MyCIMA

Strategy versus tactics

Gillian Lees's picture

Here’s a thing.  You might have noticed the story about a computer systems failure at Royal Bank of Scotland (RBS) over the last week or so which has left millions of customers without access to their bank accounts.  RBS is now considering legal action against its technology suppliers.

But I don’t know if you spotted the following interesting comment in today’s Financial Times.

 The board of the bank, which is mostly owned by UK taxpayers, spent much of yesterday debating the software failure at a strategy day that was to have focused on longer-term issues.

Now I’d better declare my interest in RBS.  I am both a private shareholder as well as being one by virtue of being a UK taxpayer.  I am also a customer and former employee.  I’m going to look at this question from a perspective of whether the board was practising good governance yesterday.

I can’t say that I am totally sure.  On the one hand, this was a major problem for RBS with repercussions for its reputation.  It was entirely right for the board to discuss it, understand how it had occurred and ensure that the response was adequate.  I’ve got no problem with that.   But to spend all day?  And at the expense of longer-term issues?

This then begs the question of where the boundary between strategy and tactics lie.  You could argue that banks are such crucial ‘public services’ that their core function is to ensure the smooth transmission of money around the system.  Anything that impacts on that should therefore be considered a major strategic issue.  In fact, the more time they spend on getting their basic function right means that the board has less time to spend on conjuring up ever more complicated strategies for the future.  In view of recent history, you could say that this is a very good thing and as the Governor of the Bank of England has recently pointed out, banks should ‘stick to their knitting’.  So in fact, spending a day pondering the implications of a major software breakdown does represent the most appropriate strategic use of the board’s time and the best way of securing the bank’s future.

It’s a fascinating issue to debate and I’d be interested to hear your views. How do you think the board should have spent its time?

  

external factors

your right the whole day is long. but am of a view the prevailing enviroment is encouraging short termism. political and media pressure is leaving less room for strategic issues to take centre stage. what we are seeing is fire fighting without a steady hand. board members are members of the public , they know their duties, but some are postering. in some banks, risk levels were set as low, where by priorities were set in other departments. so we are going to see many issues cropping up.the problem is risk managment, which feeds into  stategy vs tactics.