When Michael Jordaan steps down as chief executive of FNB at the end of this year, he will wrap up a decade at the helm of one of the country’s biggest banks. He is set to be replaced by Jacques Celliers, a member of the FNB executive committee.
In some ways 45-year-old Jordaan is a different banking leader. His almost 30 000 followers on Twitter, the social networking and microblogging service, serves as a case in point. I would not be surprised if this is the largest Twitter following of any chief executive in South Africa.
However, being different would make sense as Jordaan heads an organisation recently awarded the title of being the most innovative bank in the world.
During a leadership conversation about three years ago, I described him as follows: he possesses fortitude, courage, is not afraid of the unknown, believes a leader should be himself, is authentic, asks for feedback about himself specifically, believes in situational leadership – letting the best person take the lead – and surrounds himself with the best.
He explains more: “You surround yourself with people who are better than you; if you can do that, that’s half of it. Together you agree on what the goal is, where you’re going and then you must largely get out of their way. You can’t get good people and then frustrate them and micro-manage them, just get out of the way.
“And then, if you have made the right decisions, people tend to surprise you. It’s the most amazing thing.”
Of course, getting out of the way does not mean he disappears completely off the scene.
“You set challenges, you question, you debate intensely, but intentionally, you never tell, you just challenge people.”
Good people are inherently proud, they want to do well and want to achieve, and so “wonderful things happen”, Jordaan explains.
On reflection, his basic leadership philosophy has not changed over the past years. However, he comments: “Maybe I have changed. Over time you can relax a little more, things become clearer and you become a little more self-assured about letting go.”
And he does not feel a need to prove himself to everyone, as a younger chief executive may tend to do. Because of this he says: “You’re happy for anyone else to also get the credit because they deserve it and then people perform even better.”
Jordaan has continued down this road and he and his team have taken FNB from strength to strength. For him the ultimate achievement has been the recent accolade given to FNB as the most innovative bank in the world. It is quite an accomplishment when one considers management consciously set out to differentiate FNB through innovation more aggressively, soon after Jordaan became the chief executive.
Of course, they had resistance to this vision when the global banking crisis struck back in 2008. He explains: “We took a dip during that crisis, but then we challenged everything. We said to ourselves, bankers are either in denial or behind the curve and we want to be neither. At the time we relooked at everything completely: business model, positioning, cost structure, where the market was going.”
In short, the team realised the bank could no longer just be a beneficiary of the economy; it had to go out there and grow market share.
First they wanted to make sure their existing customers were happy, before attracting new ones. The bank cut fees, lowered prices.
“In the midst of the crisis we did what most companies don’t do: we actually lowered prices,” Jordaan says.
Then the bank went to the market aggressively, telling new prospective cutomers how much money they could save by joining the FNB stable.
As Jordaan states: “That’s a very tough thing to do. Had there not been a crisis, we may not have taken the type of decisions that we did.”
His key message is: it takes time to achieve any prestigious accolade, especially when it needs to happen on the back of a culture change. And there will always be resistance on the road to significant achievement, but this very resistance could turn out to be a friend.
The decision to take innovation to another level came alive at one of the first strategy off-sites soon after Jordaan became chief executive. After two intense days the team arrived at what seemed to be the final plan: vision, mission, measurements and the whole package.
Jordaan says: “All I wanted to do was to go have some red wine with everybody.”
But one team member challenged the final product, saying it was not strong enough, that it was boring. One can imagine the individual concerned was not too popular. But the team listened, probably because the leader was willing to do so.
The observation was that what would set them apart would be their culture, which had to be one of innovation. And this is what they did.
Another message: team members must feel they can challenge at any stage of the strategy crafting process, and the process and leadership environment should allow for this. Why? Because the birth of a great idea or essence of a winning strategy can be born or dismissed in a moment. And for this to happen it means there must be a very high level of trust within the team.
How did the bank achieve this innovative culture and consequent global recognition?
As is almost always the case, the answer is simple, but the doing takes discipline, focus and endurance. And in my view the leader always remains the kingpin, the heart, the driving force, hence the reason for a leader to remain in the seat for as long as it takes, within reason, of course.
And he adds: “In our case, we kept at it, we learnt along the way, we made mistakes and then you just tweak it and tweak it until it becomes better.
“Our strategy hasn’t changed since I’ve been around. Our structure has barely changed. This is our strategy and we’re sticking to it.”
In essence they told people that innovation is important. Jordaan says: “It sounds very obvious: you’re not going to get innovation unless you’re saying that innovation is important. For example, how many companies in South Africa have somewhere in their strategy or mission or values, the word innovation? Very few.”
Also important is to measure innovation. How many companies actually do this?
Jordaan believes there are companies in the world that do that, but “if you don’t tell people it is important and then measure it, then it doesn’t happen.” And then, for innovation to thrive, an empowering culture is essential. To achieve this takes time.
“That can take time,” he affirms. “This is where it’s important how leaders behave. Your behaviour has to be incredibly empowering.”
FNB is fortunate in that Jordaan’s style and matching behaviour is naturally empowering and this cascades over time, the key word being time.
Jordaan explains further where corporates get it wrong in his view: “People must be able to take risks and make mistakes.” He believes that organisations grow large and start bureaucratising, systematising, often putting in place necessary rules and processes, mostly to minimise mistakes.
While this may be good it also stands in danger of becoming a barrier to an empowered employee and culture.
As he explains: “It’s very important if somebody suggests a great idea and we all debate it and agree to give it a go and then it doesn’t work out, that that person is not taken to task for it. It sounds obvious, but I think it is very difficult for a lot of companies to allow this risk pattern to actually happen.”
At FNB the team realised the world was changing so fast, and that technology was changing the world so quickly that the risk of not innovating was bigger than the risk of making mistakes along the way.
This does not mean they condone silly mistakes or careless behaviour. Together with encouraging innovative ideas they also encourage the principle of “don’t fly solo”.
Anyone who comes up with a great idea is encouraged to discuss it with other people, “just like a pilot who is about to fly will first log a flight plan, that’s what you do so people know where you’re going, where you’re going to land so that if you don’t land they know where to go look for you. So, we say, whatever idea you have, don’t fly solo. Internalise it, kick it around, often it becomes better in that process and then you can go out and do it. It’s about taking calculated risks, and many of them.”
Finally, “recognise and reward people who have innovated, make them heroes”.
FNB is known for handing out prize money that borders on ridiculous. In essence the bank puts its money where its mouth is.
Every single year the bank just adds more and more innovations and as Jordaan says: “Right now we are in this wonderful phase where there is a great pipeline of innovations happening and it’s a system that is building up momentum. I can’t tell you how much fun it is to be at the helm of a system now that looks after itself.”
Of course, competitors copy these innovations. The question is, do they always understand exactly what is behind each innovation? And as Jordaan says: “More importantly, there are hundreds of innovations that are internal only, that’s not visible to the public. Ways in which we do things and you can’t copy a culture, I’m convinced of that. It takes a very long time.” He is correct in this assertion.
FNB has secured the innovation space, not only in the banking sector but in general.
It almost leaves its competitors with no alternative but to strive to occupy other spaces by way of branding, perhaps at their peril when one considers the strategic need for banks to innovate in these difficult times. And remember that an innovative culture is a reflection of an empowered culture, which is an essential ingredient to a successful bank or any large organisation.
Being a “different” leader, Jordaan has served FNB and the South African corporate landscape well. He will leave an indelible mark, indeed.
Adriaan Groenewald, a lead contributor to the BR Leadership Platform, is a leadership expert and the managing director and co-founder of Leadership Platform (www.leadershipplatform.com or follow him on Twitter: @AdriaanG_LP). Send comments to [email protected] or to Business Report editor: [email protected]