The great virtue of the financial markets is that sooner or later they force us to face our mistakes. When the glow of the 1990s fades, the mistake far too many bankers will confront is their failure to insist on managerial accountability.

Winning banks must simultaneously invest in technology, trim cost structures that aren't competitive with nonbanks', improve margins for increasingly commoditized products, and speed delivery of what the customer wants. All without forgetting that banking remains what it has always been- a risk business. On more fronts than ever, the commercial bank must be nimble.

But too many of the nation's banks still shy from the one thing the nimble organization most needs: clear accountability. Just consider the industry's seeming inability to rid itself of organizational complexity and ambiguous lines of authority.

Clinging to a structure no self-respecting nonbank would entertain for a moment, too many multiregional banks still saddle themselves with local managements and boards of directors. These purportedly retain middle-market business. But no one seems to have asked why no major nonbank in the country needs such a structure to serve many of the same clients.

Speed to market is essential to compete with nonbanks. Yet this organizational ambiguity is the enemy not only of expense control but also of speed to market. Give someone the title "president," and he or she will act like one. Try to run a major organization with a bevy of local presidents, and the national line of business will spend more time selling internally to the local managers than externally to its customers.

If headquarters owns the product manufacturing system and the local market head owns the distribution system, they inevitably fight over who owns the customer. And if no one owns the customer, the customer suffers.

The attachment to complex, ambiguous organizational structure skirts the hard, but essential, decisions. Who reports to whom? Who is accountable? For what? When?

To succeed, bankers must know what their jobs are. They must be free to do those jobs. The only barrier between the job and success should be the ability of the competition to do it better.

But too often the forlorn bank manager is trapped between two bosses, either formally or informally. That fuels second-guessing. And second- guessing conditions the manager to avoid risk. Clear-cut decisions about pay for performance become muddled. The lesson's simple: You cannot serve two masters.

I believe that large banks can be managed successfully without local autonomy or convoluted reporting structures. My conversion to the virtue of simplicity was the lesson I learned at-of all places-a thrift.

Over the past two years, Great Western Bank was in a foot race to achieve higher returns. While the company boasted a rich franchise, its imperatives paralleled those of many banks: Deploy technology, increase revenue, reduce expenses, and reengineer lines of business.

Great Western's critical disadvantage was the traditionally narrow thrift product line. But its critical advantage was that decision-making was simple. Management oversaw a remarkably flat organizational structure, with entirely unified national lines of business. A decision could be made by executive management on a Monday morning and be on its way to implementation that afternoon.

In just two years, Great Western was able-on an annualized basis-to increase fee income by 45% and mortgage originations by almost 25%, improve the efficiency ratio from 62.6% to 58.5%, install major branch and loan servicing technology platforms, and increase sales per sales employee by 30%. Needless to say, all these had a significant effect on profitability.

Moreover, when the bank wanted to introduce business banking, it only took five months from conception to a rollout in 400 branches. In a separate promotion conceived and carried out in less than a month, Great Western opened 34,000 accounts totaling $822 million of deposits in five days.

This litany is not meant to suggest that all was perfection at Great Western. In point of fact, an unsolicited takeover bid led to the combination of the bank with another partner. But the simple, uncluttered thrift structure-with clean lines of authority-made possible sweeping change where sweeping change was needed.

For bankers, the message should be clear. Simplify the organization. Clarify accountability. Or risk falling further behind in the financial services foot race when the good times of the 1990s come to a close.

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