Commonwealth Bank of Australia

COVER STORY SWITCHED ON CEO: Ralph Norris COMMONWEALTH BANK OF AUSTRALIA Two years into his role as CEO and managing director of the Commonwealth Bank, one-time Air New Zealand boss Ralph Norris has once again used his thorough understanding of IT to drive through massive internal change and turn poor customer service on its head. By David McNickel t’s not often you talk to a CEO that actually knows branches) and he fully appreciated the power of the internet how to write a computer program. But ask Ralph in terms of slashing a business’s transactional overhead. Norris about his earliest experiences with computing But it wasn’t until he got into the driver’s seat at Air New and he’ll probably tell you the story of his first IBM Zealand that that know-how became fundamental to the XT PC – fully loaded with 256KBs of RAM and two very survival of the organisation he led. I5 1/4” floppy disk drives. It was the early 1980s and Norris It was shortly after 9/11 when Norris was tapped to was working at the Auckland Savings Bank (ASB) – but drag the airline out of a hole after the New Zealand govern- even then he knew how to ‘sell’ somebody on the sizzle ment had injected $800 million to keep the national flag of what computing could do. “The first program I wrote carrier flying. Looking at the books it was clear the com- on it was actually a little maths programme for my son to pany was teetering on the edge of total collapse. In Norris’s teach him multiplication tables,” he says. “It would fire a words Air New Zealand had “racked up the biggest loss multiplication question at him – say 4x4 – and he would in New Zealand corporate history”. Things had to change have to key in the right answer.” Norris could have left it – and change fast. “When you have an organisation that at that, but he coded in a sweetener for his son. “When he has stood on the verge of bankruptcy it really concentrates put in the right answer it would come and go WOW! with the minds of the people who work in that organisation,” he some pretty ordinary graphics (laughs) and it really got him says. Garth Biggs, CEO of Gen-i (then Air NZ’s strategic interested in doing his times tables.” Over the years Norris’s IT partner) recalls it as a challenging time. “The airline enthusiasm for all that IT could offer continued to drive certainly had a mindset that it was in survival mode,” he his business rationale. As head of the ASB Bank, he’d been says. “In a typical scenario companies are really focused on instrumental in the launch of virtual bank ‘BankDirect’ (for their robustness and the quality and so on and obviously in the most part an internet only offering with no physical their operational areas Air New Zealand continued to do > 36 www. Start.co.nz Quarter One 2008 SWITCHED ON CEO // RALPH NORRIS Quarter One 2008 www. Start.co.nz 37 COVER STORY site had been offering tickets since 1999, airnz.co.nz was not a successful retail channel, he says. “It was interesting when we finalised the strategy for Domestic Express (a no frills/low cost domestic service designed to quickly boost passenger numbers). I said to the team ‘Okay, how are we going to sell this?’ and they said ‘well we’ve got our website’. And I asked them ‘have any of you actually booked a flight on our site?’ – and they hadn’t. So I said this particular initiative [Express] is going to fall flat on its face because there’s no way our current website technology will satisfy our customer’s requirements. The website was too difficult for customers to use – so it was all hands to the pump to endeavour to do something about it.” Twelve months later and any concerns about the success of the strategy had long since evaporated. Some key statistics – online sales volumes had increased from less than 4% of total domestic bookings with the old system, to 44%. The look-to-book ratio (the number of people who look at the site then buy a fare) had dropped from approximately 25:1 to 8-1. The Air New Zealand site had risen from being in the top 50 most visited websites in New Zealand to the top 10. Visitor volumes numbered around one million a month and in purely commercial terms, the site had become one of New Zealand’s most successful e-commerce websites, with daily sales in excess of $1 million. that but overlaying it all was much more urgency around costs - examining why they were doing everything they Satisfied Customers? were doing. It was questioning, questioning, questioning. Fast forward to 2005 and with Air NZ well into the It was very challenging but absolutely essential for their black and topping customer satisfaction surveys, Norris survival.” Priority one for Norris was to stay in business, was ready for a new challenge. Returning to an industry but to do that he had to make it clear to staff and custom- he knew well – banking – the incoming CEO at the CBA ers alike, exactly what business Air New Zealand was in. was not faced with averting imminent catastrophe, but “If I have any real criticisms of the company when I joined instead continuing to lead a massive IT initiative (called it,” he says, “it would be a view that the business was all Which new Bank?) that had begun prior to his tenure. about flying ‘planes’– rather than about flying ‘people’ – so Nonetheless, as soon as he got his feet under the desk at its systems, processes and logistics were designed around the CBA, Norris wanted to know what wasn’t right with flying planes. We could have been flying freight, we could the bank – specifically from its customers’ perspective. have been flying bombers, but the fact of the matter was Whereas ASB Bank had consistently been at the top of our business was about flying people - so getting staff in customer satisfaction surveys in New Zealand, at the CBA the organisation to identify with what was the real role of the story was almost exactly the reverse. “We have been the business I think started a strong trend towards cus- the worst rated bank [in customer satisfaction surveys],” he tomer focus.” says. “So when I arrived here one of the first things I did was get a clear understanding of what were the drivers of A Shift To The Web customer complaints.” As it happens the customer dissat- Driving the whole initiative was the impetus to drasti- isfaction was spread across almost every customer touch- cally cut operating costs, and pivotal to this was the airline’s point the bank had. “The drivers were things like queues,” website – as getting passengers to make their bookings says Norris, “product competitiveness, staff knowledge and online would cut processing costs and help Air NZ further training, follow up, people taking ownership, issues around reduce its dependency on third parties like travel agents levels of error rates.” At Air NZ, IT had been used to great (who can offer fares from a range of carriers). Although its effect in turning around the company’s customer’s percep- 38 www. Start.co.nz Quarter One 2008 SWITCHED ON CEO // RALPH NORRIS ‘Which New Bank’ Explained n September 2003, the Commonwealth Bank launched Iits Which new Bank customer service vision ‘To excel in customer service’. The service transformation consisted of three themes; excellent customer service through engaged people supported by simple processes. The Bank estimated a spend of $1,480 million over the three years to 2006. This included $600 million of normal project spend, and an additional $620 million in areas such as systems and process simpliﬁ cation, technology and staﬀ training and $260 million invested in the branch network. tions. Could the same thing be done for the CBA? Before businesses and there are government businesses. So there’s he’d know, Norris first had to find out what was right with a range of different customer groupings that we interface the company’s IT infrastructure, and what was wrong with with.” And the bank itself is in a lot of different businesses it. Or as he puts it “poor and good”. So how are poor and Customer he says. “We obviously have banking as a business, but good defined in an organisation like the Commonwealth satisfaction is we’re also the largest life insurer in Australia. We are the Bank? For Norris it’s all about the coalface. “Well first and largest retail funds manager in Australia and we’re also the foremost,” he says, “it’s how do you interact with your cus- now at a 10 year largest retail stock broker.” Norris says the CBA’s manage- tomers? So you need to ask ‘what’s our technology utilisa- ment deciding to launch the ‘Which new Bank’ project tion and deployment in regard to the ability of customers high and we have prior to his arrival was a brave one. “That was largely built to interact with us?’. If I go back to Air NZ for example, in house and I have to say that the decision by the board when I arrived there I found our internet offering for had the fastest and the senior management team at the time [2003] was a booking direct was very poor indeed. The system wasn’t gutsy call.” It was also expensive (see the Which new Bank: intuitive, it hadn’t been well thought through.

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