CHANGEMANAGEMENT

CaseStudy:HowMuchShoulda
NewCEOShakeThingsUp?
byPaulM.Healy
FROMTHEJANUARYFEBRUARY2017ISSUE

SAMISLAND

S ena Aslan, the CEO of FDM Turkey, wished the drive from the Ankara airport to the
banks largest branch were a bit longer. She had made site visits a hallmark of her short
tenure at the companys helm, because they helped her see how frontline employees
were weathering the changes shed been spearheading across the bank. She also used them to
scout for talent, keeping an eye out for young managers ready to move into more-senior positions
and perhaps transfer to headquarters. But this time Sena wasnt making the trip alone. Sophie
Renou, her longtime friend and mentor and a board member at FDM Turkeys French parent
company, was in the car with her, and the two women could have used much more than a half
hour to catch up.

I want to hear about work, of course, but rst tell me how Deniz and the girls are doing, Sophie
said.

Theyre good. Sweet, but strong-willed.

Just like their mother, Sophie said with a smile.

We were at a theme park this weekend, Sena continued. Zehra was on the Tilt-A-Whirl for
what felt like hours. We nally had to yank her oover her very loud protestsand I found
myself saying, You know, Zehra, we all need to slow down sometimes. Which was funny,
because Erkan said the exact same thing to me last week!

Sophie didnt look surprised. Erkan Malas was FDM Turkeys COO, and from the start he had
chafed at Senas appointment and approach. While her supporters, including Sophie, saw a bright
35-year-old former consultant to the nancial industry who had lots of energy and big ideas for
how the company should adapt to a rapidly changing market, detractors saw a young industry
outsider whod never held an executive position or even worked at a bankand who still had a lot
to learn. 1

CASESTUDYCLASSROOMNOTES
1 IsSenatherightpersonforthisjob?PaulHealyteachesthecaseonwhichthisoneisbasedinanHBS
executiveeducationprogramforwomenonboards.HeaskstheparticipantstothinkaboutwhethertheCEO
isagoodt.

Although the board had clearly given Sena permissiona mandate, evento shake things up,
Erkan had challenged every strategic shift shed made: moving away from the siloed branch
structure, letting about 40% of the banks long-tenured and stodgy senior managers go to make
room for fresh talent, and pushing to transform the hierarchical corporate culture into a more
performance-driven one.

I can just hear Erkan saying that, Sophie said. He hates change.
Or hates everything I touch, Sena replied.

So what? Sophie asked. You dont need his approval. Youre doing the right thing. 2 And as
long as hes still executing on your decisions, theres no problem.

2 HealyalsoasksstudentshowtheywouldsupportanontraditionalCEOasboardmembers.

He really doesnt like the new strategy, though, Sena said. Tasked with rethinking the banks
retail approach, shed rejected the traditional path of expanding the branches. Instead she was
ramping up mobile-banking operationswhich competitors were also doingand looking to
experiment with something more innovative: partnerships with supermarkets and electronics
stores that would allow FDM to set up kiosks within them. 3 This would enable the bank to serve
customers when and where they needed access to cash and make it more convenient to apply for
loans.

3 Manybankshavebeguninstallingself-servicekiosksintheirbranchesandelsewhere.Forexample,Chase
BankoffersthemintheUnitedStates,andShinhanBankofferstheminSouthKorea.

He says the sta has change fatigue and wont be able to get it done. 4 And some board
members may agree. Im afraid theyll dig in their heels.

4 Researchshowsthatasmanyas70%oftransformationeffortsfail,oftenbecauseofchangefatigue,apathy,

orpassiveresignation.
CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?

Let them, Sophie replied with a wink. Our heels are sharper.

StressontheGround
The branch manager, Meryem Kartal, met them in the lobby and introduced a few sta members
before showing them to her oce. As they sat down, Sena noticed an org chart on the desk. It had
xs through lots of roles and a few arrows signifying structural changes. She could barely read the
names and titles that remained.

Meryem caught her looking. I know that must seem old schoolto print out and mark up an org
chart. But I was just using it to help employees understand whats happening with the broader
business. Senas heart sank a bit at seeing such a messy visual representation of the changes
shed been making.
Are people confused?

Its like any reorganization, Meryem said. Theres an adjustment period. Weve all been a little
surprised by the, um, high level of turnover at headquarters. But I think people also see room for
advancement where they didnt before.

Willweallbeworkingoutofcallcentersor
supermarketkiosksnextyear?
Does everyone understand the reason for the changes? Do you? Sena needed managers like
Meryem on her side.

Oh, yes. The industry is changing. No one wants to come into the branch anymore. Customers
want to do everything on their computers or their phones. And just yesterday someone asked one
of our mortgage specialists if he would mind dealing with her by text, since she no longer checks
e-mail. He didnt know if he was allowed to do that.

He is, Sena replied. This was exactly the kind of agility and customer responsiveness she was
trying to encourage.

Of course, and I coached him through it. But people are wondering how theyll t into the
CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?
business going forward. They want to know whether were going to start closing branches. Will
we all be working out of call centers or supermarket kiosks next year? 5 Its stressful.

5 Theconceptofthetraditionalbankbranchisbeingchallengedbytechnology,competition,andconsumer

preferences.Accordingtoonereport,upto50%ofthebranchescurrentlyinU.S.banknetworkscouldbe
obsoleteby2020.

Sophie asked if they could talk with a few sta membersthat was why she had come along.
Meryem invited them to walk around. I let them know youd be here, and they do have some
questions, she said.

Sena joined two tellers behind the counter.

Is it always so slow at this time of day? she asked. There were no customers to be seen; it was
eerily quiet. One of the tellers, a tall young man with a short haircut, turned red, seemingly shy
and embarrassed. His counterpart, a middle-aged woman, wasnt as hesitant. This is a lull, for
sure, but itll get busy at lunchtime.

Sophie asked if they had any questions.

Are we going to lose our jobs? the young man blurted out, and then laughed nervously.

Well, I wouldnt have asked it that way, but that is what were all thinking about, his colleague
said. She added, My girlfriend said that at her company, whenever they make changes at the top,
it isnt long before frontline layos follow.

Sena assured them that no layos were planned. They both nodded, but they didnt look as
though they entirely trusted her.

Sophie and Sena then met with a few sta analysts and loan ocers. Although no one was as
blunt as the teller had been, the anxiety was palpable.

Well, that was worrisome, Sena said as they walked out the door.

Change is necessary to survival, Sophie replied.

CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?

Yes, but maybe it doesnt need to happen so fast.

TheRisksofNotActing
The next day, back in Istanbul, Sena met with Ahmet Ozan, the companys CFO. Hed been at the
bank for decadeshe was certainly old guard, like many of the leaders Sena had pushed outbut
she valued his deep expertise, and hed been surprisingly supportive of her transformation
eorts, especially ones that cut the rms costs. Hed also invested a lot of time in the model for
the kiosk pilot. 6

6 Oneofthebiggestbenetsofastrategylikethisiszeroxedcosts.Iftheeconomyturns,thebankneedsonly
tochangeitssalesapprovalthresholds.Itdoesnthavetoclosebranchesorlaypeopleoff.
The projections look mostly good, as we expected, Ahmet said. The market research from
Capital is promising. But the IT systems well need to put in place to handle the loan applications
are complex. I dont have to tell you that the execution on this is going to be a beast, whichhe
paused for a momentis why Erkan is so up in arms.

Hes been up in arms since Ive gotten here, Sena said.

True, but he might have a point on this one, Sena. His team will need to work 24 hours a day to
make this happen on the timetable youre suggesting. Its going to require a huge marketing push
and some big shifts in stang, which could result in even more attritionnot just us old folks,
but even some of the younger people who like the way we do business now.

Sena grimaced at the way hed characterized the recent management changes, but she let him go
on.

Also, we dont know that the model will work. Will people want to use the kiosks? If they do, can
we screen their loan applications quickly and eectively? I know the idea is to reinvent banking
in this country, 7 but are you sure our customers are ready to apply for loans without a specialist
helping them with the process? Are you sure were ready for that? Why not slow down a bitdo
some more-intensive market research to check that our assumptions are accurate?

7 Turkeycurrentlyhas47banksandjustover10,000branches,accordingtotheBanksAssociationofTurkey.
CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?

Sena took a deep breath, trying to absorb everything hed said. I really value your opinion,
Ahmet, and these are all good questions. But the point of the pilot is to answer them. We can
experiment and learn in real time. Thats the agile way to do it.

But its not the FDM way, Ahmet said. I know you might be worried that slowing down now
will give the impression that youre second-guessing your decision. It wont; it will just give
people a much-needed break. Trust me. I understand why youre pushing this: The board is
watching you like a hawk, and we all need to deliver the growth its demanding.

Exactly. Part of my job is to change the FDM waykeep the good, of course, but move us into the
future. We have to weigh those risks you just citedwhich are seriousagainst the potentially
bigger risk of not moving rst on this idea. Wed all hate it if a competitor beat us to this. If we
focus just on mobile, like everyone else, we wont dierentiate ourselvesand dierentiation is
the only way to win in this market. 8

8 In2013Turkeyhadfourdominantbanks,eachcontrollingmorethan10%ofthesectorsassetsmakingit

imperativefortheotherstocapturemarketshare.

HardtoKeepUp
That night Sena was sitting at the dining room table reviewing Ahmets analysis when Deniz
came downstairs.

You going to be up late? he asked.

Probably, she said, not looking up.

Youre frowning. Whats going on?

Sena closed her laptop. She appreciated that he could read her so well. It kept her honest about
her feelings.

Remember what Erkan said about slowing down? Well, Ahmet agrees with him. And Im worried
that theyre right.

CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?
But the board brought you in to be a change agent. Thats your job.

I know. And I really feel its my duty to keep pushing. Change is good. Its necessary, as Sophie
always says. And this bank has been sitting down for too long. We need to continue moving.
Shed gotten so animated that she found herself pounding on the table to make her last point.
We just cant lose momentum. If we take the break theyre asking for, when and how will we
start up again?

Deniz was still nodding seriously, but she could tell he was suppressing a smile.

What? she asked.

Its good to see the re back. Youre doing the right thing, Sen. But I also get where Erkan and
Ahmet are coming from. I know how hard it is to keep up with you.

Question:ShouldSenaslowthepaceofchangeatFDM? TheExperts
Respond
SENA IS MAKING A MISTAKE by trying to eect all

this change on her own. She needs to slow

MitchKrebsisthePresidentandCEOof
CoeurMining.
that happens, shell be ghting an uphill battle.
down, regroup, and reposition so that the shift
in strategy is seen not as Senas plan but as the
companysor at least the teamsplan. Until

When I took over as CEO of Coeur, in 2011, it too was in need of transformation. To support and
manage the huge growth wed experienced in the previous three years and prepare for scalable
future growth, we needed to restructure nearly every division of our 90-year-old company. I also
decided to move headquarters from Idaho to Chicago. Like Sena, I had permission from my board
to make changesbut I didnt march o to battle alone.

I started by making sure that the board support I had was visible. Its good that Sena has such a
strong relationship with Sophie, but she needs to ask for a more formal, explicit mandate from
the entire group. I did that about a year into my new roleafter I had established credibility
CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?
outlining the changes I wanted to make and explaining why I felt it was too risky to maintain the
status quo. Having secured the boards backing, I began to share my plan and the path forward
with others, and I had my chairman join me in those meetings. His presence demonstrated that
employees couldnt wish the changes away or make me fail by resisting them.

Support from the rest of the organization is equally important. Sena needs to recruit ambassadors
who can help push her vision forward. Right now Erkan is undermining her eorts and
reputation. She should change the dynamic by making him feel part of what shes trying to
accomplish, asking for his input, and assuring him that hes being heard. She doesnt have to do
everything he suggests, of course, but she needs him working with her, not against her, if she
wants everyone else to fall in line. In my case, I knew I had to get members of the old guard on
board. Individuals who have been in their careers a long time and know the industry well can be
strong allies.
Sena should also think about creating a small team that cuts across functions and generations
andonce they understand the plan, direction, and messagetasking its members with spreading
the word about why the changes are necessary. Perhaps Meryemthe branch managerand the
teller with the nervous laugh could join that eort. Up-and-comers would welcome the
opportunity to participate, and it would send a message that the changes are a movement led by
the masses, not by one young outsider.

I applaud Senas eorts to visit the branches, and I suggest that she nd more ways to hear what
people on the ground are thinking and feeling. Its not always comfortable or fun, but its critical
to let employees express themselves and ventand, as CEO, to listen. During our restructuring, I
held town hall meetings across the organization. We didnt stop until all our employees had the
information they felt they needed.

Senaneedstoslowdown,regroup,and
repositiontheshiftinstrategy.
Honesty and transparency are of the utmost importance in these cases. I have the sense that
when Sena told the tellers there wouldnt be more layos, she wasnt being entirely truthful.
Thats a mistake. Once people have the factseven if its bad newsthey stop lling in the blanks
and get to work. Sena will save herself a lot of headaches if shes honest from the start.

It seems as though people at FDM assume that Sena is pushing change for the sake of it and to
CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?
advance her career. By getting the boards support, building a team of ambassadors, and
communicating more eectively, she can prove that shes doing whats best for the company. All
this will take time, of course, but its worth it.

SENA SHOULD NOT SLOW DOWN. Im a big believer

in executing radical change at high speed. Of

PinarAbayistheCEOofINGBank
Turkey. course shell face some resistancebut if she
doesnt keep pushing, the risk of failure goes up.

This case is loosely based on my experience at ING Turkey, so I know the urgency of FDMs
situation. Banking is a growth market in our country, but lots of foreign players are coming in
most of the big European banks have made full or partial acquisitionswhich creates an
incredibly competitive landscape. Turkey also has a young population that adapts to technology
quickly, which makes for a very demanding customer base. Banks must therefore oer an
outstanding experience to dierentiate themselves. And Senas strategy, including the new
distribution channels, could certainly be a step in the right direction.

At ING Turkey, we tried partnering with the countrys largest grocery chain to oer no-name
debit cardswhich customers could activate with their cell phonesin plastic milk bottles. The
idea was to provide instant access to cash. Although we didnt see the results we wanted from the
channel and eventually closed it, weve repurposed the technology behind it, and I know that the
brand beneted from the experiment. Because of the unusual delivery method (no one expected
to see a debit card in a bottle!), Turks learned that we were a dierent kind of bank, challenging
how business had always been done in our country. We supported that message in other ways
for example, with TV commercials in which we poked fun at ourselves and at Turkish banks in
general. In fact, our industry association sent us a warning to stop ruining the image of banks.

Sena cant focus just on strategy and operations, though. She also needs to think about the
culture at FDM. After all, you can pretty easily change a new distribution channel that isnt
working. Its not so easy with culture. This is the tougher dilemma for Sena: how to move people
away from the traditional slow-moving hierarchy and encourage them to embrace dynamism and
innovation.

IfSenadoesntkeeppushing,theriskoffailure
goesup.
CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?

Senas eorts should start with the top management team. Although she has let many lower-level
members of the old guard go, one person in the C-suite, Erkan, is ghting her. If he cant get on
board, it might be time for her to replace him. This was a top priority for me when I became CEO
of ING Turkey. I handpicked direct reports who could support the kind of change I wanted to see.
In many cases that meant bringing in people from the outside, including from dierent
industries. Still, I kept people like Ahmetinsiders who supported my vision but were willing and
able to challenge and disagree with me on certain points. I wanted people with diverse
perspectives and ideas. Together we created an organization that emphasizes collaborative rather
than top-down decision making, along with creativity and agility; makes junior people feel
comfortable speaking up; and welcomes employees of all stripes, rewarding them for
performance and potential rather than tenure and giving them freedom in terms of where and
how they work.
Sena has made some important moves already, but she shouldnt stop now. The road to
organizational change is long. Five years in, Im still working on our cultural and strategic
transformation. You cant let resistance hold you back.

AversionofthisarticleappearedintheJanuaryFebruary2017issue(pp.157161)ofHarvardBusinessReview.

PaulM.HealyistheJamesR.WillistonProfessorofBusinessAdministrationandtheseniorassociatedeanfor
facultydevelopmentatHarvardBusinessSchool.

ThisarticleisaboutCHANGEMANAGEMENT
FOLLOWTHISTOPIC

RelatedTopics: LEADERSHIP

Comments
LeaveaComment

CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?
POST

1COMMENTS

ClementGavi 13daysago
'Insteadshewasrampingupmobile-bankingoperationswhichcompetitorswerealsodoingandlookingto
experimentwithsomethingmoreinnovative'
Sheisrightindoingsofortheperceptionofbankingoperationsisdynamicthatisthosewhohaveexperimented
earlymobilegiveninnewtechnologieswon'tbelikelydisruptedbymobile-bankingoperationsfortheyhaven't
experimentedwhatisdifferentfrommobile,thusinseeingthisasirreversibletrend,theoptiontomobilebanking
istherightchoice.Peoplecannotliveinenerawithoutbeingcoated.Newtechnologiesaffecttheveryrationality.

REPLY 00

JOINTHECONVERSATION
POSTINGGUIDELINES
WehopetheconversationsthattakeplaceonHBR.orgwillbeenergetic,constructive,andthought-provoking.Tocomment,readersmustsigninor
register.Andtoensurethequalityofthediscussion,ourmoderatingteamwillreviewallcommentsandmayeditthemforclarity,length,and
relevance.Commentsthatareoverlypromotional,mean-spirited,oroff-topicmaybedeletedperthemoderators'judgment.Allpostingsbecome
thepropertyofHarvardBusinessPublishing.

CaseStudy:HowMuchShouldaNewCEOShakeThingsUp?