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The Authors

Ray Davis―Ernst & Young’s 2004 Regional Retail Entrepreneur of the Year―is a pioneer of change in the banking industry, revolutionizing how banks look, feel, sound, and operate. He is the president and CEO of Umpqua Holding Corporation and has been featured in the Wall Street Journal, the New York Times, Fast Company, BusinessWeek, Business 2.0, Newsweek, and CNBC. Umpqua was named to Fortune Magazine’s “100 Best Companies to Work For” list in 2007. Ray lives with his wife, Bobbi, in Portland, Oregon.

Alan Shrader is managing editor of Leader to Leader and an experienced writer and editor of business books.

De la contraportada

When Ray Davis took over the regional South Umpqua Bank (and its five branches) in 1994, many poked fun at his insistence that employees answer the phone with a cheery "World's Greatest Bank." Eleven years, $7 billion in assets, and more than 120 bank stores later, many now accept that statement without question. Other banks scoffed when Davis sent his tellers to the Ritz-Carlton to learn customer service. But with two top design awards, a name change, and a completely new definition of the banking business, Umpqua has become a growth powerhouse, increasing 30 times in size.

Leading for Growth tells how any business can use the same leadership discipline and creative thinking that made Umpqua Bank get bigger, better, more agile, and more customer focused, and turned it into a relentless competitor. This important book shows how to truly lead—as opposed to manage, plan, or strategize—through extreme growth. Ray Davis's insights will help you

• Discover what business you are really in and create your competitive advantage
• Build an organization with committed employees
• Connect marketing strategy and execution on the ground
• Create learning opportunities for all managers and staff
• Fight the syndrome that often pulls people back into old routines
• Rise above the day-to-day conflicts to achieve a strategic perspective on your company and where it is going
• Manage mergers and acquisitions in ways that support rather than dilute your culture

Leading for Growth is written for any leader who wants to create a competitive atmosphere for exceptional growth.

De la solapa interior

When Ray Davis took over the regional South Umpqua Bank (and its five branches) in 1994, many poked fun at his insistence that employees answer the phone with a cheery "World's Greatest Bank." Eleven years, $7 billion in assets, and more than 120 bank stores later, many now accept that statement without question. Other banks scoffed when Davis sent his tellers to the Ritz-Carlton to learn customer service. But with two top design awards, a name change, and a completely new definition of the banking business, Umpqua has become a growth powerhouse, increasing 30 times in size.

Leading for Growth tells how any business can use the same leadership discipline and creative thinking that made Umpqua Bank get bigger, better, more agile, and more customer focused, and turned it into a relentless competitor. This important book shows how to truly lead--as opposed to manage, plan, or strategize--through extreme growth. Ray Davis's insights will help you

• Discover what business you are really in and create your competitive advantage
• Build an organization with committed employees
• Connect marketing strategy and execution on the ground
• Create learning opportunities for all managers and staff
• Fight the syndrome that often pulls people back into old routines
• Rise above the day-to-day conflicts to achieve a strategic perspective on your company and where it is going
• Manage mergers and acquisitions in ways that support rather than dilute your culture

Leading for Growth is written for any leader who wants to create a competitive atmosphere for exceptional growth.

Fragmento. © Reproducción autorizada. Todos los derechos reservados.

Leading for Growth

John Wiley & Sons

Chapter One

Industry publications write about Umpqua a lot. And they usually say nice things, remarking on our strong growth, our return to shareholders, our reputation for being cool and quirky, and our unique organizational culture. But these articles almost always insert a comment that irks me. No matter how positive the article is, it almost always says something like, "Umpqua Bank calls its branches 'stores,'" as if the word store is a gimmick. They humor us by putting store in quotation marks, as if real grown-up bankers wouldn't be so silly as to call their branches that. But it's not a gimmick. It's part of who we are and how we see our business. They don't understand that it's a huge, even dinosaur-sized, part of the reason they are writing about us in the first place! It's part of our unique culture that they extol.

Why do we call our facilities stores rather than branches? Because we understand what business we are really in. We're in the retail service business, which to us means we sell banking products and services to the public in our stores. In this chapter, I explain exactly what I mean by that and why it is so important for you to understand what business you are really in.

Business Not as Usual

It is too easy to look at your company and say, "we're in the banking business." (Or in the tire business or the computer business.) You will never break free of the hold of conventional wisdom with that kind of thinking. And if you can't break free of conventional wisdom, you'll never break out of the pack-you'll never create a competitive edge that separates you from your competitors.

To illustrate how a lack of understanding of what business you are really in can do to you, just consider Steve Jobs and Apple Computer.

Back in the early 1980s Jobs thought that his company was in the computer business, specifically the computer hardware business, and that it could prosper by selling better computers than its competitors. And for a while, that worked. Then IBM entered the picture, along with its then-partner Microsoft. In 1984, Apple tried to jump ahead by introducing the first point-and-click operating system with its revolutionary new line of Macintosh computers-a great leap forward that was much easier to use than Microsoft's cumbersome DOS system. But unfortunately, Jobs never realized that the business was changing and that he was now competing in the software business. He and his successor John Sculley kept the Mac operating system proprietary and used it only as a way to sell Apple's hardware.

Apple thought it was competing against IBM, Compaq, and the other PC clones when it was really competing against Microsoft. When Microsoft copied the look and feel of the Macintosh system with Windows-and sold it to every comer-Apple's goose was cooked. Of course, Apple faced many hurdles-who knows what might have happened if Jobs hadn't been forced from the company? But it's my firm opinion that if Jobs had understood early on that he was really in the software business, we probably wouldn't know Bill Gates as the world's richest man.

So understanding what business you are really in is absolutely critical to success.

"Okay," you might say, "that's an extreme example from the early days of a revolutionary new industry that was growing exponentially and whose landscape was changing daily. I'm in a mature industry that's growing slowly, even in good years. How does that apply to me?"

Well, it applies to you in spades! And Umpqua is living proof. After all, banking is a mature business if there ever was one-banks have been around for hundreds of years! Walk around any city, any small town, and you'll see a dozen banks in a few blocks. And don't talk to me about growth! When we started to reinvent Umpqua Bank in 1994, our market was in the midst of profound economic slump. The economy in our region was rooted in the timber industry-and just happened to be the home of the Spotted Owl and a strong environmental movement. Talk about total lack of synergy. The economy was at a standstill, our market wasn't growing, and yet we found a way to make Umpqua grow, moving from third in market share to first in just three years in our home market. How did we do it? For starters, we had to kill conventional wisdom in the company. We had to stop our people from thinking like bankers and get them to think like people in the business we were really in: retail service.

Most businesses are run on conventional wisdom, and they struggle to get by. Every quarter it's the same story. Are we meeting our numbers? Are sales up? You cannot grow your business by feeding it conventional wisdom. 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. As the new leader at Umpqua, my first job priority in reinventing the company was to kill the conventional wisdom that had guided the company for forty years. The bank's board had hired me to take this small company and make it grow. Together we decided to seize the future.

But let me go back to the beginning.

Seizing the Future

When I was contacted about running Umpqua in 1994, it was a small community bank in rural Oregon with $140 million in assets and six small branches. It was called South Umpqua State Bank, even though there wasn't a North Umpqua State Bank. The previous CEO had retired, and the board was looking for a change. The bank was at a crossroads. It was a solid bank and well respected in the small communities it served. But it wasn't really going anywhere, and by continuing to practice the purest definition of insanity (doing the same thing over and over again while expecting different results) the company was doomed to go nowhere and in fact its future would have been doubtful. The big banks smelled blood and were sniffing around, looking for prey-in our world, acquisitions.

When the board interviewed me for the CEO position, I told them that if they wanted things to stay the same, I wasn't their man. But if they wanted to employ a strategy that might have a good chance of creating shareholder value, then I might be a candidate. Fortunately for me the board realized that if they were serious about creating value for the shareholders and improving the overall intrinsic value of the company, they would have to support dramatic changes in how it operated, marketed, hired people, and the like. In fact we had to reinvent the entire institution, and build it around the principles and practices of the business we were really in. The board bit the bullet and took a chance with me-an unproven character from Atlanta, Georgia.

Before coming to Umpqua I had run a bank management consulting firm and dealt with CEOs from all sizes of banks across the United States. I learned a lot in dealing with all these different bankers. In fact, it was like attending graduate school. I learned what not to do, from helping people fix some of the stupidest mistakes they could have made. I also picked up some pretty good ideas. But overall, I was amazed by the lack of creativity at the top levels and felt that I could take my ten years of consulting experience and put it to work in a small bank with a well-defined market and hopefully create something interesting.

Here's why.

What had struck me during my years of consulting and traveling around the country, going to all these different banks, was how similar they all were-and how bland. You know from your own experience that the typical bank is quiet, cold, and boring. It has ropes to keep people in line, empty desks, and stale coffee. You can see how bored the people in line are. Often the tellers aren't much more animated. Sure, you'll get a shy smile and a weak "thank you," but two minutes after you walk out, you'll have forgotten the whole experience. I could put you down in almost any bank in the country, and you'd know right away you were in a bank, but ninety-nine times out of a hundred you'd have no idea what bank. They are all the same. I started to think that if you created a bank environment that was distinctive, attractive, and inviting, with great customer service, you might be able to give your bank an identity that people would respond to.

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.

I also realized that we would not be successful in differentiating Umpqua with resources, people, computers, locations, saturation-marketing campaigns, you name it. We were a tiny outfit; the big guys had bigger guns-they had already won that battle. And I knew full well that bank products are for the most part commodities. Sure, different banks will have slightly different loan terms, savings rates, and check colors, but they are all similar. So I felt there was little to no opportunity to have Umpqua stand out with products. Even if we were capable of creating a new and exciting product, I knew it would be copied by a competitor down the street within a few days.

I got together with my management team and we started asking ourselves questions: Why would somebody want to bank with us? Here we were in a depressed market, competing against all the big national players as well as credit unions and other community banks. How were we going to stand out? How were we going to get people to drive by two or three of our competitors' branches to bank with Umpqua? We realized that we had no answers to these questions as things currently stood. If we wanted to grow, we had to create answers to these questions.

If you sell tires, it's the same question, why would somebody want to buy tires from you? Why wouldn't they just go to the nearest tire store? Why would someone be inconvenienced and drive past two stores to get to your store? These questions were critical to our survival.

Think about your business. How do you stand out? Why should someone do business with you over another competitor with virtually the same products and services? How are you differentiating your department, division, or company so you stand out from the pack? How you answer these questions is critical to your survival.

I frequently tell people that the radical changes that we were going through began with a motion picture that played only in my head. It was always very specific in that it had a beginning and ultimately a happy ending that showed where we wanted to go-but the middle, which showed how we were going to get there, was always changing as the movie played out in my imagination. It depicted (to me at least) what it would be like to walk into a bank that people did want to hang out in, that was exciting, that was, just maybe, even a little bit cool. The movie that was playing in my mind was fuzzy around the edges at first, but one thing I saw clearly was the potential to significantly differentiate our company from our competitors and allow our customers and clients who entered an Umpqua store to know right away what bank they were in-Umpqua! Through this crazy little movie I had already started to think of Umpqua as not just another bank, but as something else entirely.

I kept playing that movie in my mind, over and over, people walking into a bank that was exciting and made them want to linger a while. Where do people hang out? Starbucks, of course. Lots of people also like to go to the mall and hang out at Nordstrom or the Gap. But those were very different businesses. Or were they? And that's when I started to focus on the larger picture of understanding exactly what industry we really competed in. Of course I realized that since Umpqua is a bank we clearly competed within the financial industry. However, I also realized that banks also compete in the retail service industry. Think about it, financial institutions sell products and services just like the companies that sell perfume, Levi's, or coffee. Retailers have stores. So do banks, only they call them branches ... for some reason.

What would Umpqua look like if we recreated it from the ground up as a retailer that just happens to sell financial services? Retailers work hard to make their stores attractive, even exciting, and focus on displaying the products and services they sell. They know how to draw customers into their stores and motivate those customers to buy. The best of them know how to build outstanding customer loyalty.

The movie in my head started to become more vivid. What if, like Nordstrom, we created an environment that drew our customers back into the store frequently to browse through our products, making it easy for them to interact with and ultimately purchase our services? After all, market research shows that two-thirds of consumer purchases are impulse buys.

I started talking about this movie (yep, still playing in my head)-my vision for Umpqua bank-to my management team. I told them, "Nobody goes to hang out at the local bank, just to kill a few hours, as people do at Nordstrom or Starbucks." I asked them to imagine what Umpqua would look like if we decided to see ourselves as a retailer offering financial services. How would our stores (not branches) look? How would we do things differently? Could we actually entice people to come in just to hang out? How would we operate? How would we train our people?

Reinventing Our Business

We didn't have all the answers at first, of course, but slowly things started to change.

One of the first things we did was to stop hiring people who had a banking background and nothing else. Since we wanted to transform ourselves into a retailer, we looked for people with a retail background. (As I said, This ain't rocket science, folks!) For a teller position we would hire someone who perhaps worked at the Gap since their job was to dazzle people who came to the store, know their product line, help customers find what they were looking for, suggest other things to buy, and make sales. These people were used to working on their feet and understood the sales process. Compare a person with a retail sales background to a person who had been a teller for ten years-sitting behind a teller window and never selling a thing from one year to the next. Who would you hire? Most bankers would have hired the teller, of course. Not us.

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."

As we went along, we made a lot of small changes, which I won't bore you with here. Then, in early 1996, we thought we were ready to assemble everything we'd learned into what we called our first concept store. We built this new store in Roseburg, Oregon, near our headquarters at the time. It was a $4 million project for us, a serious investment for a company our size. We hired a consultant to help us plan the design-and it wasn't one of the bank consultants, because we knew what they would offer. Since we had decided we were really in the retail business, we hired a consultant who focused on retail design and marketing-Charlene Stern of Stern Marketing, a true professional. She challenged us to break free of ideas that might still be holding us back and to really focus on the retail experience we were trying to create. (And I must say, her advice was superb; we received an incredibly positive response from our customers when we opened the store.)

(Continues...)

Excerpted from Leading for Growthby Raymond P. Davis Alan Shrader Copyright © 2007 by John Wiley & Sons, Ltd. Excerpted by permission.
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