Page 144 - Performance Leadership

Chapter 8 Balancing Performance and Risk • 133

returns would be marginal. But initially, guided by traditional
performance management practices, the other options look dif-
ferent compared to the new approach. Making the decision to
cut costs may seem very attractive because it is easy to calculate
how much costs need to be cut, by centralizing call centers,
until the new return on capital employed (ROCE) target is met.
But at the point where cost cutting would lead to meeting the
target, the risk becomes higher than would be acceptable.
Going all the way may lead to serious problems. At the same
time, improving the marketing awareness shows it leads to no
additional risk, until the capacity of the current processes and
systems is reached. Then the risk will increase quickly. The
management rightfully decided to forgo Islamic banking as a
means to contribute to the increased ROCE because manage-
ment has no experience in that area. But the curve shows there
is great strategic opportunity to tap into a large new market.
None of the options provides a perfect answer, as long as
they are viewed separately. However, the picture changes
once you consider multiple options, each contributing at
an acceptable risk level. Instead of the point solution to
performance improvement of the traditional way of thinking,
a performance improvement portfolio emerges.

Cost cutting in call centers is still possible, not by closing call cen-
ters but by investing in an infrastructure that integrates call centers, so
that local employees that speak multiple languages can also help cus-
tomers in another country. By itself that may not save enough cost, so
it helps to also increase market awareness, yet not so aggressively that
the current processes and systems can’t cope with the follow-up. The
joint performance improvement more than makes the goal. The idea
of Islamic banking remains. With the strongly improved contribution,
a part of it can be invested in setting up an Islamic banking pilot in a
single country and serving a single ethnic group. It allows the bank to
follow the results and build up the necessary competency. The bank is
investing in its next round of performance improvement. And the per-
formance improvements are much more sustainable compared to
the traditional approach because they improve the alignment of the