A Series on How to Achieve Superior Performance: What is a WOW! Bank?
Every community bank is unique, but that uniqueness can pose a problem for a community bank that wants to create a dynamic strategic plan to fit the bank "just right".
Bank executives and directors know the cookie-cutter, one-size-fits-all strategic plan is useless at best and fraught with errors in many cases. To avoid those pitfalls, savvy bankers use the "Goldilocks Theory" as the organizing foundation to create a strategic plan–one that is not too cold and overly risk adverse or too hot and a regulator beacon of risk. They want a plan that is "just right" and reflects the bank's uniqueness while dynamically balancing the bank's risk posture to achieve optimal future value.
Getting It "Just Right" Is No Walk in the Woods
Tackling this vexing problem isn't easy. Why? Analytical research and hands-on experience with scores of community banks have shown us how banks choose time and time again to copy another bank's model, instead of forging a strategy of their own. Goldilocks tells a tale that finding your "just right" is no walk in the woods.
Goldilocks and The Three Bears is a classic. You all have heard it as children, have probably read it to your children, and if you have been blessed–even read it to your grandchildren. What you probably haven't stopped to think about is the risks that Goldilocks took–or the lesson she created for banks.
Risks:
- She left her house–alone.
- She walked in the woods–alone.
- She entered a strange house, occupied by bears–alone.
- She tried food, unattended, unknown, and porridge??? Risky
- After she burnt her mouth on that unknown food, she risked trying yet another bowl.
- After ingesting that sample–which happened to be cold porridge–yes, she yet again tried another bowl ... till she got it "just right".
Did Goldilocks tromp alone through the woods just to find the perfect breakfast? No, that certainly was not enough exploration and risk for this little girl. Fortified with a bowl of porridge, she decides to take in the rest of the house. It wasn't enough to see that one chair was very large and obviously very hard or that another was noticeably squishy (probably a beanbag chair) to determine they weren't right for her. She had to sit in both to know. For how was she to know the final chair was to be "just right" without the trials of its predecessors?
As you follow Goldilocks upstairs, her continued persistence is rewarded with finding a "just right" resting place for a nap after trying three strange beds. The beauty of this moment is that she finds the reward of deep sleep seemingly without a care in the world. Remarkably and in spite of the many actions she has taken, she lies in a strange bear's bed after breaking and entering and possible other misdemeanors.
The Value of Risk
The Goldilocks Theory allows you to design a risk posture that makes you comfortable. If we asked you to place yourself in Goldilocks' shoes and reread the story to you, we bet we would have lost many of you at various points throughout the story. Some of you would have never left your house alone at such a young age. Others would have never entered the bears' house in the first place. Some would have simply waited for the first bowl of porridge to cool before trying it, while there are some of you who would have just headed upstairs for a nap.
The Goldilocks Theory shows there is value in risk! Without risk, Goldilocks would never have found that perfect bowl of porridge, that perfect chair, that oh-so-comfortable bed. Without risk at your institution, you will not find your perfect balance. You need a strategic plan that everyone around your board table feels is "just right" for your risk tolerance.