Cool Hand KOUACEUICH - Richard Kovacevich, Wells Fargo and Co - Interview - Statistical Data Included

Chief Executive, The, May, 2001 by C.J. Prince

I think it's one thing to make a decision and be wrong. But when you make a decision for the wrong reasons, you're really in trouble. So we're very conservative. We only do one Out of 20 deals we look at.

Norwest was behind on Internet development, while Wells was in the top-tier. How challenging was it for you coming into such a high-tech culture? Was it hard to get up to speed?

Certainly, knowledge transfer was necessary, but fortunately Wells had some great people who are very bright and articulate and were able to explain things quickly to me--and I'm not a slow learner. It would have been a lot harder, for the old Norwest and for me, to go and develop this thing. Very time consuming, very expensive, all the mistakes you're going to make getting there--that's what's hard. I don't find it particularly hard to learn; others might because they don't do a good job of listening, or of being educated or of respecting another company's skills--they just ram their own way down the throat. But if you don't do that and you listen, I don't think it's particularly hard. My philosophy is to be very decentralized. I'm not responsible for the Internet. So I just make sure I have the right people. You can coach people, but sometimes the best coaches were never the best players.

Competition and Culture

Internet-only banks, like Wingspan, have disappointed expectations recently, but a few years ago, they were projected to be the David to your Goliath. How big of a threat did you consider them to be?

We've been saying before the market finally understood it, that this Web mania was irrational. It made no sense, it was a bubble, no rationale to it--despite the fact that every consultant in the world, and all the conventional wisdom, said the Internet was a competing channel to your other channels, that you had to cannibalize your other channels, set up a separate organization in your company, hire people from the Web world, give them a different compensation, etc.

Well before it was popular, we said the Internet was a wonderful technology, but it's simply another distribution system, with different characteristics you must take advantage of. But we were firmly convinced--or at least, I was firmly convinced, it wasn't necessarily shared by the entire company--that our competitive advantage was to say to a customer, "Use any channel you want, in any proportion and it's all there for you." The reason--and this was so obvious to me--was that I just can't imagine how we would do it differently. Just think of the arrogance of someone like Wells Fargo saying that we're going to out-Internet the Internet guys. Why would you do that? It'd be like saying the New York Knicks are gonna go play the New York Giants in football. I mean they're a great basketball team, but they'd get killed. You don't want to play under the rules of somebody else's game.

Now, let's say we're wrong, and everyone decides some time in the future to only be an Internet bank. My bet is the migration from where we are now to where we're going to be is going to take from three to five years. Actually, if I had to guess, it's going to take 25 years, but I don't have to guess--I don't know what's going to happen tomorrow, let alone five years from now. But my bet was, and I was 99 percent sure, that whatever change in behavior was going to occur wouldn't occur overnight. So we can adjust our distribution points and not have to forecast it. I'm a General Mills consumer marketing guy. Consumer behavior doesn't adjust radically rapidly.