A former colleague of Philip Chronican told a journalist in 2019, as the experienced banker was appointed as interim chief executive of National Australia Bank: “If you’re a direct report to Phil, you don’t want to be full of waffle.”
It is, of course, a compliment about someone who values honest talking and principled conduct. The reason for his appointment was in line with these principles: the bank had been rocked by a scandal, along with other banks in the country, that resulted in a public inquiry and change of executive leadership at the institution.
Moving from a board role to be interim CEO for nine months, he then stepped up to be chairman. Three years on, the reputation of the bank had been restored, along with market share and profitability.
The first responsibility of any business in the midst of such a crisis is to acknowledge what has happened and the impact on customers and society: “You don’t half-apologize,” he observes.
“In business it’s about where you need to be in three to five years, not what gets reported next week”
It helped that he had experience. Relatively early in a long career at Australia’s Westpac bank, in the early 1990s, it had also been affected by crisis, as large losses threatened insolvency. This had a longer-term benefit in that a more risk-averse strategy meant that Westpac avoided the global banking crisis of 2008-09.
“We didn’t get caught up in subprime securitizations, credit derivatives … the only losses we had through the period were old-fashioned corporate credit losses.”
One of the features of the later scandal at National Australia Bank was an act of cover-up: executives had sought to influence the regulator about the content of an interim report. This is a symptom of common mistakes among managers, he says: the impulse to micro-manage what is said about you, and the tendency to be overly swayed by the current week’s headlines.
“In business, it’s very much about: decide where it is you need to be in the next three to five years, and spend your time focused on that – not on what’s going to get reported next week or the week after …You don’t have to win every day to win the long-term battle.”
Keeping a focus on the three-to five–year horizon is a discipline that extends beyond good conduct and reputation management. It is valuable in marketing also. Asked for an anecdote from his time in Geneva at IMI, he cites a lecture by Professor Sandra Vandemerwe. She gave a list of global events and asked the class to name the lead commercial sponsor for each one.
“Almost without exception, everyone in the class named the previous sponsor,” he recalls. “And the message, which was well founded, is: it takes a long time to build a name association with an event in the public’s mind, so therefore, if you chop and change, you’ll never get full value out of it.”
Philip’s career began as a civil servant in the Treasury department in his home country of New Zealand, but he has spent most of his career in the Australian banking industry. It was an enlightened policy of the HR department at the bank where he was working in 1986 that encouraged him to apply to IMI in Switzerland, reflecting the industry’s move to open up to the global economy.
“I took the opportunity and I’ve never regretted it. It was a fantastic experience, both from a personal viewpoint and from the educational and business viewpoint.”
Visiting lecturers included world leaders – he recalls talks by the former German Chancellor Helmut Schmidt, and by former British Cabinet Minister Shirley Williams. The education was rounded, including economics and politics, complemented by project work and international tours. The two-week study trip to India, which included visits to leading industries in Mumbai and New Delhi, was to prove of long-term benefit:
“India subsequently opened up to become a significant provider of services to the rest of the world. So to have been in India before it opened up meant that, certainly, I was much better prepared for when it became relevant 10, 15 years later.”
He also recalls how the school was ahead of much of the management education industry in teaching about the importance of emotional maturity and self-awareness. He had anticipated the course to be devoted to “the quants and the finance and the marketing”, but came to appreciate the relevance over the course of his career, for example in paying attention to a team’s emotional energy and commitment, as well as the objectives and operational details.
There is also a link between emotional intelligence and the longer-term focus that he has found so important: the discipline requires not only strategic awareness and good judgement, but good temperament also.
