Chartered Management Institute: In my opinion - Susan Rice, Lloyds TSB Scotland

Chartered Management Institute Companion Susan Rice, CEO of Lloyds TSB Scotland, believes that asking questions is the key to good leadership.

Last Updated: 31 Aug 2010

As a young dean at an American university some years ago, I found myself facing angry students in an occupied administration building. They were protesting about apartheid; they wanted to influence a political situation. My job was to convince them to leave the building.

A mismatch of goals. But we engaged in discussion and learned about each other's position. We too were against apartheid. We let their demonstration continue and they agreed to an alternative location. I learned a lot from that situation, and from others in banking. I have recognised how powerful it is to ask questions and how important it is to break big things down into their constituent parts.

It's often easy to grasp when we have to do something new, but not so easy to decide what to do. Take Coca-Cola in the early 1980s. Coke's market share was 60% just after World War II, but had shrunk to 24% by 1983. It blamed this on its rival Pepsi.

Enter New Coke and the discontinuation of Coca-Cola in April 1985 - a replacement product in response to change in market dynamic. Customer reaction, however, was near-universal dismay. Two months later, Coca-Cola announced the return of the original formula. 'We have heard you,' said Robert Goizueta, then chairman of Coca-Cola.

This situation was again about influence, and again about a mismatch.

Theory suggested a new product - one course of action; customers wanted another. The more powerful push was from the customer.

In business, we often create change in response to a different environment or to concep- tual analysis. I find it curious that businesses sometimes respond to these depersonalised prompts in isolation from the customer.

Research suggests that 70% of change programmes fail to meet their objectives.

Either nothing really changes or the change brings unintended consequences - often because staff and customers behave differently than expected.

It's interesting that ever since change management was elevated to a science, we've believed ourselves to be living in a different world. And in some ways we are. Thirty years ago, about 80% of a company's assets resided in its plant and equipment, with 20% in the knowledge of its people.

Today, the reverse is true. The knowledge of our staff is our principal asset.

Customers are also far better informed than in the past. They are now so knowledgeable that we are moving from a supply-led to a demand-led economy. Nowhere is this more evident than in my industry. Gone are the days when the bank manager acted with a sense of largesse. Customers realise that they have a choice, that they can vote with their feet. We must respond.

As a late entrant to the financial services sector, I arrived with no specialist market know- ledge, no remarkable insight into our customers' needs. But I had learnt from my previous roles that leading is about guiding others - staff and customers - to figure out for themselves what to do next. It's not about pushing or pulling them along.

For me, that means letting my people manage their own part of the business.

I try to ask the right questions, encourage ideas and debate, draw a story out of our numbers, register what the competition is doing and then not be afraid to take a risk on something new or different.

My role is to understand and then champion new ideas, ensuring obstacles are removed for my staff. What matters at the end of the day is that concepts are turned into a reality that reflects the marketplace - my customers - because that is what will bring business success.

Many retail banks in the US and UK have embraced the argument that customers should be encouraged to migrate to cheaper channels, from the branch to the telephone to the internet and now to SMS texts.

Our strategies have focused on developing these alternative channels.

Customers like using them - all of them. So much so that they now 'touch' their bank far more often. Realising the business case for channel migration may be decades away, because the customer hasn't responded as the theory predicted.

Business is so often tempted by the conceptual, which may or may not work. And when it doesn't, we have a bigger corporate vocabulary about accepting failure than about saluting success. People are trained to accept defeat - indeed, to expect it. I find this odd, because I don't believe in failure as an end point - my instinct is to do something about it. And so often the place to start is with asking questions, breaking the problem down into its constituent parts and solving each, bit by bit.

My view of leadership is no different in times of change than in times of stability. It's essential not just to take risks but to determine what are the right risks to take. And we do that not by a paper exercise, by theory, but by consulting our staff and customers. When we make decisions, we don't have to have all the answers all of the time, but we do have to have all the questions.


SUSAN RICE made history in 2000 when she became the first woman to head a UK clearing bank. A director of Scottish and Southern Energy and Charity Bank, she chairs the Edinburgh International Book Festival and the advisory board of the Scottish Centre for Social Justice.

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