Jim Stengel Talks Purpose & Performance at Banks

March 10, 2020 Jim Young

In this episode, we talk with Jim Stengel, about how banks that spend time focusing on their purpose and end up seeing the results in improved performance. Jim is the former Global Marketing Officer at P&G turned company founder, best-selling author, and podcast host. He will also be speaking at BankOnPurpose this year. 

  

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Transcript:

Maria Abbe:

Hi, and welcome to The Purposeful Banker. The podcast brought to you by PrecisionLender where we discuss the big topics on the minds of today's best bankers. I'm Maria Abbe, Senior Communications Manager here at PrecisionLender. On today's show, Jim Young will be interviewing Jim Stengel. Jim is the former Global Marketing Officer at P&G turned company founder, bestselling author and podcast host. He'll be speaking at BankOnPurpose this year. We'll have links in the episode notes to relevant articles and information. And we ask you if you like what you've been hearing please subscribe to our feed in iTunes, Google Play, or Stitcher. And please, please leave us a rating and some feedback. It really does matter to us. Now onto the show. Enjoy.

Jim Young:

Jim, first off, thanks so much for coming on The Purposeful Banker.

Jim Stengel:

Jim, delighted to be here. Delighted to talk about purpose.

Jim Young:

Well, all right Jim, so I'm going to start you off with my arms folded across my chest, skeptical expression on my face, question here.

Jim Stengel:

I love that.

Jim Young:

Because we hear a lot about purpose in companies. And heck, [inaudible 00:01:15] purpose in the name of our podcast, and purpose in the name of BankOnPurpose. But at the same time sometimes that can feel like a little bit of a buzzy flavor of the month business trend. So give me your elevator pitch for why it's more than that.

Jim Stengel:

How many floors do we have? Are we a skyscraper, or a strip mall?

Jim Young:

Go ahead and give your elevator pitch, and we'll decide after the fact. You can then determine how tall the building was.

Jim Stengel:

All right. I'll make it simple. Let's say we're going up one floor. The short answer is purpose works to grow businesses, grow brands, attract people, attract customers. It works. And if it doesn't work, it won't be sustainable. So when I started getting interested in this topic back at Procter & Gamble this is a long elevator ride. I just found that brands that seem to be stretching doing something different and unusual to make an impact on customers' lives, were growing better. And so we started to study that, codify it, and I left Procter & Gamble 10 years ago because I wanted to study purposeful time. And I found an increasing amount of evidence, and an increasing amount of body of evidence about how it works. It can't be buzzy, it has to be embedded in the business. The challenging part is acting on it, activating and measuring our work, it's tough.

Jim Stengel:

But it works. And, gosh, on your podcast you've had Doug Williams of Atlantic Capitol talking about it. I think PrecisionLender starts with its core values. These are two companies that are growing, they're doing a nice job. I have had the pleasure to interview several times Susan Johnson at SunTrust, and I think they have been incredible in what they're trying to do on purpose at their organization. Of course now they've merged, it's now a new company, a new name, and they're frankly taking purpose as a way to bring the companies together. So we can... I'm sorry it's a long elevator ride, but it works.

Jim Young:

Gotcha. And I will offer now more conciliatory tone. Obviously, one of our keynotes from our very first BankOnPurpose was Roy Spence. Is a guy who knows quite a bit about from an ad side of being able to tap into what a company's purpose is.

Jim Stengel:

Roy is a colleague, a great friend. I worked with him at P&G. I worked with him after I left PNG. I think he's been an incredible beam of light on this movement. And his credibility is strong. He worked with Sam Walton, he worked in the early days with Southwest Airlines. He's worked with some real pioneers in purpose, and look at both of those organizations years later. By the way, I was just with a bunch of Walmart people last week talking about this very topic, and I think they're pretty extraordinary. Largest company in the world, a very clear purpose, tremendous results in the face of Amazon and all the changes in retail. So I think it's a incredible case study that continues to be written.

Jim Young:

All right, we're going to take just a brief break right here to talk about our conference at which Jim Stengel will be speaking BankOnPurpose.

Brandi:

Hey everyone. Brandi here, our fifth annual BankOnPurpose Conference is right around the corner. And we've got a great lineup of speakers, including today's podcast guest, Jim Stengel. After listening, visit bankonpurpose.com for more information, and you can save $100 by using discount code podcast. So mark your calendars for May 6th to the 8th, and let's see you in Austin.

Jim Young:

All right, and we're back. So Jim, when you talk about defining a company's purpose, how does that work when the company is one of many similar ones in a vertical, and for our purposes, banks. It would seem that banks largely perform the same function as other banks. So how would they have markedly different purposes?

Jim Stengel:

Well, I think the first thing you have to do when you're on this purpose journey, whether you're an established institution or a new company, is think about the customers, who is important to you, who are you trying to attract? Who in a way is design persona for your organization? Who are you designing your products and services for? And I think organizations make different choices on that. And obviously the choice has to be a market big enough for you to meet your business goals. But I think if you look at any vertical whether it is banking, automobiles, consumer products, healthcare, organizations start basically with who is important for our future and how can we design for them. So that's the first thing that can differentiate where purpose goes in a vertical. And I think the second one is every bank in the world started somewhere, and started with a founder, or a group of founders.

Jim Stengel:

So there is a unique heritage with every organization. And I find that we don't often go back to that heritage and understand it. What those people were trying to do, what they started with when they had their highs and lows, what they wrote in their early days. And there's always just such interesting inspiration when you go back to the origin of an organization. And then I think the third area which adds differentiation is how you execute. I've seen categories where the brand, or business takes the uber benefit in that category. So let's say, I'll take a category I worked on at Procter & Gamble, baby care. In Pampers we tried to differentiate ourselves on being the best advocate for mothers and fathers, and their babies happy healthy development. Were other companies trying to do that? Yes. But we just did it better, day in and day out in our behavior of our employees and how we thought about our innovation, how we thought about our customers.

Jim Stengel:

I've done work with Toyota and Lexus since I left P&G. Lexus comes into the luxury market years ago, 30 years actually. It's our anniversary this year. Can you imagine having a new brand taking on the Germans and luxury. And now they're a leading brand and what have they done? They've executed better. They started with a notion of treating every customer like a guest in their home, and they have just done that better than their competition for 30 years. And they make great cars too. But it's a customer experience that has differentiated them. And I think in your category, I did a little bit of a study before the web about how consumers see the many banks. And I have a partnership with a company called BERA, which is the largest brand equity assessment platform in the world. And Capital One popped up, Chase popped up, Bank of America popped up as consumers see them. So they're already telling us they're differentiated. And the wide range of strength of the purpose and brand in your category is there, which just shows the opportunity.

Jim Young:

All right, so your idea of shaping a business around common purpose makes sense. And you've already made several compelling arguments for it, but you talked at the very beginning about getting that, activating it, and I'm curious how you get this to become a company-wide initiative. From a marketing standpoint it really dovetails with it, obviously, but when there's a push for immediate results, particularly, for our purposes publicly traded banks. If I'm a front line banker, how do you get me invested in the bank's purpose when I just have the immediate problem of I have to meet my sales targets for this quarter purpose or no purpose.

Jim Stengel:

Well, first I don't like purpose and marketing used in the same sentence. Because if purpose is seen as a marketing initiative, or an advertising initiative, or a public relations initiative, it won't catch. Purpose has to be a company initiative. And it has to be the way the company, the CEO, the leadership team feel they're going to win. Purpose is how you meet your sales targets. Purpose is how you have a differentiated customer experience. If you look at... It's a how you win, it's a strategy choice. Look at BlackRock, they're taking purpose as a how to win in their category of asset management. Chipotle purposes how they're going to win. Unilever purposes how they're going to win. Microsoft purposes how they're going to win. Kroger, on and on. It has to be linked to daily work, and that is how we meet our sales targets.

Jim Stengel:

A category that is not too far from yours. I've done some work in commercial real estate outside of US. And commercial real estate, obviously very financially driven, longterm projects, they work hand in hand with financial institutions. And there's one company that really did try from the CEO down to differentiate themselves on purpose. They said, we're going to have every sales meeting begin with our purpose, and think about how the purpose comes to life in what we're selling. All of our financial communication will be purpose infused. Our work in development plans will be purpose infused. They took every ritual of their company, and thought about how the purpose affects that. Every business goes through ups and downs, it's how you deal with the downs. And if the purpose still comes through in how you're going to get out of a rut, or how are you going to spur an innovation, or how you're going to win new customers. That's the magic. It's about action. It's about purpose being the way you do business.

Jim Young:

Okay. You mentioned in your site that employee engagement is alarmingly low, and that leadership teams are floundering to connect with new generations entering the workforce. Now you released your book Grow at the end of 2011. Did you think we'd be maybe a little further along this path to purpose by now, and what may be holding things up?

Jim Stengel:

I think if I looked in 2011 out to 2020, and dipped in society in 2020 there'd be a lot of things that would be surprising. But I do feel I would have been pretty happy with the state of companies taking the purpose journey. Now I think of purpose in three phases. You have to find it, or refind it. And you have to activate it throughout your business systems, and then you have to measure it. I was with a large group of executives and we did a poll with them. And they thought they were pretty good on finding their purpose, decent on beginning to act on it, terrible in measuring it. I think what's holding us back is a strong measurement system to show the link with purpose, action and financial results. And there's no reason in this world of big data, and superior computing, and great analytics we can't find a measure or a series of measures that show when you act on your purpose in these various ways, you will see a direct correlation with your sales results and your financial results.

Jim Stengel:

We are doing research in that space, and I'll talk about this at our meeting in Austin. And the research, the early days, the pilots are pretty dramatic in companies that are actually acting on purpose, and what they're seeing on their bottom line and their top line. We need more direct correlation that's missing. Another encouraging sign is, I don't know if you know Edelman, the big public relations organization that does an annual trust survey. And if you look at 10 years ago about when I wrote my book to now. What's interesting is trust in many institutions has faltered. Trust in media, trust in government, trust in religious institutions. Actually trust in my employer has gone up, and it's near an all time record. So I do think people are trusting their companies, they're trusting business at large, they trust their employer more than they do business at large of course. But the fact that they're having higher expectations for themselves, and the organization to make a difference with customers I think is also encouraging.

Jim Young:

Absolutely. And I can see if you can get to that correlations point where you can really say, "Here are the hard numbers that prove this out." That would probably increase the movement, in a step function level. Because at that point you... Where's the skepticism at that point.

Jim Stengel:

Yeah. That's what we feel and gosh, we can measure almost anything now. We've made great strides in understanding drivers of sales spending, marketing spending. Why can't we do this for purpose? We have net promoter score for customer satisfaction. Where's the net promoter score for purpose? So I think it's really exciting and as I said, we're doing R&D in this space. And I think if we can crack this when purpose will indeed be sustainable. And it will by the way give us a an ever growing database of why this is a smart business choice. And the winners will be those who live it every everyday better. And that's the hard part.

Jim Young:

Mm-hmm (affirmative). You also wrote 2017 in your book Unleashing the Innovators about how established companies can renew themselves. And again, for our audience at BankOnPurpose, that's banks, get anything more established at an industry wise than banks. I'm curious how purpose and innovation compliment one another at a company. Do you necessarily have to have one to have the other? I'm thinking more along the lines of, "You've got a clear purpose. Can you just chug along doing the same thing." Or do you have to have that spirit of innovation as well?

Jim Stengel:

I think a purpose that is well socialized in a company believed in, but one that excites employees, that gives them energy, that gives them a greater level of personal satisfaction coming to work. That generates just very, very different innovation ideas and thoughts. And generates by the way a different culture where people are empowered to solve customer problems, pilot things, have this rapid iteration of ideas which is what every company is aspiring to. So I think innovation needs to be inspired by the purpose, and it needs to give you a greater level of energy and spirit behind the innovation. And I think whoever is in the, if you will, R&D area in banks and those who are in the customer facing areas they have to be together on this. We can't have silos that we've had historically.

Jim Stengel:

And sad to say there are still too many of them. When I did my book I studied a lot of large companies who were working with startups because I thought it was really interesting, and there wasn't really a playbook written for that yet. And it was a fabulous book to research. I met so many interesting people, but one of the number one drivers of a successful large company startup partnership was the shared purpose between the large institution and the startups. In fact one big brand I visited, and looked at what they were doing in depth. They opened up the doors was Wells Fargo, and they were doing a lot of really interesting structured work with startups. And they spoke very, very clearly about it starts with a shared purpose, and a shared feeling about the customer problem that we can make a big difference in.

Jim Young:

So mentioning Well segues into my next question, since we're talking in the banking space, can you give me an example of a bank that in your mind has really defined its purpose and really flourished because of it? And then maybe it's the same bank or maybe it's a different one, a bank that's really found a way to build a culture of innovation.

Jim Stengel:

Sure. Well, I'm also a podcast person and I started a podcast about eight months ago. And it had about 50 people and I do one a week. And my first guest was Kristin Lemkau at JPMorgan Chase. And since I had that podcast with her she has been promoted. And I think she's one of the most purposeful individuals. She has just a great commitment to the company, to the cause, to the purpose, to customers, to innovation. So that podcast was full of purpose, and energy, and spirit. And of course they're doing a lot of really interesting things with communities and cities, and that is all about the difference they're trying to make. So I think that's one person, and one very large institution by the way that is in the right direction. And that starts with the CEO.

Jim Stengel:

I've admired what Ally has done from their beginning. I'm personally a customer of US Bank and they've been very, very important for my business. Susan Johnson at SunTrust, which I talked about earlier, they've obviously gone through a merger. I've spent time with her on a number of occasions, and the journey they went through on helping their customers with financial confidence. And by the way that, got lots of banks who are doing that and maybe many banks state that as their purpose. But the journey they went through internally at SunTrust before this acquisition to ensure that their own employees had a high level of confidence in their financial future at all income levels was a very, very powerful process, which took them a long time. They didn't want to go out to customers with a purpose before their employees lived it, and embedded it in how they thought about their own financial lives. And she's a leader that I think is really magnetic. And so those are some of my personal experiences that have been positive.

Jim Young:

Great. Well, again, Jim, before I close out on the last question, thanks so much for coming on the podcast and really, really looking forward to hearing you speak on this topic of business and purpose more at BankOnPurpose this year. But finally, we've gone through the reason why to do it, and successful examples of it and how to do it. What are some of the pitfalls in the process? When you've studied this and you've worked with companies, where have you seen them struggle, or areas or what are the biggest obstacles they're having to overcome to really implement purpose?

Jim Stengel:

Well, I think we talked about a few of these. I think one is it has to be a company... If it's not a company idea with the CEO believing in it, endorsing it, sometimes even leading it, it won't work. So senior management has to be on the bus. The second one is be careful about succession planning. If you don't when key roles change the commitment of the next person to the purpose has to be strong. And everyone has their own personal style, but it has to be. So that is a watch out. Then the third one is we too often stop short of making this relevant for every single person's daily work. And cascading a purpose and socializing a purpose with tens of thousands of people often is tough work. But the great companies who really live their purpose do that.

Jim Stengel:

And as much as they can with with today's tools, they bake it into measurement, we've already talked about that opportunity. But I've seen companies like, gosh, Unilever, like MGM Resorts, take the hard work to make the purpose relevant, to have the discussion with their employees, with North of 100,000 people. That's a campaign, but that's the power of it. And when you don't do that, it will not stick. There'll be cynicism, and it will become a slogan. I'll end with a great quote Clayton Christensen in Harvard who's passed away a few weeks ago. Was one of the great professors of all time, and I had the pleasure of learning from him in my career. And he obviously very purposeful individual but he has this amazing quote, and it is as simple as this, "Decide what you stand for, and then stand for it." And the hard part is the second sentence.

Jim Young:

Absolutely and it's short, simple but very powerful statement. And Clayton Christensen, we're obviously big fans of him as well. Again, recommend for our listeners out there Jim's books Grow and Unleash the Innovators. And hopefully you are going to be headed to BankOnPurpose this year in Austin, and if you are then you will be able to hear Jim Stengel give a great talk about it. Jim, thanks so much for coming on the podcast.

Jim Stengel:

I enjoyed it. I can't wait to talk more about purpose in Austin.

Maria Abbe:

And that'll do it for this week's show. Thank you so much for listening. Now for a few friendly reminders. If you want to listen to more podcasts or check out more of our content, you can visit our resource page at precisionlender.com, or you can just head on over to that page to learn more about the company behind this content. And finally, if you like what you've been hearing, make sure to subscribe to the feed in iTunes, Google Play, or Stitcher. And as I mentioned before, we would love to get ratings and feedback on any of those platforms. Until next time, this is Maria Abbe for Jim Stengel and Jim Young, and you've been listening to The Purposeful Banker.

 

About the Author

Jim Young

Jim Young, Director of Communications at PrecisionLender, is an award-winning writer with experience in a range of positions in media and marketing, from reporter to website editor to content marketer. Throughout his career has focused on the story – how to find it, how to understand it, and how best to share it with others. At PrecisionLender he manages the many ways in which the company shares its philosophy on banking and the power of relationships Jim graduated Phi Beta Kappa from Duke University and holds a masters degree in journalism from Columbia University.

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