An Example of Winning Through Commitment vs Planning

July 11, 2012

Imagine that you have been asked to join a company as the CEO, a company that is losing customers to a rival firm. And it is your job to turn the tide. What would you do?

Dr. Jan Wallander found himself in this very position with Swedish bank Svenska Handelsbanken. He was invited to become CEO of the bank because he was the one running the smaller, rival bank that was winning customers from Svenska Handelsbanken. Wallander did in fact turn the bank around, and it managed to outperform its competition on a number of key measures including customer satisfaction and earnings per share.

Wallander achieved this by discarding the traditional management model that is designed for leaders to plan and control organizations from a corporate center. Wallander understood that front-line managers were more than capable of running the business – and in fact were more qualified to understand the needs of the customers and how to profitably meet those needs than those in more isolated corporate positions.

Wallander sought to allow those on the front line to focus on creating value for the customer and shareholders, freeing them to take advantage of opportunities and respond to the changing needs of customers. He eliminated the bureaucracies, restrictions and predetermined plans (that are quickly outdated) put in place by centralized planners bent on control.

Wallander shifted the work dynamic so that the corporate center served the operating units, providing them with information and support. In fact, this new freedom depended upon opening up the flow of information (critical information such as data on profitability per customer and the like) to the operating units.

Wallander felt that only by enabling everyone to see the same information at the same time would the right questions be asked and the right decisions be made. And decisions at Svenska Handelsbanken remain at a local level, without the need for corporate approval. What makes this work is that Svenska Handelsbanken uses a clear governance framework based on principles, values, and boundaries.

What do senior executives do? They challenge and coach. They also look for exception conditions or unusual patterns or trends that might reflect a change in customer behavior or branch performance. These changes lead to a review and potentially a change in direction.

Convincing others that the organization should not be coordinated and controlled from the center was a tough challenge for Wallander because this was a major cultural shift. However Wallander held his ground because he believes that what holds the organization together is not a plan, but a commitment to a clear purpose and to a set of clearly articulated principles and values. The return is in those on the front line having greater ownership and engagement, less waste and overhead, and better business results.


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July 13, 2012 at 6:59 AM
Dave Moran said...

Thanks, Dan. I'm glad you found my blog and I'm delighted that you find it informative. I recently backed off from posting twice per week to once per week -- I am working on a short eBook that I want to publish by the end of the summer. I'll keep up the once-per-week posting, never fear!

July 13, 2012 at 12:45 PM

Hi Dave,
Great article. The article mentions that the corporate center supported the operating areas by providing them with information and support. The availability to information it would have been critical to the success of the approach. You mentioned information such as profitability per customer.

Throughout the past 12 years I have worked in a few projects to increase the availability of information. More often than not the organisations had several "versions of the truth". I have always overcome that by implementing business intelligence as part of an enterprise architecture aimed at reducing duplication and improving accuracy and availability of information.

Do you have more information on the strategy they utilised to improve the flow and availability of information. It would be great to find out what kind of systems they have and if they had to make system changes to support the new/changed business processes.

Always a pleasure to read your articles.


September 9, 2012 at 10:38 PM
Dave Moran said...


Thanks for reading and sorry about the lag time in my responding to your comment. I agree with you, many organizations have multiple "versions of the truth." You mention reducing duplication and improving accuracy in regards to your business intelligence efforts. Is simplification a component of this?

By that I'm getting at the a lot of data collection is geared towards reporting up for the purposes of control versus being truly informed about the state of the business related to the customer. The general strategy as I understand it is to trust and inform those on the front lines with information they need to make productive decisions, with less "control" information flowing back up the line.

And I like your blog!

September 27, 2012 at 7:18 AM

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