Michael Jordaan – CEO of First National Bank

Michael Jordaan has been the CEO of First National Bank for approximately nine years. The banking industry will not have him for much longer as he steps down at the end of this year.  He will be replaced by Jacques Celliers, currently a member of the FNB Executive Committee.

In some ways Jordaan is a different banking leader – his almost thirty thousand followers on twitter serving as a case in point. I would not be surprised if this is the largest twitter following of any current CEO in South Africa. Being different would however make sense as he heads up the most innovative bank in the world.

During a previous interview about three years ago I described him as follows: he possesses fortitude, courage, is not afraid of the unknown, believes a leader should be himself, is authentic, asks for feedback about himself specifically, believes in situational leadership – letting the best person take the lead; and surrounds himself with the best.

He explains more: “You surround yourself with people who are better than you – if you can do that, that’s half of it.  Together you agree on what the goal is, where you’re going and then you must largely get out of their way.  You can’t get good people and then frustrate them and micro-manage them, just get out of the way.  And then if you have made the right decisions people tend to surprise you, it’s the most amazing thing.”

Of course getting out of the way does not mean he disappears completely off the scene: “You set challenges, you question, you debate intensely – but intentionally, you never tell, you just challenge people.” Good people are inherently proud, they want to do well and want to achieve, and so “wonderful things happen”, explains Jordaan.

Upon reflection his basic leadership philosophy hasn’t changed over the past few years. However, he comments: “Maybe I have changed – over time you can relax a little more, things become clearer and you become a little more self-assured about letting go.” And Jordaan does not feel this need to prove himself to everyone, as a younger CEO may tend to do. Because of this he says “you’re happy for anyone else to also get the credit because they actually deserve it and then people perform even better.”

He has continued down this road and together with his team they have taken First National Bank from strength to strength. For him the ultimate achievement has been the award as the most innovative bank in the world. Quite an accomplishment when one considers they consciously set out to differentiate through innovation more aggressively, soon after he became the CEO.

Of course they had resistance to this vision when the global banking crises struck. He explains: “We took a dip during that crisis, but then we challenged everything. We said to ourselves, bankers are either in denial or behind the curve and we want to be neither. At the time we relooked everything completely – business model, positioning, cost structure, where the market was going.” In short they realised they could no longer just be beneficiaries of the economy; they had to go out there and grow market share. First they wanted to make sure their existing customers were really happy, before attracting new ones. They cut fees, lowered prices: “So in the midst of the crisis we did what most companies don’t do which is we actually lowered prices,” comments Jordaan. Then they went to the market aggressively, telling new prospects how much money they could save by joining the FNB stable. As Jordaan states: “That’s a very tough thing to do.  Had there not been a crisis, we may not have taken the type of decisions that we did.”

Key message: It takes time to achieve any prestigious accolade, especially when it needs to happen on the back of a culture change. And, there will always be resistance on the road to significant achievement, but this very resistance could turn out to be your friend.

The decision to take innovation to another level came alive at one of their first strategy off sites soon after Jordaan became CEO. After two intense days they arrived at what seemed to be the final plan – vision, mission, measurements and the whole package. Jordaan says: “All I wanted to do was to go have some red wine with everybody.” But one of their team members challenged the final product, stating that it wasn’t strong enough, that it was boring. One can imagine that he wasn’t too popular at that moment. But the team listened, probably because the leader was willing to do so. The observation was that what would set them apart would be their culture, which had to be one of innovation. And this is what they did.

Another message: Team members must feel that they can challenge at any stage of the strategy crafting process, which very process and leadership environment should allow for this. Why? Because the birth of a great idea or essence of a winning strategy can be born or dismissed in a moment. And for this to happen it means there must be a very high level of trust within the team.

How exactly did they achieve this innovative culture and consequent global recognition? As is almost always the case, the answer is simple, but the doing takes discipline, focus and endurance. And in my view the leader always remains the kingpin, the heart, the driving force, hence the reason for a leader to remain in the seat for as long as it takes, within reason of course. And Jordaan adds: “In our case, we kept at it, we learnt along the way, we made many mistakes and then you just tweak it and tweak it until it becomes better.  So our strategy hasn’t changed since I’ve been around.  Our structure has barely changed.  This is our strategy and we’re sticking to it.”

In essence they told people that innovation is important.

Jordaan says: “It sounds very obvious – you’re not going to get innovation unless you’re saying that innovation is important. For example, how many companies in South Africa have somewhere in their strategy or mission or values, the word innovation – very few.”

Also important is to measure innovation.  How many companies actually do this? Jordaan believes there are companies in the world that do that, but, “if you don’t tell people it’s important and then measure it, then it doesn’t happen.”  And then, for innovation to thrive, an empowering culture is essential. To achieve this takes time. Jordaan adds: “That can take time – this is where it’s important how leaders behave.  Your behaviour has to be incredibly empowering.”

FNB is fortunate in that Jordaan’s style and matching behaviour is naturally empowering, and this cascades over time – the key word being time.  Jordaan explains further where corporates get it wrong in his view: “People must be able to take risks and make mistakes.” He believes that organisations grow large and start bureaucratizing, systematizing, often putting in place necessary rules and processes, mostly to minimize mistakes. While this may be good it also stands in danger of becoming a barrier to an empowered employee and culture. As he explains: “It’s very important if somebody suggests a great idea and we all debate it and agree to give it a go and then it doesn’t work out, that that person isn’t taken to task for it.  It sounds obvious but I think it’s very difficult for a lot of companies to allow this risk pattern to actually happen.”

At FNB they realised that the world is changing so fast, that technology is changing the world so quickly that the risks of not innovating is bigger than the risk of making mistakes along the way.  Of course this does not mean they condone silly mistakes or careless behaviour. Together with encouraging innovative ideas they also encourage the principle of “don’t fly solo”. When someone comes up with a great idea they are encouraged to discuss with other people, “just like a pilot who is about to fly will first log a flight plan – that’s what you do so people know where you’re going, where you’re going to land so that if you don’t land they know where to go look for you.  So we say, whatever idea you have, don’t fly solo – internalize it, kick it around – often it becomes better in that process – and then you can go out and do it.  It’s about taking calculated risks, and many of them”, says Jordaan.

Finally, “recognise and reward people who have innovated – make them heroes.” At FNB they are known for handing out prize money that borders on ridiculous. In essence they put their money where their mouths are.

Every single year they just add more and more innovations and as Jordaan says: “Right now we are in this wonderful phase where there is a great pipeline of innovations happening and it’s a system that is building up momentum.  I can’t tell you how much fun it is to be at the helm of a system now that looks after itself.”

Of course their competitors copy their innovations. Question is do they always understand exactly what’s behind each innovation, and as Jordaan says: “More importantly there are hundreds of innovations that are internal only, that’s not visible to the public, ways in which we do things and you can’t copy a culture, I’m convinced of that.  It takes a very long time.” Jordaan is correct in his assertion. They have secured the innovation space, not only in the banking sector but in general. It almost leaves their competitors with no alternative but to strive to occupy other spaces by way of branding, perhaps at their peril when one considers the strategic need for banks to innovate in these difficult times. And remember that an innovative culture is a reflection of an empowered culture, which is an essential ingredient to a successful bank or any large organisation these days.

Being a “different” leader, Jordaan has served FNB and quite possibly the corporate landscape well. He has left his mark.


BRLP:  How do you feel now that the word is out about you stepping down?

Jordaan: Sad to be leaving my FNB family. My blood is turquoise after all. Happy to be spending more time with my actual family and excited about exploring new entrepreneurial opportunities.

BRLP:  You say you want to spend more time with family. How taxing is the job as CEO really on the family? What is your advice/comments to other leaders in your position, with regards to balancing family and work?

Jordaan: Mine was more taxing given that my family live in Stellenbosch while our head office is in downtown Joburg. Generally a taxing job requires a team effort from the whole family.

BRLP:  What does Jacques Celliers bring to the table?

Jordaan: Continuity, engineering angle, hard worker, authenticity.

BRLP:   You obviously believe in internal succession?

Jordaan:  Yes, if at all possible.  There are studies that show internal guys do better than external guys, unless the company is in trouble and you need a real turnaround.  I do believe in this concept of an insider outsider – you want somebody who really gets the company but also has the ability to think just a little bit differently, because the world is changing so fast right now.  Sometimes companies become a little defensive about the way they do things and they’ve always done it in a certain way.  So I believe in an insider but also an insider who can think outside. Jacques Celliers is such a leader.

BRLP:  For me, one of the signs of good leadership is if you’re able to hand over to someone internally – it means you’ve multiplied leaders.

Jordaan:  It has to be – it is the most important task of a leader.  It has to be succession.  If you leave, even if you’ve done a marvellous job and you leave a big void, then you’ve failed.

BRLP:   Had you left 5 years ago what would you have missed or missed out on?

Jordaan:  What gives me a kick is my team and when they do well.  It’s a bit like a family because most of your time you spend at work.  Typically, the modern professional, and especially when you are the CEO – will spend far more time at work than you will with your family – so in a way, they also become your family.   So seeing how people have grown and how teams synergise and form and become better and better at what they do is one of those amazing privileges that you have in a leadership position.  The bank has had certain successes since we last spoke and clearly I would have missed out on living through some of those things.

BRLP: What more have you learnt about leadership?

Jordaan:  So often in life you have to invert things and leaders for example should always think “who is the type of person you would voluntarily submit to?” – because that’s what you do, you submit to someone who is in authority.  If you were not forced to work anywhere – where would you voluntarily do it; who would you happily work for. Probably where someone has your best interests at heart and wants you to do well?  So if you can demonstrate that to people – that you actually want them to do well, you want them to grow, that you actually care for them.  So this is my fundamental belief: You surround yourself with better people and you set them up for success.  Clearly that doesn’t mean that results aren’t important, but they are just a yardstick by which you measure how well they are doing in the business.  And if people feel that, and I do believe people can intuitively feel that – we all have that ability when you sit next to somebody and you know if they are using you or have your best interests at heart.  Now that takes some time, but people get that.

BRLP:   You seem to be the only banking CEO that is active on Twitter – I don’t know that any of the others are actually on Twitter? Overall CEO’s are not very active. What’s your take on this – what are they missing?  What are you getting?

Jordaan:  First of all there was no strategy for me to get involved, this wasn’t a strategic thing.  I like to experiment with new technologies, new toys and new devices and so on.  This Twitter thing came along – at first I thought it was a joke, it’s like a stupid name actually, but I said OK I’ll try it.  And I tried it and you very quickly become hooked.  So I’m just addicted to it – my daughter calls this a tweeter, not a phone – she says dad is on his tweeter again.  I love it, I’m addicted to it, so like most other people, I am still learning about it and every now and again I send a tweet and somebody says you shouldn’t have said it like that or our PR people say how could you have released that before we released it officially?  Nothing about it is perfect, but in hindsight, what it’s done for me is make me far more accountable.  People know they can tweet me on Twitter and I need to respond. You are brought down to earth everyday with somebody saying something about queuing in a branch, or something. It makes you incredibly accountable but at the same time allows you to get involved in a conversation – you’d be amazed at the amount of ideas that customers send me. It’s been a wonderful thing for me – it cuts out all the hierarchy.

BRLP:  Is there a danger in that?

Jordaan:  There can be.  For example, you mustn’t tweet after you’ve had something to drink.  Don’t drink and tweet.  Haha – that would be one.  Or more generally, don’t do anything out of emotion, because once it’s there then everybody can see it.  I have to sometimes hold myself back before pressing that button – you have to be a little bit careful.  But generally, you have to be authentic.

BRLP:  Is it something you would tell other CEO’s to do?

Jordaan:  If someone seriously asked my advice, I would say it puts you in touch with a different world of instantaneous news, humour, customer feedback that you aren’t privy to normally.  It’s like a different dimension, a different world out there.  I’m a believer in social media – I entered it purely playfully, and I still play, I think humour is very important, but there’s a very serious element to it as well. It’s also the closest thing to a diary I have ever kept.  When someone talks to me or there is an interesting thought, I can just tweet it.  If nobody followed me that would also be fine – it’s become my little diary – sometimes it’s funny, sometimes it’s wine, sometimes economics.

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Adriaan, as an accomplished author and leadership advisor, has been interviewing and working with top leaders for more than 15 years. He is the Co-Founder and CEO of Leadership Platform. (Twitter: @AdriaanG_LP)

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