BANKS RED QUEEN EFFECT

Mere survival in current recessionary times should be lauded. Year 2008-09 went down as one where 'Red Queen Effect' was in full force. The red queen advices Alice (from 'Alice in Wonderland') that "in this place it takes all the running you can do, to keep in the same place" i.e: work twice as hard just to maintain the current position, growing requires a different pace altogether. Further, it would be interesting to see how financial Industry will continue to face market correction, green shoots and recoveries, In a nutshell how will banks 'MANAGE THE CHAOS while maintaining THE SPEED' ?

According to me following should define the speed at which banks will run in the forthcoming year -

BRAND - At the time of recession, customers are looking for a extended support from banks. Trust on banks have taken a hit. More and better products for genuine customers (lost during the recession) is the single most important initiative that will help rebuild the brand. Efforts other than pure advertising are need of the hour for maintaining the brand equity. As Suntzu said "It is a great mistake to waste men in taking a town when the same expenditure of soldiers will gain a province."

BENCHMARK - Banks will have to study other more successful banks (if any) at a very micro level to understand what the successful banks are doing right (at the same time studies of banks which failed to learn from the mistakes should be conducted). Why did we have an NPA and others did not ? What are rival banks selling now to SME/MME vis-a-vis us? Have they been successful?

Every bank should indeed take a decision in isolation but as Suntzu said "If you know the opponent and know yourself, you need not fear the result of a hundred battles.If you know yourself but not the enemy,for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle"

STAKEHOLDERS - While external strategies are required, recession takes a toll on the most valuable resource of organisation - 'The Employees'. Transparency, continued career growth, belief etc will ensure the stakeholders put all pressure to support the bank in any future crisis. As Suntzu said - "A Moral ruler makes the people to be in complete accord with him, so that they will follow the ruler regardless of their lives, undismayed by any danger"

Finally if we say the worst is over, i say it's just a beginning, where lot of gear shifts will be required. Running at controlled speed to grab the green shoots at the same time being vary of falling in same trap again should help to ward off the crisis. "In peace we prepare for war and in war we prepare for peace"

(This article of mine was published in HSBC Journal. I am currently preparing a research paper on this subject which will be sent to MBA business reviews & quarterlys)