Beyond Performance 2.0, 2nd Edition

Chapter 7Advance

How Do We Continue to Improve?

When John McFarlane took over the ANZ bank, it was the worst performer of Australia’s big four banks, regarded as the highest-risk bank investment by the market, and in strategic disarray. It was grappling with almost A$2 billion of bad debt and a cost-to-income ratio of roughly 63 percent.¹

The bank set its sights on a five-year aspiration to double its profitability and market capitalization and reduce its cost-to-income ratio to below 50 percent. To achieve this performance aspiration, health improvements were needed in relation to people development, openness and trust, risk management, and customer focus. In the Assess stage, it became clear that a raft of skills needed to be built in risk, technology, sales, marketing, HR, and so on. Mindset shifts would be required, too. For example, from “risk is the risk function’s job” to “risk is everyone’s job”; “it’s respectful not to disagree in public” to “we have an obligation to dissent in meetings”; and “process is a necessary burden on customer service” to “process is a tool to help us responsibly serve our customers,” and so on.

The core architecture of the change program was a portfolio of initiatives organized around three themes: perform, grow, and breakout. In the “perform” theme, topics were tackled such as overhead cost reduction, collections management, and lean service operations. Examples in the “grow” theme were, among others, initiatives directed at customer service, ...