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Leading for Growth

Leading for Growth: How Umpqua Bank Got Cool and Created a Culture of Greatness by Raymond P. Davis and Alan Shrader

Here are my favourite excerpts…

Leading for Growth offers real-life lessons from my experiences in leading Umpqua on a journey of transformation that took it on a path of consistent growth year after year. This book is not intended to tell Umpqua’s story. The strategies and methods I used had little to do with our particular financial services industry and

everything to do with understanding how to motivate people, create a competitive advantage, ensure flawless execution, and meet the other challenges every business leader faces.

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At Umpqua we start every day with a motivational moment-a brief group activity (five minutes or less) that promotes fun and teamwork and often teaches key lessons or provokes fresh ways to look at our business.

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And you cannot grow your business if all you are doing is worrying about your numbers-because then you are not honing a strategy to seize the future.

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Think of your own business and industry. What do you and your competitors do that is boring, stale, or bland? Is there something that is numbingly similar across every company, including yours? If so, you have a great opportunity.

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I also sent teams of people on road trips to different cities and asked them to look at companies that have a reputation for some sort of pizzazz, places like Restoration Hardware, the Gap, Nordstrom, even a luxury hotel. I told them, “I want you to observe.

Use all your senses, find out what things look, feel, smell like. And when you come back, I want you to step out of the day-to-day, forget about how banks are supposed to operate, and use your imagination to think about how this might apply to us.”

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When you move to reorient your company around the business you are really in, you’ll find it will lead to changes in almost everything you do. You’ll need to rethink many of the key dimensions of your business:

When everyone in your industry is playing by one set of rules, you must decide to play by another.

• What success looks like

• How performance is measured

• Marketing objectives and strategies

• Hiring and other personnel issues

• Rewards and incentives

• Culture issues

• Customer relations

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I see my job as head of support. If I don’t support the people under me, we fail. Simple as that. It starts with me. If I’m not the head cheerleader, shouting myself hoarse to encourage the team, forget it!

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As you think about this chapter and its themes of passion, optimism, and unreasonable expectations, I want to leave you with this bit from Alice in Wonderland:

“One can’t believe impossible things,” Alice tells the White Queen. “I daresay you haven’t had much practice,” the Queen replies. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

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What’s in Your Briefcase?

Exercise: Distribute sheets with the briefcase drawing (below). Tell the group, “Identify three to five intangible things you will carry in your briefcase today to make it great! Draw or write each item in the briefcase drawing.

“When your briefcase is full, share with the rest of the group.

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Whether they like it or not, leaders have the power to scare the hell out of people. If you don’t fully explain what you are up to, you leave people in the dark, and people in the dark have vivid imaginations. They might not imagine you’re an axe murderer, but I can assure you, they will imagine something close. And when people are afraid, they shut down right away and don’t hear what you have to say. So if you want your people to get excited about change, you sure shouldn’t scare them. You’ve got to give people information, and lots of it, so they don’t wonder what is really going on and start imagining all sorts of worst-case scenarios.

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The next time you are trying to persuade the people in your company to break away from conventional wisdom and take a risk on something new, try it. Say, “Give me the benefit of the doubt.”

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Don’t Manage Change-Lead It

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The point I’m trying to make is that you won’t know what is going on behind your back if you don’t make it safe for your people to tell you things, especially things they think you may not want to hear. It comes down to a simple question: Are you trustworthy? Can your people trust you not to fly off the handle when they tell you the truth?

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But when I’m talking to our people, I tell them to scratch out “President and CEO” on my business card and write in “Head of Support,” which is my real title in their eyes.

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So I really do see my job as head of support, to provide our people with the tools and the training they need to do their jobs at the standards we’ve set within the company. Because things are moving so quickly, I can’t assume that the tools and support that worked yesterday will be sufficient today. I’m out there all the time, asking, “What is it you need?” It’s a constant. It’s the only way we can keep up with our own growth.

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I am always out there asking these questions. What can I do for you? What is it you need? What type of decision-making authority do you need to provide the level of service that Umpqua is so well known for?

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You’ve got to demonstrate it daily: you expect people to make decisions. Never even hint that people have to ask permission first. You have to make it clear that people will not be punished for making decisions, and especially won’t be punished for good-faith mistakes.

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Empowered employees do not hesitate to tell the truth, good or bad.

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Are people free to say what they think in your company?

When people are empowered, they get into a lot of debates, some very passionate.

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People who are empowered are not afraid of being punished for making decisions.

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At Umpqua, people are never punished for trying to do something unique-what I call coloring outside the lines. What I will punish people for is not doing their jobs. But I tell our executives that nobody in this company should ever be criticized for trying to serve the customer. We might, however, recommend another way of handling the problem next time. “Thanks for taking care of the customer. If that comes up again, let me give you another idea to try that might work even better.” That’s different from criticism.

And you certainly don’t punish or criticize someone for handling a situation differently from how you would handle it. One of our customers came into the bank very upset. She had accrued $700 in overdraft charges, an incredible amount. The Universal Associate she met with went over the charges with her and found they were all valid. It was the customer’s fault for writing so many checks. But even so, the associate decided on her own to reverse almost all the charges, about $500. When the store manager found out about this, she was quite concerned. She didn’t criticize the associate, because as I said, we never criticize people for trying to take care of customers. But she did ask why the associate would forgive $500 of charges. The associate explained that the customer was basically broke, and the bank would never collect the $700 anyway. But she wanted to impress upon the customer that the charges were her responsibility, so she didn’t wipe them all away.

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When people are empowered, they don’t worry too much about the rules.

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A lot of people are just not going to color outside the lines if they don’t feel completely safe. They want rules because the rules give them security.

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I like to tell my people not to be afraid to break rules.

Rules can’t cover every eventuality. People shouldn’t break rules just to break rules, but when it makes sense, they shouldn’t let rules inhibit them from taking action. So I tell people, “Don’t be afraid to break the rules, but be prepared to explain why you did so. If you’ve got good reasons, people are going to pat you on the back and say `way to go.’ That’s leadership, that’s displaying initiative.”

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Enforcing discipline while simultaneously encouraging initiative and empowerment is a tricky equation to manage and many companies struggle to get it right. My approach is to deal with it in terms of foul lines. As long as you keep the ball inside the foul lines, it’s fair play. But once the ball goes outside the foul lines, you lose. You’ve got to set foul lines for your people: “Here is how far you can go, and if you do well with that, I might even let you go a little farther, but for now, here are the limits. Your job is to take care of the customer, and you can do it any way you want as long as you stay within these lines.”

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Daily Survival Kit

Items Needed: Mint, candy Kiss, tea bag, eraser, rubber band, toothpick, gum, Band-Aid, pencil.

Exercise: Put all items in a self-sealing plastic sandwich bag. Make one package for each participant or pass one around the group. Ask each member to guess why the items in the bag can help you survive a day.

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If you as a leader can influence your people’s state of mind effectively, you’ve taken a big step toward your goals. Changing job titles sounds like just changing words on paper, but at Umpqua it has changed the way people think about their jobs. It’s taken the mind-set and moved it up a level.

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Leaders who don’t make it a top priority to help people see the vision of the company are making a big mistake. Instead of talking about the vision and making it real, they focus on this month’s numbers or next quarter’s numbers. I know numbers are important and everybody at Umpqua knows it too-but they’re important because they help us fulfill our vision. If we are financially healthy, then we have the wherewithal to advance our vision. But make no mistake, our quest is for the vision, not the numbers. If all you talk about is the numbers, people will lose sight of the vision.

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People in our industry say if you’re big you can’t be a community bank. That’s not true. It has nothing to do with size: it’s about the way you operate the business, the culture you maintain, the relationships you build, and the way you serve customers.

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Exercise: Purchase small Lego kits (space ship, monster, and so on-the more unusual the better) and keep them hidden until the participants have formed teams of three. Place two of the team members back to back, one with the pieces and the other with the instructions, while the third person observes. Direct the person with the pieces to build the item following oral instructions from the one with the directions. After several minutes, the observer and instructor can switch roles.

Conclusion: Assembling a kit in this fashion is a lot of fun and a very powerful demonstration of how important communication is to success as a team.

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If you have a sense of urgency, you can’t manage by memos and e-mail. A sense of urgency gets bogged down by e-mail. If you want to slow things down, send e-mail. I’ve seen more hamster wheels spinning over e-mail than any other communications mode.

If you want to get something done, pick up the phone and talk it through. Instead of picking up a phone for a two-minute phone call that gets something done, people will spend ten minutes typing up e-mail, which has to be responded to, which then has to be responded to, and so on and on.

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Failure to act urgently on a customer’s problem is a take-away from our culture and I’m not going to tolerate it. I mean business on this. I’m relentless, I won’t let up.

If I get a letter or e-mail and a customer is having some sort of problem, I’ll turn it over to the EVP of retail (if he’s the appropriate guy) and ask him to take care of it right away. And I’ll keep a copy of the original, so I can follow up. I tell him to let me know when he’s taken care of it so I can take it off my to-do list. And if I see him later in the day, I’ll ask if he’s handled it. And if he hasn’t yet, I’ll say, “I want it done before you leave today.” These people are waiting for a response. To us it may seem like small potatoes and we’ll get around to it next week. Bull! To the customer it’s a big problem.

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When people deal with a reputable company, they expect the large things to be done right. At a bank, you expect your checking accounts to be handled correctly and the interest on your savings account to be computed accurately. When you go to a tire store, you expect the tires to be mounted on your wheels and balanced properly. It’s taken for granted. What you don’t expect are the little things. And what you remember is not how well the tires were balanced but whether the guy behind the counter went out of his way to help you or was rude to you or whether the coffee tasted like it had been sitting there for days. It’s the things that happen that you don’t expect that either delight or irritate you. It’s all in the details. Sweat the details.

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Leaders who think paying attention to execution at the finest level is too much work or who think they can delegate it to someone else are doomed to mediocrity. Listen to Larry Bossidy, who was chairman and CEO of AlliedSignal and then chairman of Honeywell International after it acquired AlliedSignal. He wrote a best-selling book titled Execution: The Discipline of Getting Things Done and later described his main points in Leader to Leader, a journal for and largely by top executives. He faults top leaders who see execution as tactics, seeing that side of business as something that can be delegated while the leadership focuses on so-called bigger issues. As he points out, “Getting things done isn’t `tactics,’ it’s the heart and soul of a company. Execution is everything. It produces satisfied customers and repeat business, higher operating margins and earnings per share. Leaders who do not pay attention to how their companies get things done are running companies that don’t do things well.”

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The people who really help you grow are the people you can count on when you’ve fallen on your knees-who will bust their britches to get things back on course when something blows up in your face. These are people who are not in it just for the money. These are people who get fulfillment from their jobs and from doing something right, who take pride in accomplishing something, who believe in what the company is trying to do.

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What makes 100 percent? What does it mean to give 100 percent? What makes up 100 percent in life? Here’s a mathematical formula that might answer these questions

A – T – T – I – T – U – D – E

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Our performance was measured simply. I did not want this to appear difficult to do at first. I needed buy-in from the troops; they needed to see this as clearly different but fun. So we measured our cross-sales (sales of new products to existing customers) and started the Return on Quality (ROQ) program. See Exhibit 14.1.

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Have you ever experienced poor service at a store or restaurant? Of course you have. And the first person to be blamed is usually the one serving you. But if you experience bad service, it’s probably not the clerk’s fault, or the server’s fault: it’s usually management’s fault. Management has not communicated high quality standards, supported and trained people to achieve those standards, or held people accountable on a consistent basis. At Umpqua, we do. As a result, everybody at Umpqua is now a service critic. They live and breathe it, and they are very aware of bad service when they encounter it in their lives.

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Three vital strategies ensure Umpqua’s focus as a local community bank. First, as much as possible, we make decisions locally. Second, as I discussed in Chapter Seven, every associate is empowered to make decisions that benefit customers, creating strong personal ties that bind each store to its community. Third, our Connect Volunteer Network, a hands-on donation of time and resources, further cements those ties. Through our Connect program, Umpqua associates are encouraged to spend forty paid hours per year volunteering in their communities. We make it explicit: alongside FICA and 401 (k) on each employee’s pay stub, there is a line item for volunteer hours available and used.

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What Is Local?

You won’t find it on a map. Local is not a place.

It’s a decision we make every day.

It’s treating everybody as if you’ve known them your whole life.

Local is not the opposite of global. It’s the opposite of words like careless, indifferent, and business as usual.

Values are like vitamins: they are required for the growth and development ?f any company.

Local is what we’ve always been.

Local is what we’ll always be.

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When you have a wider perspective it helps you to see the revolutions gathering that can sweep you away-or, if you harness them, carry you ahead of the pack. But you can also use some specific strategies to sense changes in the marketplace that might turn into revolutions:

• Leave the building.

• Look outside your industry.

• Partner up.

• Ask “dumb” questions.

• Take your blinders off.

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Ask your marketing director, for example, to sit down with the marketing director of a successful company in another industry. If you’re selling hardware, for instance, sit down with somebody who is in the transportation business. You may not get ideas about selling your product, but you could get ideas about branding, strategy, or PR opportunities. You will get ideas from somebody who sees the world in a fundamentally different way. And that is always eyeopening. For me, hiring bank consultants for advice is not exciting, because they’re just going to tell me about trends in banking and what other banks are doing. That’s okay, but it doesn’t go very far. I would be much more inclined to hire a retail consultant or a hospital consultant to come in and say, “Here’s how you can use our ideas in your industry.” When you talk to someone who sees the world differently, you’re probably going to discover brand-new ideas for your business.

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Another partnering opportunity arose when Microsoft came to us, wanting to explore how their technology could help transform the banking experience of customers. Microsoft’s vision included such concepts as enabling a customer’s personal digital assistant (PDA) or cell phone to send an identifying signal to bank associates when the customer enters the store. In turn, an associate can immediately begin the process of accessing the customer’s account to help reduce wait times. If using a bank kiosk, the customer could use the PDA to quickly transfer personal information to apply for a loan or other account services. Customers could also use the technology to transfer promotional information from instore digital marketing displays directly onto their PDAs. By partnering with Microsoft to test these concepts, we hope to ride the crest of the next technology revolution.

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So if you want to build your brand and grow your company, you’ve got to ask some questions-of yourself as a leader and of your company.

• Who are you?

• What gets you up in the morning?

• What’s your character?

• What do you stand for?

• What’s the spirit of your company-fun, dull, strict, loose, what?

• What inspires your people?

• What makes them proud?

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We always have something going on that makes people talk about us. Our Pearl district store started a “Friday Nite Flicks” program awhile back. We show free movies on Friday nights and everyone is welcome to come. We want every store to be part of the

community, so that people feel free to use their local store as a community center. Local stores have art shows, yoga classes, and book clubs, whatever people in the community ask for. Some stores even have weekly “stitch and bitch” sessions where knitters and needleworkers gather.

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So we decided to enact a formal program to help get people to stretch their rubber bands. What I was desperately trying to do was to give people the indication that real changes were happening. The program was simple enough: everyone in the store-tellers, new accounts reps, loan assistants-would have to take turns for a day standing by the front door and greeting customers as they walked in. Of course, many retailers do that, but in banking, it was unheard of. We had the designated greeter wear a flower corsage or boutonniere and welcome people to the store. When it was your day, that’s what you did all day long. The program was little more than cosmetic, but it took people out of their comfort zones.

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“Yes, that’s it. They basically spend almost all their time with customers. They aren’t in the backroom doing chores. They’re out on the floor.”

So I said, “Okay, gang, that’s what we’re going to do. If we are really serious about customer service, we can’t have people focus on it only part of the time and expect full-time results. We’ve got to take the paperwork and reports away from the tellers so they can focus on customers. And we’ve got to train everyone so they can help customers with all their usual banking needs.”

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In sum, what I thought at first would be a simple step of paying more attention to our customers required redesigning jobs, restructuring operations, and implementing a new culture where the focus was on customer service. At most banks and most companies, the culture focuses on efficiency, process, and controls, which almost makes customers an afterthought. Since we decided that while we were a bank, we were really in the retail service industry, I wanted the Umpqua culture to be focused first and foremost on serving customers, which was a significant change.

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