Thursday, 16 July 2009

What Business Are The Banks In?

The BBC reports that Bank boards are to come under closer scrutiny. In the article it is pointed out that several banking heads have no banking industry back ground and no banking qualifications.

This shouldn't really come as any surprise. The reason this has happened is because business and society have bought into the 'MBA' myth that has historically reinforced the idea that a professional manager has 'transferable skills' allowing them to manage any business regardless of its commercial setting.

General tools, deployed by general managers who all speak the lingua franca of business-ese. The language of 'forces', of 'gap analysis', of ROI, of 'brand equity' and so on and so on.

This 'managerialist' philosophy is 'taken for granted', so deeply embedded that its truth and nature is, for most aspiring managers self evident. It is 'the' way to run a business successfully, because it 'stretches competences' (sic) and wraps ruthless scientific rationality up in the soft velvet of service and relationship rhetoric.

Kurt Lewin said there was nothing more practical than a good theory. The implication of this observation is that the way in which a person conceives of their world determines how they act in it. Chris Argyris calls them 'theories for success', deeply held ideas that determine how problems are defined and solutions created.

So why would a supermarket retailer get a job as a top banker then?

One reason is because he is a 'general manager'. At one level all businesses are the 'same' so they can all be run in the same way. The other reason is because of the answer to that most profound of business questions - 'what business are you in?'

This question will have a senior management team split asunder if they have never pondered on it before. It demands an explanation of what exactly the business 'does'. So what business are the banks in?

Generating ROI for investors (the avowedly Freidmann-esque position)?

The 'Service' business (the deceptive landscaping of the service offer pushed by most banks to disguise the fact that they are aggressive sales led organisations)?

The 'Retail' business (we sell consumable products to individual consumers through high street and on-line channels to market)?

Add the last explanation to the previous two and you have a justification for employing Barrow Boy MBA at the senior level of your banking business!

On the other hand, characterise the business of banking as something rather more profound, something rather more central to social welfare of the country and its citizens, something rather more essential to the working of a modern society, then, the business the banks are in is nothing at all to do with getting the sales team to push the latest 'gee-whiz' offering from new product development, nothing to do with callously casting itself as a friendly service provider who cares for YOUR finances through the journey of life.

What if Banking is a prudent guardian of financial stability, the essential counterpoise to the pull of rampant consumerism with its powerful and persuasive temptations to overstretch the wallet? What if it is about 'saving' to spend rather than 'borrowing' to spend?

Retailers want every last penny from us, because every little helps their profit margins, they don't care if its baked beans or shoes for the kids. The banks should,and the way to do it to have absolute clarity about what business they are in!

Posted via web from Gullibimundi

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