Formalized management system helps bank grow value

Bankers are good at their jobs and most have a strategic plan that’s meant to guide their institutions. Sometimes that plan just sits on a shelf. Few bankers, though, have a formalized management system that keeps them accountable to their mission or allows them to effectively communicate their vision to staff. The Entrepreneurial Operating System (EOS) is the management system bankers need, said Paul Moen, a business strategist with Resultants for Business, during a free BankBeatGroups webinar held April 19.

“The leaders’ task is to move the bank forward; the management challenge is to get everyone in the bank moving in the same direction,” Moen said as he explained how he facilitates the year-long (or longer) strategic execution of EOS.

The focus of EOS is growth, not just in size but also in profitability and value, Moen explained. It’s a leadership challenge to get an organization successfully moving in the the direction of growth, but banks Moen has worked with have logged impressive statistics. Moen surveyed 25 clients and found revenue gains in the three years after executing an EOS strategy averaged 23 percent after the first year, 32 percent after the second year and 52 percent after the third year. Increases in net profits were more striking, with an averaged increase of 24 percent after the first year, 89 percent after the second year, and 209 percent after the third year.

Moen, who has spent nearly three decades as a chief financial officer at Midwestern community banks, said he became an EOS facilitator because he wanted to help bankers improve their productivity.

The EOS system was founded by Gino Wickman, who details the system in a book titled “Traction.” The model requires business leaders to lay out a vision for what they want to accomplish, build an infrastructure into which they will plug in the right people, use scorecards to hold people accountable and track metrics, identify obstacles or barriers to success, document processes, and then manage it all to achieve the bank’s long-term goals.

When Moen facilitates EOS for banks, he plans three, day-long meetings spaced one month apart, where bank leadership defines the institution’s core values and focus, then decides what it wants the bank to look like in 10years. That picture is then refocused to three years in the future, and refocused again to one year ahead. It’s at this point the plan is introduced to the entire staff. Quarterly “All-Hands” meetings — designed to hold people accountable for whatever aspect of the plan they “own” — commence at this point.

EOS is most effective, Moen said, at banks where leadership is coachable and open to new ideas.

A replay of Moen’s webinar is available here. BankBeatGroups conducts free webinars on the third Thursday of each month, featuring professional development topics of interest to mid-career bankers.