L

ii
lr
' ' . . ' ' . " :'-: i-, -i'; '*': :
ii;t,|1!.a+4.'1inLi'',", ". ,-
F*NDhEm.cr=lr
e, SenVICEe
Ar JVisrqt-ffieh&K," 1,

The JyskeBankGroupis managedand operatedasa business. At the sametime, we

attachgreat importanceto treatingour three groupsof stakeholders-shareholde rs,
customers and employees-withequal respect.Thisis illustratedby three equallybig
overlappingcircleswhich must remainin perfectbalance.lf the balanceshiftsin favor
of one or two of the groups,this will be to the long-termdetrimentof all the groups.
-Jyske Bank Management
Philosophl,
In 2003,JyskeBank Group'sprimaryoperationsconsistedof JyskeBank,which wasthe third largest
bankin DenmarkafterDen DanskeBankandNordea'sDanishoperations (seeExhibit 1). JyskeBank
wascreatedin 1967throughthe mergerof four Danishbankshavingtheir operationsin Jutland,Jyske
beingDanishfor "Jutlandish."Jutlandwasthe largeportion of Denmarkattachedto theEuropeanmain-
land to the north of Germany.Until the late 1990s,JyskeBank was characterizedas a typical Danish
bank:prudent,conservative,well-managed,generallyunremarkable, and largelyrindifferentiated.
Thiscasewas preparedunderthe auspices'of the Scandinavian ManagementInstitute.ltwas writtenby Roger
International
Hallowell. handling
ratherthan to illustrateeithereffectiveor ineffective
lt is intendedto be usedasa basisfor classdiscussion
of an administrativesituatiorr.
O 2003 SlMl,Scandinavian International
ManagementInstitute.

,, s irl$lfrg.il4 i tr .
 Morketing
594'Ser:vices ,i

*Note: Nordea is not shom as it was a Swedish bank with opemtions in Demak, having acquired Unibank.

Source: Jyske Bank.

Beginning in the mid-1990s, Jyske Bank embarked on a changeprocessthat led to its no longer being
characteraed as either unremarkable or undifferentiated. By 2003 its unique "flavor" of service made it
a leader in customer satisfaction among Danish banks (seeExhibit 2). At the heart of these changeswas
the bank's determination to be, in the words of one executive, "thb most customer-orientedbank in Den-
mark." The bank achieved its goal by focusing on what it calledJyske Forskelle. or Jyske Differences.

t .
b-EN MARK'...'',, ;,
. 1,,,.iij1-;l',:1",,::..'
1i;,,r: .

At the onsetof the twenty-first centuryDenmark had a populationof approximatelyfive million. A

memberof the EuropeanUnion retainingits own currency(theDanishKronor,DKK'), Denmarkwas
the southernmost of the Scandinaviancountries.Denmarkhad beena wealthy countryfor hundredsof
years.This wasoriginallydue to its strategicIocationin the Baltic Sea(seeExhibit3) enablingitro
extracttolls from merchantswho were forcedto sail within cannonrangeof its shores.More recently,
much of Denmark'swealthcamefrom high-v.alue-added goodssuchas agriculturalproducts,pharma-
ceuticals,machinery instruments,and medical equipment,in addition to a highly-developedservice
sectorincludingshipping.
l Euroboughtapproximately DKK6.3 asof June10, 2003
DKK7 .4 and U.S.$ 1 boughtapproximately
 I : fuople,klice, andProfitotlyskeBonkI 595
C.ose

Part l: AnalYsisof Bank lmage

Chose
Service This Bank
and lf We
They Are a
Strategic Customer Expert in Want to
Willingness
Coach for Treat- Advice and Change
Total to Take
Me ment ComPetence Banks
Risk Management
1 1 I 1
JyskeBank 1
3 a 2
Sydbank 2 z
5
(
3 4 4 3 J
SparNord Bank
Midtbank/ 7
7 6 4
Handeslbank 4
I
3 b 4
Amagerbanken 5 l

Amtssparekassen
q 6
q ) 7
Fyn 6
8 8 1 6 3
Nordea 7 7
I 1 7 8 3 A

DanskeBank 8
9 9 9
BG Bank 9 Y 9 J

Part ll: (A) ConsumetS"titf"@

bU

o 5 0
0)
F
9a 4 5
f

9o 4 0
o J 5
o
6
o- go

tq,

ffi tggg S zooo T_l 2001

596 Servites'Marketing
J

ffi
o
95
90
AA
tr
ffi
ffi
jri
tr 80
"6 ;i
o..
= . :75
o
c
q)
70 ffi
i#
65

ffi
o

60

.,{dM
50
Nordea , Danske
W
H 1999 MlZooo fl2001
ffi
&tE
H
':ffi
Part ll: (C)ConsumerSatisfactionSurvey;Dissatisfiedand Very Dissatisfied #
l z

11
ffi
..tr
i&q
10
q I ;i;
o !i:j
E d
:
@
f
7
()
6
c
O
o
c)
4
4
J

1
U
Jyske Nordea Danske BG
D i999 W 2ooo fl 2ool

S o u r c e : s u r v e yo f 1 , 7 5 0s m a l l c o m p a n i e sc o n d u c t e d b y t t D a n i s hn e w s p a p e r E r h v e r v sB l a d e t , 2 2 M a r c h 2 0 0 2 , p . 2
 ! : fuople,Senice,
Cose S97
ondPrafit'atJyskeBonki

Source:CIAWorld Factbook

system its government described

Following the Secondworld war, Denmark adopted a social welfare
as follows:
Scandinavianwelfaremodel,is
The basicprinciple of the Danishu,elfaresystem,often referredto asthe
Within the Danishwelfare system,a numberof services
that all citizenshaveequalrights to socialsecurity.
.
charge. . . The danish welfaremodel is subsidizedby the state'and as a
are availableto citizens,fiee-of
resultDenmarkhasoneofthehighesttaxationlevelsintheworld.,

IUTLAND
(see Exhibit 3 for a map)'
Jutland was physically separatedfrom Denmark's capitai, Copenhagen
was located on the island
Copenhagen,with a population comprising almost one-quarterof ali Danes'
to its
of}eanid$iaellaidl. Jutland's isolation from the capital prior to tnodern transportationled
were supposed to be
people being characterizeddifferently from their Zealanderneighbors: Jutlanders
(candid)' commonsen-
ironest, unpretentious, egalitarian, open and direct in their communication style
relatively unsophisticated, at least in contrast to those' as one Jutlander
sical, ffugal, sober-mind"ed,and
put it, "slippery people from Copenhagen."

IYSKED]FFERENCES
tenets,guiding virtu-
JyskeDifferencesstemmed.fromJyskeBank's corevalues.Thesestoodascentral
life. As onemanagerpointedout, thevalues wereconsistentwith
aily all aspectsof the orgariization's
2Seewww.denmark.dk
 ',':li
-:;-r:

59p. Sg-rvrgeq
Morketing r:,.i
:l
the bank's Jyskeheritage:"Really,when we startedtalking aboutour corevalues,andtheirJyskgqpsS;i.',ll:
we just becameovertaboutvalueswe had long held." JyskeBank's corevalues,published,foremptttili.,i
ees, customers, and shareholders,were that the banli should (1) have cornmon sense; (2) be open andl I ,
honest; (3) be different and unpretentious; (4) have genuine interest and equal respect for people; andj.,i'.,
(5) be efficient and persevering. See Exhibit 4 for a more detailed description'
The core values led management to reevaliate how the bank did businesswith its customers.Manag-.1..,
ersdeterminedthat if the bankwere to be true to its values,it would haveto deliver ,"*i"e Aiff"rentiii
from both how it had in the past,and how other banksdeiiveredseryice.JyskeDifferencestu... thorj
operationalizedasspecificpracticesthatdistinguishedJyskeBank.
;"" l' '
Competitive Positioning
Managerslooked to Jyskevaluesand differencesfor the bank's competitivepositioning.This process
was aidedby a Dutch consultant,whosema:rketrgsearchi-ndicatedthat Jyskebank'scoretargetmarketi
of Danishfamiliesand small-to-medium sizedDanishcompanies(earningswere 40Yocommercial,;
600/oretail) generallyliked the idea of a bank that was Jyske.Additional researchsuggestedthat whatl
managers deicribedasthe"hardfactors"ofprice, product,andlocationhadbecomesinequanonin thel
eyesof customers.In contrast,"soft factors"relatingto an individual customer'srelationshipwith her
serviceprovidersservedasthe basisfor differentiation,specifically,"being nice," "making time for thei
customer," and "caring about the customer and his family." l

Managers felt that the "genuine interest" component of the bank's values dictated a shift from hadi-
tional product focused selling to a customer-solution approach. They characterized the new approach,
by contrasting the statement, "Let me tell you about our demand-deposit account," with the question,i
"What do you need?"
Although the bank's core financial products remained essentially similar to those of other Danish
banks,r the way they were delivered changed. This required significant changes in the branches. both
tangible and intangible, and how they were supported. Tools were developed to support solution-based
service delivery. For example, new IT systems helped employees take customers through processesto
determine their needs and find appropriate solutions. In one, the customer and her banker filled out an
on-line investor profile to determine rvhat style of investment products were most appropriate for her
basedon risk aversion,time frame, and return goals, among other factors.A managercommentecithat,
"The tools themselvesaren't propriclai"y.\\'e've seen other financiai scrvicesv.'itirsiil:ilar pro-qrarni-
it's how our people use them thzitrrak-esthe difference."Another stated."Our toois ati: ciesignedeitiier
to enhanceour ability to deiiver solutions,or to reduce administratir.'etasksand incrsascthe anrountof
time our people can spendwith customers--delivering solutions." !
Finally, being overtly Jyske meant that the bank would no longer be a good place for any customer ri

fr
t'i
meeting its demographic criteria for two reasons. First, delivering this tlpe of service rn'asexpensive.
As a result, the bank charged a slight premium, and targeted only those customers who were less likely
to represent a credit risk. Second, the bank would have a personality. According to one manager, "The
danger in having a personality is, someone,inevitably, won't like you." Seniormanagementconsidered
this the price of being candid, and welcomed the effect it had on some customers.For example,Jyske
Bank's cash/debitcard had a picture ofa black grouseon it, black grousesbeing found in Jutland'srural
countryside.When a few customerscomplained that the bird didn't seem very business-like,or rvasn't

'Typicalcorefinancialproductsincludedhouse,car,and personalloansaswell as cashmanagement services

and investment
for individuals,aswellasloans,cashmanagement, andinvestment for small-to-medium
services JyskeBank
sizedcompanies.
did not offer creditcards.
 t: Peopb,
ca1,e gld.Prr2flrjlv:fe"g.J$
semce, l-9r9

:
cdriiron3ense"".t'.'r-'
' ground' we think before'we act<<
the grounct'
tne
>>With both feet placed firmly on
': '
T h a t m g a n s , t h a t w*e' ,: , " 1
'q :,,' : :' " ' r" ': "
:
o considercommonsenseour best guide
.app|ycommonsensewhenso|vingprob|emsandmeetingdai|ychal|enges:'
o,l:a|lowcommonsensetooverrideawkwardcustomsandroutines.]'::":]l:-]'.]':'.1,.'
.takeactionwheneverweencounterexamp|esofbureaucraticproceduJes''..
e -.observeexistingrulesand regulations
degree
. ' .acceptthat control measuresare necessaryto a certain
;tiigeneratesatisfactoryshortjand|ong-termfinantialresu|trbypurSuing,soundbusinesspractices
:- ; : I
. applycommonsensewheneverwe incurgroup expenses

Open and Honest "

and action<<
>>We are open and honestin both wbrd
That meansthat we:
.keepeachotherup-to.dateonrelevantmatters,anddonotmisuseinformationobtainedinthecourseofourwork
or by consideration
considerations for other stakeholders
. restrictthe degreeof opennessonly by business
. respectagreements enteredinto and do not betraythe Bank'sconfidence
.strivetowardsmakingimportantdecisionsconcerningindividua|emp|oyeesonthebasisofaconstructivedia|ogue
problemswe encounter
. 'communicateopenlyaboutthe mistakeswe makeand the process
and that focusis then on learningfrom the
. acceptthat mistakesare made,that they arecorrected,
. listenopenlyto new ideasand constructivecriticism

Diff erent and UnPretentious

unpretentious<<
>>We think and act differently and are generally
That meansthat we:
. encouragecreatlvllyand initlativeby being untraditional
and arecommittedand proactrve
. arefull oi initiative,
and externally
communication-bothinternally
. encourage relaxeo ano straightforward

GenuineInterestand EqualRespect
people<<
>>We demonstrate insight and respect for other
That meansthat we:
. recognizethat no two peoplearealike
customers'and employees
. seeklastrngrelationswith shareholders,
.offerqua|ifiedadvicematchingthefinancia|needsandrequirementsofeachcustomer
and personal needs
. havejob security basedon mulualobligations and thatwe payattentionto individual
working hours'and placeof work
. allow the highestposslDledegreeof personalinfluenceon assignments'

Efficient and Persevering

to reach our goals<<
>>We work consistently and with determination
That meansthat we: :
. useJB2005(thebank'scorevalues) asa guidein our dailywork
600 Morketing
Services

are not blown off coursebecauseof externalcircumstances-but take a bearingand plot a new coursewhen'thi$!;;
''- r:'r'i'i;
is deemedappropriate
a adopt an organizationwhich promotesefficiency
a considersecurityimportantto efficiency
a are convincedthat efficiencyincreaseswith the levelof personalresponsibility
allow employeesto assume personal when the basisfor decision
for day-to-daydecisions--even
responsibility
makingmay not be 100% perfect
a acquirethe levelof skillsrequiredthroughpersonaland professional development
o act on the basisof competenceiatherthan organizational charge
a supportour decisionsby well-foundedarguments

hip (one was "embarrassed to pull it out at the disco") managers were happy to invite them to open
accounts at competitor institutions. A manager noted:

Actually, if no onereactsto our materials,they'renot strongenough.Somepeopleshoulddislike us.After.

all, we're only about60/oof themarket.I don't want everyoneto like us-we're not for everyoneand don't
want to be. I''

Tangible Differences
AccountTeams
Delivering on the bank's competitivepositioningrequireda numberof tangiblechangesin its service
delivery system.Thesebeganwith assigningeach customera branchemployeeto serveas primary
point of contact.Over time, managersdiscoveredthat this createdproblems,becausecustomersoften
arrivedat a branchwhen their serviceproviderwasbusywith othercustomersor otherwiseunavailable.
Nevertheless,managerswere committedto providing individualizedservice.According to one,"How
can we be honestin sayingwe care aboutcustomersas individualsif we don't get to know them as
individuals?And without knowingthem,we can't identify and solvetheir problems."The soiutionwas
foundin accountteams:eachcustomerwasassigned to a smallteamof branchbankers.Theseemploy-
eesworkedtogetherto knor.r,and servetheir customers, sittingin closephysicalproximity within the
branch.
*
Branch Design i
:.i
JyskeBankplannedto spendapproxirnately DKK 750million to physicallyredesignits branches (most :?

ofthis hadbeenspentby 2001).Danishobservers thenewbranches

j
described aslooking"like an adver-
tising agency"or "a smarthotel."Theseeffectswereaccomplishedthroughthe useof modern,up-scale g
materialssuchas light wood, warm colors,and original art. Branchredesignalso includedchangesin 's
#
the ll'ay customersinteractedwith their bankers,madepossibleby architecturaland designchanges. :fi
For example,customerswaiting for their banker''couldhelp themselvesto fresh coffee in a small part ;!

of the branchresemblinga caf6.A customercommentedon the caf6,"It meansmore than you initially ..$
'15
think-it makesyou feel welcome,it saysthey'rereally interestedin me." Fruit juice was availablefor i:l
children, who could amusethemselveswith toys in the play center.Bankers'deskswere now round :i
j.*
tables,signiflringequality.A teamof threeor fouqbankerssatat a singlelargeroundtable,with custom- r'4
ersmakingthemselves comfortablebetweenthe'bankers' work stations.Customers could seebankers' fi.,]
computerscreens,reinforcing openness. Customers'ability to view the screensalso facilitatedthe use 'ii
Irj
of IT programsdesignedto structureinteractionsbetweenaccountteammembersand customers.As
#i
#
.#
 ondProfit otlyskeBonk 60 |
I : kopte'Service'
Cose

equals'bankers'andcustomerssatint",.uT"typeof"!1,,:,andbankersnolongergal.onaraised *"ret"ppbi6a to
of which went back to r"oaar ti--Js *rreothe heads"i*t--:i";.opr;
dais,the origins
rr d]:l"tion' spiciallv designedmeeting
be higher than those of others, i.cgnveii]li;;i;d-tg
,.home,,yrr" *rt*o;.H;!tbilt"*oi"t
T:tt picturesof aremodeledbranch'
rooms giving the feehngof
: -':
po':ib.,,e'? regyir'ine'JYske'diff-erence;
?:f,!j}, wasintused'i,'io:tr'ttuot-*1'e"y" PflLl:"1icv
indi;;;"d*;.-l
ioueconsidered tt.d"g;;4;yg"*:"l"iri?:'"'rffiTffi11ia11t::31
manag(
n"a *t"q nicturl onthem''as'one more
Anfoyggt'business"*ap
*eren't warm=th..ni"nfJli"it f""rt;a 9ttq."1tduncaring'"To makethem
really gray.They witf eachemployee to "getthe genuine
Jyske,thebankhiredalrof"r.ionaf pt otogrupfte'*ftt*ott"d
prc*t *; 'nen yellowto makeit
tinted-slightly
interestinthat employee'seyeto comet" n#;;h
;;#;;6;h;;jl"ih;i".,'....'...j'..;.:i'...
. 1 .

I ntangible_Differences
statedthat the mostimportantof these
Deliveringthebank,snewcompetitivepositioningalsorequirednumerousintangiblechangesandoth
changes.noi immediatelyvisiblet9 the customJr'Uanagers customerto servethecustomer'
closestto the
thoseempl'oyees
involvedtrainingandempowering

Theseincludedteam-
*llXi""tor*ch wasremodeled, all stafftookpartin specialtrainingsessions'
practittt frotnthe"traditional"retailsector'
buildingandcustomer;;;;;, drawingonbest
EmPoweringthe Bronches and
structure'asking'"Whereis valuecreated?"
examinedits organizational
JyskeBankleadership was
questions
bemadein ordert"
..wheieshoulddecisions themostvalue?'the answerto both
"*l
"in the branches'" 'red
^r1r^-'{i-n '{onicinnqni conseqrrence requr approvalat thebranch'regional'
Previously,almostall lendingdecisionsof any request
levels.Specifically,_u would'upprou.han employeefor a loan' The
and headquarters "urto-", The branch.managerwould thenmake out the formal
would be communicatedto the branch-unug".. office with the
DKK 3 million' was sentto a regional
application,which if the loan was for more tf,an application' and if the
would then commenton the
branchmanager's.o--.nir. The regionaloffice for approval' where additional com-
loan were fbr more trtuno6 15 miilion, t;;; it tf headquarters
ti-o,. than DKK 30 miltion alsorequiredapprovalfiom
mentswere addedto the application.Loans
this process'managersdiscoveredthat most of
the headof credit for the uJot u, a whole. In examining
the middle,ratherthanbetweenthe employee
the debateandcommunicationwereamongi"aviJ"urr"i"
mostinformationaboutthe customer)andthe ultimate
closestto the customer(who presumablyhadthe
areto be true to our valueof using
"1H1fflTing the situation,the bank'sleadershipstated'"If-we the pro-
und,o ma:Y laYers'reviewingloans'"First'
commonsense,we shouldn'tneedso -uny p.opr", loan completed the formal applica-
ih. request.forthe
cesswas changedso that the employeer"""'Jirig in how
employe" uv giuing rii- t*"ruttip of the loan,which he was trained
tion. This empoweredthat pricing was within a set
orpti"i"itn. loa1.y long ashis suggested
to handle.He was from the
"lr;;;;;;"rc" shouldbe' Most loansieieived final approval
rangeof wherethe final apprbvaluntfrorityi"Tt it
branchmanager,*t,o','u,."itt'erselectedi"p"'-tbased.onhercreditskillsorgivenadditionaltraining
oftheir size'In theseinstances'
level,because
in credit.A few loansrequiredapprovalurifi. r.gional regional headof credit' 987oof loans
it iirectly to the
the employeecompletingthe application,"rrt
602 ServicesMorketing'''

lr

S;I

ol
Source:jyske Bank

r{fi
 l: ftople,service,
Cose Bonk 603
ondProfitotlyske

up to DKK 90 million were approved'The

were handledat:thebranchor regional levels,where loans of
the bank's headof credit who reviewed
credit deparhnentat headquarterswas disbanded,leaving only
was retainedfor loansof this sizebecause
loansof more than DKK gO*ittion. This additionalr."ui"*
significantlyaffectthe bank'scapital'
expos'reto the customerwould be so greatthaidefault could
processes'However,they also
The changesimplementedwere orilinally designedto affectintgmal
thatbecausethe employeein direct
improvedcustomers'experi.n""r. For'.*u-pl., m:anagel,belieWd
of informationin applicationsincreased;
contactwith the customermade the application,fte [uality bank's portfolio
ii, and the quaJityo{ lolls
as a result, *or. borro*.rs worthy of ciedit received lnihe
from a maximum of
largeit loans declined
improved.ln addition,the time to reachadecision forthe be made aknost
*itrtio the branch could
thrgewegks,toten days. Smallerloans abtgtq be.approved in the
terms were more often included
instantly.Finally, customers'expectationst.g.aingitice and to the
loan, in a form acceptable
application.This helpeJthe approvingautho-ritytJsee whetherthe
effort when customerS''expectations
bank,was likely to be acceptedby the customer,savingtime and
were inconsistentwith the bank'srequirements'
to managers'becauseof the
The streamlinedapprovalprocessdid not posea credit risk, according
incentive make poor loans (branch
to
combinationof: (1) d;r";"e branchcredit skills, (2) lack of
or quality),and (3) a robustintemal
managershad no incerrtivesimmediatelyrelatedto loan volume
auditingfunctionthat monitoredcredit quality'
consolidatedfrom five regionsto
At the sametime that the creditprocesswas redesigned,the bank
and 45 branches reportedto eachbusinessunit
three,and increasedspansofcontrol so that between35
resources, and control professionals at the regional
director.who had u ,tuffof -u.teting, credit,human
level (manyof whom hadpreviouslybeenat headquarters)'
A seniormanagercommentedon the roiesof headquarters, the regions,andthe branches:
ourvaluesandstrategy intoproducts, processes' andinformation
Headquarters is wherewetransform for
iomes from headquarters is translated
technology.Thethreeregionsarewherewemakesurethaiwhat
aridwhereweensure thatJyskeDifferences are,being acted upon-ahatcustomers
thelocalma.tetpta"e,
and thus rvhere value is really created'
experience them. The I l9 branches are where *" ,.*. customers
is implementation in the field, supported by
20o/oof whatwe do is development at headquarters, and 80%
we need the regional level to ensure that implementation
the regions. Given the small iize of our branches
is done right.

Empowermentthroughout the Bank

were encouraged to
Empowerment was not limited to the branches'Throughoutthe bank' employees
were encouraged to
makedecisionsof all sortsif theyfelt comfortabledoingso' ln general,employees
"Doesit makesenseto askfor help or permission? Is therea business reason for ask-
askthemselves, 'big'decision(big beingrelative)?Is it debat-
ing?Is thissomething you'u. never done before? Is this a
in doubt,ask' However'if there
able,or is it a new prirrciple?"In general,employeeswere told, "When
is no doubt,go ahead."Managerswereexpectedto setan example'
time' Oneemployeenoted'
Examplesof this policy in actionincludedworking hoursandvacation
with your colleagues'you
"If yourlob makesii possible,you setyour hours,you just haveto agree
t]lunugtinoted,"The uniona
don't needapprovalfrom your boss.You do the ,u*. *ith holidays""A
didn't havea problemwith this, but the union in Copenhagen worriedthat employees
at headquarteis
mightmisusetheflexibility.' --_r and-
-J^-entertatnment
meals
Another exampleinvolved the amountemployeeswere able-to spendon
while travelingor entertaining customers. Pre,riously,therehadbeena setamount'DKK 125'andbills
aAswastypicalin Scandinavia, were membersof a union
and managers
mostemployees
 604 Serviceslvlorketing

cgnsi.stenJly_came_to DKK 125. Consistent with its value of cornmon sensg the bankchanged the policy
to be,(paraphrased) "Spend what you need to spend." This resulted in what,an executive stated was:;
$ffi
ffilii':ri

' ' . 1
ffi
ffi
i'substantial decline in travel and entertainment expenses."When asked, l'How do you get a sl,stem likd
this to. work?'? he replied:
,ffiffi

ffi

,
Fiist, youtell people_what's
Second, you check on
expected.
their behavior.If they arebuying expensivewine, you ask, "Why?" You explainrii.';
. im
'.iH
what makessense,and why. You do it in a way that tells them ydu honestlywant to help them improve .ffi
: - i '' ' .i';:rii
" Third, if thereare continuedproblems,this personmay not be right forthg bairk." l
fie real challengeis when we hire someonefrom another'balk.We expectthem to be up to speed
quickly becauseof their background,but they aren't usedto making these'kindsof decisions-they hat'eto '::i;
,be taughthow. '
: . . r
:1
,
ffi
#
Manogement Style
A seniormanager
commented: ,,: : ;
You cantrain and educite all:day-long,but dnlessyour managersandemployeesare committedto Jyske
ffi
#l
.,ffi
Differences,theyjust won't hap;en.Cetting them committed-required a greatdeal of my effort.
When'we startedthis processtherewere times when it was har-d-really hard. The brinch managers
ffi
F$
ltI
.FR-
didn't think strategically-they satin their officesandfocusedon their day-to-day work. I wantedthe
'
branchmanagerto get up on a hill and look around,to get a biggerpicture.To get themto changeIrasked
. ;
them questions:Wliat's the market?Where-and who-are yow competitors?What are your strengthsand
'weaknesses, how do they tie to JyskeDifferences?Now, contrastwhatyou needwith what you have.Are the
teamsin your branch living up to the demands?What do you needto do to ensurethat that they witl? There
will be resistance;understandwhere it is coming ffom. One way to deal with it is to make agreementswith
ffi:tr
.r;t
,,fd

individualson how they wiii developnew skills. If thereis a completemismatchyou may neednew team
members,but for the mostpart,you cancoachyour peoplethroughthis kind of change-you canleadthem. ,#
E
*ii
r$li
According to anotherexecutive: $*:
The branchmanagbrshaveto be ableto motivateemployeesto work a little harder,and differentiy.The i,i
most successfulgive their employeesa lot of latitudefor decisionmaking.They do a lot of training, 80% ,$
of which is on thejob. Whenit isn't. it's niostlyrole playing.Therearen'tanyhigh-powercd incentivesto
offer,but therearereallygoodtoolscomingout of IT. It's morehow the brancl;managers,,loitthln .,r'lr,lr
the1,do. Theyconstantlylink thetools,training,andbehaviorsto our Jyskevalucs.Theygettlrr.ireirplor-
eesto sharethe valuesand act on them.

A third noted:

When I havea diffrcult situationI look for what I call a "culture carrier."I try to put that personinto the
middle of it, becausethey live our values.What I usuallyseeis that the otheremployeeswho areon the
fenceaboutthe valuesstartto comeover-they seethe exampleandthey like what they see.This leaves
the few peoplewho realiy don't want to be Jyskeon the outside,andthey tend not to last long. Most
peoplearewilling to change,but they'vegot to be supportedin the process.

Human Resources *
Legalaspectsofhumanresources, recordkeeping,andhainingwerecentralized at headquarters. In con-
trast, adviceon how to deal with humanissuesivas providedby humanresourceprofessionalslocated
in the field (at the regionallevel).They deliveredthis adviceto generaimanagersin the field suchas
branchmanagers. Thebrancheshadto pay for this senice,andthey couldchooseto eitherbuy theser-
vice or do without if thev nreferred. i\
t
ru
s
'ffi
 ond ProftotJyskeBonk 605
Cosel: ftople, Senice,

SelectionAnexecutivediscussedemployeeselectionatthebank:'.-'']
'- i looking skills' we're looking for
It's very important.For most of thejobs, we're not only for-bankine
'social our lystg values:openness'genuineinterest
abilities-service mindednessand compatibilitywith
with someone' We don't have a systematicapproachto
in other people.You can smell it when you speak and
, this, althoughwhen we're.hiring someonefrom anotherbank we ask why they want to work for us
listenforanswers,consistentwithJyskevalues.Wecantrainmostbankingskills,butwecan'ttrainorese
peoplewith them,and gettinga few of our established
attitudes.Maybe our biggestchallengeis hiring
. gmployeestoadoPt them. -,
., ' noted,
ntial hires to wdte ;bout themselves. A manager
H;ff "d;ril;**,repromotingthemse,v
,#J3i;1ffffi"iJ:;i:H,:*rTj:l,TJff
Training A manager in human resourcescommented:
is his or her responsibility-' we believe develop
we have told every employeethat his or her development
banks are cutting staffand saving every way
ment is incredibly important. while my peersat other Danish
development'But it's up to the indi-
possible,our goal iit to get employeesand managersto invest in lore
developmentactivities,but we keepanything
vidual to decidewhat to investin. we're outsourlinga lot of
relatedto JYskevaluesin house'
few monetary incentives' The few in place
Incentiyes Managers pointed out that the bank had
annual raises'
consisted'of three tlpes,-stock' one-time payments' and
of the top ten Danishbanks',a
Stockincentives:if the bank,sannualperformancew1-a!9ve \averaSe
to afl employees and managers'In-addition'
stock option grant valued at DKK 8.000 was made available
stock annually at a20o/odiscount'If thebank's
any employee.orrro.rr" ,rp to DKK 13.200to buy company
banks" the discount rose to 40%'
annualperformancewas amongthe top threeDanish
employees could be awarded one-timepayments'
One-timepayments:for truiy exceltionalwork,
this type of payment'
Fewerthan l% of individualsat the bank received
increasesbasedon their manager's
Raiseincentives:employeesandmanagersreceivedannuaisalary
possiblewas 107o,althoughan employeeor
evaluationof their *o.n rir. highestraisepracticably
qpically receiveda raiseof approximately
managerin the top l5% of performers(the highestlevel)
lok. Salaryraiseswere eventually limited as total salary had to remainwithin the bandsestablishedfor
permanent partof the employee's
a particularposition.Oncean increasewasgrantedit becamea
salary.
Bank: "I'm not restricted'
commitment An employee commented on what it was like to work for Jyske
me to work and I'm supposed to'" Another
I don,t have to leave my head at home--I can take it with
commented:
carefulwhat you say'Here'you
You'retreatedas a humanbeing here.At otherbanksyou haveto be really
canbe openand honest-I can approachanyone-€ven the CEO'
you collectyour pension.I pay a
JyskeBank is a way of life. you comein at 8:00andyou leavewhen
premiumfor this, r coutd earnmoreat anotherbank,but it's worth it for me' At somebanks'bankershave
prostitutedthemselvesfor higherpay,stuffingproducts down the throats of customersthosecustomers
may not need.We don't.

Anders Dam, Jyske Bank's CEO, stated:

but wherethey gain value
If you can createan environmentin which peoplearen't talking aboutmoney,
and their where
customers, the bank will take careof thosewho
in their relationshipswith their colleagues
workhardeveniftheygetsick,thenpeoplewillbecommittedtothebank.
 ,',,' .
606 Services'Morket,ng

MetricsdndFinancialResults .: ; :: ". . : :j ,:r :r:.1".:,i'

Bank managers:frequently referredto the importanceof measuringperfolmance,in both quantitativs
and qualitativewavs, and at a variety of locationsin the bank. traditional financiai rneasures
were
consideredimportant,but not all-important.In addition to traditional measures,Jyske eank
impie-
mentedan informationtechnologysystemlome€sureaccountprofitabilityon a risk-adjgstedbasis
(risk
adjustedreturnon capital,'or'RAROC).This,hadbeena considirableeffoi and wasjus-icomingoo-)ioe
i n 2 0 0 3 . , , . , , ,: , .j . ,. . j , - : .
Customerandemployeemeasureswerealsoconsideredimportant.Managersreportedthat employee
satisfactionwas higher.at.JyskeBank than at any of its major competitorsbasedon data collected
bv
third parties-Severalsourcesof data indicatedihatJyskeBanli custom"rrutira"iioi *l'.
Td.p:t{.."l
also the highestamongthe bank's major competitors(sdeExhibit 2). CustomersatisfactioncoutCUe
trackedto the regionallevel. Planswere in place fo be able to measuieand report it at the branch,,aii'I
eventuallythe individual customer,levels.
_ Financial'andselectedoperatingresultsare presentedin Exhibit 6. Jyske Bank took a conserva-
tive approachto earnings,writing off its entire inveshnentin remodelingbranches,building a new
headquarters, and new information,technologysystemsin the yearsin wnich spendingoccurred.This
amountedto DKK 302 million in2002, DKK 253 million n200t,DKK 194miilion inlOOO,andDKK
212 million jn 1!99. Resultsfor 2002 alsoreflectedan extraordinary tzxpaymentof D${ 222 million"
which was describedas "a potentialliability in light of discussionswith the Danishtr* uutrroiti'#f'^'
JyskeBank's statementof corevaluesandprinciplesincludedthe following:
.-.. theaimis for JyskeBankeveryyearto beoneof thetopperforming Danishbanks.'. . JyskeBankis
thusanexcellent choicefor shareholders whowantto makei long-teniinvesfinentandwhodonotattach
great importance to dccisions which generate only short-term price increases.

Communication
Managementbelievedthat most employeesliked working for the bank and appreciatedJyske
Differ-
encesas they affectedtheirjobs SustainingJyskeDiffer-ences requiredthe bank to remiin indepen-
{ent, 1ot an easytask inthe Scandinavian bankingmarket,which had consolidatedconsiderablyduring
the 1990sand early twenty-fust century.Executivesbelievedthat they had taken the right
srepsto
ttTuil independentby investingin employees,systems,and infrastructurethat would
enablethe bank
to deliversuperiorvalueto its targetedcustomers,andthusachievesuperiorfinancialreturns.
This eco-
nomicmodelwasbuilt on thebank'svaluechain(seeExhibit 7).
Deliveringthatvaluerequiredconsiderable change.one m#g"r stateda point that severalalluded
to:
If youwantemployees to behave
differently,
youhaveto besuretheyknowwhatthatmeans-howthey
shouldbehave goingforward,andwhytheyshouldchange. Wecan'iaskpeopleto.rr."g. *i,rr"r, *--
municating thiskindof information
to them_it's notfair.
Bank leadershipbelievedthat communicationshouldbe, in the words of an
executive,..a car wash,
not a waterfall----communication must come from all directionsat once,not just down from
above."In that spirit, in 1997communicationreinforcedJyskevaluesand differences "ur.ud.
when the bank
produceda video tapeon JyskeDifferencesmade.available io all employees.This wasdesisnedto look
like a televisiontalk show.The hostwas a promirientDanishtelevisi,on p..ronutiiy ulratf,.ir"rt, *"."
%tt"td"S t" ,. "lf we areright [andwe eventually reverse the charge]we havean upside.lf we arewrong it
"*.utive,
won't impactfuture results.All in all the tax issueis not relatedto the 2002 resultand it would be morecorrectto judge
the
resultbeforetax."
 607
Cosel: People,Senice,ondProfitat JyskeBank

Et[EEt' tihdttid$tia $'tlldl{ed, O Perating Rddulti#

lyikeBank)Grotirp
Five-Year
r .rggg :liige
zooo

3.1.78,l ;r61
37.9,: t
,aJ,6?l ,,219
-2J47*
3ls,'
4
':710
1,083 , eso 1,255
'199
. ";:1"-*572 " 172
""" 267
oz5 r,083
ProfrUlossfor the Year ;,1'
2000

lssued ii ,
r1998

iir il;:::,!
r::i.i: .
Per Jyske Bank share
23.17 25.39 22.07 1 4 . 6 8 1 t9.as
Coreearntngs 15.77
31.86 29.58
on ordinaryactivitiesbeforetax
Profit/loss : 2g'tr2 24.11
16.71 27.51 20.83 I I.LL
13.84
Net profiVlossfor the Year
0.00 0.c0 0.00 3.20 :t 2.80
Dividend 161 149 123
192 177
Priceat year-end : ,,178 l3l ' 1 1 4
170 157
Bookvalue i t.o8
...1.08 1.O4 103 'j1
Price/bookvalue ",:- t 't r , 10-9
' rg.e . 10.5 5-9
Price/earnihgs :

The Jyske Bank GrouP '

" jtr.r :11..{, 11.0 10.5 10.4
Solvenryratio t79 8.2 9.s
8.2 8.0
corecaoi$r.{i_o;-" 1.56 1.36
.": 1.36 1.33 1.51
Incomeonevery kroneot 3.0
-,f.g 2,0 .l::: 2]
Totalprovisions as o/ooI total'loans
Lossesand provisionsfor the yearas 7o '0.: 0.4 0.4
0.4
of total loans
608 Services
Morketing

Depositsand Advances DKK biliions

100

80

60

40

20

0
1999 . ,2000 2001
ffil Deposits E Advances

Customers
480,000

460,000

440,000

420,000

400,000
2000

Numberof Full-Time
Stafi
3,500

I
3,250 t
i!
j*

'I
3,000 ,"i
.!
'$
j
2,750
:I

':
2,500
.,1
Source: Jyske Bank i.{
\4

{&
ffi
,16
 Bonk 609
Cosel: ftople,*nice, ondProft'otJyske

lnternalServiceQualitY StaffRetention

Staff Satisfaction

Staff EfficiencY

Extemal Quality

Client Satisfaction

Client LoYaltY
RisingBusiness
Volumeand
ProfitabilitY

see Heskett et al'' 1997'

Sasser,and Schlesinger'sservice Profit chain'
Source: JyskeBank's aclaptation of Heskett,

AndersDamandDanishexpertsonbusiness'EachwasinterviewedandtheydiscussedwhatJyskeD
to employeesand customers'
and what they-meant
ferenceswere,how tfref wer" beingimplemented,
and-customers in thebranches'
ruppon"Aby videoclipsof employees o,,-"ice for
fnr the bank's
hnnk,r strateglc
.oniin.,"d in 1999,executives planning a surprise
Communicationefforts
third year'
meeting,to which all employeeswere invited every
took place in Vejle' the closestcity to the bank's
The Bottle tt Yeile The 1999 strategicmeeting
3' 107employeeswho choseto
headquarters with an auditoriumlargeenoughfor ihe 82%of thebartk's
someof whom were from JyskeBank'
attend.The meetingopenedwith a panelof seniorexecutives,
R grim-facedAndersDam got up, andintroducedoneof the stangersas
and otherswho were r;G;^.
..theCEo of a large, iu.g", Sivedishuunt.'i bu. then"continued, explainingthat the Swedishbank
"".v stock market valuation,a premium of 2'3
had offeredto buy lyJL nuit for almosttwice its current be sentto the Copenhagen
for' A fax was to
times what otherDanishbankshad recentlybeenacquired the meeting'As he spoke'a
immediately after
stockexchange,suspendingtradingin JyskeBank shares
senseofforebodingroseiri the audience'
cozy relationshipbetweenSwedesand
Non-scandinaviansshould note that despitethe currently
southemSwedenoncehavingbeena Dan-
Danes,they foughtagainstone anotherfo. -any centuries,
ish possession.
 6 l 0 ' S e r v i c e s l l l a r k e t i n g: '. "i ' . : ' ,,li

The CEO of the Swedish bank took the podium and announced(in Swedish, which is very Aifficuii,
for most Danes to understand) that his Danish was'very poor, s6 that he would "speak ScanAltiu"iair,i
very slowly," after which he continued to deliver his adciressin S'*'edish.
He stated,amongother things,that "You-Jyske Bank, yeu aregood,very good.But areyou good
enough?For tomorrow?For the furure?For a world without bordersacrossthe continent?"Afte; hi;i
speechAndersDam took the podiumagainand askedfor an "immediateand honestresponse" fre111
the employees.Over the courseof severalquestionsand responsesit becameclear that althoughthei
takeoverwas friendly,;the.integrationwould be anythingbut.,In the words of the SwedishCEO, ,ni
mergerLhas
^.
certainadministrative
^^*^:- ^J*:-:^k^+:.,^ ^,f-';;+^-^^
advairtages, ,,,L:^L
which -v'ill
-,:ll -^^--i-;
requirban^- ^ll--^u^-L:-
adjustment -.^fc- ^ tt D---,-i
in staffing." Eventually,
a managergot up and said,"Do ioi.nethingfor the environment.Put the Swedeson the ferry and send
themback!" His suggestionreceiVedwild applause.
After a pause,AndersDam retumedto the podium and,now smiling,explainedthat it had all beena
joke, which he called"JyskeFun." He addedthat he was"proud,proudasa peacockof your reactionto
thejoke," beingdelightedthatthe vastmajority of theaudienceflatly rejectedthe ideaof beingacquired.
One questionerput it bluntly, statingthat (paraphrased) "JyskeBank couldn't live JyskeDifferences,
couldn't do the things for employeesand customersthey had beenworking so hard on, if it wereto be
acquired."Dam finishedhis speechby pointing out thatif JyskeBankwereto remainindependent in thei
increasingly-competitive environmentDanishbanksnow faced,everyonewould haveto contribute. ,
Part of that contributionwas an effort to diversi$,the bank'stype of shareholders and increasetheir,
numberin orderto ensurethat they sharedits long-termperspectiveon finincial performance.Employ-.
ees encouragedcustomersto considerpurchasingJyskeBank Group shares.Betweenthe "Battle atl
Vejle"and2003,thenumberof shareholders increased from 150.000 to morethan210.000.
Managers and employees agreed that the messageof the "Battle at Vejle" was heard throughout the
organization and that Jyske Fun was a good idea. Subsequentexampies of it included the only national
advertising campaign the bank had engaged in during the past decade, which was effectively a. dog
beauty contest with entry requiring a visit to a local branch. When asked why advertising was so lim-
ited, an executive replied:
Two reasons.First, we rely on word of mouth, so we don't needto advertisethat much----ouradvertising
costasa percentage of revenueis half whatbanksof similarsizespend.Second,we haveto be absolutely
surewe canconsistently deliver JyskeDifierencesbeforeu e aclvedise
thlru.
Later in 1999, communication efforts continued rvhen managerscreated a video tape iilustrating
Jyske Differences in an unusual way. The tape introduceslv{ax Perfonna, an ex-KGB agent hired by a
mysterious and beautiful senior managerof a competitor bank. Performa is assignedto nna out if Jyske
Differences are actually being delivered at Jyske Bank's branches.He checks off each Jyske Difference
as he experiences it, pretending to be a Jutlandish faimer wanting a loan (speaking Danish rvith a thick
Russian accent). In the course of applying for the loan he discovers that .TyskeDifferences are being
delivered, among them that the employee opening his accounthas the authority necessaryto rneethis
needs(common.sense),that the bank will go to great lengths to show genuine interest in him (he and the
branch manager drink an entire bottle of vodka one aftemoon), and that Jyske Bank rs difercnt and isn't
for everyone: when he complains about the black grouse on his debit card he is politeiy told he might
be happier banking with a competitor. At the end of the tape the viewer leams that the mysterious senior
manager who hired Performa actually works for Jyske Bank.
Fxecutivesbelieved that they neededto constantlyreinforce the messagethat remaining independent
required every employee to work a little harder, and to behave in a manner consistent with Jyske Differ-
ences.To deliver that constant reinforcement, they printed the bank's values and Jyske Differences in i,:
#
rt
s
g
,ffi
 Cosel: ftople,knice,ondProftotJpkeBonk 6l I

occasion,branchemploy-
materialsthat managerswere askedto discusswith theil employees.On one
differences and their
ei:swere askedto come in on a Saturday,without pay, to discussthe values and
implicationsfor day to-daybehavior.807ochoseto comein' lfReturn to
In 2002,,communication efforts included the bank's strpteglc employeemeeting'-cafled
duo) and entertain-
Vejle." The meeting,completewith live, high-energymu'sic(a locally popular drum
and servedas a reminder of what still needed to be done.
mJnt,celebratedthi bank^'saccomplishments
value chain infor-
Finally, in2002the bank introducedwhat it called a "tool box" for communicating
to selectelements on the bank's
mation to and from the branches.The tool box enabledeachbranch
value chain (seeExhibit 7) and measurethe branch'sperformanceagainstgoals relatedto that ele-
lights
ment.The tool box deliveredregularlyupdatedinformationincludingguidessuchasgreen_orred
chain elements. An executive described the
describingthe branch'sperformanceorthe selectedvalue
tool box is "a way to oierationalize the value chain so that everyone in the organization understands
how they needto behaveon a day-to-daybasisin orderto optimizeit'"

The bank's leadershipbelievedthat Jyskevaluesand differences,and the bank'svalue chain,provided

ways to achievethe balancethey wantedamongtheir three stakeholders:employees,customers,and
shareholders.Severalleaderscommentedthat with the large capital investrnentsbehind them as of
2003,net incombwould increaseconsiderablyin the comingyears,assumingthe recessionof 2001 and
2002 wasover.Shareholders had receiveda 17.8o/o annualretum on their investmentfor the ten years
prior to year-end 2002.Anders Dam's 20021003 goal for shareholderswasto increasethe bank'sstock
multiple approximately 40% to the level of Danske Bank's, the largestandmost richly-pricedbank in
Denmark.This was achieved in July 2003.6 While the bank's leadership was pleasedwith the bank's
success,they were more interested in determining how the bank would remain in a position of leader-
ship while still keepingthe interestsof its key stakeholders in balance.

TO THEIYSKEBANK CASE
QUESTIONS
l . As of the mid-1990s, what was Jyske Bank's competitive positioning. that is, what did it do for cus-
tomers relative to its competitors?
2 . As of 2003, what was Jyske Bank's competitive positioning?
5 . What did Jyske Bank change to enable it to deliver its new competitive positioning?
A
T. How did Jyske Bank implement those changes?

6Managers amongstockanalysts
in the bank'sstockpricemultipleto recognition
attlbuted the increase rn
that investments
JyskeDifferencesmadein the previousfiveyearsand expensed immediately werebearingfruit-