Traditional "truths" about what makes management effective warrant further examination.

"Hierarchical structure is the only way to manage risk."

Wrong. Banks have traditionally structured their organizations like a pyramid. Many recognize that this is not an effective way to create employee participation and build empowerment.

The reasoning behind using hierarchical structures was that they are necessary for managing capital, liquidity, interest rate fluctuations, and other risks associated with our business. The assumption was that as a mediator of risk, a depository institution must be hierarchical.

I do not believe this is necessarily so. An organization can be a highly effective risk manager without hierarchy, by employing the same decision- making discipline throughout the ranks. It is management's responsibility to prepare all employees to make decisions that management itself would make.

"Big is beautiful."

Not necessarily. Large organizations can become too cumbersome. Many use old paradigms and controlled environments just to manage their sheer corporate mass. In the process, they inadvertently encourage their employees to park their brains at the door before they come to work each morning and avoid individual initiative and risk-taking.

But other large organizations, such as Norwest Corp. and Barnett Banks, empower local decision-makers. That makes the whole greater than the sum of the parts.

"Gradual change is a winning strategy."

Wrong. The trade-offs between evolution and revolution have been weighed many times. Revolution entails significant risk, but the times call for a dramatic change in the way we do business. Evolving toward such a change will take too long.

Banks that wish to revitalize themselves need to wipe the slate clean-to revolutionize their structure, culture, and business paradigm.

"Management is about control."

Management is about caring, nurturing, and building a learning organization. Management is about touching people in their hearts as well as their minds, inspiring them to be their very best and giving them the opportunity to be their best.

"People are replaceable production units.

Wrong. Some companies manage individuals as if they were computer chips. When they break down or fail to perform, they are replaced-immediately, and without much thought. The organization may become highly efficient, but it has no heart.

People who are invested in their companies will produce better results. Treating people as replaceable is discouraging and dehumanizing, and results in an uninvolved work force.

"Volume equals value."

More is not necessarily better. Selling a lot of a losing product is not gong to generate shareholder value or good bottom-line results. Often people take loss leaders as an excuse to build significant volume that does not generate value.

Similarly, market share does not equal profitability. Though market share is a positive characteristic, by itself it's insufficient to generate profits.

Profits come from effective pricing and relationship-building. True, these can benefit from strong market share. But market share sometimes means only that you have 100% of all the D customers but none of the A's- not a very profitable situation.

Remember, much that we've traditionally accepted as true isn't. To create a winning company, challenge the accepted wisdom and chart your own course.

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