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Leadership Series

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A Discussion with Chinatrust’s Michael DeNoma

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Boyden’s Leadership Series presents discussions with business and thought leaders from organizations across the globe. The series focuses on topical issues that offer executives, political leaders and the media insight into current trends in business and talent management in the global marketplace.

This issue features Michael DeNoma, President and CEO of Chinatrust Commercial Bank. He discusses building a global bank, the state of business in China, opportunities as an American CEO in Asia, and how a blind African marathoner provided the ultimate inspiration.

Michael DeNoma is currently President and CEO of Chinatrust Commercial Bank. Prior to this, from 1999 to 2009, he was CEO of the Global Consumer Bank at Standard Chartered as well as a Main Board Director, and most recently, Vice Chairman of Asia.

Before joining Standard Chartered, Mr. DeNoma was the Founder and CEO of two nationwide companies in China. He previously held senior executive positions with Hutchinson Whampoa, Citibank and PepsiCo. He started his career at Procter & Gamble.

In addition, Mr. DeNoma is a Director for the International Centre for Missing & Exploited Children, on the Board of Trustees for Singapore Management University, and President of the Singapore Wrestling Federation. He is an American citizen and holds a BA from Ohio University and an MBA from The Wharton School of Business.

Discussion with Michael DeNoma

Boyden: What challenges do you think are unique to your role as an American CEO of a Taiwanese company?

DeNoma: I’m fortunate to be the first foreign CEO of a dominant family-originated company in Taiwan. The Koo family has been running Chinatrust Bank since its founding 45 years ago. The family was quite visionary in that they had an aspiration early on to make Chinatrust a global bank. They brought me in to transform the bank from a leading Taiwanese player to the first truly international Chinese bank. The challenge is to take what is a strong and vibrant local player and turn it into a global financial institution.

Boyden: Was that the main reason you took the role?

DeNoma: Yes, to take Chinatrust to the next level, transforming it into the first truly international Chinese bank in history. I have always believed that there should be Asian global financial institutions, especially Greater Chinese. As the world shifts and Asia continues to develop, I think it is inevitable that there will be. When I first met with Dr. Koo, he told me that becoming a leading international bank has always been his dream. It is a perfect match between ambitions, for the institution and for me.

Equally important is that I need to work in a place where the culture and the values match my own. Chinatrust has a culture of wanting to lead, but they also have a big heart. Thousands of Chinatrust employees volunteer weekends to help orphaned children in Taiwan. They have been doing charity work for kids for 25 years. Helping children is important to me as well.

Boyden: How would you describe the state of business in Taiwan?

DeNoma:  Taiwan is a fascinating story. It’s effectively been frozen out of the world psyche for 50 years. Because of this, Taiwan’s been forced to be resolutely entrepreneurial, and in this crucible, powerful global companies have been born. For example, 80% of the smart phones in the world are now produced by Taiwanese companies. Taiwanese companies dominate the Top 10, Top 30, and probably the Top 50 high tech exporters in China. In 2008, Taiwan had more patents per million population than any country in the world, and it has consistently been the fastest in patent growth per capita over the last decade.

Taiwan’s well positioned. The debt-to- equity ratio of its companies is among the lowest in the world. The country is liquid and its companies are financially strong. The Taiwan Stock Exchange is the one stock exchange in the world that most closely mirrors NASDAQ, in terms of its information and technology company composition. Interestingly, we IPOed a Silicon Valley company here last summer, which is probably surprising to a lot of people. The Taiwan stock market has not moved significantly in 20 years. However, with the Economic Cooperation Framework Agreement between China and Taiwan I think that’s going to change.  

Boyden: How would you describe the state of business in China?

DeNoma:  China’s a juggernaut and the genie’s not going back into the bottle. China has a massive percentage of the world’s manufacturing capacity. They certainly have the latest technology factories. A country that grows this fast will have corrections, as demand struggles to keep up with capacity and vice versa. China is a strong force in the world economy. It’s trying now to grow into what will be a more global role.

Chinese companies are starting to internationalize. At the same time, its domestic market is now significant in size. What used to be predominantly export-oriented industries are now also producing for domestic consumption. What this means is that China is now the largest cell phone market in the world, the largest automobile market in the world, and so on. I think that will continue. What we also see now is a phase of massive infrastructure building -- what the US went through probably 50 years ago. While the US is coming to the end of the useful life of much of its infrastructure, in many cases China is just starting off with the rapid building of new high-speed rails, airports and highways.

Boyden: In your view, why is the US falling behind?

DeNoma: I don’t think the US is falling behind as much as the rest of the world is catching up. I think the US is in a maturing phase of growth. The USA was the first large population country in history to go through industrial revolution puberty. As India and China now experience the same growth spurt, with much larger population bases, they’ve become major world economies. I think the issue for the US is not falling behind as much as it is learning how to compete in a world where other large population countries have also transformed. When you’re no longer the biggest kid in the class you have to adjust.
Boyden: Did the global financial crisis affect your bank?

DeNoma:  We weren’t really affected by the crisis except that there was pressure on some of our export-oriented customers and we were impacted by western wealth management products that defaulted. Overall, Taiwan felt less pressure on the economy and on corporate and personal balance sheets than the West.

Our US operations followed the community bank problems in the United States. We had significant exposure to commercial real estate, which is a community banking issue. We moved rapidly to restructure it.
Boyden: You announced reorganization plans last year. What has been your philosophy in this plan?

DeNoma: The role of a new CEO is to work with the Chairman and the Board to set a direction for the organization and then to enroll the entire organization in that direction. The latter can be the more difficult in many cases. What is also important is that the new direction reflects the essence and culture of the company. When I first came to Chinatrust, I tried to listen for the heartbeat of the institution. I wanted to be sure we set an ambition that responded to that heartbeat.

For Chinatrust to achieve our vision of becoming the first truly international Chinese bank in history, we agreed that we needed to do three things: Solidify our position as a Taiwan champion, become a Greater China and Asian leader, and become a North American innovator.

Next we agreed on our mission – what good would we do for whom in society.  We agreed that we would protect and build our customers’ savings and wealth – be they individuals, companies or communities. This is the constant dilemma and challenge of being a banker – to both protect and build. Finally, we agreed on our values. The first two values are trustworthy and professional – two very good ones – and the third, the most interesting and distinctive, is caring.  Something the employees of the bank believe deeply in. It’s a great reflection on the institution that caring is one of our three values.

BoydenWhat do you think is most critical for the reorganization plans to have success?

DeNoma: Probably ownership and buy-in all the way down to the front lines. To that end, we took our new mission, vision and values as well as our 10-year goals on the road to all our employees. By the end of the road shows, virtually all 10,000 employees of the bank had stood up and pledged their support for the new 10-year direction.  

Reorganization of our management model was also quite critical. We wanted to be organized in a way that was distinctive versus our competitors. We put a global structure in place and now have global CEOs of both wholesale and retail as well as global product heads within each of these businesses for key customer and profit streams. The job of a global product head is to be at the leading edge, at the sharp end of the stick in terms of the latest innovations in their product or service area. 

We moved from six to 65 profit accountable general managers – a tenfold increase in the number of people lying awake at night trying to figure out how to double economic profit as well as value for the customer every three to five years. This has created a dynamism and speed to market within the organization -- and a willingness to listen and learn.

So, rather than having the normal way a bank works, with a pilot and co-pilot up front and everyone else shoved on top of each other back in the passenger seats, this is more like fighter pilots in formation. These GMs, with their teams, build business agendas to grow and expand their businesses. These agendas go through intensive review and challenge; but then, the teams have the authority and resources to execute them.

Interestingly, from an all-employee survey we just completed, in terms of speed and efficiency of decision-making at the general manager level, we got the highest rating of any company surveyed, not just against all Taiwanese norms, but also against all global high-performing companies.

Obviously there are many, many things we need to improve on, but this area came back better than expected. Ultimately, the reorganization’s purpose is to make the organization distinctive so that we can make better decisions faster than our competitors.

Boyden: Is it harder for an Asian executive to operate in Europe or the US, or is it harder for a Western executive in Asia?

DeNoma:  There may not be much of a difference. In both cases, you need to adjust to cultural norms. And, there will be language issues on both sides – which are solvable. The biggest challenge for both is to remain enthusiastic and energetic when inevitable difficulties arise.

Boyden: Can you talk a little bit more about the cultural aspect of communications?

DeNoma:  It can be tough to be effective sitting in an office issuing memos in a language that isn’t your native tongue. So, it’s probably best to get out there in front of your employees and your customers. If, as they say, a majority of communication is non-verbal, then you need to show up. There’s no better substitute.

Of course, there are subtle differences you have to be sensitive to. For example, Asians can be less confrontational, so you need to be aware that not speaking up in a meeting does not mean everyone agrees with you, whereas in a some Western companies that would be more the case. One way to address this is to have more one-on-one meetings before the meeting.

Boyden: So there is more to it than culture?

DeNoma:  There is a saying that I agree with – that the key factor for success in any significant change management effort is the intention of the intervener. I think that’s true in any culture. If employees think that your intention is for the good of all and has integrity, then you’ll be okay. Anything less and you will face challenges. 

BoydenDid you know Mandarin before you started with Chinatrust?

DeNoma:  I knew a bit.  It’s an extraordinary and humbling language. But I have done some speeches in Mandarin now. Simultaneous translation can also be very effective and accommodates everyone. Frankly, if you want to be an international company, nobody speaks every language. So there are always going to be markets where, no matter who you are, you won’t speak the native tongue.

Boyden: Is Chinatrust run a little bit differently in the US versus Taiwan?

DeNoma: All of our countries are run with slight differences in culture and operating style. But the whole company is now on the same mission, vision, and values. So as we go forward, I think there will be even fewer differences. Many companies that are not global have a dominant local business and everything else is called international. What we want is a global organization in which Taiwan is just one of our countries. That shift in thinking is very important. Many companies don’t internationalize well because everything is viewed with reverse binoculars from their home country.

Boyden: How would you describe your leadership style?

DeNoma: Probably not much different from most, but with a skew toward the entrepreneurial. 

Boyden: What is most critical in recruiting management talent?

DeNoma: I love to work with diverse teams. I have an interest in recognizing differential strengths in people and I prefer eclectic teams because if everyone has the same strengths, you can get blind-sided. When recruiting, I look for people with different yet complementary talents. Having drive is non-negotiable, but otherwise, I look for a range of talents.

Boyden: What would be your most important advice to a manager moving up the ranks today?

DeNoma: Run to the crossroads of either opportunity or pain -- learning to recognize both. Growth opportunities will allow you to make a lot of mistakes and recover from them. And, when an organization is in pain, nobody expects you to do well, so when you do, you will get recognition and further opportunity. Also, get significant people management experience as soon as you can. Make it a priority to lead a large team as early in your career as possible. Finally, and maybe most important, make sure you are working toward living a life you’ll be proud of.

Boyden: What drives you?

DeNoma: Adventure.

Boyden: You’re a CEO, you have a large family, and you regularly compete in ultra-endurance triathlons. So what’s your view on work-life balance?

DeNoma: People say I don’t sleep, but there is an interesting story about challenges here. I drove the sponsorship of marathons around the world for Standard Chartered and one was in Nairobi, Kenya. I was at the starting line of the 10k race when I saw a young blind man who was tied with a leather strap around his wrist to another young man. I was behind them, trying to protect them in the crowd. The starting pistol went off and when I got to the finish line I found out he had won the race. It turns out that he had lost his sight when he was 19 years old from river blindness and someone suggested he start running as an antidote to the severe depression that followed. As time passed, he got better and faster. We sent him all over the world to run marathons. Long story short, he is now the fastest blind marathon runner in the world.

When I met him that day, I was inspired. I thought, “I’m going to sign up to do something that I think is impossible, and I’m going to raise money for blindness in the process.” So I signed up to do an Ironman Triathlon. The thing is that I had never run a marathon, had not ridden a bike since I was a child, and really couldn’t swim. When I first started out, my trainer signed me up for a sprint triathlon and I was the last to come out of the swimming pool. My son was watching and he said, “Dad, you are unbelievably bad at swimming.” He was right. I was pathetic. But I wanted to show him that if you’re willing to be a beginner and stick with something, not giving up when it looks impossible, but fighting and persevering, you can achieve much more than you ever imagined in life. Fortunately, I finally did learn how to swim and now have finished a number of Ironman and other races.

When you start doing ultra-endurance sports you realize that the biggest challenge is mental, not physical. You learn to overcome that. So I do get up at five in the morning to train, which is not something I necessarily love to do. But there is a psychological benefit to knowing that you made your lazy body get out of bed to work out before your day begins.
Boyden: If you were to look forward in three years, where do you want to see Chinatrust?

DeNoma: Well, not three, but perhaps in five to 10 years, it would be the first truly international Greater Chinese bank in history. And, it will be seen as one of the best-managed banks in the world. The team here is outstanding. When I came in, it was like an injured great horse running on a small track. It’s injured no more. We’ve put it on a larger track. It’s a hell of a horse.

We would like to thank William Farrell of Boyden Taipei for making this edition of Boyden’s Leadership Series possible.

The views and opinions expressed here do not necessarily represent the views of Boyden; only those of Mr. DeNoma.