Relentless Customer Leader Podcast

Dr Chris L. Brown (00:00)
Get ready to unlock the secrets of building an unshakable customer -centric empire. Welcome to the relentless Customer Leader podcast. How customer -obsessed leaders win. I'm your host, Dr. Chris Brown, and this is a podcast that's going to ignite your passion for delivering experiences that leave your customers craving more. In each episode, we're going to dive into the minds of visionary leaders and trailblazing companies

who have made customer experience their sacred mission. Prepare to be inspired as we unpack the game -changing strategies, unconventional thinking, and the real -world stories of customer -centric transformation. Whether you're a budding entrepreneur, a seasoned executive, or simply someone who believes in the power of remarkable customer experiences, this podcast is going to equip you with the tools, the mindset, the motivation to elevate your game.

Brace yourself for a journey filled with great insights, inspirational stories and contagious energy that will reignite your commitment to putting customers at the epicentre of everything that you do.

Dr Chris L Brown (01:16)
My next guest is Ken Wilcox. Ken was previously the CEO of Silicon Valley Bank. And in that role, he successfully pursued a strategy of expansion and diversification while remaining focused on the group's core niches of technology, life sciences, venture capital, and premium wineries. Banking is not necessarily an industry we associate with high levels of innovation, and yet Ken was able to earn the distinction of Entrepreneur of the Year by Ernst & Young.

both in 2009 and 2010 for his work at Silicon Valley Bank. He earned an MBA from Harvard Business School and he has unusually a PhD in German studies from Ohio State University. He's also written a great book titled Leading Through Culture, which distills practical leadership wisdom that can be applied to any organization. There are a number of powerful concepts, some of which we're gonna touch on in this conversation, but I encourage you to.

to go out and get that book and read it yourself. As you'll hear in the following conversation, Ken's really a very thoughtful, people -oriented leader who's mastered the art of organizational leadership during really challenging times. I hope you enjoy hearing more about Ken's leadership journey.

Chris Brown (02:30)
Fantastic. Well, I'm here with Ken Wilcox, and it's great to see you again, Ken.

Ken (02:36)
You as well, thank you.

Chris Brown (02:37)
Yeah, so I thought we could start this conversation by getting a little bit more background on really how your journey's evolved. I know that you have an MBA from Harvard and also have studied, you've got a PhD in German studies, which is quite an eclectic mix of different types of educational experiences. But tell me, how did you kind of end up, I guess,

where you did with the banking role and the CEO role at Silicon Valley Bank.

Ken (03:09)
Well, why don't I just go back to the German studies for a second and bring you up to date, starting at that point. I wasn't particularly well directed when I was off to university. I didn't really have any idea of what I wanted to do in life. I felt, though, that it was important to learn about other cultures. So I decided I'd pick a language.

and then do a junior year abroad sort of thing. And I just, German, it could have been any other language for that matter. At the time, Germany seemed like a logical place to go for all kinds of different reasons. And there was no opportunity at that point, I'm wanna underscore to go to China because I graduated in 1970 and people just weren't able to go to China at that point.

So I studied German and one thing led to another. I liked it. I enjoyed being in Germany. I kept on studying in Germany and ended up studying at three different German universities actually. Ended up with a PhD in German. What you find out when you do something like that is that your choices are more limited than you might otherwise imagine. If you have a PhD in German on your resume, there's pretty much only one thing you can do.

and that's teach at a university. Because anybody else who's considering you for anything else will look at that PhD in German and come to the conclusion that it's not a good idea. So I ended up temporarily at least teaching at the University of North Carolina in Chapel Hill. And I enjoyed it quite a bit, but what I didn't like with being poor, that was in an era when

Chris Brown (04:37)
Yeah. Yes. Yeah.

I'm gonna go.

Ken (05:00)
raises for university professors in the humanities, and German's part of the humanities, were 2%. And inflation in the US was 12% and 13%. So you can see that I fundamentally lost half of my buying power in just a couple of years. So I went and went to Harvard Business School. I still didn't have any idea of what I wanted to do. So I decided I'd work in a bank.

Chris Brown (05:21)
Yeah.

Ken (05:30)
commercial bank thinking that would expose me to a lot of different industries and I would have a better idea of what appealed to me. I joined the bank in Boston. They told me I could pretty much work wherever I wanted to, but I would have to pick. And I looked at what was available and it turned out there was a job in the technology lending group.

Chris Brown (05:38)
Yeah.

Ken (05:58)
And as a matter of fact, the one opening that they had in this rather small group was an opening for somebody who wanted to work with venture backed technology companies, so very early stage, but backed by venture capitalists. So I kind of on a whim chose that. And I ended up doing it for almost 40 years in a manner of speaking. I loved it. It was fun getting together with entrepreneurs.

Chris Brown (06:23)
Yeah, yeah.

Ken (06:27)
venture capitalists were very interesting and it was fun being on the cutting edge in terms of what was happening in the world of innovation.

Chris Brown (06:37)
Yeah, yeah. No, it's a fascinating journey, you know, to get to that point. And I imagine your upbringing and sort of your early life also shaped perhaps your philosophy to doing business as well. I mean, how did that evolve, I guess, over time? How did you how do you think?

Ken (06:59)
I understand over doubt. Now, interestingly enough, I came from a family of academicians, not business people. Although, most of the people in my family who were in academe were teaching organizational behavior. And in that capacity, they often had side gigs as consultants to businesses. So, and my father was

Chris Brown (07:05)
Yeah.

Ken (07:27)
I think somewhat of an idealist. He was so interested in organizational behavior that he pretty much lectured to us every night at the dinner table. And in particular, what I remember most was he believed that American business was on the verge of a major shift away from what he called theory X leadership styles to theory Y leadership styles. And

What that boiled down to was up until sometime when I was in college, maybe in, or at least in high school in the U.S., a lot of our management practices were based on our experiences in World War II. So they were somewhat militaristic, very top-down with clear levels of authority.

The people at the universities that were studying organizational behavior were pretty convinced that wasn't the best way to run a corporation. And so this whole idea of theory-why leadership came into being in the U.S. I think sometime in the 60s and in the 70s. The idea was that people wanted ultimately, this is kind of based on Maslow's hierarchy of needs, they wanted to self-actualize.

And to self-actualize means that you get to do some thinking on your own. You get to make some decisions and then look at the results and then reformulate your decision based on how well you've done. Wasn't all just taking orders from above and doing exactly what you were told. So I heard these lectures at the dinner table every night for several years during, you know, like junior high school and high school.

Chris Brown (08:46)
Yes.

Yeah, yeah, it seems to me that, you know, that that's been an evolving thing, hasn't it, over the last sort of 30 or 40 years, where there's been sort of this command control and sort of a very militaristic sort of style to corporations, to now becoming, you know, this recognition that that's not necessarily the most ideal way of running a business and

actually people want to be able to express themselves and be able to really draw out their own talents and apply those in that sort of setting. So I think it was sort of early, early sort of insight there from many years ago that this was the direction that I think things are going.

Ken (09:57)
Yeah, well, I was listening to all of that and tucking it in the back of my head, but not really doing that much with it until I actually graduated from Harvard Business School and got my first job. And my first boss was not exactly militaristic, but very, very determined to make all the decisions himself. And it had a

Chris Brown (10:20)
Yeah.

Ken (10:22)
I reacted to that very negatively. So I would say that in fact, my second boss fit into the same category and maybe my third one too. And over time I came to the conclusion, I don't really like this. And two things, one is if I wanna avoid it, I better end up being the boss myself, I guess. And the other thing was once I was the boss, if I was able to pull that off, I didn't wanna behave that way because I didn't think that would bring out.

Chris Brown (10:24)
Yeah.

Ken (10:51)
the best and the people that worked with me.

Chris Brown (10:54)
Yeah, yeah, you didn't want to impose the same experience you'd had on others, right? In your book, you know, it really begins with sort of this idea of, you know, the question of why do you want to lead? You know, what is it that you that draws you to leadership? And, you know, I think part of that you talk about, you know, understanding the underlying motivation to lead.

Ken (11:00)
That's exactly right.

Chris Brown (11:22)
How do you think about that? Maybe share a bit more about that concept of why people wanna lead organizations or wanna lead and what the underlying motivation is and how do you kind of tease that out, do you think? How do you make an assessment of that yourself?

Ken (11:39)
Well, of course it's very complicated because human nature is very complicated and there's nobody who's is simple enough that they fit into a category without any differentiation. But I would say in general, bosses tend to fall into two different categories. One category is bosses who want to be boss because they like being boss and it doesn't really make any difference what industry they're in or what the content of the job is.

They just like telling other people what to do and being the, as George Bush said, being the decidinator. They love being the decidinator. The other kind of person I think is somebody who cares deeply about a particular issue or a set of issues or a way of looking at the world. Those kinds of people have a vision in their minds

Chris Brown (12:18)
It's fun. It's great.

Ken (12:38)
the way things should be. And they never are the way they should be. They're always different. Those people are focused on changing things and making things better. And they don't necessarily look to become the boss. Oftentimes they're selected because the people around them say, hey, that person's got a great idea. And they would like to take this place to a better place than where it is right now. So we'd love to have them as boss.

And I personally believe that I fit more into the latter category, with the one exception that I was definitely trying to escape being bossed around all the time.

Chris Brown (13:19)
Yeah, yeah, yeah. That was a sort of negative driver of what he did to me boss, right? And, you know, that idea of vision, I know, you know, we've had a number of conversations over the years about customer-centric leadership and so on. And one of the areas is sort of this customer vision. With for you, the vision, Silicon Valley Bank, you know, and you outline this in your book also is, you know, really,

Ken (13:26)
That's exactly right.

Chris Brown (13:47)
reorienting around this venture-backed segment, if you like. How did that come about for you? I mean, how did you develop that vision? And what were you seeing that sort of manifested that for you? Do you recall any triggers?

Ken (14:02)
Really there are two things that came together, I think. One of them having to do with employees and the other one having to do with customers. And on the customer side, there were a couple of things motivating me. One was I got into this technology lending group really without understanding what it was all about. But I soon learned that the people in the technology sphere in the innovation space were for the most part, trying to create.

and services that would quote unquote make the world a better place. It would make people's lives better for them. Now in point of fact, it hasn't always worked out that way. There is the argument that in some regards, excuse me, technology has worsened some people's lives. When you think about the internet today and the social media companies, but in general, it's about making people's lives better.

lives more pleasant and giving them access to more information and helping them to self-actualize. So that's on the customer side. In addition to that, on the customer side, I would say that banks, commercial banks in particular, don't have the greatest reputation, meaning a lot of people don't really like their bank. They don't like their bankers and they feel that banks are very parental.

So I also had this idea that we should try to run our bank in a way that customers enjoyed interfacing with us, that they didn't feel they were being talked down to, that they didn't feel that we were treating them like children. So that's on the customer side, two different things. But then on the employee side, there's the thing I mentioned before, that people really would like to grow and learn.

Chris Brown (15:43)
Yeah.

Ken (15:55)
in their jobs. They don't want to just like drones do what they're told to do. So all those things came together in a way that resulted in my very definitely developing strong opinions about the direction the bank should go in. And somehow some people who liked that noticed it and got the idea that maybe I should be considered in the line of succession.

Chris Brown (16:12)
Yeah.

Yeah, yeah, yeah. No, no, it's an amazing journey that you've gone on to then take on the leadership of Silicon Valley Bank. I mean, how did that actually happen? Talk me through the sort of, I guess, that the experience of going from being in the bank and working your way up, I know you took a role on before the CEO role, but how did that sort of play out?

Ken (16:53)
You know, it was actually from my point of view, quite a surprise. I did not imagine that people were thinking of people in the, in a position to make decisions about the succession. I didn't imagine that people were actually considering me seriously or thinking about me. But they came to my attention and I was quite surprised and I was obviously flattered. And then I saw the benefit that if I could do that.

it would solve a whole bunch of different problems for me. And I was, one day, I was already at Silicon Valley Bank because I left Bank of New England in 1990 and joined Silicon Valley Bank. And one day in 1997, the CEO of Silicon Valley Bank who'd only been CEO for five years at that point, asked me to go to dinner with him. And he said, you know, he,

Chris Brown (17:23)
Yeah. Yep.

Ken (17:45)
He would like himself to retire in three years. And would I consider moving from Boston, where I was, to California, where our headquarters were. And he promised me that all other factors being equal, if nothing went wrong, that he would train me to be his successor. Oh, I'll talk to my wife about it. And her initial response was, there's no way we're gonna do that because...

Chris Brown (18:08)
Mm, mm.

Ken (18:15)
Because people in Boston, even today, I think, don't necessarily have the highest opinion of Californians, nor do Californians necessarily have the highest opinion of Bostonians. But I didn't put her under pressure. I just talked to her about the benefits, and within six months, I talked her into it.

Chris Brown (18:29)
Yeah.

Yeah, yeah, you cross the divide. That's great. That's great. And so, you know, you took on the new role and, you know, set a new direction really for the business, didn't you, to really narrow the focus on, on this technology market and really develop that. And it's interesting hearing your story because, you know, you, there was obviously a CEO that you'd taken over and there was a...

Ken (18:41)
across the divide.

Chris Brown (19:06)
that was a different business. And then you were really almost recreating the business in a way for the next phase of the organization. When you think.

Ken (19:14)
Well, that's exactly right. Because when I joined the bank in 1990, Silicon Valley Bank in 1990, it had what we called at the time, the three-legged stool approach. And the idea was that one third of the bank would be focused on early stage technology companies. One third would be focused on small real estate developers. And one third would be focused on what we called main street, which just means everything else in the world.

small business, so to speak. But we positioned ourselves from a marketing point of view as the bank for technology companies. Because bear in mind, there are thousands of banks in the US and all of them are focused on all kinds of businesses and on real estate developers. Almost nobody is focused on technology. So that was the one thing.

where we differentiated ourselves from other people. So we made it appear that that's what we did all the time, but it turned out it was only about a third of the business. And then my predecessor, a fellow named John Dean, was not enamored of technology, and he felt that it was too risky, which is what most bankers think. And the result was that he...

Chris Brown (20:32)
Yes.

Ken (20:36)
reduced our exposure in technology so that by the time I became CEO in 2001, we were only about 20% technology and everything else was everything else. It was small business of, you know, all different sectors. But my thought was at the time, and I still stand by that, I think it was a good

Chris Brown (20:47)
Mm-hmm.

Yeah.

Ken (21:01)
With every other bank in the country, if not the world, focused on a variety of different businesses and also focused on real estate, we should try to be in the one market that differentiates us. Plus we develop some particular skills there. So why not do the one thing where we actually have a leg up on everybody else? And so in the first couple of years of my tenure as CEO,

Chris Brown (21:25)
Yeah, yeah, yeah.

Ken (21:31)
I made three big decisions. Two of them are relevant to this discussion. One of them was that, well actually, all three are relevant. One of them was that we would drop everything else that we were doing over time and focus exclusively on the technology space. So we did that within the course of about three, four years. We reduced our exposure to everything else with one small exception, that being wine.

we reduced everything else to zero, and we became a 99% technology-oriented bank. And then the other two things we decided to do, and these are really my only three big contributions to the bank's strategy over time. The second thing was, prior to my becoming CEO, we only worked with small companies.

Chris Brown (22:07)
Yeah.

Ken (22:26)
small technology companies, early stage technology companies. And in a sense, we were not doing ourselves a service because we're doing the hard work. It's difficult to work with very early stage technology companies and they are risky. And then when they got to a certain size, we sort of gracefully let them go to other banks that were bigger. So we decided that we would invest a lot of money in product.

Chris Brown (22:48)
Mmm.

Ken (22:53)
to enable us to adequately service larger technology companies. In other words, we'd find them when they were at inception, but we'd keep them and keep them happy. And then the third thing we decided to do was go global because technology is a global business. And my feeling, which I still think was on the mark, was that if we didn't go global with our customers,

Chris Brown (23:03)
Yes.

Ken (23:20)
that somebody else might. And so it was really important that we accompany them on their global journey. And most technology companies historically have gone global over time.

Chris Brown (23:20)
Hmm. Yeah.

Yes, yeah. So I mean, it was fundamentally about differentiating the bank in a way that was made it unique, made it attractive, variable and so on. Yeah, yeah, made a lot of sense, made a lot of sense.

Ken (23:42)
Right.

But we did keep the wine because it was just too good to give up. We actually at one point banked more wineries than any bank in the country, maybe the world. I don't know about that, but than any bank in the country.

Chris Brown (23:54)
Yeah, yeah.

Really? Yeah, yeah. And a lot of these would have been up in Napa Valley, I guess, were they all?

Ken (24:09)
That's right, it was almost exclusively in Napa and Sonoma.

Chris Brown (24:13)
Yeah, yeah, yeah. And, you know, so you were really leading the bank at a time it was very challenging, a very challenging economic time and, and so on. And if you think then, sort of shifting back to leadership and your own thoughts on leadership and leadership style, I mean, how would you how would you describe your leadership style and sort of some of the

the key attributes that you felt were important and that you sort of promoted in the bank.

Ken (24:48)
Well, first of all, let me address an issue that you just touched on a minute ago. I became CEO in 2001, April of 2001, which in retrospect turned out to be actually almost exactly the onset of the big recession that was initiated, ushered in by the dot-com companies.

total disintegration of the dot com companies in the US. So in the first year or two of my being CEO, I was definitely persona non grata with Wall Street because every quarter was worse than the one prior. And I remember certain analysts at certain investment banks on Wall Street that were pushing me all the time to have a big layoff.

Chris Brown (25:18)
Yeah.

Yeah.

Ken (25:42)
But I didn't, I just didn't want to do it because I believe it takes about 10 years to develop a good technology lender from start to maturity. And if we were to let a whole bunch of them go, lay them off, first of all, they'd go to competitors. And secondly, I'd never be able to get them back. And third, within a couple of years, things would turn around and we'd need them.

Chris Brown (26:00)
Mm.

Yeah, yeah.

Ken (26:09)
So I just put on my blinders and wouldn't listen and forged on ahead and that worked out. That was a good strategy. But in terms of leadership strategy, I would say that I can almost encapsulate my leadership strategy with just one small story. And that's when I became CEO, I didn't know how to be a CEO.

Chris Brown (26:19)
Yeah, yeah, yeah.

Ken (26:37)
I really and truly didn't. And for the first year, I was kind of grasping for straws. I was trying to figure out how do we go about doing this in a way that A, works is effective, but B, also does what I'd initially set out to do, and that is enable people to quote unquote self-actualize through their work. And my thought was,

Chris Brown (27:00)
Yeah.

Ken (27:03)
I've got to figure out a way of making decisions that doesn't make me the sole decision maker. So I looked around and I did some reading and I got a consultant. And within a year I discovered my only mentor who's been dead for about 3000 years now I think. It's Cyrus the Great, who is...

Chris Brown (27:28)
Okay.

Ken (27:28)
was, I think around 3000 years ago, I'm not sure I remember the exact dates anymore, but was the head of what's now Iran and was purged at the time. And we know almost nothing about Cyrus the Great anyway, because archeologists just haven't discovered much, but they did dig up at some point a bust of Cyrus the Great. And there was an inscription on the bust that said, diversity and counsel.

Chris Brown (27:37)
Okay.

Ken (27:55)
unity in action. I thought, my God, you know, I've read a lot of biography, and most of the great leaders in my assessment have actually subscribed to this particular notion.

Chris Brown (27:58)
Mm.

Yes, yeah, yeah. It's a...

Ken (28:13)
And so we turned it into a management style. A few of us sat down together and thought about that and turned it into a management style, a way of thinking about running a corporation that really has worked well, I think. And here's the idea. Number one is as CEO, I don't wanna be making all the decisions. That's ridiculous. For...

Two different reasons. Number one, it's impossible. But number two is you want to give other people the opportunity to grow. And part of growing in an organization is making decisions. So as decisions appeared that needed to be made, I would divide them into two categories. The ones I wanted to make and the ones I wanted to push down.

I encouraged everybody at the next level to do the same thing so that we were pushing decisions down to the ground floor as far as we could. And to the extent that we kept them for ourselves, try to make them only big ones that are relevant to your level of leadership. So fundamentally, I didn't make many decisions at all. Just a handful of them, and I pushed everything else down.

And then when I did have to make a big decision, I would pull together a small group consisting usually of my direct reports and maybe a couple of subject matter experts in the corporation. And we would have a discussion. And at the beginning of the discussion, I would describe what it is that we're discussing, what's the decision. And I would make it clear that this is my decision. It's one of the very few.

that I'm

taking from myself. But I don't wanna make the decision in a vacuum. I want the value of their expertise and their thinking. So the idea was you have to tell me what you think. You have to discuss it with me and tell me what you think. That's what I'm paying you for. And I really, really wanna know what you think. And then sometimes those discussions would be going on for an hour, sometimes three, four hours. Sometimes they'd extend themselves over a couple of days.

Chris Brown (30:04)
Yeah.

Mm.

Ken (30:32)
And then there would come a point in time that I sensed intuitively where it was, we discussed it to the extent that we needed to, it was time to make a decision. That was mine to do. I would make the decision.

And again, I limited myself to very, very few decisions. And then the second part of it is carrying out the decision. And that is what Cyrus the Great was referring to apparently as unity in action. So the diversity in council was the discussion part where the rule was you had to tell me your opinion.

Chris Brown (30:57)
Mm-hmm.

Ken (31:14)
Don't worry about whether or not I'm going to disagree with it, because I wouldn't do that openly anyway. That would just discourage people.

Chris Brown (31:21)
Mm, mm, mm.

Ken (31:23)
Then the decision gets made and then the third part of it is carrying out the decision and there it was the other way around. There we wanted unity.

Chris Brown (31:32)
Yeah, yeah, yeah.

Ken (31:34)
And people had to support the decision. If they didn't want to support the decision, they had to stand down. And if they wanted to be disruptive, they had to go away, but they had to support the decision. And that turned into a management spell for the whole corporation. And we made that into a seminar and we taught people up and down the corporation through our...

Chris Brown (31:47)
Yes.

Ken (32:02)
ever ongoing seminars on Cyrus the Great. Over time, we quit calling it Cyrus the Great. We called it the three Ds, discuss, decide, deliver. And there was a time when there wasn't a person in the whole corporation who didn't know what the three Ds were.

Chris Brown (32:06)
Yeah, yeah.

Okay.

Yeah, yeah, that's a very powerful philosophy. Yeah, yeah, it's very powerful philosophy. It sort of reminds me to Ken, I think that last bit right of, you know, unified action is just thinking about Amazon's idea of Jeff Bezos talks about disagreeing and committing. And so, you know, that's the challenge piece, isn't it? So you,

Ken (32:25)
And then start to talk about the basic of the developer.

Yeah.

Chris Brown (32:49)
You have the disagreement upfront, you might not believe in it, but then at a certain point, for the organisation, you need to commit to doing it, to making it happen, to executing, to moving forward. And that certainly, that kind of leads me into thinking about this other idea that you had in your book around, you know, the spectrum of human behaviour and, you know, the types of people from...

from, you know, on two axes here, maybe tell me a bit more about that because I think it requires adults to really be able to execute the way that you've described.

Ken (33:25)
Thank you very much for that opportunity, because that's something I'd like to talk about. But before I do that, I want to add one more small point to the whole idea of Cyrus the Great. And that is, I believe if the leader tries to make all the decisions himself or herself, that he'll end up with less than optimal people. Because the ones who are creative and thoughtful.

will want to be making decisions and they'll get fed up over time and they'll go someplace else. So you'll be left with people who don't want to make decisions and then of course you're forced to make all of them yourself. But anyway the spectrum of human behavior that is something that sounds probably a little bit more scientific than it actually is but it's something that I came up with and it's the idea that

Chris Brown (34:00)
Yep. Yeah.

Yeah.

Yeah.

Ken (34:22)
You can place everybody in any organization on a spectrum. And in the middle of the spectrum are what we call the adult to adult people. Those are the people that realize that if you're working together with other adults, you're going to have differences of opinion. And if you're an adult, you're going to figure out how to...

discuss your way through those differences of opinion and come to some kind of conclusion that you can both execute on, that you can both be reasonably happy with. So those people are in the middle of the spectrum. At one end of the spectrum, we have what we call the passive aggressive people. And those are the ones that hate confrontation.

Chris Brown (35:10)
Mm-hmm.

Ken (35:14)
And so they always pretend like they're in agreement with you, no matter what you say, they smile and shake their head. And you think they're in agreement, but, you know, the next day you find out somehow or maybe a week later or two weeks later that they never agreed with you in the first place, but they're just pretending. And they're really very dangerous for a corporation because they're disruptive. They won't execute on the decisions that we all agree to.

Chris Brown (35:34)
Yeah.

Ken (35:43)
The other end of the spectrum is the people that are almost the opposite. Those are the obnoxiously assertive people. They're the ones that love confrontation and they feel that they have to get their way all the time and they'll browbeat other people into accepting their ideas. So once I figured this out,

Chris Brown (36:03)
Yes.

Ken (36:07)
I decided that what we needed to do is get rid of all of the people at the ends of the spectrum, either by coaching them to the middle or by inviting them to go work someplace else. And of course, I couldn't do that by myself. So that required a lot of, we taught the various levels of people how to deal with those types.

Chris Brown (36:20)
Yes.

Ken (36:34)
And within about a year and a half or so, we got rid of all of the obnoxiously assertive people, either by coaching them to the middle or by asking them to leave. I will admit it's hard to get rid of passive aggressive people because you don't know who they are.

Chris Brown (36:47)
Yeah, yeah.

Yeah.

Yes, yeah, hard to uncover that hard to uncover that. And yeah, and thinking about coaching it too, Ken, I mean, how do you how would you coach someone that sort of has that sort of passive aggressive where they're sort of just undermining things and how do you bring

Ken (37:01)
Yeah, they're hiding.

Well, we usually do that in a progression. We would begin with the manager. So if it was somebody who reported to me by way of example, I being the manager would have a couple of sessions with them and talk to them about how this doesn't really, is it's not consistent with the culture we're developing. And in our opinion, it doesn't make for an optimally run organization.

Chris Brown (37:39)
Yeah.

Ken (37:47)
So would they please think about it and try to do better? And if that didn't work, if after a couple of sessions with a single manager didn't induce some change, then we would have an intervention where we'd have three or four managers get in a room with them. And that would border on threatening in the sense that...

this group of managers would say, look, it's not just your boss who feels that way, the rest of us do too. And if you can't fix it, you know, we're gonna wish you the best, but we're gonna ask you to go someplace else. And that worked. It worked with the obnoxiously assertive people. Again, as I say, the passive aggressive people.

Chris Brown (38:21)
Yeah, yeah. Yeah.

Yeah, yeah, to move on. Yeah.

Ken (38:42)
Some of them stayed for years. It would take years to find them, to discover them.

Chris Brown (38:47)
Yeah, yeah, yeah. There's another concept that's related to this, I think in this chapter around building the great culture at SVB and it's still with cops and robbers versus the voice of conscience. Can you describe that concept a little bit more? So I think I've seen that before.

Ken (39:07)
Yeah.

Yeah, well, that's an easy one for me to describe because in my experience, most commercial banks...

run on a cops and robbers model.

Chris Brown (39:21)
Yeah, cut.

Ken (39:22)
And but what we were targeting was what I call the voice of your conscience, meaning everybody has a voice inside them that tells them what's right and what's not. And if we can just get them to listen to it and follow it. We don't have to be monitoring them constantly because they'll want to do the right thing on their own.

Chris Brown (39:42)
Yeah.

Yeah.

Ken (39:50)
Actually, it's something that I learned in my first job in banking. My first job in banking, we had a chief credit officer whom I remember so well. He just loved to meet with lenders in small groups or bankers in small groups. And he loved to say the following thing, what I'm going to say right now. He'd say, if you find yourself in disagreement with the credit committee,

you should go home and look in the mirror and ask yourself, why am I doing this? Why am I in disagreement with the credit committee? Then he'd pause and he'd say, if you find that you're regularly in disagreement with the credit committee, you really need to go home and look in that mirror again and ask yourself why. And then the final stroke was, if you find yourself always,

in disagreement with a credit committee, you should go someplace else where you can find a credit committee that agrees with you. And that seems so poignant to me and so on the mark. So what we did was we tried to make people, it's just like parents, you know, when you have kids, you don't want to be telling them what to do when they're 30. You want to build in them.

Chris Brown (40:58)
Yeah.

Yeah, yeah.

Ken (41:17)
a voice of their conscience which tells them what to do so that you're not telling them what to do when they get older. And that's what we've tried to do and that is in a sense another way of wording it is turn all of our employees into adults.

Chris Brown (41:26)
Yes.

Yeah, yeah, yeah. It's very powerful, very powerful. We talked a little bit about sort of leadership style or sort of touching on that, but when you think of great leaders, what are some of the attributes that you think about? How would you describe them?

Ken (41:54)
Chris, could you say that again? You froze up for a minute from my point of view.

Chris Brown (41:58)
Oh, okay. Yeah, I was just asking about attributes of great leaders. What are the things that come to mind when you think of great leadership?

Ken (42:11)
Oh yeah, yeah. I think when I think about great leaders, I've actually done a lot of thinking about this. I think that there are three characteristics that you'll find in almost all great leaders. The first one is they're cognizant of the fact that people are copying them.

And the truth is most people are subconsciously copying leaders. They just, they don't even know they're doing it. They just automatically do it. And probably the best example, uh, is, um, raising children, you know, until they get to be about 13, they're meticulously copying everything you do. They're trying to turn into a mini you.

Chris Brown (42:35)
Yeah.

Mm.

Yes.

Yeah.

Ken (42:56)
And then, you know, when they turn, when they reach adolescence, they almost turn it upside down and try to do everything the opposite of the way you do it until they get into their 20s. And then they come back home again and they end up being just like you when they're adults.

And so this is an issue. Great leaders have to be aware of the fact that they're being copied. So they have to display copyable behavior. They have to display the behavior they'd like others to exhibit.

Chris Brown (43:25)
Yes, yeah, yeah. There's a good term.

Sorry, there's a good term to describe this, I think called the shadow of a leader, which is this sort of idea that the leaders, that they have a shadow, right? And it has an effect on others and whether they're aware of it or not. And I think in a lot of the work that we've done, we've seen and we encourage leaders, if you want to have people to be more customer-centric, if you like, or more interested in customers, then...

the leaders need to be somewhat interested in customers too, right? They need to demonstrate some interest in customers. And if they're not, then it's hard, hard to change things.

Ken (44:02)
Exactly.

Exactly.

And people in a sense are relieved when they find that leaders have foibles, because then they can excuse their own foibles.

Chris Brown (44:21)
Yeah, that's right. That's right.

Ken (44:23)
Well, the second characteristic that I would associate with great leaders is that they don't try to make all the decisions themselves. They have a decision making process that involves others. And then the third thing that I think is really important about great leaders is that almost all great leaders are focused on the future rather than the present. Great leaders tend to delegate the present to their direct reports.

Chris Brown (44:37)
Yeah.

Ken (44:52)
and they focus on the future. And the future that they see is one that makes the corporation and the lives of everybody in it better off.

Chris Brown (45:06)
Yes. Yep.

Ken (45:08)
People are more willing to follow leaders that are going to lead them to the land of milk and honey, so to speak. Take them to a better place.

Chris Brown (45:16)
Yes. Yep. I think you describe it in your book, you know, building a great culture is about, you know, care about me, help me grow, describe me the promised land and lead me to it. So I think that encapsulates it very, very well in terms of creating this great culture.

Ken (45:32)
Yeah.

Chris Brown (45:36)
In your own sort of leadership journey, I know it's not all up and to the right, is it? So there's lots of challenges along the way and things that haven't worked out the way that you've wanted them to. I mean, what are the things that stick out in your own mind in terms of things that didn't go the way that you wanted them to or things that you hadn't worked out well?

Ken (45:59)
I'll mention two, one in each of two different categories. One of them is when you, something happens that causes you to realize you're not doing as good a job as you should be doing. And that's, you know, it's often hard for people to, first of all, recognize that that's happened. And secondly, if they do recognize it, to admit it.

And third, even more difficult is to act on it. But I do know that at the beginning of my tenure as CEO, back in 2002, I'd been on the job for about a year and the board wanted me to do a 360.

So we did that and I was shocked by the results because of course there were a number of good things that came out of it, but there was one thing in particular that was shocking to me and I also realized that it was damning and that is that I was viewed as too harsh with people with whom I was in disagreement and I had to deal with it. And

Chris Brown (47:05)
Mm.

Ken (47:13)
I did, but it wasn't easy and it was obviously disquieting internally and embarrassing. But I had to fix that because the truth is you can't really get people to share their opinions with you if they're afraid of you.

Chris Brown (47:31)
Yes, yeah, it shuts that down, doesn't it? Yeah.

Ken (47:34)
It shuts it down. So that was one thing and that's on the personal side. On the bigger side, I'll mentioned a huge flop in my third year or so as CEO. And that is that I had this vision, which I think was the right vision. And I was in the process of executing on it. And that was that we weren't going to be just a commercial bank.

we were going to try to line up, meaning either purchase or develop within, all of the various products and services that technology companies need in the financial arena. So we would be like one stop shopping. We'd be more than a bank. And one of the things we felt we needed to have was a boutique M&A firm.

because it's axiomatic that the vast majority, if not all technology companies ultimately get purchased by somebody else. And why shouldn't we be part of that process? Why shouldn't we help them find either the right acquirer or if it's the other way around, the right target to purchase? And so we did, we...

Chris Brown (48:49)
Mm-hmm.

Ken (48:51)
It was spent about a year looking and we finally identified a boutique investment bank that was exclusively involved in technology and we purchased it. But it didn't work out the way we'd hoped it would. And fundamentally, that decision caused the loss of, you know, a couple hundred million dollars.

Chris Brown (49:01)
Mm-hmm.

Mm.

Well, yeah.

Ken (49:15)
But the other side of the coin was, we had a great chairman in my opinion anyway. The chairman of our bank was really a smart guy, very urbane, very wise. And he said, yes, that was a bad mistake and it would have been better if you hadn't made it. But the organization learned so much in the process and in a sense, elevated itself up to a higher level.

and became a much better organization as a result of this process of acquiring that boutique investment bank and then ultimately failing. So he said it was a learning experience and that we should get back up on our horse again and try harder next time. And I think that's the way to deal with failure.

Chris Brown (49:58)
Yeah.

Yeah.

Yeah, I mean, it's a hundred million dollar investment in education.

Ken (50:16)
That's right. That's exactly right. That it was, I do think that our organization was much better off, much more sophisticated at the end of that process than we had been at the beginning. And it's one thing that actually enabled us to take on larger, ever larger clients so that we could keep our technology companies longer as they matured.

Chris Brown (50:29)
Yeah.

Ken (50:42)
That may sound like rationalization, but I believe it's.

Chris Brown (50:43)
Yeah, yeah.

Yeah. What do you think went wrong with that in terms of that acquisition? Because it's always a challenging area of acquisitions, isn't it? Because you've got different cultures potentially in the new business. And how do you integrate that and ways of doing things? What do you think were some of the reasons that it didn't work out?

Ken (50:57)
Yeah.

Well, that's a good question.

I actually have thought a lot about that, partially because of the big mistake, but also partially because we financed, our organization had financed a lot of acquisitions, you know, companies that wanted to acquire other companies over time. I will say that in my experience, or at least in my perception, the vast majority of failures on the acquisition front are the result of cultures. The cultures don't mesh.

And in this particular case, that was exactly what the problem was. These two cultures didn't mesh. They didn't mesh at all in a variety of different ways. And that's a longer topic than would be appropriate in the context of this discussion today. But it was definitely an issue of cultures.

Chris Brown (51:40)
Yeah.

Yeah. So I'm curious now about this Ken, because it leads me to think a bit more about the ability to assess the organization's culture. So we have some tools that allow organizations to essentially assess how customer-centric their organizational culture is. Have you come across tools in your work and experienced the...

do a reasonable job of giving you a pulse of the culture and a sense of where it stands.

Ken (52:31)
I think they are out there for sure, but I honestly can't tell you that I can think of a tool that would be accurate and appropriate. But I will tell you one thing. When you're looking at acquisitions, here's what the biggest danger is. You wanna acquire something and you're looking at a variety of candidates and it's a little bit like dating.

Chris Brown (52:43)
Yeah.

Mm-hmm.

Ken (52:59)
Meaning when two people are dating, they both want to have a deal. They both want a consummation. And they both are presenting them the best side of themselves and they're looking at the best side of the other person. And it isn't until they come together and actually take up housekeeping that they begin to notice that I really don't like the other person after all. And a lot of what I thought was true.

isn't really true. And so I think it would be good if there were tools that would help, although again I can't think of any just offhand. I'm sure they're out there. But more importantly is not getting deal fever, meaning don't get so emotionally attached to the deal that you are bound and determined to consummate it even if you suspect there are aspects of it that aren't right.

Chris Brown (53:58)
Yeah.

Ken (53:58)
And that's what happened in this particular case. Both sides wanted to have this thing take place. And so we began to ignore the differences.

Chris Brown (54:04)
Yeah.

Yeah, yeah, there becomes a sort of confirmation bias too, doesn't there? Once you're kind of going down that path, you're looking for more and more reasons to do it and sort of just automatically ignoring reasons not to do it perhaps.

Ken (54:22)
Right, and if you see the other side behaving in a way that you know is going to be unacceptable longer term, there's a strong tendency to say, well, that was just an exception, and it was just a bad day. That's all.

Chris Brown (54:37)
Yeah, yeah, exactly. Exactly. I thought we should talk a bit about, you know, what's happened with Silicon Valley Bank. Obviously, there's some pretty dramatic situation happened in the last couple of years with the bank. And, you know, what do you think went wrong there? How did that sort of come about? I mean, I know there was certainly new, you know, some really new technology

Ken (54:51)
Hmm

Chris Brown (55:04)
that enabled it to really happen, which was something that perhaps couldn't have happened in the past because of the speed of people being able to withdraw money and things like that. But what's your perspective on it?

Ken (55:15)
Sure, I appreciate that question, largely because I don't wanna be associated with the disintegration of the bank. I am proud to say that I wasn't part of it. I was already gone by five years or so by the time this happened, but I have spent a lot of time studying it. I spent a lot of time talking to my former colleagues and I've developed.

a view on what went wrong and I'm happy to explain it, but I think it looks like this.

First of all, I remember now somewhere around 2019 or so, maybe 2018, 2019, the world became flooded with liquidity. And part of it would have been associated with the COVID obviously, because governments were

were pouring money into systems in order to keep them afloat. So having so much money in the world floating around resulted in more money going into venture capital than had been true previously. And if money goes into venture capital, in the US at least, and also to a certain extent in other countries, because we were in several countries around the world,

If money goes into venture capital, it ultimately is bound to funnel through our bank at some point in time because we had such a dominant market share. So here's the short answer. Between 2018 and 2023 when we went down in that five-year period,

our deposit levels quintupled. They went up by a factor of five. Our loans didn't increase because there was so much cash out there people didn't need to borrow. So the result was our loans stayed the same fundamentally for five years and our deposits

Chris Brown (57:14)
Yeah.

Mmm.

Ken (57:23)
Here's what happens. There are two bad things that happen. One of them, and I want to treat them separately. One of them is that you're tempted to do something with those deposits because they're sitting there and your CFO is thinking they're just sitting there and they're costing us money. We should deploy them somehow so that we can get a return.

And so the CFO put them into long-term treasuries. Now, banking 101 will tell you, you should never, if you're a banker, a commercial banker, put deposits into long-term treasuries. Because if...

Chris Brown (58:09)
Mm-hmm.

Ken (58:11)
And here we're getting into something that for some people is a little bit esoteric and for other people is their daily bread and butter. If you put these deposits into long-term treasuries that have pay interest and interest rates go up, the value of your bonds goes down. And

But they thought to themselves in 2018, 2019, 2020, well, rates will never go up. They've been low for 20 years. So it's perfectly safe. They're never going to go up. But guess what happened? All of a sudden around the world, the heads of central banks began to worry about inflation. So they started raising rates. The value of the bonds went down. And suddenly there was a big paper loss.

Chris Brown (58:45)
Yeah.

Ken (59:03)
And in some cases that became a real loss. If customers needed their deposits back, they had to sell the bonds to get the money back so that they could give their customers their deposits back. So that's one thing that went wrong. And the other thing that went wrong is if your deposits, at least in the United States, quintuple, you become a larger bank.

Chris Brown (59:04)
Mm-mm.

Ken (59:28)
or in other words, you're viewed as an ever larger bank. And suddenly we went from being about the 40th largest bank in the country to being the 17th largest. Now that was a curse because the top 20 size-wise are subject to a totally different set of regulations, much more stringent, much harsher.

with a lot more oversight because the regulators want to make sure that the 20 largest banks don't get into trouble. So the regulators came in and they said, you guys are now one of the 20 biggest banks in the country and you don't have adequate risk control people. So they forced us to hire a couple of thousand additional risk control people in a very short period of time.

Chris Brown (1:00:02)
Yeah.

Ken (1:00:24)
Unfortunately, a couple of thousand was a pretty high percentage of the employee base. And if you bring on too many new people in too short a period of time, you can't enculturate them fast enough. And the result is your culture gets watered down. So I think that's my explanation. That's a couple of two different things there.

Chris Brown (1:00:42)
Yeah, yeah, yeah.

Mm.

Yeah.

Ken (1:00:54)
And I think both of them contributed.

Chris Brown (1:00:57)
Yeah, the other side of it I was thinking about Ken was the on the customer side, you know, it's sort of it's always a bank's worst nightmare, isn't it to have customers do a run on the bank, right, to want their money back all at once. And I just wonder, is there any way would there do you think the any way of sort of mitigating that?

Ken (1:01:13)
Yes.

Yeah.

Kiss.

Chris Brown (1:01:24)
Would there have been an opportunity to do that?

Ken (1:01:26)
Here's the thing. I actually experienced another run on a bank 30 years ago, or something like that, in 1990. I was at Bank of New England. And the reason I left Bank of New England and went to Silicon Valley Bank,

is because the bank failed. And it was in part because of a run on the bank. But in that era, there was no social media. So it took six months for the run on the bank to play itself out.

Chris Brown (1:01:53)
Mm-hmm.

Mm-hmm. Yep.

That was a real accelerant.

Ken (1:02:05)
Yeah, but social media enables people to communicate with each other so quickly that a run that would have taken six months 30 years ago can be accomplished in 24 hours. And that's what happened with Silicon Valley Bank. We had in particular a lot of venture capitalists advising their companies that the bank was in trouble.

Chris Brown (1:02:22)
Yeah, yeah, yeah.

Ken (1:02:35)
take your money out and they did it so quickly that literally, I think the, somebody has figured out that it took only 36 hours to destroy the bank by pulling money out of it. Pretty sad. Pretty sad. The other thing, I know this sounds a little defensive Chris, but I do want to underscore it wasn't the business model that did us in. But in other words, it wasn't lending to technology companies.

Chris Brown (1:02:51)
Yeah, it is.

Mm-hmm.

Ken (1:03:04)
It was these other factors.

Chris Brown (1:03:07)
Yeah. And I think it's, you know, there's big lessons around just the perceptions, isn't there, of, of what the banks doing and how secure my funds are, are so sensitive, that have to be so delicately managed, because we're so as human beings, we're so risk and sort of fear sensitive, aren't we? And so, you know, we get

we get controlled by if there's real threat or perceived threat, we take action very quickly if we can. And yeah, it was just, just an incredible thing to, to see unfold.

Ken (1:03:45)
Well, you hit it. It's the prisoner's dilemma, in effect. And if everybody had been able to step back and say, wait a minute, if none of us pull our money out, we'll probably all be fine. But if some of us pull our money out, the rest of us are threatened too. Yep. That's what happened.

Chris Brown (1:03:51)
Yeah.

Yep. Yeah. Yeah, that's wrong. Yeah. Um, probably just a few questions to wrap up the conversation here. You know, I'm you know, this podcast is sort of called the relentless customer leader podcast is the name of the podcast. I mean, when you think of the term relentless, is that a term that you can relate to? Or what does it mean to you?

Ken (1:04:37)
Well, it's not a word that I use, but I think I understand what it means. And I would say that a relentless focus on customers implies at least two different things. One of them would be that you don't rest until the customer's problem has been solved. And the other one would be,

Chris Brown (1:04:58)
Yeah.

Ken (1:05:01)
that you are so keenly focused on doing things that will make the customer happy or that will enable the customer to flourish.

both of those things. And I do think they're both extremely important. And I do think that one of the things that I always emphasized and that accordingly other people in the organization emphasized as well is never to rest on our laurels because we may think that the customers are happy.

Chris Brown (1:05:13)
Yep.

Ken (1:05:35)
but we don't know with certainty unless we are constantly checking. And if we're not constantly checking, they may be slowly drifting into not being as satisfied. And you can be absolutely certain that somebody else is gonna come along and figure that out and figure out how to make them satisfied. So it's really important.

that you never rest on your laurels. You always are driven by, it's a little bit the Andy Grove idea of only the paranoid survive. You can't take your partner for granted and you can't take your customer for granted.

Chris Brown (1:06:18)
Yes.

Yeah, yeah, exactly, exactly. And you have a new book on doing business in China that's coming out this year. Tell us a bit more about what that's about. And I know in your Leading Through Culture book, there's an appendix on your experiences in China, but this is an extended version of that, I imagine.

Ken (1:06:43)
It is. That's yeah, that the final chapter of the culture book is rather tiny, and it deals with the extent to which cultures and other countries end up being different and that you have to adjust to that if you're going to do business in other countries. But what this book is about is specifically doing business in China. And here's the background. I was there for four years.

building a bank from scratch with, it was a joint venture bank. And so it was conceptually Silicon Valley Bank, 50%, and 50% the Chinese Communist Party. And...

You begin to notice if you live in China and you have lots of contacts with other people and you get together with other people and talk, you begin to realize over time that western companies that go to China don't last forever. Some of them last for a long time, but in the end they almost invariably

Chris Brown (1:07:49)
Mm.

Ken (1:07:57)
Lose out.

General Motors is a good example because General Motors has been cited often as, well, that's the exception to the rule. General Motors has done so well in China. Well, that was true up until a couple of years ago. General Motors is now in the process of extricating itself from China. Because, when the Chinese Communist Party invites you to come to China,

Chris Brown (1:08:17)
Mm.

Ken (1:08:25)
And often they do, often they encourage you, often they come to you and say, look, we've scoured the world and you're the company we need because you can help us.

and you're flattered, and so you go, and you build a joint venture, what you need to realize is that your goal and their goal are not identical.

Chris Brown (1:08:51)
Yes.

Ken (1:08:51)
Their goal, your goal is probably to expand your market and ultimately earn more. And their goal is to learn stuff that will help them do a better job in the world market ultimately, not just the Chinese market, but the world market. And...

Chris Brown (1:09:14)
Yes.

Ken (1:09:15)
So this book is all about, my book is, by the way, I wanna underscore that my wife and I loved our years of living in China. China is so interesting, so fascinating. It was such a great experience. But I also think that if you do that, it's important to realize what the process looks like and how you can make sure that you optimize

Chris Brown (1:09:44)
Yeah, yeah, yeah. Yeah. It's a very, very different place, isn't it?

Ken (1:09:47)
your stay. So the title of the book is the China Conundrum, How to Ensure that Win-Win Doesn't End Up Meaning that You Lose Twice. Or at least that's the working title.

Chris Brown (1:10:01)
I'm going to go ahead and close the video.

I like it.

Ken (1:10:03)
It's to try to help people do a better job when they go to China.

Chris Brown (1:10:07)
Yes, yeah, yeah. I mean, just yeah, I think in your description of your experience there, you can see what a minefield it must be. I haven't done business over there. So it was a great insight into what the challenges would be if we were to do business there. But very insightful, very insightful. Well, thanks, Ken, for your time today.

Ken (1:10:09)
and it should be coming out at the end of the year.

Chris Brown (1:10:35)
Where can people find you online? What's the best way to interact with you and your work?

Ken (1:10:40)
Well, the truth is I'm right now in the process of developing a website, and I'm starting a sub stack. But in the meantime, if anybody wants to reach me, my email is probably the best way to find me. And my email is

Chris Brown (1:10:45)
Okay.

Ken (1:10:56)
R-E-D as in the color red, M-G-A as in the British sports car, 5-6 as in the year 1956, at gmail.com.

Chris Brown (1:11:08)
Okay, okay, great, great. Well, I'll hold up, I've got a copy of your book here on my Kindle or my iPad device here, but I recommend everyone go and grab a copy of that. It's a fantastic insight into what it takes to create culture, to create leadership teams, to really lead in organizations and create organizations that win in the marketplace and sustain over time, I think.

is what you were able to do in your tenure there at Silicon Valley Bank. So a great read, lots of lessons, lots of insights and I really appreciate you taking the time to talk with me today, Ken, so thank you.

Ken (1:11:50)
Well, thanks so much for taking the time to talk with me. I really appreciate it. Thank you, Chris.

Chris Brown (1:11:56)
Yeah.