I sleep better when the world makes sense.
Despite its Lean techniques, Toyota, a customer-driven business icon, is struggling. It makes no sense. In my attempt to understand their sudden woes, I somehow found my way back to consumer banking and was struck by what I found when I connected seemingly disparate parts of the business environment together—the massive Toyota manufacturing defect and the bank crisis, starting with subprime. What role does a passion for the customer play in defects of the risk, profit, and accelerator pedal varieties?
How Customer Centricity Killed the Economy, will be the title of the book that I someday write but for now, I am satisfied just to understand the role that a relentless pursuit of serving customer needs played in getting us to where we are today in consumer banking. Customers hated the onerous process of getting a mortgage and data suggested that risks were low enough to accept fewer, if any, pieces of paper so enter low-doc mortgage. Customers wanted to buy better homes or get into their first home faster and home values were climbing so enter pay-option arm. We were all happy until the floor fell out from under us.
Over the December holidays, I was visiting family in India, and despite everything you read about rapid economic development and the expanding middle class, the poverty so many people experience there is still striking. However, the poverty I saw this time looked very different than what I’ve seen in previous trips. People still live in flimsy shacks, but now they have televisions in those shacks. In the big cities, mobile phones are everywhere. In the past, large populations of the “unbankable” seemed completely out of the reach of traditionally structured financial institutions. These days, in countries like India, large bands of the population can be served through channels that were never an option before, like the mobile phone.