Blake Collins Group

Michael E. Collins-2016

To optimize performance, a leader has to balance strategic agility and dependable operational excellence. As it relates to strategy, it is important to have a portfolio of activities to pursue if the skill set and competency exists in your operation. In a rapidly changing environment, I advocate linking elements of an organizations past and present with a new vision of the future. I call this organic innovation. 

Full text of speech to Federal Reserve Bank of Cleveland–September 25, 2014

Thank you for inviting me to speak at your conference. I have a good deal of admiration for the work you do at the Cleveland Fed from your effective oversight of banking institutions, including large regional banks; your transparency in the area of lessons learned; your work in the payments arena and the role you have played as a leader in the system in business process improvement efforts. These activities are all critical to ensuring the system operates effectively and efficiently. Supervision is an essential part of the financial system. It represents the public interest. The work you do for our nation and your region is important and you should leave here every day knowing you are making a difference.

I want to also acknowledge your choice of Loretta Mestor as the new President of the Cleveland Fed. I have had the privilege of working with Loretta in Philadelphia and I think she will be an excellent CEO.

This is a great time for you to be meeting to discuss your journey toward a goal of excellence. The industry and the Federal Reserve had their reputations adversely affected by the financial crisis, and operating with sustained excellence can restore the public trust.

I’ve been asked to share my perspective on leadership based on my career at the Federal Reserve and time spent in the banking industry. I would like to also share a few things that in hindsight might have made me a better supervisor from my time as a banker.

I started at the Federal Reserve Bank of Philadelphia as an assistant examiner at a salary of $9,000 a year. I have always had an interest in economics and the impact that access to capital had on our economy, local communities and individuals. This early interest may have come from being one of 5 children and having an older brother whose clothes I got after he grew out of them.

I learned some important lessons as I moved through the ranks to head the Supervision, Regulations and Credit Department in Philadelphia:

• First, you must always ensure that you manage the day-to-day activities of your function flawlessly. Operational excellence and execution of core business processes is critical.

It builds confidence and equity in your operation and can help you win the ties when you are competing for new business opportunities and seeking funding for new initiatives. It allows you to grow your operation and entertain strategic opportunities. To optimize performance, a leader has to balance strategic agility and dependable operational excellence. As it relates to strategy, it is important to have a portfolio of activities to pursue if the skill set and competency exists in your operation. In a rapidly changing environment, I advocate linking elements of an organizations past and present with a new vision of the future. I call this organic innovation. It resulted in several new initiatives and growth opportunities for us in Philadelphia over and above our core responsibilities including:

• Retail Risk
• Partnership for Progress
• Radar – Quants/Supervisors

As a leader, it is important to build the intellectual and operational capacity of your function and build a culture of innovation to support growth.

The goal is to balance performing in the short-term with taking the necessary steps to position your organization to cope successfully under multiple scenarios in the future.

Given certain organizational constraints, leaders have to balance clarity and boldness with a realistic understanding of what can be accomplished. When you achieve your goals you build credibility.

Leaders should:

• Build the capacity of an organization to learn as fast as the world is changing.

The collective intelligence of an organization is one of the most important assets that should be leveraged to build franchise value. Building this capability requires an ability to understand changes in demographics, technology and human capital to ensure you can effectively lead and adapt to change.

In fact a 21^st century definition of leadership could be as follows: Bringing people together around a shared mission and values and empowering them to lead in order to meet corporate objectives while creating value for all stakeholders.

I also believe it is important for individuals to learn continuously. I advocate learning one big new thing every year in an area outside of your area of expertise. It not only makes you a more interesting person, but provides insight into trends that might be useful in your business.

• Leaders should not only focus on growing their business, they must also grow their people. Most leaders are judged on business performance, but people create the real competitive advantage. Talent management is as important and critical as business management to building a pipeline of talent for the future.

The Federal Reserve is an expertise-oriented organization where it is important to build world-class technical skills to ensure we can manage complex global issues. However, we must make talent management co-equal with technical expertise to be at our best and build for the future that requires extensive collaboration and interdisciplinary teamwork. As you move up the leadership ranks, emotional intelligence is as important as IQ.

In fact, the conversation on the importance of human capital is changing. Just this week the founder of Alibaba, Jack Ma, gave a speech where he placed shareholder value 3^rd behind employees and customers in his business.

Leaders build strong teams, particularly teams with different and complementary skill sets. When I became head of supervision in Philadelphia I had all of my officers and managers take the Myers Briggs Test. It turned out the entire management team, with the exception of two people had the same profile (ENTJ). ENTJ’s are Practical, realistic, matter-of-fact. Decisive, quickly move to implement decisions. Organize projects and people to get things done, focus on getting results in the most efficient way possible. Take care of routine details. Have a clear set of logical standards, systematically follow them and want others to also. Forceful in implementing their plans. As a consequence it was critically important to seek a diversity of views to ensure we had multiple perspectives when making decisions.

A strong team is the greatest asset you can leave as a leader.

Often the best results come from interdisciplinary or integrated teams. All organizations have networks. Frequently relationships and not structure determine how your employees act. In order to gain critical insights during a crisis, leaders should break down silos and tap expertise across functions. This worked well for the Federal Reserve during the crisis and resulted in innovative and nontraditional responses to resolve issues.

In general strong leaders are:

• Visionary
• Manage multiple stakeholders
• Set high standards
• Drive execution
• Focus on innovation

And demonstrative a willingness to fix their own mistakes

Leaders should be passionate about what they do, but have compassion toward people.

Leaders should understand mega trends, recognize long-term patterns and see a context for change or create one.

The basis of leadership is trust, so leaders should be authentic. They should create the conditions for employees to succeed and ensure everyone is valued as an important contributor to the firm’s success.

A leader should have a tolerance for things going wrong and ensure the organization learns from mistakes. Some of the best learning comes from failure. A modicum of failure supports learning, but don’t major in failure or repeat the same mistakes.

Let me make a few comments about my transition from bank supervisor to banker.

I joined TD Bank two months after retiring from the Federal Reserve. My initial role was strategic advisor reporting to the CEO of the domestic bank. My job was to help TD navigate the regulatory landscape post Dodd Frank. My career in the Federal Reserve System prepared me well. TD is a Canadian based institution with a large and relatively new footprint in the U.S. Working at the Federal Reserve where matrix management, building teams, getting results, focusing on operational excellence and managing data were all relevant skill sets. One change was that my focus shifted from a primary emphasis on the public interest to one of enhancing the customer experience and building shareholder value. Two months after joining TD I was asked to lead several functions including Regulatory Affairs, Legal, Audit, Compliance, BSA/AML, Loan Review, as well as a diversity initiative in the bank. I had dual reporting relationships for these activities in Canada and the US. This collection of activities were the Control Functions in the bank. The alignment of these activities contributed to sound corporate governance and risk management assisted the bank in meeting its strategic objectives. About a year later I became President of TD USA, the Delaware subsidiary of the US Holding Company.

My first objective was to elevate the profile of the Control Functions Group within the institution to ensure that these activities were not just viewed as a cost center. I had to convince the business line leaders that the group could assist in profitably growing the business, building the brand and enhancing shareholder value. The message was that effective internal controls are the foundation of safe and sound banking. They ensure public confidence and reduce the likelihood of regulatory findings, penalties and fines. The tone at the top was a major factor in ensuring the message around the importance of controls resonated throughout the bank.

A few things I learned from my experience as a banker that would have made me a better supervisor were as follows:

I was struck by the number of teams and people involved in resolving recommendations from examiners and implementing policy initiatives in a bank. At a minimum, Finance, multiple business lines, Risk Management, Legal, and Information Technology, project managers, senior management and Boards of Directors may be involved in meeting recommendations. I think this puts a premium on the need for clarity when making recommendations and developing policy to ensure they can be addressed efficiently and effectively at institutions. Providing insight and context are helpful to bankers when making recommendations in addition to feedback on industry trends and horizontal reviews.

Another observation is that I would have been a better supervisor if I had more intimate knowledge of bank operations.

As a supervisor, I would have paid more attention to firm structure, revenue drivers, tax incentives and financial market activities, which drive a good deal of decision making in banks. Having a better understanding of these issues would have provided me with more insight into incentives, culture and how the business really works.

Some of this is now inherent as a result of the Living Will process, which is providing incentives for simplifying bank operations. Although important, I would have elevated the importance of interagency and safety and soundness and compliance cooperation to ensure better alignment and reduce uncertainty in what is expected of firms. Uncertainty increases cost and may lead to less effective resolution of recommendations.

Today bankers are concerned with government regulation, the pace of innovation, globalization, payments activities and cyber security. In particular compliance risk is front and center as banks have come to realize they have an operating duty to do everything well, and do things for the right reasons. I think some traditional risks like interest rate risk and credit risk should also be on the radar screen.

In closing, I would say the most effective leaders:

• Display a can-do attitude
• Foster innovation
• Have the capacity to see around the corner
• Inspire and lead teams
• Drive execution
• Attract and develop talent
• Empower others
• Exhibit good listening skills

Your focus on the quest for excellence will allow you to continue to make meaningful leadership contributions to the district and the nation, and I applaud your efforts!