John S. Clendening

J ClendeningJohn S. Clendening is responsible for profit and growth via Charles Schwab Bank, the Schwab Center for Financial Research, the Client Loyalty Initiative, and  crossenterprise  strategy and platforms. Prior to Schwab, Clendening held executive positions at Savista Corporation,, Consumer Bank of First Union, and Minute Maid. Clendening holds a B.A. in economics, from Northwestern University and an M.B.A., from the Harvard Graduate School of Business Administration.

What does focus mean to you and your organization?

I think about it in two ways. One is a task orientation – being attentive to the task at hand, and seeing it through execution. The second, is a focus on the future – on where things might be going next. There’s a tension between the two of those but I’ve learned that if I don’t specifically carve out time and energy to focus on anticipation, then I don’t do it well.

Is ‘anticipation’ a longtime practice for you?

Well, I’d like to say it’s longstanding. I’ve been more or less effective at it depending on my environment. I had the benefit of being in a company many years ago – prior to Schwab –  that was very, very reactive. I realized how debilitating that was for impact. We were always trying to catch up to an idea that came from headquarters or that we’d seen a competitor do. If you’re doing that, you’re always staying one step behind everybody. The opportunity to differentiate is very limited if 90% of your focus is on trying to mimic or catch up to what others are doing.

And, in an economy like this, the temptations are greater, pulling one toward being reactive and living only in the moment. There’s a lot of uncertainty around what the future will hold. So, in a market like this, I’m reminded of the need to spend sufficient time thinking about the future and its possibilities because we  won’t always be in a downturn. Things will get better.

What tools do you recommend for looking at the future and getting focused?

Well, I don’t know if these are all tools but I can name some practices and capabilities a company can put in place that are very helpful.  The first is a capability of understanding the client and how sentiment is changing at the root level. This is far deeper than a focus group‐level of insight. This is a bedrock tool to predict how things might change in the future. You can’t anticipate anything if you are operating at a literal, on‐the‐surface level.

Second, having consumer segmentation frameworks which can focus your enterprise and yourself, and that you continue to test, and are open‐minded to morphing. Third, really understanding where you make money, and how, under different environments, your revenue and profit streams change over time, is also bedrock.

I learned from someone who was very influential in my career that you can be much more nimble and inspirational in terms of meeting client needs if you’ve got those three foundations established. And, you need those capabilities to do the next thing, which is to have a hypothesis‐driven approach to establishing a range of possible future environments. Ask yourself, “If these are some outcomes that we may be faced with in a year or two or three, what does that mean for our firm? What are the different actions we’d want to take?”

Lastly, a technique that works well is to ask, “Which environment do I think I’m in? If I laid out a few possible worlds I might be living in a few years from now, how do I know  which one I’m heading towards? When do I know I’m there?” If you do that, you’re in a position to activate a particular course of action that you’ve already considered and make sure you’re living for that next couple of years, as opposed to only living in the moment.

How do you drive that mentality and approach throughout your organization?

Primarily by creating specific goals around the desired future state and then backing into work plans that are designed to deliver that, as opposed to leaving it to chance. Also, Chuck (Charles Schwab) and Walt (Walter Bettinger, II) have an operating model where the expectation is that you’re executing against the business at hand, but also creating differentiation versus the competition. In the center is a focus on the client. There’s not much of a premium placed on asking, “What should we have done yesterday?”

What are some ways that you communicate your critical areas of focus?

We use a number of mechanisms. A lot of it is one‐on‐one, but we try to use a multichannel, multimedia approach. So, in addition to having our plan of record that has evolved during the course of the year, we use webcasts, internal websites, governance structures, and other things to make sure there’s clarity in what we’re focused on and what our progress is.

Any big challenges in getting people on the same page?

What continues to surprise me is how long it takes for an entire organization to understand when a change in direction has occurred – such as the establishment of a new strategy, or a new way of thinking about the client or the consumer. It’s remarkable how long it can take for that to be fully embedded and embraced. You’d imagine, or you’d like to think, that just a few communications and boom, it’s all clear, but that’s definitely not the case. You scratch your head over that, but at the same time, you know that the success you achieve is going to be proportional to the degree to which there’s an enthusiastic embrace of the new direction.

You’re definitely looking for something more than mere alignment to direction. If it’s not emotionally held, then the employee engagement isn’t going to be sufficient for dramatically strong performance, especially if you’re looking for strategic change.

Have you been in an environment where it was very difficult to focus?

Yes. What comes to mind is a case at a previous financial services company where our branch had been No. 1 in the category but now was declining to a No. 3 player. We had lost a ton of share, and couldn’t command pricing with consumers or the retail channel. The firm was struggling overall and a bunch of new leaders had come in. I was at a lower level and yet had accountability for a piece of the firm. That was a pretty tough environment to get focused in since the performance was so poor, and what I was working on was core to the company. The idea flow was huge but the quality wasn’t that great. You had the feeling of being on a treadmill, of just surviving and getting through the day‐to‐day.

What I learned is that, an environment of fear really runs counter to being focused and to the self‐confidence that’s needed to say, “I’m not doing a bunch of things just for the sake of being busy, and I’m pretty darn sure that what I am doing is sensible.” When you’re operating from a position of fear, the success criteria almost becomes, “Hey, we’re doing stuff! We’re doing stuff! We’re in bad shape, but look at all the things we’re doing!”

I’ve found that, when that happens, it is typically a manifestation of a couple of things. One is not having those foundational capabilities built, such that you can narrow down your choices to ones that are really good, and also realistic. Second is a crisis in leadership. When leadership is frenetic, you’re not going to see execution. You just can’t. You’re also not going to have any self confidence among the folks within the firm. People check out. They ask themselves, “Is this new thing we’re being asked to do really the thing we’re going to stick to?” So that was a case where I learned to set aside enough time to be focused on the breakthrough idea or combination of ideas that could really move the needle.

How do you know when you’re doing it right?

That’s a great question. How do I know? For me, the real answer is, “You know when you know,” because you can see the quality of the work that’s being done, and know if it’s  spot‐on or not. And, if you’ve got front line people who are dealing with clients every single day, you know if you have momentum because they know if you’re selling things to people, and servicing consumers. Over time, of course, you also know it in your performance. But, you’re not going to know your performance immediately. Oftentimes there’s a 90‐day to 12‐month lag on that information.

Given what’s going on in the economy now, what have you shifted your attention away from to increase your focus?

My approach is start by making absolutely sure that I’ve got the right focus on the future. I don’t think bottom up, asking “How do I prune, how do I make room for new things?” It’s more of a top‐down, “I’ve got to make room for that sort of thinking” approach. If you do that, and make sure the execution is where it needs to be, there’s not really room left for anything else. The things that aren’t getting done don’t even come to mind. I don’t even know what they are. If you feel like you’re focused on the right things, you don’t really have to worry about what you’re not doing.

Any advice for others trying to achieve growth as the economy turns around?

Make sure you’re spending enough time developing unique insight about your consumer, your competition, and your economics. If you aren’t spending that time, there’s no reason to believe you’re going to do better than others once the recovery takes root.

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