Wednesday, May 2, 2018

CBA: The two-edged sword of comfort and cohesion

It was 2004. I was conducting a workshop with the top 200 Australia managers for a global sporting brand. I’d done my homework. I‘d interviewed suppliers, retailers, consumers. There was a need for them to lift their game. Retailers were angry about the supply chain and unreliable and inaccurate orders. Suppliers felt bullied. Consumers loved the shoes and hated the apparel. So you can imagine my interest when the participants arrived for our two days together. They were friendly, they were fun and most certainly collegiate. But the casual and formal conversations reeked of complacency and their views on their global rival, their biggest competitive threat, were out of kilter with the current reality and especially stakeholder frustrations. 

Presenting to them on my ‘discoveries’ and the offhand, almost defensive reactions of some of those managers was more than disappointing. I’ll admit I had a lump in my throat as it dawned on me that most of them just didn’t get it. I registered the irony of feeling vulnerable myself even though I knew they were in far more trouble than me.  Now I understand through the brilliant work of Heifetz and Linsky, I had “turned up the heat” on them and rather than accept the gift they were given by external stakeholders and not wanting to turn on each other, they attempted to shoot the messenger instead. 

Reading about APRA’s report on the Commonweath Bank yesterday, has taken me back there. In many ways the CBA has outperformed its rivals. We just have to look at their share price as one indicator. They’ve purportedly had the best technology, high engagement and strong leadership. But what they seem to have failed to do is to strike a balance between collegiality/culture and good outcomes. When an organisation is riding a crest of a wave that seems like it will go forever, how does it ensure employees including executives maintain focus, strive for continuous improvement and ensure they don’t start taking their customers for granted? They cannot afford to assume like my iconic sporting brand or any AFL Football Club that decides to forget its members by immersing itself in a ‘bubble’, that their followers will always be there - no matter what they do, no matter how those customers or members are treated. 

All emotions have a vast range of intensities. In the mildest form of negative attention, companies can feel indifference towards customers. But in its most acute form, reflecting of superiority, this lack of respect is exemplified in disdain, even contempt. I don’t believe many at CBA were necessarily conscious and intentional in their disrespect to some customers. Over time some of them, with no knowledge or intervention by executive leaders became habituated to decisions that after a while didn’t seem so bad. Indeed strategically we know that where shareholder return is exalted and certain KPIs result in fat bonuses, we can predict the behaviours that will follow. When self-interest melds with organisational interests in a harmonious workplace, people stop questioning. There’s no one to play devils’ advocate and any outlier who does, gains little traction with unpopular ways of thinking.   

According to APRA, in certain practices, the CBA lost its humanity and its ethical compass. Paradoxically, just as people may feel unsafe to ‘upstand’ in the worst of cultures that are physically or psychologically unsafe, they can learn not to question unethical and unempathic decisions, individual and organisational, when they like and trust those who make them.  

Yes, CommBank rode the crest of a wave for a long time. However there comes a time in the life of any surfer when they face the wipe out and get unceremoniously dumped. It’s often not fatal but it leaves then winded and wounded. CommBank will have to face the harsh truth of its culture and whilst legitimately continuing to acknowledge its success and lots of things that were done right, it can expect in its people an identity crisis, some grief, some necessary hypervigilance about processes and protocols and an unfamiliar struggle with humility and apology. 

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