Banking on Breadth: Why CEOs Value Cross-Functional Perspectives (page 1 of 3)

That was the message that the heads of three companies -- ARAMARK, Commerce Bancorp and Contigroup Companies -- delivered to students when they spoke recently at Wharton. "My experience has been that you'll develop the best solutions for any business problem only when you are able to integrate perspectives of a broad range of disciplines," notes Joseph Neubauer, CEO of ARAMARK, a managed services company in Philadelphia. "I've had the great good fortune to get to know hundreds of CEOs around the world, and I can absolutely assure you that being focused is critical, but being narrow is a mistake"

Banking as Retail
There can be tremendous value in importing new perspectives from a different discipline or industry. Vernon Hill, president of Commerce Bancorp., broke every rule of banking to create one of the highest-growth retail banks in the industry. Hill envisioned the company as "a retail chain that turned out to be a bank" and used this perspective to challenge assumptions about banking. He emphasized convenience and superior service - opening seven days a week and offering free coin counting machines - rather than focusing on lower rates and cost cutting.

Hill grew the bank organically in an era when larger rivals believed the only way to grow in the mature banking industry was through mergers. Like a retailer, he built the business one branch at a time, from a single location in New Jersey in 1973 to a network of more than 220 banks spread throughout the surrounding region. The company's advertising emphasized the new "anti-bank" positioning with messages stressing, "no stupid hours, no stupid rules."

While traditional banks were growing by single digits or shrinking, Commerce posted 26% compound average growth of its assets over the past decade. Although Commerce remains relatively small, it is taking billions in deposits away from larger competitors. Hill points out that First Union lost $6.1 billion in deposits in New Jersey between 1991 and 2002 and Fleet lost $1.7 billion at a time when Commerce gained $8.4 billion. Like a retailer, Commerce also monitors and reports "same-store sales," which have been steadily increasing. "It's a retailer's view of life, not a banker's view of life," he notes.

This fresh perspective is important for organizations and for individual employees, Hill says. "No one needs a me-too bank, university or employee. Every one of us every day has to learn to create value. When you learn to create value, you have value."

Running 6,000 Profit Centers
Complex business problems usually cannot be solved through a single discipline. Neubauer discussed the importance of interdisciplinary perspectives in the decentralized businesses that have built ARAMARK's $10 billion company in "managed services," including outsourced food, facility management and other support services. Individual front-line managers are responsible for handling client relationships and P&L for 6,000 profit centers around the world. "Finance, marketing, operations, sales, service, human resources - you are basically running your own business," he says. "Cross-functional integration is necessary for survival."

In addition to expanding individual knowledge, diverse teams can help focus multiple perspectives on business problems. Neubauer says he often pulls together a team to consider a particular challenge. "The days when one person could have all the knowledge to solve a problem are over," he adds.