Let’s move on, in particular, to who should take Ken Lewis’s place. As it happens, BofA’s board has gone through a meaningful upgrade in recent months, with some excellent additions, including Susan Bies, Bill Boardman, and Paul Jones. This board really might be capable of taking the first step in repairing what is one of the most prominent companies in the financial services industry, and setting it on a path that will benefit shareholders, employees, and customers.
I’ve followed BofA and its predecessors for 30 years. Over that time, I’ve gotten to know the company pretty well, and have gotten to know a number of the people on most short lists of candidates, too. So as a public service to BofA’s board of directors, its shareholders, and the citizens of Charlotte, North Carolina, here are my thoughts on what the board should do next.
First, if the board were honest with itself, it would see the company’s past strategy for what it is: a colossal, value-destroying failure. No internal candidates are qualified to lead the sort of transformation needed at BofA. Only an outsider can. Think if this as the start of the deMcCollification of Bank of America--and not a moment too soon.
In particular, BofA’s board must reject the core strategic premise on which the company has been run under Hugh McColl and Ken Lewis: the idea that size equals success. In banking, size does not equal success. As Dick Kovacevich likes to say, “Big is not better; better is better.” The board needs to understand that. Instead, it should look to install a management that can improve the operating performance at each of the company’s business lines. A relentless pursuit of operating excellence, as opposed to a relentless pursuit of deals, is what separates the best-run institutions in the industry –companies like JPMorgan Chase, US Bancorp, and Wells Fargo—from Bank of America and Citigroup.
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