Cap One – a Capitalist’s Drive for Growth
Reflecting on the recent announcement that Capital One plans to acquire Discover, it is impressive to see the strategic positioning and drive for Capital One to continue its growth patterns. Capital One has a good track record for growth, as it boasts that it has exceeded numerous growth targets since its creation in 1994. This type of track record doesn’t happen by accident. It takes a clear strategy and, most importantly, a dedicated focus on execution. An effective short-, mid-, and long-term strategy is rooted in having a clear understanding of and focus on your company’s unique advantages, which then translates to a winning proposition in the marketplace. Also, it is important to plan for execution to meet organizational goals. This requires a commitment to focus and relentless attention on many execution details daily to achieve success. Then, enterprising, growth-minded companies drive growth and set even higher goals to achieve success within their marketplaces. This is what brings Capital One to the plan to acquire Discover….an internal strategic drive to move on to the next step of change in performance for the company and its investors. By acquiring Discover, Capital One moves strategically into a new world where they can compete with Visa and Mastercard to provide a globally competitive payments network while also capturing numerous other synergies in the card business from the combined companies. I bet Capital One delivers on its aspirations since they have a demonstrated track record for solid execution – the most important predictor of success being past performance. More competition in the card payments field should also benefit retailers and consumers! Does your organization have an established strategic plan and leveraged pathway to success? If not, contact us to learn more about the various models we implement to help organizations activate their mission, vision, and values.
First Republic Bank: Highlighting the Importance of Risk Management
The recent collapse of First Republic Bank is another example highlighting the importance for business leaders to be uber-predictive and ongoing practitioners of risk management. This process should be embedded into their operations to protect their brand, valuation, and customers. The seeds of First Republic’s failure were sown years ago when their strategy was developed to focus on wealthy clients by offering rock-bottom interest-only jumbo mortgages as a key means to get those clients to accumulate assets in the bank. Due to widespread banking industry concerns, First Republic Bank needed cash to cover clients withdrawing their money from the bank. Their mortgage loans were of little value to generate cash in the current higher interest rate marketplace. If First Republic Bank was thinking about risk management as part of its ongoing practices, its leadership would have considered how to deal with future rising interest rate risks. Taking a longer-term view of possible future financial market scenarios may have helped guide them to a better-informed strategy and avoid this collapse. Sadly, the effects of the First Republic Bank’s failure impact many….employees losing their jobs, shareholders losing their investment, and senior leaders losing their positions – everyone’s reputation is impacted. Their reputational piggy bank is now sustaining many withdrawals. Risks for businesses come from many different sources – financial, legal, environmental, operational, and reputational are just some major areas to consider. A sound business management process for leaders is routinely conducting risk assessments while considering the possible scenarios in a fluid marketplace. This is one of the key roles of leaders….to understand possible business risks and take actions to manage those risks appropriately to ensure the longevity and valuation of the enterprise. This way, banks can turn short-term adversity into a long-term marketplace advantage.
