Ray Davis, president and CEO of Umpqua Holdings, is one of my favorite CEOs. That’s not because he’s brash, colorful, or combative — he’s none of those things. But over the last 16 years, he’s done something few leaders ever do. He’s figured out how to stay ahead of the transformations in technology, markets, and culture that have shaken his competitors in the financial-services world, and built a brand that stands for something special, hopeful, even meaningful in an industry that is profoundly broken.
The core challenge of leadership, Davis argues, is to “find the revolution before it finds you.” In their search for that revolution, he and his colleagues have created a one-of-a-kind brand in a world of me-too thinking. In the process, they have also created a case study in how to deliver long-lasting results in fast-changing times — a case study from which all of us can learn.
Ray Davis took charge of Umpqua back in 1994, when the bank was a pipsqueak of an outfit with six branches in and around the southern Oregon town of Roseburg, assets of $150 million, and, in his words, a “plain vanilla” competitive strategy. Since then, Umpqua has been one of the banking industry’s rising stars. It now has 183 branches stretching from San Francisco to Seattle, assets of $11 billion, and a unique strategy that positions Umpqua as a lifestyle brand rather than as just another local bank.
Umpqua’s 15-year track record of growth has little to do with the products it markets, which are virtually identical to the products offered by other banks. What’s distinctive about Umpqua has to do with how it offers those products — its commitment to reimagining the experience of interacting with a bank. Davis puts is this way: “If you took a person, blindfolded them, sent them to a bank, and took the blindfold off, 99% percent of them would say, ‘I’m in some bank somewhere.’ We want our customers to say, ‘I’m in an Umpqua bank.’ We don’t want the experience of banking here to feel like banking anywhere else.”
That’s why Umpqua designs its branches to appeal to all five human senses. What should a bank look like? In Umpqua’s case, its branches evoke the spirit of a sleek hangout space, more like Starbucks or a well-appointed art gallery than the neighborhood savings-and-loan.
What should a bank sound like? In Umpqua’s case, it’s the sound of music. The bank signs indie bands to its Discover Local Music project and invites customers to listen to songs on in-branch kiosks or download them from the Web. It even sells compilation CDs of the best songs.
What should a bank smell like? Being the Pacific Northwest, the answer, of course, is coffee. Branch employees are happy to brew customers a cup of the bank’s own Umpqua Blend (which it also sells by the pound), and they end every transaction with a piece of gold-wrapped chocolate served on a silver platter. (That’s what Umpqua tastes like.)
Moreover, during and after hours, the beautifully appointed branches host community activities as well as banking activities. There are book clubs, movie nights, neighborhood meetings, “business therapy” gatherings, “stitch and bitch” sessions in which participants knit and gossip. Umpqua’s Innovation Lab, a branch filled with high-tech gadgets in Portland’s South Waterfront neighborhood, even hosts bowling leagues — not with balls and pins, but with Wii video bowling on 144-inch high-definition screens.
Why does Umpqua bother? To change the conversation with customers and the community, to make itself interesting in a world where most banks are boring, to become a passion brand in an industry sorely devoid of passion. In other worlds, to find the marketing revolution before that revolution finds and upends the bank.
“People come to the South Portland store in the middle of the day with their bowling shirts on,” Davis marvels. “Some customers are waiting to see their banker, and others are bowling! It’s incredible. It creates an environment where people say, ‘That was fun, let’s go back.'”
This distinctive personality and market presence, it should be noted, has served Umpqua well during the financial meltdown. Back in 1994, when Davis took over, Umpqua’s market value was a trifling $18 million. Today, despite all the economic setbacks in the Pacific Northwest, and even after investors have turned their backs on banks across the country, Umpqua’s market value is close to $1.5 billion.
CEO Davis explains his bank’s approach to business, in boom times or dark times, this way: “In an industry like ours, which is so old, where people are used to doing things one way, with blinders on, this model is not just shifting the paradigm. It’s crashing and burning and nuking the paradigm! That’s how you stay relevant. And if you can’t stay relevant, you’re done. The banks that are failing have no value proposition — nothing — other than, ‘We are a bank and we will offer you a higher rate.’ We have a one-of-a-kind value proposition in our industry.”
That’s the strategic mindset that allowed Ray Davis to “find the revolution” in his industry. Do you have the right strategic mindset to find the revolution in your industry?
Reprinted from Harvard Business Review