Group Brainstorms At Your Bank? Bad Idea.

December 11, 2017 Maria Abbe

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Group brainstorms are supposed to be an effective way to bring everyone's voices to the table and spark some great new ideas, right? Not so much. Jim and Dallas discuss why group brainstorms can harm your team's productivity level and how to structure meetings and team communication in a more efficient and effective way. 


Helpful Information

Managers Must Be Insane To Brainstorm In Groups - Tommy Tunguz

Jim Young LinkedIn

Dallas Wells LinkedIn

Podcast Transcript

Jim Young: Hi, welcome to The Purposeful Banker, the podcast brought to you by PrecisionLender where we discuss the big topics on the mind of today's best bankers. I'm your host Jim Young, Director of Communications at PrecisionLender and I'm joined again today by Dallas Wells, our EVP of Banking Strategies.
Today we're going to talk about an article called Managers Must Be Insane to Brainstorm in Groups. And Dallas, not to sound a little snippy here, I'm going to let you take the lead on this because I can't help but interpret the title of this article as a direct shot at our podcast brainstorm sessions that we have occasionally to come up with new ideas for the podcast. So, tell me a little bit about this article and whether or not I should take this personally.
Dallas Wells: Well of course you should take it personally. It's obviously what it meant. So the article which I love the title of and it's actually on the blog of Tom Tunguz and I hope I pronounced that correctly. That's how I've heard it before. But it's an excellent blog, we'll of course link to this particular article in the show notes. He's a venture capitalist and he focuses a lot on tech stuff but there's some really good things in there that I think anyone in banking or working in any business will get some good stuff out so including this article which is about we tend to in modern business want to brainstorm and come up with ideas in groups. We have a problem to solve. We get a group of the right people together in a room and the idea is we hash it out and by kind of feeding off of each other we come up with the right answer.
And this is a very short article. But it points out the science behind it which it doesn't really work. There's a couple of studies and it's an interesting thing to try to measure. Do we come up with a better answer or not? But there's a few studies that have been done on this that show that there is some benefit to having those cross-functional groups work on a problem collectively but brainstorming, coming together in a room to try to hash it out on the spot doesn't really work. And what works better is if those same cross-functional people go their own ... go hide out in their own little cave for a while, work on the problem and then come back together and use their separate ideas that they came up with and put those together to come up with a better answer.
So, it's pretty compelling evidence in there. Again, short article. Very much worth your time and the link will be in the show notes. But, good stuff about how the way that we all think is the right way to do this is actually dead wrong.
Jim Young: All right. First off I'd like for you to email me five new ideas for podcasts.
Dallas Wells: I walked right into that one didn't I?
Jim Young: You really did. So, podcast aside, what does this have to do then with banking? How did you connect this to our target audience here with his commercial bankers?
Dallas Wells: Yeah. I'm scarred by all the committee meetings that I've sat through in my life as a banker so that struck me from the title of the article. The Manager Must Be Insane to Brainstorm in Groups. Banking by its nature is run today by committees and just if you were to look down my resume or any bankers or former banker's resume, a lot of what's listed there is which committees you served on. That kind of gives somebody an idea of what things you were doing.
If you look down mine there's things like asset liability committee, loan committee, compensation committee, pricing committee, BSA committee. All of these are teams that were put together to solve some particular problem. It does a couple of things in banks. Number one, it's the classic let's get a cross-functional group together to come up with a better idea. Sort of what Tom is talking about in his blog post here. But the other part of it in banking is it's a control method. You don't have one rogue employee who can be responsible for something and run the ship aground because there's a committee of people there helping to oversee that.
The struggle in banking in particular is that very rarely do those committees have someone who is effectively in charge. Someone to be ... one person to be held accountable to it. I had at one point a ... it was actually a sales person, a vendor, whose pitch to me was, "Hey I'm responsible for everything to do with your account, with your relationship so you have one throat to choke," which I thought was a ... it's a little bit of a hokey salesy way of putting it. But the point was a good one and that phrase stuck with me because it was accountability. He was taking ownership of everything that was going to happen with that. It wasn't, "Hey we've got this development team that will handle this for you." It was, "I personally will make sure that it happens."
That idea of accountability I think has really been lost in banking. Simple things like a loan approval. Used to loan approval in almost every bank was done with signature authority. So if you were the VP of credit for one particular market you might have signature authority up to a couple million dollars where you could approve loans up to that size. Once they got to the largest size then it starts to go from individuals to a committee. What's happened is is that committee approach has kind of moved down that chain to where it used to be only those loans that were approaching legal lending limits were handled by committee. Now committees make approval decisions on just about every transaction that most banks do.
It's slow. Nobody's accountable. When things go sideways, who do you point the finger at? There's no person to blame. There's nobody who owns it. So it's caused the banks to be frustratingly slow and as Tom points out in this post we're talking about, sometimes come up with suboptimal decisions.
Jim Young: Okay. Well let me play devil's advocate here on this. So, and I'm going to take it more from the lending pricing sort of aspect of this. If you don't have this sort of group thing, like you said there's a reason for that group thing which is that's great if Bob has signature authority on this but do we want to put all of our eggs into the Bob basket here? What if Bob's not really good at this particular thing or what if Bob is now out of step with the market? How do we rely on that and he's not scalable either, that sort of thing?
What about all those arguments in favor of like, look sometimes a group, there's a reason for a group. How do you counteract that or is there some third option between group and individual?
Dallas Wells: Yeah, so it's the combination that really makes it work. And one of the things we talked about in our book, Earn It, available on Amazon. Perfect holiday gift, go buy it. There's my plug.
Jim Young: Awesome promo.
Dallas Wells: Yeah.
Jim Young: Well done.
Dallas Wells: But in the book we talk about a pricing team which team is just a ... it's a euphemism for a committee. It's the same concept. But the important part that we lay out there is that there should be a chief pricing officer. So there is someone who owns it in your analogy. There's Bob who had the signature authority but there's a group there to help him to make those decisions. And so in the banks that we see do really well with this, they will have a team that gets together to evaluate these things. So you still get that cross-functional expertise. Bob gets help. And it shouldn't just be a group of credit people in the room making a credit decision, right? You need the sales team there too. You need someone there who understands the profitability as well. You need a voice from all those different stakeholders.
But ultimately the decision comes down to Bob. So they talk through it. He weighs everybody's input. He makes the decision. The reason that's so important is if Bob is not good at it to get to that point. If Bob's out of step with the market, if he makes bad decisions, what you need is just a quick feedback loop on that. And the other thing that banks have not always been very good at, if Bob's no good at it get rid of him. Find somebody else to own that. But since he did own it, it's clear if things don't work. If it's not working like it should, you remove Bob and you put in someone else. If it's a committee it's not as clear of an answer of how you solve that because you don't know whose fault it is that it went wrong. In the other case it's pretty clear. It's Bob's fault.
Jim Young: Okay. How about though in the case in the article he talks about a little bit some of the things you run into with a group brainstorm is that you get that group together and then some people can turn into wallflowers. Or, that some people sort of follow the lead of someone else and figure oh this is the sort of stuff we should be brainstorming. These are the type of ideas we should be putting forth. So what if you form this team and Bob is kind of a dominant force or that sort of thing? Are you really ... are you maybe cloaking what is still individual in the guise of a team?
Dallas Wells: Yeah. I think what you're getting into is a little bit of the logistics of actually how do we do this to avoid those potential pitfalls. And part of the concept here, the reason this works is if you think about brainstorming in a group or even this committee that we're talking about, so I've framed it in the classic way if we get in a room and we hash this out, that group brainstorming thing. So if there are five people and we spend two hours on it, that's 10 man hours so to speak but we really ... those conversations tend to follow to your point, one train of thought. Somebody's probably dominating that conversation and people are reluctant to completely change the subject or come of left field with something or sound dumb or they're wallflowers. They're just kind of along for the ride.
And so you spend 10 hours to get two hours' worth of work. Or let's say that the benefit of the group we double that productivity and we get four hours' worth of output out of it versus if everybody can look at this stuff asynchronously. So, not at the same time. Not in the same room. But we still had the ability to bounce ideas off of each other. So, there's technology now that makes this incredibly easy but everybody gets to put their own thoughts in. Evaluate things on their own time, kind of in their own cave where they can think their own line of thought and put in their thoughts, their vote, however you want to handle it. But then those same five people spending two hours each on it, you kind of get 10 hours of a stream of thought on it instead of what we collectively did as a group. That's the ... an ugly arithmetic way of thinking about it.
And so if in this group where Bob is ultimately responsible, this deal that we're evaluating, you can get input from people on their own time. And even email works. It's a little clunky but that's how we see some banks do it. Everybody in the group has to kind of put in their thoughts and at the end, then Bob can take that, evaluate it and make his decision accordingly. It keeps that domineering presence from squashing the input of everybody else in that group.
Jim Young: One thing you touched on though is I think a key word in there is has to provide their input?
Dallas Wells: Yeah.
Jim Young: Because that is one thing I can ... pulling the curtain back a little bit and revealing that we're throwing a stone from a fairly large glass house here when it comes to [crosstalk 00:12:32]
Dallas Wells: Yes we are.
Jim Young: [inaudible 00:12:34] is that you have someone who is a leader who then asks for input and everyone else ... you get some input but it's not on their list of to dos. They don't have ... because they don't run it, they don't have to provide input. So sometimes you really end up having to spend some time really begging, pleading, cajoling people to please give me input, right?
Dallas Wells: Yeah. And this is an accountability thing and as you said pulling back the curtain. We have ... we've tried lots of different ways to make this work for us here at PrecisionLender. And we have the added struggle that we're growing really fast. Every time a group comes back together there's a new face in there so you have to incorporate those things as well. And it really is a cultural thing of expectations and sometimes it take some repetitions to make it work.
So, one of the teams that I was a part of, we used to do everything where we just got in a room and talked it out. Then as the group got bigger and we went from five people to eventually 20 people, travel schedules all over the world and it was just impossible to get everybody together at the same time. We had to move to an asynchronous way of doing it. And the first handful of projects or meetings or things that we did that way, were kind of a flop. They just didn't work because of exactly what you said. Somebody put something out on our internal wiki and it's crickets.
And what it takes is leadership calling people out on that. We would use names. We would say, "Hey, Jim, we need your thoughts on this by the end of the day." So you have all day. You can do it on your own time. You can go through your own process. But you've kind of publicly been called out. Lots of companies cultural wise are reluctant to do that. They are for whatever reason reluctant to say, "Hey, you are part of this group and you have said nothing. Let's hear from you."
And that's what it takes is using people's real ... their name. Pointing a finger at an individual and saying you have to contribute. And so it takes buy in from leadership and the reality is is it takes somebody far enough up the org chart to where people say, "I don't really want to do this but I got to," and it just builds a habit. Once we did that for several iterations through it, people knew what the expectation was and an idea came out, they knew that they had a reasonable amount of time, a couple of days to put their thoughts and input in there and then a decision was going to be made and we moved on. So, it's just a new habit. It's a new way of approaching it that takes some effort and it takes management's buy in.
Jim Young: So, one final thing then. Let's take it back to a bank and this sort of system set up ... I'll choose like a loan committee. I called it a committee because I don't know what to call it. A committee but loan team. We'll call it that then. How would that work then and what would that look ... how would it look different I guess for that ... what was once the loan committee and is now the loan team?
Dallas Wells: Yeah, so here's the extra hurdle for a bank. As you said it's different and we're a tech company. If we want to change how we do it, all it takes is somebody standing up and say, "Hey, as of now this is different." In a bank a lot of times especially when you get to a loan approval processes and workflows, those are things that are actually written into policy. So, that's the part that you have to navigate. If the policy actually says that the approval authority sits with the committee and not with an individual, that's something that has to be addressed all the way at the board level.
Now, just because the committee has the actual policy approval doesn't mean that you can't change the way that committee makes that decision. So, a lot of bankers will get hung up on that and say, "But the policy says that's how we have to do it." Okay, you're right. That's how the committee comes to its decision but the actual logistics of the day-to-day decision making process, we as a committee can decide, "Okay. Bob's going to make the final call here. Everybody's aware that's how it works. He takes the ownership of it. The big bosses upon high are on board with that. Let's go forward with that decision making process."
So you have to navigate those things. They're very political. They can be tricky. But I would say that in most banks there are ... you don't have to tackle loan approval first. There are in most banks hundreds of things that happen this way. Start with some that are easy but are impactful, right? And once you build a track record of that it becomes a lot easier to adopt it in the more difficult areas.
Jim Young: Okay. I can follow that logic. I would also say if you're going to call someone out and tell them they need input by the end of the day, make sure that their email doesn't go to say another folder where he won't see his emails. I know a guy that happened to a couple of times.
Dallas Wells: Yeah. For a guy I know, yeah.
Jim Young: Sure, exactly. All right. Well that'll do it for us today. Thanks for listening. If you'd like to learn more visit our resource page at If you like what you've been hearing make sure to subscribe to the feed in iTunes, SoundCloud, Google Play or Stitcher. We love to get ratings and feedback on any of those platforms. Until next time this has been Jim Young and Dallas Wells and you've been listening to The Purposeful Banker.

About the Author

Maria Abbe

As a Content Manager here at PrecisionLender, Maria develops the messaging, stories and content pieces for prospects and current clients – showing them the value in PrecisionLender. Her passion for serving others is evident as she leads the volunteer program here at PrecisionLender. Maria’s ability to be organized and constructive, along with her ability to be practical makes her an exceptional addition to our team.

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