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Storytelling In The News: #157

The story of NAB and sharing the vision

May 22, 2004

When we last called in on the National Australia Bank (NAB) on April 3, 2004, there was a fight going on among the board of directors. Competing storytelling about who was to blame for the managerial failures in the company had turned into open civil war that was tearing the company apart. The chairman of the board, Graham Kraehe, blamed Catherine Walter, who in turned blamed the whole board. Competing motions were to be put before a general meeting of the company in a dramatic showdown.

Now two months later, both Kraehe and Walter are gone and the general meeting never took place, but the room where it was to have taken place was already booked and paid for. What to do?

The CEO, John Stewart decided to use the room to call a huge staff meeting and urge the staff to join his "revolution" - aimed at creating a candid culture that will avoid the pitfalls that have cost NAB dearly in lost prestige and shareholder value.

The meeting, at the Hamer Hall at the Victorian Arts Centre, was convened to make use of booked space after a proposed extraordinary general meeting was canceled. This followed the decisions by chairman Graham Kraehe and rebel director Catherine Walter to quit the board.

It also symbolically ended one of the most cathartic periods in the bank's 147-year history, as a $360 million foreign currency loss spiralled into a public boardroom brawl that led to the resignation of two chairmen, a chief executive, board members and several senior staff.

Cultural revolution, not evolution

At the meeting, which was closed to the public and media, Mr Stewart told staff he wanted a revolutionary approach to cultural change, because encouraging evolutionary change would "ensure the blockers" stopped it from happening.

A key finding of both the Australian Prudential Regulation Authority report and a controversial PricewaterhouseCoopers investigation into the currency losses was the need for sweeping changes to the bank's culture.

It was described as being too bureaucratic and focused on process and documentation, rather than understanding the substance of issues, "taking responsibility and resolving matters".

All levels of management were criticized for encouraging a "good news culture" that cocooned top decision makers from information that might have enabled the bank to avoid a string of corporate mishaps, ranging from the $3.5 billion HomeSide losses to the currency scandal.

Mr Stewart is pushing for a new approach to management, culture and staffing that starts by developing a team-based approach and cultivating an open and honest culture.

The market is awaiting the appointment of several senior staff he says are necessary to boost the bank's domestic and international prospects.

Those attending the meeting said Mr Stewart "outlined the issues with great candor".

Bottom line

Time will tell whether Stewart will get his cultural revolution. It sounds as though he has started off by talking about what has gone wrong with frankness, which is good start.

The question is whether he will be able to inspire and energize to adopt new ways of behaving. This will only happen if he uses storytelling to communicate the change and if he himself exemplifies the new culture.

Read the The Sydney Morning Herald

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