Strategie review - interim report
Rl organization
Measures announced in mid-June marked the first steps towards the cost-cutting exercises and focused customer
orientation that will be crucial to Rabobank International s survival in a tough, unforgiving business. How were
those initial decisions reached? What will the next steps involve? Where are we in the strategie review process?
We ask Maarten Hulshoff for the thinking behind no regrets decision making. In addition, as the strategie review
team (SRT) comes ever closer to completing its task, we find out how the team works by sitting in on one of a
series of offsites with people from around the network. Background on the newly established Transition
Implementation Project (TIP) rounds out
this cluster of stories on strategy. First
up, a Q&A with our CEO based on your
questions and issues.
didyou know?
4 What'sNewS lssue7*July 1999
You have taken a number of decisions and
actions which have impacted people's jobs.
How do you go about reaching those deci
sions, given the fact that the SRT has still to
report its findings and recommendations?
What we are trying to do here are two
things simultaneously. One is overall
strategy, the other is 'mini-Euroland', ie.
London, Utrecht and headoffice. We need
to make significant cuts to the cost base in
that region so what we've done is looked
at the various businesses in these units
and at headoffice support functions. Based
on fact, we differentiated between those
businesses that don't make money and do
not support the customer base, and those
which do and are strategically important.
Once we had made that distinction, we
took so-called 'no regrets decisions', one
of which led to cutting the international
equities in the UK. This was a business
that was not making money and didn't
look likely to make money in the
foreseeable future. And it's a business
you're in either all over the world as a
huge ugly player or not at all. There is
simply no place for a small player to make
money. On the other hand, we wouldn't
shy away from investing in the Dutch
equity business. We believe it's a place to
be and to invest in.
People are, of course,concerned about
what is going to happen over the next few
months. There is a lot of talk about the es-
SRT offsites involving people from around the network are breeding grounds for best practice
tablishment or transfer of activities? What
about the lean and mean merchant bank
that may be based in Amsterdam? And the
Meta concept? How do you see that pan-
ning out?
I don't want to preempt or anticipate the
proposals of the SRT hut I can mention a
few things on this: if 1 look at RI, I think
that given our tax position, our triple-A,
and the capital we have, I think we could
probably make half our current earnings
with a minimum number of people. We
have, however, 4,500 people. And with
those 4,500 people and the whole
infrastructure that has been put in place,
we generate only twice the amount of
revenues at a high fixed cost base. So, at
issue here now is how to make better use
of the infrastructure that is in place
already, how to increase the earnings it
can generate by getting the best out of it.
You're not suggesting that you'd like to
down-size completely and start from
scratch?
That would be overdoing it a little. It's a
novel idea for a Sunday afternoon exer-
cise. But the reality is that Rl is there, has
a good name and good-will in the busi
ness, and it would be ridiculous to cut
down the size so dramatically. But it
would also be ridiculous to have a busi
ness which earns the same as its cost base.
The long, hot SRT summer is hear
ing fruit, and sooner than you may
think. Our strategy paper is cx-
pected at the end of August and an
operating model by mid-Septeniber.
