When Dan Myers and his partners capitalized Bridge Bank N.A. in 2001, it was the largest new bank IPO in the state of California at the time. More impressively, they did it during the most brutal economic downturn in Silicon Valley’s history. Even then, the biggest challenges were still ahead.
“We expected to grow rapidly, and based on experiences at other banks that were also somewhat recognized as high growth models, we understood and appreciated that we would transition rather quickly from a de novo, to a $250 million bank, to a $500 million bank to $1 billion bank, and the infrastructure and risk management challenges inherent in each of those milestones were significant,” says Myers, the founding president and CEO of the San Jose-based company.
In addition to its differentiated business model, which focuses exclusively on business – not on retail, the bank’s strategy involved executing a high-growth business model. From the beginning, the founders were cognizant that the company needed to be able to handle change extremely well if it were going to be successful with this vision.
“We had to be adept at change because regardless of economic environment, the company was going to go through some accelerated phases of growth in an accelerated manor that demanded we be good at change,” Myers says.
To ensure that everyone in the company was proficient at change management, Myers and his team knew they needed to weave it into the culture of the bank itself.
Stay several steps ahead
To handle the continuous change that comes with fast business growth, Myers realized that the bank couldn’t afford to not plan ahead when it came to its strategies, infrastructure and growth goals.
“You have to think ahead, not only a couple of quarters or to the end of whatever fiscal year you’re operating in,” Myers says. “You have to look down the road one to five years, which most banks do on a strategic basis. But their five years we’d be looking at in one to two years.”
Proactively building up your infrastructure prepares your company for fast growth by enabling a smoother transition from one phase of growth to the next. This allows you to focus your attention and resources on the core business, such as finding good clients that fit your target profile, soliciting new business and producing the results for its shareholders, rather than trying to constantly re-adapt a long-term strategy.
“We would never want to be in a position where we’re playing catch-up,” Myers says. “So we’d build infrastructure, we’d build capabilities before we actually needed them. When it came time to execute at that higher level, from an internal cultural management perspective, we would already be there.”
To develop a culture of forward-thinkers, it’s important to talk to employees about what kind of growth you are anticipating so they understand why it is important to create a culture that is accustomed to change.
“A lot of that success was focused on explaining that to the bankers that we had already hired, the founders and making sure that as we brought people in they understood not only were we going to execute a sound bank business plan but we were going to do it in a way that would anticipate this high growth and prepare for it,” Myers says.
Myers and his team also spend a lot of time talking to employees, customers and stakeholders about how the company’s value proposition is being received by clients and the bank’s more active referral sources in the community – that includes professional services groups such as CPAs, attorneys, venture capitalists and investment bankers, in addition to the management of all the companies who bank with Bridge Bank on a direct basis.
Having this dialogue is helpful to stay on top of trends and shifts in thinking among key groups in your industry, allowing you to adapt proactively.
“We took it a level higher and said we want to be even more differentiated in that we’re going to be the only true professional, business bank operating at the community bank level in our region,” Myers says.
“So it’s the constant, ongoing conversation are we offering the value proposition, products, services that are relevant in doing what they’re supposed to do for their clients,” Myers says.
The company recently expanded this effort to include brand analysis, which seeks input from its stakeholders and also from prospects that it didn’t manage to turn into customers.
In today’s tough environment, it isn’t easy to attract new clients and retain them for growth, so it’s critical to be part of the industry conversation if you want to be successful tomorrow.
By planning ahead, the bank has been able adapt quicker than many competitors in times of great change, including through two significant economic downturns.
“It’s making sure that we’re questioning those out in the market and getting feedback to expand our target,” Myers says.
Be clear on strategy
When looking at how to set up Bridge Bank, Myers and the other founders analyzed the structure and organization of other local de novo banks — banks that have been in operation for five years or less. What they figured out was that in California, the average de novo community bank would grow to anywhere from $300 million to $500 million in size in a 10-year period. Yet Bridge Bank planned to grow even faster than that.
“We were intending to be roughly double that in the same amount or a lesser amount of time,” Myers says. “So our time horizons were moved up a little bit with the same challenges imbedded in them.”
To execute this growth efforts, he felt it was even more important that the company set clearly defined goals for the bank and its employees for how they would achieve growth.
“You need to understand your organization, not only what it really is — and that’s a challenge, too — but where you intend it to go,” Myers says.
He says that much of his time goes toward developing a culture and communication system to make sure the growth strategy and vision remain clear for everyone.
“There can be a disconnect that develops over time,” he says. “You simply have to encourage the folks that you rely on to run various aspects of your business to keep you informed in an accurate way so that you can manage accordingly.”
It’s beneficial to have a communication system that provides top level management accurate, honest input and feedback so that your top leadership can best understand the organization as it matures. Because fast growth companies tend to be adding new employees all the time, part of that involves devoting significant time and resources to encouraging open communication within your organization.
In other words, talk to people.
“I know it’s a simple concept, but as you grow very rapidly you have people coming in from different organizations,” Myers says. “You have a constant mix and evolution of culture. You really have to proactively develop lines of communication, methods of communication and provide people with the tools to communicate effectively.”
This helps you avoid falling into what Myers calls the “big bear trap” of pursuing areas that are not consistent with your primary model, a pitfall he’s observed for many banks.
“Over the years, it’s been important to remind our folks from top to bottom in the organization that it’s not only critical to focus on what we said we’re going to do,” he says. “It’s to have the discipline to stay away from things that we know are not complementary, which again is running counter to what most other larger banking organizations have done even in the last 10 years.”
Engage people in decision-making
As the second or third startup for many of its founders, Bridge Bank has had the benefit of an experienced leadership team throughout its growth. Yet from this experience, Myers and his partners have also learned that leaders cannot be the only ones coming up with ideas if they want their company to flourish. It is collaboration at all levels that gives companies the greatest advantage when planning for the future.
“Our best solutions for managing the challenges as the company continues to grow don’t necessarily come from the top,” Myers says. “Some of the best ones come from team building and teamwork at all levels of the company, top to bottom, as they work at their own individual levels on different aspects of those challenges.”
By asking people to play a more active role, you empower them to make decisions so they can take initiative to solve problems and come up with solutions or ideas proactively. Being able to acquire clients and build the bank’s business today relies on this efficiency in decision-making. Therefore, the bank’s culture is built around continuous improvement and finding new ways to grow its value proposition, no matter what the economic climate looks like.
The No. 1 driver of this culture is recognition, both verbal and financial.
“It lets us all continuously look for ways that we can improve everything that we do in a positive, constructive context so that we can execute better, we’ll take better care of our clients and we’ll have better performance not only for our shareholders but then how that comes back to our employees in terms of the ways they benefit with their relationship to the bank, including compensation,” Myers says.
“Although we have an economic recovery under way, it’s tepid at best. Therefore, your growth aspirations are really driven by your competitive positioning and abilities to take business from competitors. The overall growth in the economy isn’t going to float all boats.”
Engaging people in your company’s growth goals is more successful when it comes in the form of enthusiasm rather than censure. When you reward people for bringing ideas to the table about how your company can improve its performance, it helps them engage in innovation as a challenge to do better rather than a disapproval of the way thing are being done.
“Unfortunately in some companies it is a form of criticism,” Myers says. “You can do this better — do it better.
“Going hand-in-hand with the collaboration and teamwork, if they identify a challenge within the company, we encourage them to recommend a solution and a way of dealing with that challenge at their level with decision-making authority. That encourages an efficient resolution of whatever the challenges but also understanding that there’s accountability that goes with that.”
Today, Myers says the bank continues to focus on developing its bankers and its change management culture to stay competitively positioned for high growth.
Through continuous effort to take better care of its clients, the bank not only survived through the worst of the financial downturn but actually had its best years for new client acquisition and issuing new credit commitments. Over the last 10 years it has grown organically to some $1.2 billion in assets in 2011, an increase of $131.3 million from just the year before.
“It’s that core competency of change management that served us well when we launched in worst economic environment in Silicon Valley, which has since been bested by the great recession,” Myers says.
“When the banking industry as a whole was really taking it on the chin from a PR and creditability perspective, we had our best years at bringing new clients in, which I think says something about the validity of our value proposition, how it resonates in the market and how our people have executed in delivering that value proposition so that it’s appreciated for what it is.”
How to reach: Bridge Bank N.A., (408) 423-8500 or www.bridgebank.com
Takeaways
- Stay ahead of the game.
- Set clearly defined goals.
- Use teamwork to make decisions.
The Myers File
Daniel Myers
Founding president and CEO
Bridge Bank N.A.
Born: Dayton, Ohio
Education: DePauw University, liberal arts. Pacific Coast Banking School, Seattle, Wash.
First job ever: I bailed hay part time.
First job after college: Pacific Valley Bank in San Jose, Calif., as a reconcilement clerk
Who are your heroes in the business world and why?
Entrepreneurs. They have the vision, the can-do-anything attitude, and perseverance that is the basis for new company and new job creation, even in the face of monumental challenges in today’s environment.
What do you do to regroup on a tough day?
Take our golden retriever, Belle, on a long walk. She’s a good listener.
What is your favorite part of your job?
At Bridge Bank, I get to meet and work with so many exceptional and interesting people, including the entrepreneurs, business owners and all of the top tier career professional business bankers that have joined me at Bridge Bank.
