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Book Review: It's time to rethink the "rules" of banking

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  • Written by  Jeff Stephens
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  • Comments:   DISQUS_COMMENTS
Rework, by Jason Fried and David Heinemeier Hansson, Crown Business, 279 pp., 2010. Rework, by Jason Fried and David Heinemeier Hansson, Crown Business, 279 pp., 2010.

Rework is likely not a book to be proactively read by many bankers. Among those bankers who read it, unfortunately many will write it off because they will think things like:

•  “This book is written for start-ups—we’ve been around 100 years.”

•  “That won’t work in banking.”

•  “People take their money seriously, so we have to be traditional.”

Those bankers will be missing out on a great business book, full of valuable lessons that can, indeed, be applied to their industry. In fact, one of Fried and Hansson’s first pieces of advice in is to “ignore the real world.” As they say, “the real world isn’t a place, it’s an excuse. It’s a justification for not trying. It has nothing to do with you.”

I hope bankers will keep this in mind as they read.

I enjoyed Rework greatly, and feel it offers a great deal of value to the banking industry. Written concisely and eloquently, Rework is made up of very short, simple chapters with clear points, and great illustrative graphics—and it only takes three hours to read. The book offers a somewhat contrarian view of business principles and examples outside the context of banking, from the restaurant industry, entertainment, manufacturing, retail, and many others. I’m a well-known advocate for non-banking business examples, and this book delivers them by the dozens.

The examples come into play in laying out the three key lessons of the book:

• Prioritize your work

• Say no

• Be real, and be yourself

Let’s take a look at each.

Prioritize your work

Many bankers will tell you there are not enough hours in the day. According to the principles behind Rework, though, there is always enough time—if you spend it correctly. Much of the book is dedicated to helping the reader decide the best focuses on which to spend time.

The authors are not big fans of a common banking industry practice: long-term strategic planning.

“Planning is guessing,” they write. While there is value in planning ahead, they do not feel a company must write down and obsess over long-term plans. Instead, the authors favor deciding what to do next week—not next year—and prioritizing accordingly.

That’s because the future is impossible to predict, and doing so can divert a great deal of time and energy. “It doesn’t matter how much you plan, you’ll still get some stuff wrong anyway. Don’t make things worse by overanalyzing and delaying before you even get going,” the authors say.

Rework poses a profound and simple question to the reader:

If you stopped doing what you do, would people notice?

If the typical bank were to disappear, sure, people would notice—but mostly because of the media attention and the loss of jobs. But would there be a void left?

In banking, probably not, because there are so many other institutions simply buying and selling money. Rework advocates for “making meaning”—ensuring that your business is creating or providing something that makes an impact on the world; something that would leave a huge void if you were to disappear.

Say no

Oftentimes it’s not what you do that defines you ... it’s what you don’t do. As the authors claim, a movie is made by what the editor omits, not what she includes. A beautiful graphic design is not created by adding as many visual elements as possible; it’s created through making hard choices about what to omit.

With this notion in mind, Rework encourages readers to do less, but do it better. This is not the typical approach in banking, where banks are usually fixated on having products and services that allow them to serve the entire span of humanity, from children to wealthy retirees, from small businesses to municipalities and commercial titans.

One way to say no is to let customers outgrow your bank.

The authors’ company, 37Signals, for instance, has decided that instead of adding features as customers’ needs expand, 37Signals will keep their product simple and not try to accommodate the growth of every customer. By contrast, banks are generally obsessed with having a product for every step in a customer’s lifecycle—which clearly leads to greater complexity and a larger menu of products for employees to manage and customers to understand. But as the authors point out, means of satisfying simple, basic needs will always be in demand. Focus your bank on being true to a certain type of customer, rather than a specific customer with changing needs.

Most bankers perceive the idea of serving only a narrow slice of the market as a constraint. Authors Fried and Hansson love constraints, and encourage readers to not only accept constraints, but to embrace them.

Rather than using limited resources as an excuse, there is a huge opportunity to use them as the catalyst for inspiring creative solutions. Remember the television show MacGyver? It was his lack of available resources that brought out his creative ability to make something from nothing. Constraints inspire creative solutions, but in banking, too often, constraints are seen as limitations and excuses: “We don’t have the time to do that.” “If we only had the resources of our competitors, we’d be able to keep up with them.” 

Rework encourages readers to embrace these limitations and stop being held back by them.

Saying no also applies to competitive strategies in banking. A bank that believes in Rework’s paradigms would not care what its competition is doing.

That’s because when you pay too much attention to the competition, you are letting them define the parameters of the game.

In banking, if you are trying to create “the world’s greatest checking account,” you are already beat because you are playing into what someone else has already defined a checking account to be. Instead of trying to keep up with the competition, Rework recommends companies under-do the competition: Do less, but do it better.

Often, when your product does less than the competition’s, customers will ask for it to do more. Rework’s section “Say No By Default” explains why it’s not good to just give customers what they want. Using the banking example of ING Direct, the authors explain that when the bank launched in the U.S., customers asked for brokerage services, credit cards, and unlimited deposit maximums—but ING Direct said no, staying true to its strategy of simplicity. In many ways, it’s like the famous Henry Ford quote: “If I’d listened to customers, I’d have given them a faster horse.”

Be real, and be yourself

The banking world has a strong industry culture of following conventional practices, which creates a barrier between customers and banks. The Rework authors believe in being real and being human—not being corporate.

Among the advice that hits home most strongly with me is the section called “Decommoditize Your Product”—a concept I am known for advocating. Fried and Hansson do a great job of explaining a very simple premise: If you inject yourself into your product, it will become something nobody else can replicate.

“Competitors can never copy the ‘you’ in your product,” they say. This is core to the concept of a bank’s brand. Every bank’s business model is based on buying and selling money, but each bank has a unique personality as a result of the people who comprise it. If banks become better able to inject that personality into their company, they will be able to break free from being commodities.

Rework also offers a chapter on damage control, which unfortunately is a topic most businesses, especially banks, must be expert at. In the name of being real and being yourself,  Rework shares tips on how to say you’re sorry and mean it. The chapter also deals with handling the inevitable waves that occur when a company chooses to rock the boat of tradition (which it should). In doing so, banks that favor “corporate-speak” ought to drop it and talk like real humans. Instead of “being transparent about our deficiencies,” banks should “be honest about our problems.” Doing so will help your bank connect better with real people.

Company culture is a topic that many banks focus on—some with more success than others. Rework reminds us that a culture is not created—it just happens.

“Culture is a by-product of consistent behavior,” the authors state. It is created through action, not words. This point resonates strongly with me personally, as I’ve always advocated to banks that they must “find” their brand story and culture, not work to “invent” one they wish they had.

Inspiration is perishable

The book concludes with a brilliant and important point: whereas good ideas have a long shelf-life, inspiration is perishable, and can vanish as quickly as it comes. To be as productive and powerful as possible, harness that inspiration when it strikes you. Not only will you get more done, you’ll have more fun and feel great about your progress.

Rework is full of insightful tips, new ways of thinking, and excellent examples that will help bankers change their way of doing business. If banking readers can learn to prioritize their work, say no to excess, and be real and be themselves, the banking industry will become much stronger, and individual banks will thrive.

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