‘Bank as a Being’ A Systems Approach to Bank Management - A Solution Blueprint

‘Bank as a Being’ A Systems Approach to Bank Management - A Solution Blueprint

In today’s dynamic business environment, managing banks has become one of the most complex endeavors. There are multiple aspects with intricate correlations to be maneuvered to realize effective integrated management.

This paper throws light on influential ideas, current context and available technologies and builds on a solution leveraging a systems approach to arrive at a new paradigm christened ‘Bank as a Being’ (BaaB).

Introduction

Banks are multi-dimensional service organizations. They work across customer segments, geographies, regulatory environments, technologies, vendors, and staff. Enduring successful management requires careful planning and execution while taking into account material change across dimensions and impact of change in one dimension on the other dimension(s).

Most banks could explore a model to manage themselves more as a ‘system’ rather than a sum of parts. Today, various aspects of the banks are loosely connected by means of financial goals or budgets and capital allocation. This article explores the systems approach, along three dimensions, with a view to provide bank management with a practical tool.

1. What are the contributing and agenda-setting ideas that suggest this approach (explicitly or implicitly)?
2. What is the proof that banks need for such an approach?
3. What technology options exist and what could be the elements of solution design?

Ideas Related to a Systems Approach

Mr. Geneen’s monkey

An American CEO1 once quipped ‘When I am finished, a monkey would be able to run it’ , referring to his company and the structures he had put in place. Infamously, this quote is often used in management literature to highlight short-term thinking and extent of radical change that no structure can typically manage. When viewed with a positive lens, the idea/vision behind this statement can be ‘agenda-setting’ .

Restless Inc.

Richard Pascale, 2 a management guru, attributed the success of Honda in the US to its state of restlessness, rapid re-adjustments collectively termed by him as ‘organisational agility’ . Agility and its measurement is a key topic on the agenda of most banks. The same state of restlessness was articulated by Andrew Grove as ‘paranoia’ in his famous book.3

Blind and paralyzed

The remedies to factors that cause decline at most organizations are in the control of management.4 In effect, this means that either an organisational ‘blind spot’ or a ‘response paralysis’ , or both, typically hinder execution of preventive action. Vertically aggregated structures don’t alleviate the situation either. Solutions are needed to ensure vision and responsiveness.

The learning organisation

Peter Senge’s work on the learning organisation in his book ‘The Fifth Discipline’ advocates viewing the organisation as a whole and not merely a sum of its parts. He emphasized that systems can be understood by contemplating the whole and not by any individual part of the pattern. He also emphasized the ‘co-relation’ between sub-systems in organizations that work as a set of interconnected sub-systems - hence decisions made in one part of the business have implications for the other parts.

Strategy, structure and systems to purpose, process and people

Most organizations today have been built on the strategy,5 structure6 and systems7 (SSS) (command and control) philosophy. Collaborative change programmes typically fail or have limited success because they are just IT systems and processes that are implemented on a structure that inherently does not support such an approach. With more and more collaboration, organizations have already started to evolve into the purpose, process and people (PPP) model whether specifically acknowledged or not.

Living systems theory

James Miller observed living organisms and defined the living systems theory by suggesting eight levels of hierarchy and 20 typical sub-systems that comprise any living system. ‘Self-organisation’ in the wake of change is an important quality of living organisms that he highlighted. When applied to a banking organization’s context, the pursuit of ‘self-organisation’ can throw up interesting views.

Across these six ideas that have been voiced over couple of decades, it is evident that a holistic approach holds the key for integrated management of organizations. Banks are no exception to this.

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