December 30, 2009
Prior to her role at Wells Fargo, Ms. Moldafsky was general manager of the KitchenAid brand at Whirlpool Corporation, head of Retail Marketing at Charles Schwab, and held multiple positions in the financial services, card, travel, and international divisions at
Ms. Moldafsky holds a bachelor’s degree from the University of Michigan and a master’s degree from the Wharton School, University of Pennsylvania.
What does competitive advantage mean to you and your organization?
I think of competitive advantage as first, defining your key differentiators and second, determining how sustainable those are.
How would you describe Wells Fargo’s competitive advantage?
We have a broad customer base and a unique operating model. Our 84 distinct businesses are complementary, leveragable across each other, and counter‐cyclical. And, we have deep distribution channels including a strong online business and extensive retail bank distribution network. Connecting that is a highly collaborative culture focused on finding the benefit to the customer. These are all advantages, but our true differentiator and competitive advantage is that we are a cross‐selling machine. We know how to leverage all of these strengths in a way that drives sustainable revenues.
How does that competitive advantage translate into the home equity division?
Home equity fits in nicely with the Wells advantage because it’s a relationship‐oriented product. It’s very profitable for the bank and can be cross‐sold by all channels. Also, our strong brand takes some pressure off of having to compete strictly on price. So, historically we’ve been able to be more innovative around the role of home equity for consumers.
So you drive more growth organically through your existing customer base than through new customer acquisitions?
Yes. A lot of our revenues and product innovations are driven by creative thinking about how to leverage our distribution channels. Our patented Home Asset Management Account product is an example. It enables customers to package their home equity and mortgage together so they get one statement and, as they pay down their mortgage, it comes back to them in their equity. It’s a very cool product that we would never have thought of without a large mortgage distribution channel.
Does your competitive advantage impact who you see as your competition?
We’re schizophrenic about our view of the competition. We don’t have any one competitor across our 84 product lines because every business competes differently. But when you think about distribution, we clearly have distinct competitors. Even these, however, are in two groups. The big national banks like Chase, Bank of America and Citi, are one set of competitors. But in the regions and stores, credit unions and small regional banks are our main competition.
That’s unusual in my experience. When I was with Whirlpool, there were three appliance manufacturers sharing the market. And at Schwab, you had a concentrated group of brokerage competitors. Here, we compete with both the big guys and the little guys.
How has a clear competitive advantage created significant growth in companies you’ve worked in?
At Wells, our competitive advantage around cross‐selling drives growth through products. More than 50 percent of customers who walk in to a branch to open an account walk out with a package of four or five products. They get an ATM card, checking account, online banking, etc. That packaged sale is a result of how we think, how we drive growth through our customer base, and how our product businesses and distribution work together.
At Whirlpool, design as a competitive advantage drove big gains. White goods never used to be about design. It was always about whether the icemaker could make eight or ten quarts of ice. We hired colorists and designed a whole line of appliances, focusing on the look and feel. Washers and dryers were suddenly available in colors and Sears was putting them out at the entrance to the mall stores to bring in customers. It became fashion, and a trend. We translated that across all brands and products so that if you had a Whirlpool washing machine, you’d want a Whirlpool dryer because they go together. If you had a Whirlpool refrigerator, you would want a whole Whirlpool kitchen. We differentiated on design and understanding packaged sales to drive strong growth.
How does a company get everyone pulling in the same direction on competitive advantage?
At Whirlpool every employee was trained in customer loyalty and, every employee, at every level, had to participate in an innovation team.
At Schwab it’s always been Chuck coalescing and driving people. It’s a religion with him, and the people who followed him. Everyone drinks the Kool‐Aid. Here at Wells, thinking about customers and helping them succeed financially is just part of the culture. There’s organic agreement around our competitive advantage.
How do you keep your advantage fresh?
You start looking at what you can build that grows share of wallet, makes money and also drives efficiencies for the customer.
So more of a ‘push’ than a ‘pull’ model where customer needs drive products?
Wells is a lot more ‘push’ than other companies I’ve been in. Schwab and AMEX are much more focused on understanding and solving customer pain points.
Wells innovates to make our customers’ lives easier, but the innovation originates more from the ‘push’ side. For example our division wanted customers to have a box on the mortgage form that says, “I want home equity as soon as I have equity”. Having that box eliminates a huge customer pain point because 90% of customers want it and it’s a hassle to have to resubmit paperwork and pay for appraisals later. But the idea originated from us asking how we can better leverage the point of origination with mortgage, reduce our costs, get higher penetration and, therefore, block out our competitors. It’s great for the customer but we didn’t start by asking customers to tell us their biggest pain point.
The same was true at AMEX with their spending report. Customers want to have their cards with AMEX because the spending report provides an easy way to see what they’re spending across cards. But that didn’t start with the customer need. It started with a team at AMEX asking, “How do we get all of their credit cards to be with us?”
How do you know when it’s time to refresh?
When the metric you thought was driving your profitability isn’t, it’s time to refresh. At some point, more product doesn’t equal more profit. Consumers rebel and you hit diminishing returns. Then it’s time to find the next appropriate measure of healthy growth.
How does Wells define healthy growth?
Another Wells mantra is, “You get bigger by being better, not better by being bigger.” How many consumers wake up and say, “I want to be anonymous in a bank that has more customers than anyone else?” Nobody says that. They say, “I want a bank that cares about my business and makes it easier for me to do what I need to do to be successful.” By doing that, we will be bigger, we’ll sustain our differentiators and maintain our competitive advantage.
What tips do you have to help companies get clear on their competitive advantage?
To grow, you need to know why your customers value you and how you are going to continue to attract customers. Also, you need to figure out where you’re making your money and what’s sustainable in that. Trying to create a competitive advantage that you don’t already have is tough. So take something you have and figure out how to leverage it and make it uniquely sustainable.
I think that’s why competitive advantage so often starts with the culture. It was hard for a while at Whirlpool because we didn’t start with a culture of innovation. It was an engineering company which had to restructure to change the culture to shift its competitive advantage from engineering to design.
What company do you think has a strong competitive advantage?
Amazon has done a great job. Knowing their customers and being able to anticipate and respond to evolving needs has always been one of their key differentiators.
And Tiffany is a great example. Think about how long they have been in business and the significance of the blue box. To this day when somebody gets that box, they’re excited.