During a training on strategic leadership, board members of a teachers’ based Savings and Credit Cooperative (SACCO) – except the Chairman – boasted of how their institution was better than all others in the region. Using financial data, they demonstrated to me how the SACCO had more members, deposits and assets compared to their competitors. To give credit where it is due, they were truly bigger than their closest competitors to the extent that they had dominated one of the main competitor’s home county. To challenge them and gradually drive them out of the comfort zone that the chairperson had hinted to me about, I shared with them data on the sizes of teachers’ based SACCOs based in counties in other regions with almost equal, lower and larger teacher as well as general population. To their disbelief, they were performing worse than some counties with lower teacher and general population.
To help me build a case and drive the above point home, I sought the team’s opinion about four commercial banks which they all stated that they were great or excellent companies. Their assessment of greatness was based mainly on their personal perceptions about how big the banks were since none had analyzed each of the banks’ financial or other form of performance. In addition, none had compared the said banks with each other or any of their other competitors.
Upon collecting the views, I highlighted some financial performance data of the four commercial banks. Using the year of formation as the basis, I created two pairs for comparison purposes. Though this data is available on the Central Bank of Kenya website and is therefore public information, I will use pseudo names A, B, C & D. Banks A & B were both formed in 1984. By 31st December 2021, Bank A boasted of KES 877 Billion in total assets, 11.97 million clients, KES 652 billion in deposits and a 13.57% market share. On the other hand, Bank B boasted of 1.81% market share, KES 87.4 billion in customer deposits, 2.46 million clients and KES 111 billion in net assets.
Bank C was formed in 1965 while bank D was formed in 1968. As at 31st December 2021, Bank C boasted of 9.42% market share and 3.73 million clients. The bank also boasted of KES 399 billion and KES 540 billion in customer deposits and total assets respectively. On the other hand, Bank C boasted of 0.82 million clients, 2.31% market share KES 124 billion in customer deposits and KES 146 billion total assets.
The numbers convinced the team that institutions can live with an illusion of good performance or greatness while they were at best well behind other institutions that were once peer or at worst mediocre. The discussion then drifted towards reasons for the disparity in the financial performance of institutions operating in the same market as well as facing similar challenges and opportunities. The participants easily highlighted factors such as lack of visionary leadership, unwillingness to confront the truth and neglect of or promotion of a toxic organizational culture. In addition, they highlighted short-term thinking, lack of focus and surprisingly, mediocre leadership – remember they are the leaders.
The SACCO as well as banks B & D are examples of good companies. They have good strategies, good staff and good boards of directors amongst other positives. They perform better compared to some competitors, and many others in the industry. They however lag behind other similar institutions in more than one important parameter. They can also be compared to people who could be the best in a family, village or any such grouping e.g. financially, education, philanthropy etc. – but who poorly compare with peers in other societies. These people or institutions usually define their peers narrowly and settle in a not so comfortable comfort zone. They are also likely to live in denial of the fact that they could have a greater impact on mankind if they only left that comfort zone and pursued greater challenges. They are most certainly unwilling to enlarge their horizon for fear of discovering a bitter truth. These are people or institutions whom Jim Collins aptly described as “Good but not great” and as proof that “Good is the enemy of great.”
Dr. Weru Mwangi is the CEO & Lead Consultant at Ultimate Management Solutions, a firm specializing in training & consultancy in Finance, Governance, Strategy, Risk Management and Leadership Development. He can be contacted on weru@umslgroup.com
