Remarks by Walter B. Wriston

Wriston, Walter B.


Digital Collections and Archives Editor's note: This speech includes labels for slides, however, the accompanying slides were not donated with the text. The slides were treated as footnotes. The footnote number is inserted where the slide would go.

The Citibank is a microcosm of the world and therefore we can expect that the stresses and strains that the world is now enduring will be reflected in various ways throughout our own organization. The world has been unsettled by the explosion of technology, the continuing struggle for human rights, the redressing of past wrongs against minorities and women, the changing value systems, and the incursion into all of our lives of an increasingly heavy hand of government. All of these things, and more, have combined to produce a vague feeling that perhaps it is not as much fun to come to work any more as it used to be. Whether you live in New York City or Rio or London or Singapore or wherever, the urban problems seem to become more intractable, the number or government forms becomes more impossible and the mechanics of living more complicated. Since we can't stop the world and get off, we have to devise the best possible way to manage our destiny.

It has be a fundamental belief of managements of the Citibank, that one of our principal functions was to assemble, motivate and manage the ablest group of men and women which could be collected in a single organization. The people in this room and around the world are tangible evidence of the success of this policy. But the success of this effort brings its own problems. Paradoxically, the more we succeed in attracting and holding on to superior people, the more difficult we make our own jobs. Very bright people often see a dozen different alternative ways to handle any given problem. People lacking the same intellectual horsepower might come up with only one solution. A discussion about any subject in a group like this would produce many different ways to do something, and hopefully the best idea would get itself accepted in this marketplace. There are always those who think life would be simpler if we had some kind of a pass/fail mechanism which would determine that there is one, and only one, right way to do something. Presumably, this judgment would be made at headquarters. The history of the world and the history of Citibank demonstrate conclusively that when decision making is centralized, trouble eventually follows. This is true because a centralized system can only capture and make use of a limited amount of knowledge, while a decentralized system comes closer to being able to use the aggregate of information and creativity which cannot exist at a central point. The success of our organization has been built by very able people operating with decentralized authority and centralized financial control. This is still and will continue to be our policy.

The fact that we are attempting together to establish a standard chart of accounts, a management information system which permits you to manage your own business better, and a more uniform and efficient operating base, does not and should not obscure the fact that in the last analysis the results we achieve together will be a result of many different individual management styles working toward a common objective. The man in the gray flannel suit never came to work for the Citibank, and the concept of a right and a wrong way to do everything will not stand up under the light of day. Mr. McNamara got a lot of good press for his numbers just prior to building a car that could not be sold, losing a war in Asia, and building an airplane that didn't fly. In my judgement, his administration has to be judged a failure, but the financial control systems which he inaugurated were not. The trouble was not with the numbers which were produced, but with the too great reliance which was put on them, while at the same time blocking out or ignoring other sources of valid information. We do not plan to fall into the same trap in the Citibank. Information is not an end in itself, only a tool to aid judgment. Much of the truly vital information on which your decisions are based is never written down. Henry Mintzberg puts it this way in the current : "First, verbal information is stored in the brains of people. Only when people write this information down can it be stored in the files of the organization - whether in metal cabinets or on magnetic tape - and managers apparently do not write down much of what they hear. Thus, the strategic data bank of the organization is not in the memory of its computers but in the minds of its managers. On the other side of the coin, it is perfectly clear that we cannot manage a business which has grown as explosively as ours has on the back of a matchbook. We must have good numbers in timely fashion. The fact that we are asking for and developing together a lot of numbers to help us run our business better does not mean in the current phrase that "numbers are more important than people." The drums always exaggerate trends, and it is easy to misinterpret a request for numbers into a scenario that says that in the future that there will be less and less room for the SENOF or the manager whose style of management does not conform to a standard cookie-cutter mold. This is not true. We are not moving toward a system where there is only a right or wrong way to manage. The world is basically made up of gray areas, and the success of the Citibank has been in developing men and women with judgment who can sort out on a timely basis the course to pursue which is consistent both with absolute integrity and a healthy bottom line. Our success has also been based upon the assurance that in the last analysis yours and my loyalty is to the Citibank itself, and not to any one individual, branch, division, or group. I have always been extremely proud that when the chips are down, the organization as an organization, performs superbly, when it became necessary to evacuate our Vietnamese staff from Saigon, a great many people worked around the clock in a lot of different areas, improvising, arguing, persuading, but with the sole objective in mind of saving human beings and assuring them that each and every one of them that we brought out would have a job in the Citibank. The fact this effort was perceived by the people in our organization as routine, was a high compliment. In a very different context, the organization handled a business crisis in a superb way. The day that Herrstatt failed, the international payments mechanism literally broke down, and dozens of people jumped in to put it back together again. Credit officers moved into 111 Wall Street and made decisions on the spot involving millions of dollars of payments, and their skill amazed the operating managers. The credit officers were equally impressed with the skill of an operating team which worked incredibly long hours with an improvised manual system to produce balance forward numbers. The experience did both cultures a lot of good, as each not only gained new understanding of the other's problems, but a new respect for the way the problems were dealt with.

Current pressures always make it easy to forget where we have been, and to worry about how you or I or anyone else will cope with such a rapidly changing situation. We are all impatient, but we should not lose our perspective. Perhaps I can illustrate this with my own experience. When I took over the European District every salary increase of every clerk in every branch in every country was sent to New York for approval. The credit limit of the Vice President in charge of London City Office was $50,000 secured and $25,000 clean; everything else came to New York for approval. It is useful to bear these two simple facts in mind when the noise on the drums suggests that we are moving away from a decentralized authority structure in the bank. Every credit officer knows that facts make their own decisions, and most of our bum loans were made because we lacked good information. Most of our bad management decisions are made for the same reason. What we are attempting to do now is to put together a bottoms-up management information system which will tend to minimize the number of bad decisions made solely because of bad information. Good information won't cure bad judgment, but it will permit good judgment to make better decisions. In the process of trying to get the information, the pendulum will, and no doubt has, swung too far and we have too many reports. These reports contain both vital and useless numbers. As we gain experience, we will hopefully arrive at an optimum trade-off between numbers and time spent. We are not there yet - but we are trying, and the number of reports should decline rather substantially as we gain experience.

In addition to trying to get a better handle on our business, we have launched the concept of matrix management which is guaranteed in the beginning to create friction and trouble. On the other hand, no one has yet figured out any other way effectively to manage the businesses which we have across such a wide spectrum of both geography and product. My own sense of the matter is that the quality of Citibank people around the world is making the matrix work with a minimum of problems.

The truth is that in an organization of this size and complexity we need all kinds of talents, we need all kinds of management styles, but we need to wear one sweater and have an agreed upon set of goals. We do not want or need one standard road map showing the only approved way to achieve those goals. A good manager should have every club in his bag. There are times when he needs a driver and there are times when he needs a putter, and the selection of the management style used to achieve a given result is not the important issue. The important issue is to achieve the result in a way consistent with the human values upon which the Citibank has been built.

We have a well defined set of goals, and we are moving toward them through the combined talents of all. No one has ever been where we are today, so we have no well known guidelines to follow. This being true, we should not be surprised if we wonder about the future and where we as individuals will fit into it. We have a parade of buzzwords which change rapidly. We have as a group very different personalities and management styles. All this diversity is held together by the Citibank sweater which in turn is stitched together by a common set of ideals on how human beings should be treated, by a pride in our collective achievements, and an agreed upon set of goals.

We have spent a good deal of time thinking through our mission, our goals, and our strategies. Last month each of you received a document reflecting the results of these deliberations at our last off-shore policy meeting. The finished product represented a choice among goals and principles; a choice upon which we'll base our future decision-making, and against which our progress will be measured. It would be useful to discuss with you today what went into this document, and what we expect to come out of it.

In our latest period of re-assessment, we perceived that we needed to make some fundamental decisions to guide our long-term growth; some basic choices as to where we're ultimately going, and what we aspire to become.

The Policy Committee discussed at considerable length, and I might add, with some spirit, the answers to these essential questions, what it hammered out is the document you received. With this in mind, let's take a look at the statements point by point. [1] 

This may seem like an uncomplicated, unarguable goal. It has rather more significance, though.

As Citicorp has grown, it has pursued opportunities in many directions. We have evolved into a financial congeneric. Indeed, we had begun describing ourself as a financial supermarket. Some products paid handsomely, some so-so, and others were marginally profitable, and some we don't have hard numbers on. Most products and many businesses have a life cycle. Some are just getting off the ground, some are stable and some are declining. Our continued success depends in some measure in identifying the place in cycle for each product and business and allocating resources accordingly. It also depends on having the courage to put money and talent behind new venture businesses which will pay the check tomorrow.

We're going to continue to try to concentrate our resources on our most profitable businesses. That has several implications. When we get into new businesses, which do not meet our hurdle rate, we do our best to get out of them on the best possible basis.

It also means that as a long-term goal we'll seek to be self-funding which in turn means we have to grow our earnings faster than our assets.

By cutting out marginal activities and consolidating around our core profit-makers, we will also be establishing the strong base we need to support a policy of aggressive innovation.

In doing this, we'll make mistakes. That's inevitable. We must be prepared to accept mistakes. When we make a mistake, instead of building a life-support system to perpetuate it, we'll acknowledge it, get out, and try again.

You might observe a certain sense of balance in these decisions. If our dedication to innovation is on the venturesome side, our determination to make enough profit to be self-sufficient is decidedly conservative.

The other adjective in this sentence - "most competent" - was obvious. Although the decisions about profit versus innovation involved considerable debate, no one questioned that competence is the obvious prerequisite inherent in our mission.

Let's look now at the second sentence in our statement of mission: the profitable provision of a full range of financially-oriented services must always be compatible with the highest standards of integrity. [2] 

Integrity has always been a Citibank tradition and a key to success, since all banking is based on trust. Now, more than ever, multinational corporations are being accused of all kinds of business practices that are perceived as unethical. No one knows better than you that value systems vary from culture to culture, and some would like to impose their value system on all. Whatever the value system or whatever culture, integrity is universally understood.

In the final words of our statement of mission, we enumerate our obligations: to our customers, our staff, our shareholders, and to the general public.[3] 

All are important.

Providing our customers with satisfaction--not the one-day satisfaction of completing a deal, but the long-term satisfaction of seeing it work out successfully--isn't an easy job--but the one that keeps us in business.

Our mission identifies our staff as another principal obligation. Our people are all that differentiate us from every other bank or business in the world. Developing them is the single most important factor in our continuing success.

Our stockholders put up the capital to put us in business and are entitled to our best efforts.

Our obligation, finally, is to the general public. It is not an obligation to be taken lightly. The general public comprises all those people who elect the legislatures who pass the laws that govern our activities. Politicians may be motivated by many ideals, but nothing motivates politicians so effectively as the votes of their constituency--the general public. The public must be well served or we will not have a business to manage. [4] 

Our statement of corporate mission is not a casual collection of words. It is a hard expression of carefully worked-out principles that will guide our decision-making into the future--and against which our worldwide activities will be measured.

Based on this mission, we developed two sets of goals: one financial, and one strategic. With a clear understanding of the mission, the goals will pretty much fall into place.[5] 

Our financial goals are a 15 percent growth in earnings per share a year; capital assets at least 8 percent and equity capital at least 5.5 percent of risk assets; a 95 basis point after tax return on risk assets, and a 19 percent return on stockholders' equity.

These are ambitious goals. The fact that we have achieved some of them before should not deceive us into thinking that they're easy. They are not, but they are achievable.

From our corporate mission also flows a set of business strategies.[6] 

The first involves people and implements the principles we discussed in our mission.

The second strategy reflects our experience that you never know where trouble will come from--you just know it will come. Our actuarial base is our fundamental way of spreading our risks and earnings over a wide and solid enough base to amply support our innovation.

The third strategy deals with concentrating our limited resources on a limited number of businesses. We will not dissipate them on marginal businesses, but concentrate them on our basic interest-differential financial business. We will have the courage to get out of businesses that do not live up to expectations.

Our fourth strategy reflects our mission of innovation to develop a venture business that can become the core business of tomorrow. Only by taking a chance on tomorrow can we replace the business that may decline today.

I started this review by saying the Citibank is a microcosm of the world--and it is. Jacob Bronowski's superb book on the Ascent of Man said it all when he wrote, "We are all afraid--for our confidence, for the future, for the world. That is the nature of the human imagination. Yet every man, every civilization, has gone forward because of its engagement with what it has set itself to do. The personal commitment of a man to his skill, the intellectual commitment and the emotional commitment working together as one, has made the Ascent of Man."

We will be talking here in Mexico about our "engagement of what we have set ourselves to do." The road that we will travel together will not run in a straight line, nor will it always be smooth, but, working together, I have no doubt that we shall achieve our goals.








  • The document was created from the speech, "Remarks by Walter B. Wriston," written by Walter B. Wriston for the Regional Senof Conference on 21-24 July 1975. The original speech is located in MS134.001.003.00002.
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