How the Best Leaders Create a Strategic Plan with Mark Kanaly

Speaker A: Helping community bankers grow themselves, their team, and their profits. This is the Community Bank Podcast.

Speaker B: Well, hey, everybody, and welcome back to the Community Bank Podcast. This is the podcast by Bankers for Bankers. I'm Caleb Stephens with South State Bank's Capital Markets division. It is great to be back with you for another episode. And as we approach the midpoint of the year, it's never too early to be thinking about the future. And in fact, if you're an executive or CEO, uh, you're probably always thinking about the future. And a big part of planning for the future is having an effective strategic plan. Strategic planning is a topic that we've touched on many times over the years. And today we're bringing back a familiar guest to help us think about the future of your community bank. Joining me today is Mark Kenaley. Mark is a partner with the law firm Austin and Byrd. He's an attorney in the Atlanta area, serving banks just like yours. And in this discussion, we go a little deeper. We get into the nuts and bolts of strategic planning. And specifically, how do leaders facilitate an effective strategic planning process? Because, you know, to have a strategic plan, to have an effective strategic plan, you have to know how to build one. You have to know how to facilitate conversations that bring the best ideas out of your team. So this is a great conversation with Mark. And before we get there, I want to tell you about the ARK program. If you're looking to boost ROE and roa, the ARK program can help you do that. To learn more, click the link in the show notes of this episode to book a free strategy call. With our team, we're going to look at your loan portfolio. We're going to show you opportunities to retain your best clients, to win more deals, to double the fee income that you earn on loan originations, all without adding any complexity or to your bank. The ARK program lets you lend fixed, receive, floating, and keep derivatives totally off your books. It is a game changer for community banks. We want to tell you more about it. We want to offer you a free strategy session to help you take the next step and boost your bank's ROE and roa. This is not just a loan hedging tool. This is a profitability tool. And it's one that's going to help you earn more money and retain your best clients for longer. So to book that free strategy call, hit the link in the show notes of this episode and it'll take you right to it. Now, enjoy this conversation on strategic planning with Mark Kennelly. Well, Mark Connally, it's Great to see you again. Welcome back to the Community bank podcast. Thanks so much for coming on.

Speaker A: I'm delighted to be here. I'm flattered you guys asked me.

Speaker B: Well, you and I have known each other for a while. You've been on the podcast several times. And, uh, for the listeners who missed those conversations, give us just a quick level set about what you do.

Speaker A: So, I am a lawyer at Alston Byrd. I head up our financial services practice. I've been doing this 30 years. I have, uh, either the most consistent or boring resume you've ever seen. It's got one job since law school. It's been a great place for me. Uh, more important than that, I've been married for 28 years, have two kids, a 24 year old, a 22 year old, and I'm totally blessed on that front.

Speaker B: That's great. And you know, Mark, I know you spend a lot of time with banks, uh, helping them with strategic planning, among a lot of other things that you do. Obviously, I know you do a lot on the transaction side. Um, you're very active with banks all over the place, all over the country. Um, but when it comes to strategic planning, which is what we want to talk about today, if I were to give you just sort of a blank slate free menu to say, what's the purpose of strategic planning and why should banks, or really any company for that matter, why should they have one?

Speaker A: So I'm actually going to take a step back from that. Um, my wife and I go to church on Sunday morning and when we get back from church, we go for a walk. And I would say at least once a quarter I make the comment to her about how blessed I've been to be in a space with so many good people in it. The banking space I work in is filled with good people. And so I kind of start with that, Caleb, because that really is such a centerpiece to everything we're talking about, which is human capital is at the center of all this. People you like working with, people you trust, people who lead by example and not just by spoken word. That is so key to every organization. Um, yes to your question. I do a lot of strategic planning. I do somewhere between 10 and 20 sessions a year where I'm flattered to be invited either as a special presenter, where maybe I have a topic that I'm covering, or I'm the facilitator for the entire session. Um, you know, everyone has their own flavor and style of how they go about strategic planning. And that's part of the Magic of it. I mean, you don't want to be feeling like you're trying to follow what someone else is doing or it's not actually your strategy, it's not actually your process. And so I do think, um, spending some time trying to tailor the approach that any particular bank is going to take, or any company for that matter, to how they go about strategic planning is important. And a few examples are, you know, I see some groups get together and it's like this clumsy whiteboard experiment where there's not really an agenda and everyone's just kind of throwing ideas out at something they've read most recently in the Wall Street Journal or somewhere about an idea. Here's an idea I saw, let's talk about it. And everyone's polite and indulges that because that's kind of human nature. And pretty soon an hour and a half has gone by and you've only got so many really highly productive hours of time when you get a group together. I think what works better is where in my case, the bank is blessed with sound, uh, active leadership in place where you have a management team that has a vision of what they'd like to see accomplished in the strategic planning. That's not to say that it's in a dominating way. It's real leadership. It's standing up and explaining how you see things and why it works that way. Um, and then making sure that you have the buy in from the board. And so while it's collaborative, absolutely. It's one that's guided. It's a tour that you're on more than it is wandering around the woods together trying to find strategy. For most companies, they kind of know what they want to do. Right. I mean, it's not like you get together and say we're going to do something totally different next year. Um, that would mean you had no strategy or your strategy was bad. And so it really is fine tuning a lot of times your approach to strategy and the planning process.

Speaker B: Hmm. So you mentioned people in leadership. I think it was John Maxwell who said famously, uh, that people buy into the leader, you know, before they buy into the, to the vision. So mission, hiring, culture, all those things set up a good strategy. But you know, execution on that strategy matters. A plan is only as good as, you know, your ability to act on it and execute on it. Where do you see breakdowns and where could leaders improve when it comes to executing on, um, the strategy that they, they say they want to pursue?

Speaker A: There is a book I like called Strategy.

Speaker B: Ah.

Speaker A: And the Fat smoker. And what the book is about is the fat smoker knows what they need to do to get thin. They know how to quit smoking, that they should do it. It isn't that they don't know those things. It's that they don't execute. They don't have the discipline, the willpower to do it. And part of good leadership is making sure that you are following through. And so it's not that you do your strategic planning and you put the, uh, up on the shelf and you dust it off a year later and say, yeah, we really didn't follow this very closely. It's got to be a living, breathing thing. That means two things. From the left side, that means it's subject to change. That just because we said in December or January, we felt a certain way. When the world changes, it means sometimes in June, you got to say, hey, let's take a look at what we thought six months ago. And does it really still hold true? You know, we all kind of take for granted how our days go. What's the old expression? You know, the. The days are long, but the years are short. You look up and six months have gone by in the snap of fingers. It's important to take a breath and look at that from time to time. The second's true from the other direction, which is you gotta grade yourself. You gotta say, hey, did we actually do any of this stuff? I mean, I see people put kind of pie in the sky. Um, I would say it's less of a strategic plan, more of an aspirational piece where it's just too far. It's hard to follow a leader who isn't putting a path down that you can see right in front of you, where it's something so amorphous. Sure, in the abstract, you're all for that, but you gotta have, brick by brick, a way to get there. Um, there's a quote that I really like, and I'm not gonna read it to you, but it was Walt Bettinger, the old, uh, Charles Schwab CEO, who talks about the difference between management and leadership. And he talks about to kind of, kind of paraphrase it. You know, management's like an administrative function. Leadership is followership. That there's something compelling about the leaders that makes you want to follow them. Strategic planning. The leader needs to pull people along so that they want to dust off that piece. Six months later, they want to look at it again. They want to see how they've done. They, uh, want to hear in the leaders, you know, Sort of full throated way, how do we do on this gang? Where can we do different? And then I think it's super important, uh, that as you sit around and talk on these topics, the leader has to be a listener. It has to be someone who, when the team is there, hears firsthand what's working, what's not working. Sometimes it's the leader's fault, sometimes it's the other's fault. But no fault is ever assigned, no blame is assigned. It's all perspective and geared towards addressing the issue.

Speaker B: Yeah, that's a great distinction between leadership and management. It reminds me of a quote, forgot who said it, but something to the effect of, uh, you know, managers light a fire under people and uh, leaders light a fire, uh, within people. Yeah, I can't remember who said it, but definitely ties in there. Um, you mentioned the importance of listening. Talk about, because I'm sure you've seen this happen from time to time. Talk about when you know, the department head, the CEO, the board chair, whoever might be involved, you know, that's leading the planning process internally. Um, you know, who's dominating the conversation. Um, I'm sure you've probably seen that happen. Talk about, I guess, the pitfalls that can happen when a leader, um, you know, is dominating the conversation. Maybe uh, talking too much, taking the air out of the room. I've seen this happen on occasion over my career, uh, talk about the importance, you know, of listening and how a leader can create an environment where they can bring the best out of their team during the planning process.

Speaker A: So I would say a couple things. One is there is a Harvard, um, uh, I forget if it's Harvard Business Review or Law Review article that's out there and it is written about what makes a good chairman. What should a chairman do? And it's written as though you're talking about an independent chairman, not someone who's CEO and chair. A chair themselves is a leadership position. But there is some magic to being an effective chair. And the article goes through and talks about so much of it is helping to connect cables and helping to get people to talk and engage and so much less is about expressing your own opinion and, and tilting the balance of the conversation. And you know, human dynamics are so interesting. If you get a group of really talented people in the room, if one person dominates the conversation too much, sometimes just the passage of time, you look down at your watch and it's been an hour and a half and you know, you got to stop at two hours, sometimes you lose just because of that other times people are just intimidated by the individual. Other times it just stymies other ideas. So I worry where I see a board like that. Um, what we do is sometimes as part of our strategic planning, we'll do board self assessments and have people kind of grade themselves as directors. And it gives you an excuse to talk to some of the other directors. And we've had times we've got to pull someone aside and say, hey, just so you know, we kind of looked at the scores around this and you know, people feel like maybe, um, it'd be good if you let others speak a little more. And often the individual is really just like surprised by it and almost hurt sometimes they know it. Um, but yeah, you can't have someone sort of just drive the conversation. Um, it's an old expression about driving into a cul de sac. Right? I mean if you let one person talk enough, you're not getting a whole bunch of different routes on your way out of the cul de sac. You're just in their cul de sac, you're getting their feedback and nothing else.

Speaker B: Well, I think you lose something in that process because you lose, uh, the opinion of others on your team. Um, one of the famous Chick Fil A stories, which our listeners will know if you listen to this podcast. We love Chick Fil A around here. David Salyers is one of our board members. He's the former VP of marketing for Chick Fil A. One of their most popular products, the frosted lemonade, was created when a local operator, somewhere, uh, somewhere out there, mixed uh, ice cream and lemonade together and ran it up the chain. And at one point it was 2% of all their, uh, like system wide sales. And so, um, you lose the ability to collaborate to source the best ideas when, uh, yeah, when one leader is totally dominating the, um, conversation. And it never really took the time to really listen.

Speaker A: Well, there's that old story, the same kind of theme that I love so much, where I forget what, um, telecom company it is, is sitting around and stressing about, uh, the fact that in their Canada region the telephone poles and the wires are freezing and it's becoming so heavy it's damaging the lines and people are having outages. And so they sit around and brainstorm. And this one guy who almost never talks gets kind of talking in a laughing way because they're hitting the dead end and, and he says, you know, he goes, we should just, uh, take honey pots and put them up at the top of those telephone poles so the bears climb up there and shake them. And someone else says, how would we get the honey pots up there? And stops and says, oh, my gosh, all we have to do is fly helicopters over the lines, and it breaks the ice off from the vibration. And they do that to this day. It's the whole point of you want contribution from everyone. I will use that as an excuse to talk about one other dynamic that I really appreciate with a, uh, boards, whether it's in a strategic planning process or not. When we do those evaluations and I ask people, we're going to do a forced ranking. You rank who you think are the top two directors, and then you rank who the bottom two directors. And it won't be shared with anybody. It's total confidential. It's not meant to be out to get anyone. Almost always it's the case somehow it's that number two spot. The second best director in people's eyes is usually the person who has almost no industry experience, sometimes not even a lot of business experience. But they have this magic ability to ask good questions. And often it's the question that the other directors really should be asking, but they don't want to reveal. They don't remember the answer to it. It's a ratio they talked about once upon a time. That person who's just genuine and you talk about what leadership can look like in different skin, that's being a leader in a different way. That is sticking your chin out and saying, I want to know more on this. Help me understand this. I think too often when we don't know something, we kind of clam up and are unwilling to engage in it. Sometimes that's your best leader is the person who, whether it's a chair or someone else, just leans in and says, well, wait a second. Let's make sure we understand what this is. You know, some people are there to impress each other with their acumen and their knowledge. Sometimes the most effective leader in that context is someone who, again, whether in the context of strategic planning or otherwise, just leans in as authentic. Um, that's a form of leadership that's underestimated.

Speaker B: Let's talk just a minute about how, uh, you know, a great strategic plan doesn't just happen. You know, our. The football coach of the University of Georgia Bulldogs, Kirby Smart, uh, he'll talk about football and he'll say, you know, we don't just show up and win. You know, like, there's all this preparation behind the scenes that nobody sees that goes into this. It doesn't just automatically happen. Talk about A good strategic planning process. What does the pre work look like? Uh, sort of the plan, uh, or the meeting before the meeting, uh, so to speak.

Speaker A: Well, first on the Kirby smart thing, I cannot resist the comment of that year that Georgia played Florida State when Florida State had gotten spurned for the college Football playoff or whatever it was at the time. And half their players sat in. Georgia showed up, they played all their starters, they looked like a well oiled machine. It was such a reflection of their tone and culture. And so you make the Kirby comment, but like doing the push ups and eating your vegetables matters. Um, in terms of preparation for strategic planning, you know, you don't want to come in. On the one hand, at one end of the spectrum and management already has the strategic plan penciled out and is just cramming it down everybody's throat. At the other end of the spectrum, you don't want the whiteboard exercise. I alluded to earlier, there is some magic to being in the middle, right? This is the team that does too much physical fitness and gets their players injured before the season starts versus being ready for the game. I do think management needs to get together and make sure they are all on the same page, that there is a unified voice. And so much of the preparation to your question really is making sure that we've all locked arms. Not in a way that's impenetrable. We're not here to hold off good ideas from directors or good thoughts or credible pushback. But we are here to say that we are aligned on this. We think we've got the resources, um, in terms of talent, market receptivity and so on, to do this and have the strategic plan, really the key pieces of it refined enough that there's something for the directors to embrace. And so that preparation is key. Now most of the times you have the benefit of having run the company you're talking about for the last year or three years or five years. And so, so many of the pieces are there. I think what's really impressive is where you see new management teams come in and them having to turn a bank around, which you see sometimes you'll see a bank or another company that really needs a breath of fresh air on strategy. And I do think that's where sometimes, uh, some of the consultants in the space can be, uh, worth engaging is they can breathe that breath of fresh air with the management team first. I see a mistake people make is sometimes they will bring in an industry consultant expert. Um, maybe it's a former banker or one of the Big consulting firms in our space, the banking space, and they bring them to the strategic planning session. And at that point so much of the pie had already baked. In some ways they really should have met with management beforehand extensively and made sure through the management sessions, to your point about preparation for the game, getting together and talking about, have you thought of this? And you know, have you thought of uh, maybe doing this differently? Have you looked at what this bank does? Make sure that you're not just trying to close off every avenue of discussion, but you're trying to make sure you gel around some key principles that you can present to the board to unify. And again, I think I'll say it again in that moment, I do think that the CEO, cfo, etcetera, need to be good listeners to that consultant. It shouldn't be a brush off exercise. This is someone who's expert and does this. You listen, you take receipt. You're not going to agree with everything they say. That's not the point of being a leader. It's not to roll over on every issue, it's to listen and learn. Um, I sometimes will tell people that when they think about their value as a leader, what is the value proposition? And in our space sometimes you'll see a CEO who's more of a customer facing CEO, right? They really drum up business. And others, you see people who are just strategic masterminds that they have a vision for where they want the company to be at the 3 year mark, 5 year mark, 10 year mark. Others are executors that what their real strength is. All are okay, all are good forms of leadership. I do think there's some self awareness the leader needs to have in that moment about what is my strength, what is my value proposition, how am I bringing that to bear? But even more importantly, it's recognizing the stuff not on the list. What are your blind spots? What, where do you need to be getting input from others, Whether it means you hire a really strong cfo, really strong consultant, someone who's really good in the HR side, but you got to complement your weaknesses as well and know what they are.

Speaker B: That's well said. And I uh, think you would agree that um, the real test to a good strategy, you don't always get it right. You have to, you know, as you say, it's a living, breathing thing, you tweak it, you try things and uh, at times maybe you take the wrong path. But at the end of the day, or at least at some point, the results, it's uh, the results that come from that, that really prove whether or not it was, uh, a sound strategy. Um, and if you're not getting the results that you desire, you probably have to go back and look at the plan. And if the plan's good, maybe even have to take a step further back and look at your culture, your people, your vision. Because at the end of the day, this all really does kind of fit together.

Speaker A: One comment down that fairway is, um, I sometimes use the expression discipline in the face of success. Sometimes if you are too focused on the numbers. At the other extreme, it masks real problems, it masks cultural problems that are starting to manifest. Um, it can mask, uh, laziness that has crept in, lack of discipline just because times are good. You got to be careful on that end also.

Speaker B: Good bad habits are formed in good times, as they say.

Speaker A: Yeah, the fact creeps in.

Speaker B: Mark, a couple more questions as we sort of land the plane here. Um, and I love this discussion. I mean you. One quote that I, that you've reminded me of is the quote, people support, um, a world that they help create. So if you're not involving your team, if it's just the executive, you know, Moses coming down from Sinai on high saying, here's the plan everybody. Um, that's going to be difficult, you know, to get full buy in across your team. On the flip side, that puts the pressure on your team to take responsibility to go execute. Okay. You know, if my division leaders say, I think we need to do X, X and X, great, the pressure's on your team, uh, to then go execute on that plan. One question about this though is, um, as you kind of look at, um, as you meet with banks, how does the time frame vary? Are you typically looking at the next year, the next five years? Um, have you ever had a bank say, we need a 10 year plan? I'm like, there's going to be some new AI thing that comes up. There's only so much you can control out throughout the future, as is what I'm saying. But at the same time, if you're just myopically always focused on the next year, you might be shortsighted. So any thoughts there?

Speaker A: Yes, several thoughts. One is, if you're a community bank, you should have a list of three to five banks you admire and reasons that you admire them. They might be 10 times your size, which means that maybe a 15 year plan. So I don't know that the time on that sense matters, but there's got to be things that you admire. A lot of people talk about the chick Fil a approach to marketing, that's a great example. It's a very large company but I hear people routinely say man, they've really got that marketing thing done. Whatever it is about these companies you admire, you should be able to say that out loud. I then for my part, when I think about strategic plans, usually think three years is about as far as you can reasonably foresee anything. And then the plan really speaks to one year which is what is the blocking and tackling we do within the next 12 month period. That puts us on a course to get to that three year mark, getting to the companies we admire. Mark the 15 year plan that is just iterative. It's just good at each meeting to be and you almost want to keep moving that cheese so you never get to them. Right. I m mean the whole point is having things you can always be doing better.

Speaker B: And how do you help a company think through specifically um, tech investments. And how do you delineate between what's what we call shiny object syndrome? We're just going to do this because it's cool and there's a lot of hype around it versus no, this is actually going to be a needle mover. And to your point, it can be hard to know sometimes as you look out into the future what's hype and what's actually going to be something that creates efficiencies for your company. How do you help executives think through those things?

Speaker A: Well, first I remind every director when they come in the room, um, every one of you is walking in today with some pet metric, some favorite metric that you like to track for success in the banking space. Sometimes it's total assets, sometimes it's return on equity, sometimes it's efficiency. None of them are bad metrics, none of them are wrong metrics. But they're only useful when viewed in their totality. Right? If you can goose any one of them directionally and cause other problems. And so you need to look at its totality. You have to look at those investment opportunities through the same lens, which is there's risk that it brings with it, there's opportunity it brings with it, there's distraction that it brings with it, there's personnel, time and resources that it will uh, uh, require be devoted to it. And then there's reporting that goes with it. So I always remind people, recognize that it's a moment of investment. Make sure you feel that it's a good investment. Some are riskier than others and that's okay. But make sure you're also monitoring in an understandable way where you've created a timeline that's reasonable. You can't for example, make a fintech partnership, uh, investment and then three months in say it's not working. That's just too short. You have to have a reasonable amount of time. You have to have the right resources around it so they can actually be successful. And then there has to be some sense of um, even if it's just kind of a spoken agreement that you know, look, if this doesn't work after a year and a half, we have a way out of this, a way to wind this down. That happens sometimes. That's not a sign of good or bad leadership or a bad idea. Some opportunities are just better than others. Sometimes they work, sometimes they don't. Highly people dependent. Sometimes you harness the wrong people and that's okay too. But I do think having that timeline where you're reasonable about when do we measure on this and say we missed or we hit, that's good.

Speaker B: Well Mark, it's been great to have you on again. Thanks so much for taking the time. I know you keep a busy schedule. If the bankers listening want to get in touch with you, how can they find you?

Speaker A: I, I couldn't be easier to find you. Just Google Mark Canaley on, on the Internet. I, I am on our website. Uh, my phone number is there, my email address is there. It's K A N A L Y. I'd be delighted to visit with you.

Speaker B: Fantastic Mark. Thanks again for the time. Sam.