2018 Conference

Lorraine Moore:    I want you to envision yourselves at a wedding. We're all gathered together for a wedding. The date is October 14, '65. The setting is Naples, Italy. We're all here to see King Alfonso marry the noble woman from Milan, but just as the wedding is about to start, we're disrupted by some smoke, a fog in the sky and in the air, and the sun turns a bright azure color. People are speculating what's going on. They don't actually know. Thousands of kilometers away in the tropics there was a large volcanic eruption that was the size of multiple atomic bombs. 

Over the next five years in Europe there were massive impacts and effects from this. Initially, there was so much water that in Germany graves were rising up out of the ground. In some European cities, people were using rivers, their streets had turned into rivers, for their transportation. It started to get colder. Within five years, there was a mini Ice Age. The bulbs didn't spread any flowers. The buds didn't come out. The grass wasn't growing, and people were using their carriages on ice to travel from one place to another. 

Why this is analogous to you is there are eruptions happening, a disruption happening around the globe, some of which you haven't heard of and aren't aware of, but is impacting your business and other industries across the globe. When you leave here today, I want you to be thinking about what you're going to do not to respond to disruption, but to create an eruption and create disruption in your own industry. I'm gonna share with you some of the key disruptors and themes that are happening that are cross industry.

I'm gonna identify for you some of the opportunities that I think exist in particular for banks. Then I'm gonna bring it right to the level of you and give you a couple of tools to help you create a culture of accountability in your organization. When you create that culture of accountability, it'll better position you to be able to respond to the changes and actually be leaders in changing your industry. 

There's three key trends that really matter. The first is automation, which you've heard a lot about in the last couple of days. The second is a decline in customer loyalty. The third is consolidation or actually the collapsing of industry verticals. I think I went too far. Okay. Nope. There are many interesting automations, and technology, and disruption that's happening. I hope that if I ever have to have neurosurgery or someone that I love, I'm able to use a surgeon that now has the ability, with virtual reality, MRIs, and CTs, to see into the skull in a way that they were never able to before. 

Revolutionary new wheelchairs are allowing people who are quadriplegics to be able to stand, greatly increasing their health, extending their lives, and really bringing about many improvements. One of my clients is a manufacturer that creates accessible furniture and designs accessible furniture. This is changing their business, hugely positive for the individuals, but also a change to their business that they'd never anticipated.

We all know about Watson, Siri, Wilma, Andy of course, and it's not a typo, the joke about Alexis, and of course we have Alexa. One of my clients is the COO of a large technology company, a North American company, billions in assets, and many, many customers across North America. She was hosting a dinner party at Easter. Family was there. Kids were home from college. The daughter in-law happens to be named Alexis, and every time they'd say something to Alexis, Alexa would wake up and respond and say, "How can I help you?" They realized that everything they were saying and all of the conversations they were having were being captured by Alexa and stored potentially who knows where. 

That is one of the quandaries for you in commercial banking and for other industries as well. Your customers, your B2B customers, also your B2C customers, they want you to use the big data that you have, the knowledge that you have of them, to anticipate their needs before they know them. They want you to understand them so well that you can anticipate and service their every requirement, but wait a minute.

They don't ever want you breaching their privacy. They don't want to find their information shared somewhere else. There's this fine line. Your customers are gonna be a bit bipolar. They want you to have all of that knowledge about them, but they want you to secure their privacy. It's no small feat. There is no such thing anymore as cyber security. When I consult to boards, I tell them, "Cyber security is dead. You need to think about how you will respond when you have a security breach." Going forward, you're living in these two worlds. 

How many of you, when you are looking for a new financial advisor, a new dentist, a new physician, a new gym, someone to do home renovations, you want to install a pool, how many ask others, "Who would you recommend? Who did you use?" Exactly. It's no different with your B2B customers, because they are also consumers. While social media is incredibly important and the big data that you're capturing is important, relationships are the key. Wharton did extensive research over a lengthy period of time, which was just completed last year, so it's recent, and it's relevant. 70% of buying decisions are made based on referral, word of mouth, or recommendation. 

It doesn't mean that social media isn't important. It doesn't mean that you don't stop marketing, because you want people to know about you, but it means that while you are doing that, the relationships that you're building with your customers still remain acutely important. That's particularly the case, because there is a decline in customer loyalty. There's been a decline in trust. There's a decline in larger organizations and entities, whether they be publicly owned entities, whether they be government entities. This isn't just North American. This is global.

What does it mean for you? It means that when you are a large organization, like a TD Bank, where I worked, and there were some people here from TD Bank, even if you're a $5 billion bank or a family bank in the US, you need to be aware of the fact that generally consumers, which includes your B2B customers, have more trust and more faith in individuals than they do institutions. This is showing up a lot in the hospitality industry, as an example. People trust Airbnb. They trust TripAdvisor. They trust VRBO. 

They trust Airbnb over the Four Seasons, who's Canadian, and they have a great representation, because they look at the person on Airbnb. There's a photo there. It might not even be the person. It could be a photo of anybody. They view it as someone who is just like them. That's a person who's renting out their second home or renting out their place as a way to be able to save money for their kid's education or for their retirement. They're like me. Other people have commented. I trust them. Understand the importance of the individual relationships and the fact that you are somewhat going against the tide by virtue of being an organization, which makes those relationships all the more important. 

The third trend is consolidation. There are no longer industry verticals, although when you look at banking, to be honest, most of you still behave, not just in this room, but banks in general, behave as if those verticals still exist, and they don't. They're collapsing. When Amazon bought Whole Foods, I thought, "Well, that's clever I guess." Then I thought about it for a few minutes longer and realized it was brilliant, because Amazon didn't buy Whole Foods to be able to get into the grocery business. They bought Whole Foods, because they wanted to get into the shelves, and cupboards, and refrigerators of their customers by delivering the food right into their homes. They want to become that trusted one stop that you go to. 

So, while car companies are thinking about autonomous driving vehicles, that's one of the things obviously that's very topical for car companies right now, as well emission standards, a lot more in Canada than in the US, but some car companies are thinking outside of the box. Volvo and one of the others have partnered with Amazon, so that you can use your car as a vault, so that when Amazon makes a delivery, they will have the ability to remotely unlock your Volvo, put your package inside, and avoid it being seized by neighborhood pirates taking your Amazon package off of your porch. 

Amazon now also purchased the alarm systems, so that now you can let them into your house. Now they can be your alarm responder. Amazon started as books. It's going to be liquor and pharmaceuticals. I have a client in Canada that they have a high end series of liquor stores in a couple of provinces in Canada. They're very successful. I said to them, "You're a dying breed. I know you have very loyal customers, but this is a declining business," and they hadn't even realized that. So, the walls are collapsing. 

When I'm talking to my clients, my CEOs, and the boards today what I'm really saying, and I'm saying this to you today, is be the eruption. Ensure that you're disrupting. Don't build a fortress around protecting yourselves and recognizing the things that you're doing well. You need to think about where you're going to go in the future. Here's why banks are very well positioned from where you are today to be disrupters and to create new business models. Supply and demand. The economy's very strong in the US right now. New businesses are gonna continue to grow and to be created. There's going to be a great deal of consolidation of organizations, as Baby Boomers are starting to get to the age where they want to sell the companies that they've created, as companies amalgamate for scale. They're gonna need money. They're gonna need capital, so there's a tremendous supply.

There's also a supply on the consumer side. While I know you're serving B2B, I continue to remind you, as Jim did yesterday, that they are consumers as well. You have a sophisticated workforce in banks. You're often leaders in technology. Many of you are using PrecisionLender or you're thinking about using PrecisionLender. That's just one example, but you have a highly sophisticated workforce, and if you tap into those individuals, to your employees, you can foster innovation and generate new ideas. Banks offer career progression. Why does that matter? Because that is what millennials are looking for, among other things, but they want to know, just as we did, that they're in an organization and an …

Lorraine Moore:    … just as we did, but they're an organization and an industry where there's going to be an opportunity to grow their career. So, why does that matter? Because there is a war in North America for talent. Forget the trade wars and the war with Syria. There's a war for talent. You are at virtual unemployment. Being able to recruit and retain the highly sophisticated workforce is very advantageous for you.

You have access to financial data. You have access to lots of big data. And because you have access to people's financial information, and because you understand their hopes and dreams as business owners and as people, you're able to establish trust. From those trusted relationships you can build out new services and new offerings. And finally, banks have leading technology. Many technology companies are being purchased by banks right now across the world. That's no accident.

But there are some erosions. There are some areas around the edges where banks have been caught. PayPal: one of the individuals I work with, some of you from PrecisionLender have had some communication with Dave Mowat. He's the CEO of a credit union ATB in Canada. He's soon retiring from ATB, but he's a dynamic leader, highly innovative, very progressive. But Dave has said to me, "Lauren, one of the things we missed was PayPal. We [inaudible 00:15:45] them over here around the edges taking care of $5, and $15, and $22 purchases. We never viewed them as a threat to our lending."

By last fall, PayPal had already had almost six billion in credit out there, because they just started easily offering to people the ability, "Oh, you want to make that purchase? We can loan you that money." Five billion dollars is the same as the value of some of the banks that are here.

Robinhood, similarly, an app to be able to do trading on your phone. Well, that's what they do today, and that was worth six billion by last year. They've had very rapid growth. The millennials love them. Well, couldn't they do mortgages, retirement plans, 401(k)? They could do lots of things. So, while you're very well-positioned, there are opportunities obviously for others to come in around the edges and take away some of your market.

What are some of the things that banks could do? There's lots of interesting things you could do, but you need to think beyond banking. What about printable houses? Banks could start to manufacture printable houses, as well as holding the mortgages on them. The mortgages will be small. You can set them up in some communities. 

FedEx recognized that while they have a really, quite effective business model. Certainly, it works very well with Amazon, but it wasn't going to be profitable at the same level over the long term. So, what are they doing? They're going to 3D print the products that they're shipping for people. They're a transportation company. They're a logistics company. If they kept their thinking that narrowly, they wouldn't have thought about creating the products.

Education: what can banking do to potentially step into the education world? I believe that the model of warehousing kids from age five through 22 or whatever is outdated. I did some work with the faculty of education at one of the big universities in Canada. They had brought in a dean to that faculty of education who came from IBM. They recognized simply having an academic leading the faculty of education was not a good long term strategy. 

After 90 days in the job her mantra became everyday and in everyway we bore children to death. Our education system is no longer serving the needs of our kids or the future. I have a 20 month old grandchild who can call me from his mom's phone. Who will pick up my phone and swipe it, and in five minutes he's taken a 100 photos. He's 20 months old. Education is prime for disruption. What could banking do to step into that space?

In Canada, cannabis will shortly be legalized available for distribution through pharmacy. One of the big pharmacies in Canada that's nationwide stepped up and said, "We want to be the distributors," and they will be. In Calgary where I live it's going to be available in businesses on the street. But one of the credit unions in Canada stepped up very early, and went to the federal government and said, "Let us be the clearing house for all the cannabis purchases and sales within Canada. We'll ensure that we track all of it, and that it's all compliant and everything else. We would do that. We'd be happy to do that." It falls under the Liquor and Gaming Commission. They've stepped up and it looks like they're going to do that.

Some people have some ethical questions about that. Put that aside, cannabis clearing might not be what you want to do, but it's simply an example of something else that you could be thinking about. 

And then lastly, there's a huge opportunity with what is now the biggest market on the planet. That is people in their 60s, and 70s, and 80s who are living long and healthy lives, and who want a sense of purpose. So, why does that matter? Because you're commercial. Well, it matters because they're buying companies. Because they're sitting on the advisory boards for companies helping direct the management team, because they are consumers, and because they want to contribute. You've had some conversation about recruiting, and selection and talent. These are great consumers. These are your potential customers and your existing customers. They're also potentially very good employees not in the traditional way. Not five days a week from nine to five, but in select opportunities.

I've given you a number of things to think about from a macro-level of some of the trends and disruption. Why I believe that banks are well positioned, and I work with a lot of industries, what some of the risks are, and I've planted some seeds for you to think about what else you could be doing from the banking.

Now, as I promised we're going to turn it to you. We're going to talk a bit about how you create a culture of accountability. Let's talk about why it's important to create a culture of accountability. I've had my consulting and coaching advisory business for about eight years now. My first book was called Feet to the Fire, and it was about creating a culture of accountability. It came back because I found consistently, whether I was working with corporate executives in Fortune 100 companies, whether I was working with CEOs of $5 billion, a billion dollar or $50 million dollar companies, there was this consistent theme of people saying, "Lauren, how do I create more accountability? How do I rely on people to trust that things are going to get done?" Well, it all starts with you as leaders.

There's a direct correlation between creating a culture of accountability, and enabling an organization to foster innovation, to generate new ideas, and create new business models and new revenue streams. There's three key components to creating a culture of accountability. They're in more detail in my book. The first one is results. Well, of course, we all think about results. But most of the time when we're talking to our employees, we're talking to them about activities. How many sales calls did you make this week? How many clients did you meet with? What do you have in your pipeline? It's really important to not just talk about activities, but talk about the outcomes.

Okay, so you had this in your pipeline a month ago, you had this many sales calls. How many deals have you closed? How much money have you lent out? How have you increased the margins? How have you contributed to the growth and EBITDA?. So often our employees come to us and say, "I did this and this, and this and this and this. Man, I've been really busy, and I've been doing a lot of things." I think, "Okay, yeah, right, okay, good. They're really busy." I recognize that. That's good. We let them off the hook for not having achieved actually the results or the outcomes that we wanted, because we're allowing the conversation to be about activities. So, if you remember nothing else from this model, remember to think about a shift to results.

Accountability must be on a sustained basis. It can't be the final quarter of the year and suddenly you're putting more focus on generating results, that you're ensuring that you have your conversation with each of your RMs. It needs to be sustained every month consistently, every quarter, every year throughout the year.

And finally, there needs to be consequences, and these are positive consequences, not just negative consequences. People need to see that there's recognition when they do the right things. That there's some reward, some acknowledgment. But as well, they need to see that there are consequences for those who don't meet the expectations of the organization. That can be in delivering results, but even more importantly, it can be in demonstrating the right behaviors. I'm going to give an example about how someone led and created accountability through demonstrating the right behaviors.

The misconceptions when I talk to people about creating a culture of accountability is that it sounds like more work. It's going to be more time consuming. You know Lauren, I'm already on the road a lot. I've done work with a number of the large accounting firms, and those senior partners of Deloitte and KPMG they're on the road all the time. They would say and others would say, "I don't have the time for this." Or it's $50 million organization and it's kind of all hands on deck. Or Lauren, it doesn't fit our culture. Or Oracle, we've got a bunch of race horse sales people. They don't want to be held accountable. They're like a cash machine. They're motivated by money. Or Lauren, we're an engineering firm. It's a lot of engineers. They like graph paper. They're introverted. I can't get them to start behaving like that.

The reality is that when you create a culture of accountability, it takes less time. It takes less time for you and for your people. It reduces your stress, and it reduces their stress. You know as leaders that, that filters out to your clients. What I'm going to share with you, a couple of tips I'm going to leave you with today. It worked in every industry and every sizable organization. 

Finally, you are here today because you have demonstrated the inherent capabilities associated with personal accountability. How do I know that? I haven't met all of you. Because I know what it takes to be in these jobs. I know what it takes to have been recruited and selected to work at PrecisionLender coming from another bank. I know what it takes to survive commercial banking for multiple years. You've made sacrifices in your lives. You've set goals for yourself. You've held yourself accountable. You know how to do this. You're unconsciously competent at holding yourself accountable, and so you can teach and hold your employees accountable.

The TV guys aren't here, and I had not met them before today, although I still have a very large network at TD Bank. But this story is about former TD CEO, Ed Clark. I had the great honor and privilege of working with Ed for a number of years. When TD purchased [Ken 00:28:01] in a trust back about …

Lorraine Moore:    And TD purchased Canada Trust back about 2000, so before … Well, Banknorth was bit after that, so it was one of the early acquisitions. It was at that time, and I think still may be, the largest and most successful financial services merger in North America. Success is measured in terms of market share and [EBDA 00:28:23] and client retention, employer retention, all of those things. When we brought the two organizations together, it was bumpy. The technology was bumpy, we had employees really frustrated with us, we had customers whose mortgages weren't closing on time, we had foreign exchange issues. It was bumpy. We joked as executives, when we went out to your branches we needed to wear bulletproof vests because either our customers or our employees were going to be shooting at us.

So Ed had taken over this large organization. What was interesting was TD purchased Canada Trust and Charlie Baillie, very good, very seasoned executive. Formal commercial banker. After relatively short period of time, Charlie decided to step away and put Ed in the position of running TD Bank worldwide, which was very humbling of Charlie to do. So Ed inherited this large organization. He had been the CEO of Canada Trust. It was a smaller entity, been taken over by TD. He saw all these things that were going on and he knew the kind of culture he wanted to create and thought, "What can I do so that 1,200 branches across the country … " And Canada's pretty spread out … "And all of these employees and my executive team can quickly see and understand what I want to create here." 

So what he did, I coined it "walk the line," is he would go into retail branches, downtown Toronto, of course, because he worked in the tower, but as well Prince Edward Island, Cottage Country, where he had his cottage, north of Toronto, wherever he happened to be, and he would walk into that branch and he would go up to customers. He might be in his shorts if he was in cottage country. He'd go up to customers, he'd shake their hands, he'd say, "Hi, I'm Ed Clark. Tell me why you do business here? Why do you come into this branch? Is there anything we can be doing that would improve your experience with us?" And as you can imagine, small-town Prince Edward Island, a branch, everybody notices. They know what Ed looks like 'cause they've seen him on the video, they being the staff, they've seen him on the videos, but aside from that they've probably never met him. 

He would observe the interactions between a customer service representative or a branch manager and a customer, and then he would provide immediate feedback. He'd go up to that employee and he'd say, "Chris, I saw how you engaged with Mrs. Jones in that situation. Clearly she was really frustrated. We made a mistake on her mortgage. You recovered from that really well. Here's specifically what you did that I thought was fantastic." Well if the branch manager was still sitting in their office somewhere and not out on the floor, you can imagine that Ed would stop by and ask them why they weren't out on the floor. But what he was doing, he was modeling for that branch manager and for the employees, "Here are the behaviors that are recognized. Here are the behaviors that I want you to model as well. And I recognize and see what you're doing." 

Ed's not shy. If he saw an interaction that he did not think was a good interaction for the customer, if he saw a branch2 manager that actually wasn't out of their office when there was a line up in the branch, he would take the opportunity to immediately address that as well.

So there were well over a thousand branches. How many branches did Ed get to? I don't know. Maybe a dozen over the course of the year or so. A very small percentage. But by doing that and demonstrating that leadership, as you can imagine, it spread like wildfire, and that contributed to a great degree to creating the culture of accountability. So if Ed was doing that, what can you do?

Here is a really powerful technique that I learned when I was still a corporate executive. I want you to imagine a telephone conversation or a conversation in your office with one of your employees or one of your colleagues. You catch up on things, you make some agreements, you talk about your next steps, they leave your office, you disconnect the Skype call or you hang up the phone and you think, "Yeah, but there's that thing that's kind of annoying me." Happens with all of us. I often, when I'm working with CEOs and executives, I will participate in their one-on-one coaching calls or their one-on-one meetings with their employees, often virtually 'cause we might be in three different locations. 

And I can remember vividly, I was working with a CEO of a restoration firm, a large national restoration firm, do commercial restoration after floods and things like that, and he said, "Lorraine, now, I want to create a culture of greater accountability." So I was working with him, I was working with some of his senior leaders. I participated in a call, was talking to one of his senior guys, hung up the phone, everybody was happy. I said to him, "Greg, how did you feel about Scott's response to these questions?" "Oh, man, Lorraine, that's the third month in a row we've talked about that and he hasn't got that done." I said, "Yeah, I was frustrated and he doesn't even work for me." So here's the thing Greg, why didn't you say anything to Scott when we were on the call.

So here's the technique: the next time you have a conversation with a colleague, conversation with a direct report, three to four minutes before that meeting is to end, I want you to pause and think, "Okay, what am I about to leave unsaid." 'Cause that's where the gold is. It's the gap in expectation of how you are hoping your colleague is going to behave or you were expecting them to behave or what you really wanted your direct report to get done but didn't, and you talk about it. You say, "Listen, there's one final thing before we go that I want to talk to you about." You leave nothing left unsaid. You are less stressed, your employees or your colleague, they may not be happy about it, but there's a more trusted relationship there, and there's greater clarity around what you're expecting.

I want you to think about one person at your company, someone that has responsibility to you, perhaps an EM, someone that you have oversight to, that there's something that you haven't talked about, or there's something left unsaid, or you've kind of talked about it a bit, but you haven't been really clear and specific about the gap. So I know you know who it is. There might be more than one, but you've thought of one.

What is the gap? What is the opportunity? Could be a high potential that you think, "They could do better." It could be somebody who seems to have lost their energy. Could be somebody who's not meeting expectations consistently. When you are going to have a conversation with that other person and when the two of you will follow up as accountability partners to say, "I had the conversation and this is how it went"?

We've talked a lot and you've heard a lot over the last couple of days about the pace of change, the exciting times that we're living in. It really is a fantastic time to be working in banking, and in many other industries as well. We're undergoing a global transformation on many levels. So as you leave today after attending these few days and interacting with your colleagues, I want you to think about when you go back, if not you, who? If not you to step up and start to lead some change and look for business opportunities and take some risk, then who? You're armed with all kinds of new knowledge and expertise and relationships. Develop a bias for offensive play. You can play defensively and try to protect the industry, your clients, the size of book that you have, but truly, you need to play offense. You've got the choice? Play offense. Cut down some trees. Remove some obstacles. Remove the forest. Remove the trees that are getting in the way of you seeing the forest. Focus on the things that are truly important, because you've probably heard this before, but I see it over and over again, 20% of your priorities or 20% of where you're spending your time or where your people are spending their time is going to generate 80% of your returns.

When you're working in a turbulent environment, your mom's advice was great advice. Eat well, sleep, make sure you have time for friendships and relationships, take care of yourself when things are disruptive. Establish anchors. Make sure you have things in your personal life that serve you and that are fun and that are an expression of who you are, so that every day when you're in the office you have the energy and the fortitude to really be as great as you can be. There's lots of research, and certainly I have personal experience in the benefit of taking some time to just pause. Close your office door, go and sit on a bench in a park, turn your phone off, have a blank notepad, and just think. That side of our brain that generates the new ideas that will conceive the new business opportunities that is the Amazon thinking about getting into people's cupboards doesn't come when you're flipping through your phone; it comes in quiet reflective time.

And as you're doing by participating here, continue to rigorously pursue professional development. Keep sharpening the saw and grow as a leader. So when you leave here today, I want you to go out and create a disruption. My hope for you is that you will go out and light a fire. Status quo never makes history. And you have one career, so go out and light that fire.