in my talk because it was just mind-blowing to me that such DNA existed in inside the company. And 3M is another example, and it's really the failure. I think we learn more from failures than from successes. But it's interesting to look back and see where companies had to make changes and got things wrong and then, and then leveraged the learning for figuring it out.
Brant Cooper (32:11):
And so, I think that there's I think that there's things that you can understand about your organization's DNA that can help you adopt these learning or exploration principles
Brant Cooper (32:28):
And another example from the book was Cargill. And so, there's a company that when they started looking at the market for alternative proteins, they didn't feel like they had to jump in and go create a bunch of startups in their innovation labs.
Brant Cooper (32:47):
They were actually able to sit back and watch the market develop and then figure out that, hey, what we are really going to be able to bring to the table is our distribution engine that virtually nobody can touch. And then we can make our move at the right time, whether that's through acquisition or partnering or some of these other ways.
Brant Cooper (33:07):
And so, to me, there was another example where they could look and understand what their core differentiation was, what their competitive advantage was. And so, rather than kind of chasing this fantasy of disruption and this fantasy of this new technology breakthrough — let's look at our DNA and our core competencies and what differentiates us. And then let's leverage that as we start to look at how we're going to create new growth over the next several years.
Jim Marous (33:40):
So, let's take a short break here and recognize the sponsors of this podcast.
Jim Marous (33:42):
So, welcome back. I'm joined today by Brant Cooper, author of the bestselling book Disruption Proof. We've been discussing how financial institutions, actually, organizations in any industry must continually evolve and embrace change to become future-ready.
Jim Marous (33:59):
So, Brant, it is no secret to the majority of people, change sucks. Using this as the foundation, how does leadership get organizational buy-in for concepts that could cost them their jobs?
Brant Cooper (34:16):
I think that jobs might be lost anyway, or they might be lost if they're not able to actually start weathering the change because I just think this is going to be the new way of working.
Brant Cooper (34:29):
I think that the disconnect often is that the leaders are demanding workers change. They demand sort of the employees adopt a new mindset rather than investing in that mindset change. And part of the investment in that is that you have to align incentives.
Brant Cooper (34:50):
And this is not just monetary, but you have to align a way of working the space, to work in a particular way. You have to align the structure even in order to get the type of behavior that you want.
Brant Cooper (35:05):
It's pretty well-known. I think it's scientifically shown that when you deal with sort of rote behavior, things that are done in a repetitive way, then money compensation tends to be very important. But that if you start dealing with complex issues where you actually have to engage your cognitive thinking and problem solving and all those type of things, it's more rewarding work. And so, the monetary is less important. It's still important to reach a threshold, but it's less important than the ability to work in a way that gets to exercise your creativity and your inspiration.
Brant Cooper (35:46):
So, it's kind of ironic to me that at least, I'm trying to make the case that organizations must do that with their employees. They must work with the structure and how you organize your work so that people get to exercise their creativity and their intelligence.
Brant Cooper (36:08):
I think it's ironic that that's required, but at the same time, the HR policies tend to be sort of very old school, command and control: "No, you must come back to the office. No, you must do remote work. No, you must follow this rigid policy of hybrid work."
Brant Cooper (36:28):
And there's sort of like this glaring, this sort of misalignment there between ... if you actually empower your people and you let them choose, I think based in a team structure, not an individual structure — but based in a team structure, you allow them to figure out where they should be working based upon the type of work that they need to be doing …
Brant Cooper (36:50):
And if you delegate decision-making so that teams become empowered to actually solve problems themselves, guess what you also get? You get employees that are more committed to the company because they feel like they're making a contribution. They get more passionate about their work because they're exercising their creativity and their inspiration. They get to have the social construct of a team that they're working with.
Brant Cooper (37:16):
And to be honest, in my opinion, the teams will reinforce accountability and behavior and those type of things. And so, if companies can actually make that switch, they actually start solving a lot of the big quit and the resignations and the remote work, and all of those end up becoming things that are solved out of actually creating the right work environment for people.
Brant Cooper (37:40):
And so, getting companies over that hump is really just remains the biggest challenge, and I think it's scary. But I think that the benefits far outweigh the risks. And every year, there's more and more organizations that are adopting those type of things. There's even other companies that you can learn from and how to implement that sort of thing in your own company.
Jim Marous (38:08):
It's interesting, I'm a big fan as many people on the podcast, that listen to podcast know of Liz Wolverton, what they're doing at Synovus. So, a legacy bank — in fact, there was one in Columbus, Georgia, and the way that they integrate employees into the process of transforming the organization.
Jim Marous (38:24):
And there's a trust playoff because if you simply push down what you need to do, there's a break of the trust factor within an organization. On the other hand, when they want to close branches, they engage all the employees that are going to be impacted and let them know how they'll be positively impacted by this change.
Jim Marous (38:45):
What ends up happening is they have a much better conversion rate of those customers to a different branch than they're used to going to, as opposed to people talking down on the organization the entire time during the process.
Jim Marous (38:59):
And it's interesting, as you said, if you build that trust between employees and employers, if you show them how they are part of the future and how it benefits them upfront and truthfully, how that really works to everybody's advantage.
Jim Marous (39:14):
It's interesting because when we talk about digital transformation, a lot of times, we talk about improving the customer experience. Well, there's also the impact of efficiency. There's a financial impact that works well for organizations.
Jim Marous (39:27):
How do you see this playing out as we look at change overall, and as we get more and more towards more digital organizations that have less of the costly infrastructure, both back office and front office to deal with?
Brant Cooper (39:44):
Well, so efficiency is sort of one of my favorite topics now because I think when we were producing widgets in factories, it was pretty easy to measure financial efficiency. Can you get more output for what you're putting in? And really the in is labor and raw materials and all these other type of things.
Brant Cooper (40:02):
In a digital world, it's really not quite so easy to measure that. And I think that by continuing to measure just that sort of financial efficiency, we're trying to jam a square peg into a round hole. What we've lost in that story is the financial efficiency of what?
Brant Cooper (40:26):
So, now, if we're doing reorgs or we have to cut people like just the layoffs that are going on (and this happens even in the tech companies), the company's kind of go like, "Oh, we're going to just do this 10% or 6% cut across the organization."
Brant Cooper (40:40):
Well, that's actually pretty silly way of going about it. Maybe they think it's fair, I don't know. But if we think about it in terms of what is the efficiency of accomplishing our mission, it kind of changes that game. So, if we're thinking about what are the activities that we're doing that create value and how do we become as financially efficient as possible in creating the value that we're supposed to be creating as a business ...
Brant Cooper (41:09):
Like if you look at, I don't know, I use examples in the book like Uber or Airbnb. Uber's not going to start flipping hamburgers if they think that they actually can become more financially efficient by becoming a burger joint. No, their job is to accomplish their mission, which is getting people from point A to point B or now, with all of their food delivery, it's expanded. But they still have this mission that has to do with cars.
Brant Cooper (41:35):
And so, if you ask the question, how do we become more financially efficient and we stop there, then what you get are standardized cuts across the organization. If, however, you say, how do we become more financially efficient in accomplishing our mission, then we're going to start looking at things a little bit more finely to understand that, "Hey, listen, we need to trim fat everywhere, but we don't want to cut into the muscle, where the muscle is the value that we're creating."
Brant Cooper (42:04):
And so, I think that if we just apply that concept inside of our businesses, it would be a game-changer. And just a couple of examples.
Brant Cooper (42:11):
If companies over the last decade or two had been saying, "How do we keep our supply chain as efficient as possible while being able to accomplish our mission?" Then redundant supply chains may have been okay.
Brant Cooper (42:32):
But if we just look at financial efficiency, we're going to say the redundant supply chain is overhead, it's just pure cost. And then a disruption happens and our supply chain goes by, "Well, now what is the loss?" I mean, the losses are huge.
Brant Cooper (42:47):
In San Diego, we had a ransomware attack on one of the hospital systems. And it's the same sort of thing. It's like if you ask how do we become more financially efficient, then redundant IT systems, training nurses on how to act in an analog way instead of just purely digital way, those things would be considered overhead and just costs.
Brant Cooper (43:15):
But if you think about the financial efficiency in accomplishing our mission, which is to provide great healthcare to the citizens of San Diego, then maybe those decisions are like, "Well, no, we really should have some redundant IT systems, and we should have an analog day where nurses are trained how to do these things so that when the disruptions come like a ransomware attack or a supply chain issue, we're actually still able to provide the value that we're signed up to provide.
Brant Cooper (43:41):
And so, I think that it would be interesting, and I'm not sure Wall Street would completely reject it, is that if we actually just redefined what we're trying to be efficient at and get rid of the cuts by silo and look at how do we become more efficient at the integrated whole that's required in order to achieve our mission.
Jim Marous (44:09):
Yeah, it's interesting because you look at these recent examples and there's been so much change. And you mentioned that a lot of the layoffs have happened in the tech industry that actually was building on the future growth that they thought would be achieved. And then all of a sudden, the economy goes south and they're not prepared.
Jim Marous (44:26):
And as you said, are they taking these cuts, slash them across the entire board or are they selectively doing those?
Jim Marous (44:32):
So, as you look at an organization trying to become more disruption-proof, what's the most disruptive change you see on the immediate horizon?
Brant Cooper (44:44):
Boy, I'm not very good at, at predicting the future. I think that it really has to do with ... I hate to be like an AI fan boy. But I think that as AI, true AI — it's kind of used as a buzz word now. But as true AI is able to tackle the extraordinary reams of data that we have, we'll start being able to find causal relationships, whereas it may be just correlation now.
Brant Cooper (45:21):
So, I think that like especially in healthcare, I think that there's a lot of guesswork involved, and I think that when we digest what's going on in these different industries, we often confuse what are the facts with what are the hypotheses about those facts.
Brant Cooper (45:38):
But I think there's so much data out there, and again, I'm not really talking about all the privacy stuff, which I have concerns over, but there's just so much data there that if we could start drawing inferences and testing causal relationships, it really can change things in how we're treating different diseases and how we're managing healthcare, and really providing a tremendous amount of value to human beings and to customers in those markets.
Jim Marous (46:12):
Finally, as I mentioned, you have a great book. I really enjoyed it, Disruption Proof. How do people hear more from you? You mentioned you have a podcast coming out. You also write blog posts regularly. How do people find you?
Brant Cooper (46:26):
So, I encourage people to reach out to me. My email address is firstname.lastname@example.org. I encourage people to connect with me on LinkedIn. I do have a lot of content that's flowing that's usually posted on LinkedIn. And so, I would love it if people reached out and engaged with me and let me know where their uncertainty is, and see if we can't solve for that, and learn how to learn again.
Jim Marous (46:54):
Yeah, that's a great point. And that engagement is how we learn. So, thank you so much for being on the podcast today. I really appreciate your time.
Brant Cooper (47:02):
Thanks for having me, Jim. That was a fun discussion. Thank you.
Jim Marous (47:06):
Thanks for listening to Banking Transformed, winner of three international awards for podcast excellence. If you enjoy what we're doing, please take 30 to 45 seconds to show some love in the form of a review. It helps us to continue to get great guests.
Jim Marous (47:20):
Finally, be sure to catch my recent articles on The Financial Brand and the research we're doing for the Digital Banking Report.
Jim Marous (47:27):
This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, audio engineer, Sean Rule-Hoffman, and video producer, Will Pritts. I'm your host, Jim Marous.
Jim Marous (47:38):
Until next time, remember, transforming an organization requires strong, top-down leadership as well as ground-up behavioral change.