Bruce Philp
Co-Author
The Orange Code: How ING Direct Succeeded by Being a Rebel with a Cause

This is part two of a two-part interview with Bruce Philp, branding expert and co-author of the book, “The Orange Code: How ING Direct Succeeded by Being a Rebel with a Cause.”

To read part 1, click here.

RFG is pleased to have Bruce as the keynote speaker at the 2009 CEO Forum this August, where he will share his perspective on strategic branding for the new future in financial services.

The interview was conducted by RFG General Manager and Chief Operating Officer, Bob Dye.

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Bob Dye: I’ve heard a quote attributed to Arkadi Kuhlmann about firing customers: “If people need a lot of hand-holding, we’re not the right bank for them.” Can you explain?

Bruce Philp: The customer has to buy into your business model for the whole thing to work, no matter what business you’re in. Now, obviously, you can’t ask customers to buy into your business model, not in those words. You have to imply it through your marketing and lead consumers to self-select into your value proposition. If you attract customers who understand the value you’re offering and are willing and eager to support the system behind it, then you wind up with something that is sustainable. Whereas, if the customer thinks they’ve been deceived into getting something they are not, the model is not going to be sustainable because the customer will be perpetually disappointed and the marketer will be perpetually playing defense. That makes marketing adversarial, and nobody wins. Arkadi’s quote has become rather famous, but I believe he is simply saying that ING Direct can only be valuable to you if you accept these terms. If you can’t accept these terms, then we’re going to disappoint you and you probably would be happier if you just moved on. It’s really that simple.

Dye: If I remember correctly there is a phrase in the book “While ING Direct is for everybody, not everybody is for ING Direct.” How often are customers turned away?

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Philp: I haven’t heard a number quoted in a long, long time, but the incidence would be pretty low by now. And the situations tend to happen when people apply, or very occasionally at the call center when customers are asking the staff or the bank to be something they are not.

Dye: In terms of your outlook for the financial services industry: Is the glass half-full, half-empty or half-cracked and shattered?

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Philp: From a branding or marketing perspective it is very nearly empty; but as corny as it might sound, it means the glass is full of opportunity.

This industry is at a decisive moment: if it fails to start engaging and advocating for customers, then it’s destined to become a sort of government-managed commodity business,

like the oil industry. That may seem dramatic, but hopefully the point is made. If the industry decides to turn its attention toward the people that come through the door every day, then there is chance to make the marketplace a partner in sustainable capitalism. If you need an example look at Detroit: I think you could line up all the car companies in the world in descending order of financial health and the ones at the bottom of that list will be the ones that systemically put their customers last in line behind their operational and shareholder imperatives.

Dye: Consumers and businesses are evaluating their relationships with financial institutions and looking for safety, soundness and financial guidance. In today’s environment, does a financial institution have an opportunity to distinguish itself from the negative press and leverage this opportunity?

Philp: I absolutely think there is a huge opportunity. Thinking about the environment broadly, it’s true that the financial services industry is getting kicked around pretty aggressively these days. It’s true that consumers have lost confidence, and it’s true that they are angry. But it isn’t the whole story. Consumers want to believe in financial services; they want to feel safe; and, they want to have confidence in the system that is using and protecting their money. That desire for confidence is going to look for a place to land.

So, I think consumers may feel more comfortable with the community-based institutions. Accountability is easier to understand as a customer if I am dealing with a locally-based institution.

I am going to feel like I have a little more power in that equation and it’s physical and tangible. As a consumer, I know that institution depends on me, whereas I’m less sure about that with big institutional banks. I can understand that customer-facing bank on the corner, where I am not sure if I understand Bank of America.

Dye: What should financial institutions be doing now?

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Philp: I mentioned the word confidence earlier; I think that they ought to paint that word on a giant piece of plywood, and nail to a wall in prominent place at their headquarters. At the moment, the word confidence in financial services tends to imply things that are structural in nature, but I think there is a greater challenge ahead to build people’s confidence in the motives of financial institutions and in their purpose. We tend to judge each other as people three quarters on the motives we impute and one quarter on the actual behaviors we can observe. We judge the companies we do business with the same way. For us to have a functional relationship going forward, I don’t need to just trust that your balance sheet is sound; I actually need to trust that you will organically act in my interest, always. We aren’t supposed to be afraid of our banks, and I don’t think we can move as a society, as an industry, until we deal with that.

Dye: How should we think about internal communications or involving the employee in this process?

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Philp: I recently saw a post on Twitter that said: “Branding and corporate culture are two sides of the same coin.” I really believe that’s true. It’s true for a few reasons, the main one being that consumers understand brands not based on marketing communication, but based on the sum total of their observable behavior. That means the entire organization is somehow engaged in the branding process – not just the marketing department. That’s probably the biggest reason as to why the two are so closely aligned. But from a leadership point of view it runs a little deeper. We all need to do work that matters; we all need to believe we spend our days doing something that makes the world a little better and that we have the power to positively affect that process. You somehow lose your soul if you don’t believe deep inside that you are engaged in something that’s important. I think that’s an essential gift that financial institutions have to give back to the people who work there. Because those organizations are never going to be able to function optimally until employees feel that sense of purpose and they are never going to be able to organically deliver a great experience to the customer and win back their confidence if they don’t feel they are engaged in a process that matters. Take away the connection between the results of your work and the process of your work, and you wind up with the kinds of awful things that happen on an assembly line.

I strongly believe that marketing to your own people is as at least as important as marketing to the general public if not more so.

We actually do this kind of work with clients that do no external marketing at all. That’s how big a job it can be if you believe.

Dye: What two or three takeaways would you like people to gain from reading your book?

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Philp: If I imagine that the people you are talking about are leaders, then I would say that the three key takeaways are these:

 

• First, a brand is as valuable as any asset you can possibly have on a balance sheet. Its capacity to attract people, its capacity to keep them beyond reason, its capacity to engender and to give an organization a sense of purpose are immeasurably valuable. Brands matter.
• Second,

brands are not built with marketing, they are built with corporate behavior.

Everything your company does is building the reputation people associate with your name.

• Third, brands are the responsibility of leadership. I think the best CEOs today consider their brands to be constitutions for their organizations. They wake up and look in the mirror at the brand manager.

Dye: What’s the biggest lesson you personally learned from your experience with ING Direct?

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Philp: I certainly saw lots of theory on branding validated, and that was a great privilege and terrific learning experience. But, what I think shocked me was learning how massively important leadership really is. To watch what these guys did and how much depended on the energy, will and single-minded focus of the guy at the top, and the few people he trusted around him, was really stunning.

Dye: In your book you have some pages on team building, and you have a phrase, “don’t just hire — assemble a cast.” What’s the difference between assembling a cast vs. hiring to fill a need?

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Philp: The point is made strongly in the book because Arkadi is a bit of a romantic, and that’s part of where he gets his energy to keep going. In the beginning he was facing a marketplace that was going to be hostile to the concept that we were going to try to sell. And he was facing an immense organization across the ocean that was making a big bet on his crazy idea.

So his way of dealing with that was to say, ok, this is a great adventure of Homeric proportions. How can we do less than throw everything we have into it and see what happens? In that spirit he chose people for his team not just their competence and for their natural tendency to fit the culture, but for their character and for the fact that they might have something to prove. It wouldn’t just be a job for them, but an opportunity on a personal level. So there are two beneficial dimensions to this. One derives from this notion of casting. In the book, we talk about “The Dirty Dozen” and similar caper movies. When you think about a team that way, there tends to be room for everybody as a collection of individuals. I am not going to compete with you; I am the communications guy and you’re the explosives guy ― we are all necessary. It is what organizational psychologists call a hunting culture. The other benefit was it produced tremendous energy. People came equipped with motivation; you didn’t have to beat it into them. It’s become a cultural artifact 13 years later; the company still functions this way, in both Canada and the US. I thought this was very artful.

Dye: In August, you’ll be speaking at our CEO Forum to a group of CEOs and senior executives. Additionally, we have several chief executives that read The Raddon Report. This audience is not going to be starting from scratch, but rather trying to figure out how to improve what they have. They may be thinking all this sounds interesting, but how does it apply to me if I am sitting with 250 employees and trying to fight the day-to-day battle of running a bank or credit union?

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Philp: If I were a bank or credit union CEO, I would be thinking about how I can reinvent what I have – even if I am not free to make material changes to the way it operates. For the last year, maybe longer, this has been an environment of managing through crisis, trying to solve problems, prioritizing and taking remedial action. You can become very good at that and convince yourself that as long as you are solving problems you are winning, and if there are no problems, it means you have won. I tend to think we are going to make it through all of this with a great chance to get better as a result. And if not now, then very soon, the kinds of executives you are talking about are going to have a chance to say, ok, I managed; now how can I lead? How, in the middle of all of this chaos, can I find the opportunity to actually renew? Nature provides us with allegories for this. Think about what happens after a forest fire, for example. After the conflagration, there is a vivid rebirth. I really think that this is such a tremendous moment of opportunity, and I hope I leave these executives with the feeling that in some small way they all have an opportunity to launch something new. I think that would be beneficial to everyone concerned, including their customers.

Interview conducted by Bob Dye on April 22, 2009.

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