FOUR BIG LESSONS ON STRATEGY EXECUTION

A famous banker once said that he’d rather have “first-rate execution and second rate strategy than a brilliant idea and mediocre management”. My first five years as Group CEO of CIMB have shown my team and I a thing or two about the truth of that statement, although I might not agree with it completely. To justify my slight disagreement, first, let me share the four key lessons I’ve learnt on strategy execution in my five years as Group CEO:

Lesson 1: Have a clear vision and hold people accountable

Our previous mid-term strategy was called Target 18 (“T18”) which was a four-year plan to recalibrate our core and help CIMB Group grow for the period 2015 - 2018. Once our T18 business strategy was developed, one of my first tasks was to set a vision of what success would look like – both in financial and non-financial terms – and, more importantly, why we had to put in so much effort to get there. We had five clear ‘headline’ goals, and these were broken down and allocated to 18 specific programmes, and further allocated to projects, through many rounds of discussion (and negotiation!). At every level of the organisation, the teams had clear and measurable goals to be delivered each year, both in terms of what was expected (e.g., a new innovative product launch), as well as what ultimate benefit the deliverable was meant to achieve (e.g., how much interest and revenue the product garnered). The four-year goals set were challenging, and at that time the team didn’t know exactly how they were going to meet the goals, but I’m glad to say that with strong support, many of them rose to the challenge to meet and even exceed the initial goals set. 

Once goals were set and agreed, it was important that everyone was held accountable to achieve them. I can’t count the number of times I’ve sat through beautifully prepared presentation decks, and then said “Thanks for all these, but can we get back to the actual progress on what is in the agreed plans?” Recognition and rewards were a key motivational element for the project teams, but the more difficult part was holding people accountable for the times when things didn’t go well. A lot of subjectivity and judgement of what was true (and fair!) had to come into play. But once it was established that someone wasn’t pulling their weight, remedial actions were decisively taken. 

Lesson 2: Winning hearts is arguably more important than winning minds

While it was important that everyone understood why change was needed, it was more crucial for everyone in the organization to be convinced in their heart of hearts that the change was something they wanted to support. Now, I’m no change management guru, but what I’ve figured out over the last few years is that apart from the why and how (why we need to change, and how we are going to achieve the change), people need to understand two more things: first, what’s in it for them (i.e. why they should care and help), and secondly, how they as individuals can help. 

That’s why once we had communicated the overall goals and strategies, the communications quickly turned towards ensuring that employees at all levels could articulate and evaluate their personal roles in helping the firm to achieve its vision. We simplified the messaging to make it relatable and easily understood and actionable. For example, our #ABetterCIMB culture project drove home the three critical behaviours that every CIMBian was encouraged to practise: going the extra mile to delight customers (both internal and external); respecting and supporting each other; and recognizing each other’s efforts. Another example was our Mission T18 card game, where each CIMBian had to carefully balance between our different objectives of Customer, Culture, Cost and Capital, work together and overcome unexpected challenges, to win as a team.

Continuous engagement with the team is a crucial part of our strategy execution.

Although we ensured we communicated successes to keep everyone abreast and motivated, I also had to keep reminding myself and the team that we had to be truthful in what we communicated. That was a tough balance to achieve. If we focused more on the good stuff, then everyone would think everything was hunky dory and take it easy… or would that spur them on to do even more? On the other hand, if we focused on the bad stuff, then people would get demoralised… but perhaps feel a greater sense of urgency and hence, do more? I still don’t know what the right answer is (and I don’t think there is a right answer), but we ended up doing a fair mix of both, and that seemed to work well. 

Another thing I realised is that if we keep talking and thinking about change and transformation in terms of what we have to lose, we tend to limit our thinking and play a defensive game. This doesn’t motivate people, and just drives fear and insecurity. Instead, by framing the challenge in a positive way – what we have to gain by making the difficult changes – everyone was placed on a more open minded trajectory, which drove inspired and positive thinking. 

Lesson 3: Be clear that you are serious about execution

Once the T18 strategy was formulated, it was very clear that huge changes were required to get us back onto our ambitious growth path. However, as the new CEO of the group, I had to tread carefully between keeping the team stable and motivated, while making the required transformational changes and far-reaching organizational shakeups. Although oftentimes changes were difficult (both technically and sometimes, politically!), I’m proud to say that we bit the bullet as a team and followed through. A case in point was the JV of our equities business with China Galaxy. Although it made a lot of sense in terms of access to platforms and the Chinese wealth market, it also meant having to ‘share’ control of our equities business, which was the genesis of CIMB. However, once we announced the JV, I believe both CIMBians and the market saw that we were serious about achieving our goals.

Having said that, we didn’t try and do everything all at once. We reviewed what needed to be done, and gave ourselves measured milestones and targets. T18 was a four-year marathon, and sprinting all out in the first two years would have burnt everyone out unnecessarily. Even then, it wasn’t an easy task keeping everyone motivated. I recall a point in our second year of transformation: everyone was pushing really hard, some deliverables were completed but results weren’t really apparent yet; our share price hit a low of RM4.01, and most of us were exhausted. We could have easily told ourselves that it just wasn’t working and we should dial down the pace and intensity on strategic things for the future, and just focus on our current business. Well, I’m glad that I had a strong team who rose to the challenge and refused to give up, as the signs of turnaround started appearing shortly after that! Having now lived through a number of transformations, I can safely say that if it’s a genuine transformation, the going will get tough. The key is to keep pushing past the rough patches and stay the course.

Lesson 4: Regularly review and re-evaluate the strategy, and adjust if needed

Throughout the T18 period, we had to carefully pick and prioritize our battles, with the larger goal of winning the war. Some of our plans worked, some didn’t. For those that didn’t, we looked at what went wrong (and sometimes questioned whether the plan was the right one in the first place!) and pivoted, where necessary. The point is that in a war, you’d be extremely lucky to win every single battle. Instead, we managed our strategy as a portfolio of plans, knowing that there would be inevitable failures, and (hopefully) some outstanding successes that would even out the scorecard in the end, and get us to our ultimate goals. The important thing was to stay focused on the bigger goals (the ‘war’), and not get discouraged by a few failures (the ‘battles’).

Celebrating successes is as important as addressing failures to maintain momentum and to stay the course.

Conclusion

Now that T18 is over, with CIMB meeting all of our T18 targets and improving more than our peers on almost all key metrics, I can look back on my journey and reflect. Did we achieve every single thing we set out to do? No, we didn’t, but we did achieve a lot more than what we had achieved before, or what we even thought possible (such as bringing our cost to income ratio down by 9% in just four years!). Would I do it again? Of course! Knowing what I know now, there are a number of things that I would have done differently (but that’s a story for another day). However, the one thing we did right was finding that balance between short vs. long term, intensity vs. endurance, investing vs. protecting, depth vs. breadth. So, back to the original question on whether it is better to have “a first-rate execution and second rate strategy anytime than a brilliant idea and mediocre management”, I must say that in CIMB’s case, we were fastidious in crafting a good strategy, but obsessed with strong execution. In short, T18 success was predicated on both strategy and execution being top notch and above all, executing that vision as a united #teamCIMB.