What's so Gr-r-r-reat about your bank?

• Author: Albro, Walt
• Position: Feature

It's easier to market an excellent bank than an ordinary one, according to Jim Collins, author of the best-selling management book 'Good to Great. Collins talks about the factors that enable businesses such as banks to evolve from being merely good to being exceptional.

More than five years ago, Jim Collins became intrigued with the question of how mediocre companies evolve into great companies-businesses that achieve out standing results and sustain these results for at least 15 years.

A former faculty member at the Stanford University Graduate School of Business, Collins began researching the issue through his own management research laboratory in Bouldeg Colo. His research team identified 14 good-to-great companies as well as 14 other companies in the same industries that had failed to make a similar transition. These latter companies were studied for comparison.

Collins' researchers came up with five ways that good-to-great companies are different:

* Leadership is low-key but persistent. Collins calls this level 5 leadership."

* The hedgehog concept. Good-to-great companies rely on a limited-rather than a large-number of guiding ideas and business models.

* A culture of discipline.

* Technology accelerators. Good-to-great companies think differently about the role of technology.

* The flywheel and the doom loop. Those who launch radical change programs and wrenching restructuring usual by fail to make the leap.

These results were published in Collins' recent best-selling book, "Good to Great: Why Some Companies Make the Leap . . . and Others Don't." (HarperBusiness, 2001).

Senior Associate Editor Walt Albro talked with Collins about two of the book's case studies: Wells Fargo & Co., San Francisco, and Walgreens drugstore, Chicago. An excerpt of their exchange follows.

BANK MARKETING: In your book, you cite Wells Fargo & Co. as an example of a corporation that put "who" before "what" questions. Can you explain what you mean by that?

COLLINS: Wells Fargo underwent a 15-year period of spectacular performance starting in 1983. But to understand how that came about, you have to go back to the early 1970s when the CEO was Dick Cooley. At the time, Wells Fargo was not a great global bank, but it was a good regional one. Cooley foresaw that financial deregulation was going to happen eventually. He didn't know when or how, but he knew that the storm was coming.

His approach was: I don't know what it is going to take to produce the best results. I don't know what the "what" is. Instead of a "what" strategy, I am going to develop a "who" strategy. I am going to build the best management team in the industry so that when financial deregulation comes, we will have the best management tearm, and there will be no question about our capacity to succeed in that new environment.

In brief, Cooley recognized that a corporation's greatest strength lies in having a phenomenal group of managers. And, he had the foresight to build that team. That team was so good that almost everyone on it went on to become chief executives of other major financial services companies. We're talking about Bill Aldinger, who \became CEO of Household Finance; Jack Grundhofer, who became CEO of U.S. Bancorp; Frank Newman, who became CEO of Bankers Trust; Richard Rosenberg, who became CEO of Bank of America and Bob Joss, who became CEO of Westpac Banking (one of the largest banks in Australia).

BANK MARKETING: Is...