Transforming the Organization by Integrating Everyone
Some time ago I was actively involved with the Integration Consortium, a non-profit organization promoting best practices for data and systems integration. One of my duties was to organize conferences and I had the good fortune to secure Jim Rager, Ex-Vice Chairman of Royal Bank of Canada (RBC) as the speaker for one of them. The talk he gave at the conference (which was titled the same as this blog) was mesmerizing when he described how the organization had transformed from being product centric to customer centric.
To quote Mr. Rager,
“Complex retail businesses, whether they offer consumer goods or banking services, are NOT about distribution, product strategy, scale, or technology. All of these elements are important, but delivering on a customer value proposition is about ALL of these elements executing in unison. The trick is total alignment across the organization with appropriate prioritization of competing interests which, if done well, can grow profitable customer relationships by creating a tailored client experience, building a more personal and friendly image, reducing costs and effectively managing risk and capital.”
The Royal Bank of Canada customer management story stands out among the rest for its impact on revenues, profits, retention, and growth. The results come from ten years of business and technology partnerships, and a pioneering approach to customer segmentation. Mr. Rager’s vision required technology, operations, and business leaders to collaborate beyond traditional organizational boundaries. Along the way, RBC learned how to refocus its organization away from products towards real customer’s needs.
In fact, early on in the transformation RBC went so far as to shift the power from product line managers to customer segment managers; the customer segment became primary P&L financial reporting hierarchy while the product-line P&L was relegated to internal shadow accounts for historical comparison. The results that the organization achieved for the following decade was spectacular both in terms of innovative offerings that never would have been conceived without a customer-centric operating model and in terms of bottom-line profitability.
So when I had a chance to meet Jim one-one-one after his talk, I asked him the question that had been burning in me for months leading up to the event. I said “Jim, that was a very bold move to flip your entire organization on its side from a traditional vertically-oriented product company to a horizontally-focused customer organization. You must have been really convinced that a customer-centric go-to-market strategy was so compelling that you took the leap of faith to change your entire management structure and P&L reporting.” His response was “No, it had nothing to do with that.”
At this point I was totally taken aback so I dumbly asked “What do you mean?” Jim elaborated “What I really wanted to do was to eliminate the fat in the organization and redundant operations that had built up over decades. Everyone was so entrenched in their current mode of working that they couldn’t see the waste and fought to maintain the status quo. I went to the chairman and told him I wanted to reorganize around a customer-centric operating model so that no-one had a solid footing to defend their legacy operating mode.”
At this point the light bulb went on for me, but Jim wasn’t quite done. He continued “In the end it doesn’t matter if you organize around products, customers, or constellations in the sky. What matters is that the management team is aligned.” With that statement the final piece of the puzzle fell into place. I realized that the reason the bank was profitable for years is not only because they eliminated unnecessary costs, but did it in a way that energized and empowered the entire organization around a new vision and plan.
Whether your transformation is dramatic and rapid, or more measured and gradual over several years, the fundamental success criteria in all cases is one thing: alignment. For simpler changes, or those impacting just one function or one team, it is often sufficient that a single individual can make it happen. But for multiple changes that need to happen in concert, and over a longer period of time, a different approach is needed.
The “secret sauce” for a Business Transformation is strategic alignment. To hear more about how you can achieve alignment in your transformation efforts, come and see me at Informatica World at the Next Generation ICC session or sign up for one of the Roundtable discussions.
 Mr. James T. Rager was most recently the Vice Chairman of RBC Financial Group, the master brand name for Royal Bank of Canada and its subsidiaries. In addition to global responsibility for RBC Banking, which encompasses RBC’s personal and commercial banking businesses, Mr. Rager was a member of RBC’s nine-person group management committee, which was responsible for setting the overall strategic direction of RBC Financial Group. Mr. Rager joined Royal Bank in 1979 and served as Vice Chairman from 1999 – 2004.