Success is neither magical nor mysterious. Success is the natural consequence of consistently applying the basic fundamentals.
—Jim Rohn
A company is only as good or as strong as the foundation it’s built on. In good times, the foundation can act as a catalyst—a stimulant to help move you forward. In difficult times, the foundation becomes a ballast to help keep your organization upright and stable as it faces strong waves of negative change. No matter what business environment you’re navigating, you’ve got to have a strong foundation when it comes to the basics to succeed in the long run. It’s no good to try to dazzle customers, current and prospective, with all the amazing new product and service innovations you’ve got in the pipeline if your people constantly stumble and your systems can’t keep up with demand. Before you worry about exceeding your customers’ wildest desires, make sure you’re fulfilling them first.
If your company is built on stilts, the first minor tremor in business activity could cause it to collapse. So the stronger and the deeper the foundation and the more solidly your organization is cemented to it, the better chance it has to survive even the most difficult times. The strength of this foundation also resonates throughout the organization to your associates, customers, clients, and other stakeholders. And let’s face it, a strong foundation doesn’t hurt your reputation either.
When you’re playing a game of football, if you don’t have a front line that can block the opposing players and keep them away from your quarterback, he’s going to be ineffective. He won’t be able to hand off or pass the ball before he gets clobbered. The members of your company’s offensive line have to be able to execute the basics of their job consistently and repeatedly.
For example, if you’re a restaurant owner, one of the basics is to pass the government health inspection. Another is that your food has to be pretty good and the interior of your restaurant should be comfortable and draw people to it. Your servers should be friendly, and your customers shouldn’t have to wait too long to place their orders and get their food. Those are all basics that people expect to be executed well when they spend their hard-earned money at a restaurant.
If you run a construction company, your customers will expect you to understand how to read blueprints, obtain the permits required to make your construction project legal, and how to hire and manage experienced subcontractors whose work is up to a reasonably high standard. If you can’t do these and other construction-related things well, you’re not executing the basics.
Every business has a set of basics that it must execute well. Banking is a highly regulated industry, so we have to be very good at all the regulatory requirements that are thrown at us. If we’re not, the regulators can stop us from doing business in just the same way that the health department can shut down a restaurant until it complies with the public health laws. This could turn out to be the kiss of death for a restaurant that’s already on shaky ground, and many have folded for just this reason. If you’re not good at the basics and haven’t built a strong, reinforced foundation, you’re standing on very shaky ground. One economic downturn or a botched project or two, and your business will quickly be in a fight for its very survival. I can also predict that if you’re not good at the basics, you’re not going to be any good at the higher-level things that need to be done—those things that will successfully differentiate your company from others like it.
There’s one more thing that being good at the basics can do for you: build a reservoir of goodwill and trust with your customers that can carry you through difficult times.
There’s a high-end restaurant here in Portland that was named Restaurant of the Year by the Oregonian newspaper in 2005. In 2013, it was investigated by Oregon public health officials after more than thirty people who dined at the restaurant over a two-day period developed gastrointestinal symptoms due to an outbreak of a norovirus.1 Despite the outbreak, which was widely reported in the press, the restaurant bounced back from this potential public relations disaster. Its leadership team acted quickly to address the problem by contacting customers who had dined at the restaurant during the period in question and replacing a refrigerator that wasn’t cooling properly. Perhaps even more important, it bounced back because of the reservoir of goodwill that it had banked with its customers and the community over the years.
When asked by local media, the people who had gotten sick said that they weren’t worried—that as far as they were concerned, it was still a great restaurant and they were going to go back. If the restaurant hadn’t accumulated this goodwill, that would have probably been the end for this particular small business.
So how do you know whether your people are executing the basics well? In my experience, there’s only one way to do it: inspecting the work your people are doing on behalf of your business. Because we empower people to do things at Umpqua Bank, there is a very large dose of accountability—and inspection. One of the basics that we absolutely have to execute well is to stay on top of regulatory issues. So I have compliance people, I have regulatory people, I have government affairs people, I have internal audit people, and I have credit review people whose job it is to constantly check to make sure that we’re in compliance. In smaller businesses, whoever runs the organization must regularly inspect what’s going on. When you delegate responsibility, you have to inspect what your people are doing to make sure that your standards are being lived up to.
It takes a great deal of self-discipline for leaders to hold the line on their standards and not let them slide. People are coming at you every day to try to tell you why it’s okay to look the other way just this once and to let your standards drop below what you consider to be acceptable. If you listen to the constant pounding of that message long enough, you may start to believe it. It takes an incredible amount of self-discipline to say, “No, we’re not doing that. We’re doing this. This is the way I want it done. I appreciate your input, but we’re not going to sacrifice quality and the reputation of our company to get there more quickly.”
Years ago I was a guest at the Windsor Court Hotel in New Orleans for a planning session. The hotel is justly famous for its remarkable art collection and its attention to detail. At some point during the proceedings, I was walking down the hallway and went up to one of the hotel’s employees to ask directions to the men’s room. The employee was at the top of a ladder, dusting the artwork, when I asked him, “Can you tell me where the men’s room is?,” expecting him to simply point the way. Instead, he said, “Sure,” and then he proceeded to climb down from his ladder and personally take me there.
I always wondered why he didn’t just stay on that ladder and tell me to go down the hall fifty feet to where the restroom was. I later read in a book that the standards of the Windsor Court Hotel are that employees should never point directions to customers; instead, they are to take customers to their requested destination. That employee could have easily stayed up on his ladder and pointed me to the men’s room and I would have been none the wiser. But he took the time and energy to get down off his long ladder and take me there. As a customer of this grand hotel, I was surprised and delighted—it made an impression on me that I still tell people about many years later.
There are all kinds of standards. In our company we have communication standards, professional standards, cultural standards, and more. All of these standards, very important to us, outline to our associates exactly how we expect them to behave and the high level of service we expect them to extend not only to our customers but to one another. I have found that standards need to be in writing; if they aren’t, it’s too easy to change them on a whim—“I don’t like that anymore; I’m going to do it this way.” Written standards help people understand what an organization’s leadership team wants them to do and how to do it.
But standards are not absolute, and there are times when we want our associates to use their own judgment to decide to do something different. I make a habit of telling people in our company that they’re empowered to break the rules if they think it’s the right thing to do. But I also let them know that they will be held accountable and that they’ll need to be able to explain why they did what they did. Depending on the result, we might say, “Great job, way to go!” or, “That was a good try, but I’d like you to handle it this way next time it comes up.” The point is that you must temper your criticism of people for doing what they think is right. You need standards, but you also need your people to use their own discretion when necessary.
Ethics are in essence another kind of standard, albeit a kind that for the most part comes from within an individual rather than being imposed from outside. You want and need to hire ethical people—men and women who know right from wrong, have a strong moral compass, and refuse to break the law. As we saw from the example of Enron, a fundamental failure of ethical behavior and accountability at the top of an organization can put even the most successful company out of business.
An interesting aspect of ethics that’s plaguing the largest businesses today is that some of these companies are so large that some people believe they may be too difficult to manage. I don’t necessarily believe that, but I do believe an organization can get so big that people are no longer adhering to the standards and ethics that leadership established and believes are being followed. It’s difficult to inspect ethical behavior at that size.
Just like a company’s culture can be diluted and made weaker the larger it gets, so too can its ethics. Every intangible our company possesses can become diluted for lots of reasons. I think the dilution factor is stronger in larger organizations than in small because there’s so much translation going on within the company. The message goes in one end of the organization and may be different by the time it comes out the other side.
The leader has to be the person in the organization who looks most critically at it—that’s part of the job. How else can you get better if your leader doesn’t think you can get better? When it comes to ethics and the standards you have to be able to inspect, you must be able to hold people accountable; you always must be trying to improve and make them stronger and to develop methods, systems, and processes that enable you to track these behaviors. And this is just as important in small companies as it is in big ones.
When we talk about the core values and the leadership team, there’s one that is absolutely fundamental: you must walk the walk and talk the talk. We have two sets of eyes watching us—those we work for and those who work for us. And the people who work for us are the most important set of eyes because if we’re not providing resources for them and living up to the standards and the ethics and the cultural foundation that the company was founded on, if we’re shrugging off things that we feel are important, if we’re rolling our eyes on important things in front of people, we’re sending a loud and clear message that these things aren’t important. So if you as a leader don’t consider ethical behavior or your company’s culture or core values to be important, then your people probably won’t either.
I’m personally much more patient with people in the field screwing something up than I am with an executive back at the home office. We pay our executives well, so it’s fair to expect them to be really good at what they do. They know what the rules are. They know our standards and the ethics, and I expect them to live up to them. But sometimes they don’t, and when our fellow associates observe this behavior, it reflects badly on all of us. We have to set the example, since there could be hundreds of associates who will think that if our standards aren’t important to them, then they aren’t important to the rest of us. Whether it’s intentional or not, I’ll call them on the carpet if they’re doing anything that might weaken the cultural standards of our company. I won’t tolerate that. It’s a zero-tolerance situation—there’s just no room for messing around with our company’s culture and our high standards.
There are two aspects to believing in yourself. The first is that you have to have confidence in your ability to accomplish your goals. That’s contagious. Remember: people are watching. The other is that you as a leader need to buy into whatever it is that your company represents. You also need complete buy-in from your leadership team. They have to believe in it. They’ve got to walk the walk, talk the talk, look the look, dress the dress, and fully support your company’s culture, standards, and values. If they don’t, you have the wrong leaders on your team.
This buy-in goes hand in hand with believing in yourself, and it’s just as important. If you say, “I believe I’m really good at my job, but I think what’s going on here at the company stinks,” then you’re going to fail. And if you say, “I really like what’s going on at the company, but I stink at doing my job,” you’re also going to fail. But if you’re in the enviable position of being able to say, “I believe strongly in what’s going on in the company and I know I can do my job well,” your chances of success are significantly improved. It’s not enough to just believe in yourself. You also need to believe in your organization and what it stands for and represents.
And as a leader, not only do you need to believe in the importance of executing the basics well; you have to believe that you can support and hold your people accountable for executing them. One way to look at executing the basics well is that you’re helping to build a solid brick foundation that will last for decades or maybe even centuries into the future. For a company to thrive that long, you’ve got to build that foundation well, with bricks fired from the company’s core values and in the execution of the basics. If you’re not going to live up to your company’s culture, standards, and values, the bricks in your foundation will start to crumble, and your company, which was built to last, will eventually collapse from within.
When the recession hit the banking industry in 2008, the management team at Umpqua decided that we wanted to come out of the recession with a stronger balance sheet than when we entered it. To some observers at the time, this was unbelievable. Many people were saying, “Let’s just hunker down and survive.” But my reply was, “No, I don’t want Umpqua to just survive. I want our company to thrive. I know we’re going to take some lumps along the way and that’s the way it goes, but I want us to come out of this with a stronger balance sheet.” And in fact, as of this writing, our balance sheet is indeed stronger than it was in 2007 and 2008. It’s so strong that I often tell our people that should another financial disaster hit the United States where banks are in big trouble again, sure, we’ll probably lose a few bricks in the foundation we’ve worked so hard to build and strengthen, but the walls will stand and we’ll weather the storm, no matter how severe it may turn out to be.
It’s a good feeling to be able to tell your people this, and it goes a long way to build both the comfort they currently feel in their jobs and the confidence they feel for the future of the bank—and themselves.
Note
1. Lynne Terry, “Health Officials Investigate Norovirus Outbreak at Andina in Portland,” Oregonian, March 13, 2013.