Standard Bank : Quantifying Values



  • 5
  • November 15, 2013
  • David Lapin

Case Study Details

The Company: Standard Bank Ltd.

The Challenge
The CEO of Standard Bank Ltd, a large multi-national retail and investment bank employing over 35,000 people, invested large resources, executive time, and personal credibility in building and communicating a corporate set of values for his entire organization. He knew that an organization of that size only gets one chance to successfully implement a values exercise of that scale. Failure would, at best, infuse cynicism into the organization and, at worst, erode trust in leadership. His challenge to Lapin International (formerly SBE) was to help him excite his operational managers about the Bank’s new values and to generate sustainable commitment to their implementation.

Lapin international's Approach
Lapin International's strategy was to demonstrate the monetary yield if the values were used strategically. This had never been done before with any degree of objectivity or precision. The CEO asked for volunteers from the Business Units. One volunteered, the Wills and Estates Unit. The Bank attached little or no financial value to the Unit and kept it more as a service to clients than for bottom-line contribution to the Bank’s revenue. But, despite the Unit’s lack of perceived glamour, the leader of the Unit, a young, cutting-edge thinker, was excited by what we proposed and brought his team along for the ride!

The Project
In collaboration with Cyest® Financial Modeling methodology, Lapin International engaged in the following steps:

Step 1 - We evaluated the realistic NPV of the Unit. This amounted to $300m.

Step 2 – We calculated the potential improvement to that NPV if they were to use every best practice initiative (BPI). We identified their primary Business Levers as: Volume, Value, Efficiency and Churn (the loss of customers between the time of signing the will and death). Implementing conventional best practice BPI, these levers would be improved by the following percentages:

• Volume: +20% per year
• Value: 0%
• Efficiency: +10% per year.
• Churn: -50%

These values were entered into the Cyest® model and translated to an NPV of $450m. This represented a 50% increase in NPV, achievable within five years.

Step 3 – Using Lapin International's proprietary methodology, we developed a Business Philosophy for the Unit. The Business Philosophy comprised three sections: i) a Purpose, ii) a System of Values to support the Purpose, and iii) a measurable Vision.

Step 4 – Using our Business Philosophy methodology, we developed a Value System (built upon the Bank’s set of values) capable of delivering the Unit’s intangible offering and designed to build the culture in the Unit.

Step 5 – After identifying performance gaps between current levels and the levels of performance attainable if the Unit would tenaciously execute on its Purpose and Value System, we revisited the impact on each of the drivers using the Cyest® model. A conservative evaluation, avoiding any possibility of “double counting,” yielded an NPV of nearly $1bn, achievable in five years.

Step 6 – Too often, change is undertaken with the best of intentions but with insufficient attention to the real reasons why that change never occurred previously. Using Harvard Business School methodology, we drilled deep into the root causes of potential inhibitors to the desired transformation and ensured that our action plan addressed those root causes effectively.

Results
The added value to the business from using the Bank’s Values as a means of realizing the Unit’s Purpose is estimated at $700m in NPV. This is four times the added value that could be achieved from conventional BPI! Additionally, whereas conventional BPI is costly and often erodes an organization’s culture and morale, driving the business with values has the opposite effect: It’s costs are minimal, and it uplifts employee morale and inspires human energy.

Less than a year after implementation, the Unit was on target for the projected financial growth. In addition, the leader was not only retaining his best talent, but had resumes coming in daily from talent working for his competitors, willing to join him for significantly less than they were earning at the time. The reason? The excitement, morale, and culture of his Unit.

To date, some 18 months after the initial exercise, the Unit is on track to deliver the growth figures it estimated.


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