The Next Big Question
Hosted by: Drew Lazzara and Liz Ramey
Executive VP and Chief Information Officer
Tom has been with Northern Trust for nearly 21 years. Tom has driven Northern Trust’s technological evolution, while wrestling with how best to preserve a foundation of trust and expertise in a digital world.
What Does It Mean to Make Trust a Differentiator in Your Organization?
NOVEMBER 2, 2020
This week on The Next Big Question podcast, we are joined by Tom South, Executive Vice President and Chief Information Officer at Northern Trust. Tom shares his perspective on how organizations can generate trust through vulnerability, authenticity and expertise. We discuss the challenges in creating meaningful digital experiences and interactions that reflect those qualities and how a financial services organization like his can innovate by offering hybrid experiences that are both personal and digital.
Drew Lazzara (00:13):
Welcome to The Next Big Question, a weekly podcast with senior business leaders, sharing their vision for tomorrow, brought to you by Evanta, a Gartner company.
Liz Ramey (00:23):
Each episode features a conversation with C-suite executives about the future of their roles, organizations, and industries.
Drew Lazzara (00:32):
My name is Drew Lazzara.
Liz Ramey (00:34):
And I'm Liz Ramey. We're your cohosts. So, Drew, what's The Next Big Question?
Drew Lazzara (00:39):
Well, Liz, this week we’re asking – what does it mean to make trust a differentiator for your organization? To help us tackle this big question is Tom South, Executive Vice President and Chief Information Officer at Northern Trust. Tom has been with Northern Trust in various leadership roles for nearly 21 years. And that strong, personal connection he has to the organization runs deep. It’s something that comes through very clearly in our conversation this week. As Tom has driven Northern Trust’s technological evolution, he’s wrestled with how best to preserve that foundation of trust and expertise that has always distinguished the firm, especially in a digital world that is increasingly transactional. Trust, after all, is right in the company name. In our chat, Tom reflects on what trust really means for a business, how leaders transmit that value across organizations in a tangible, practical way, and how you demonstrate it to distinguish yourself from competitors.
Before we sit down with Tom, we’d like to take a moment to thank you for listening. To make sure you don't miss out on the next Next Big Question, subscribe to the show on Apple podcasts, Spotify, or wherever you listen. Please rate and review the show so we can continue to grow and improve. Thanks, and enjoy.
Drew Lazzara (02:06):
Thank you for being on The Next Big Question. Welcome to the show.
Tom South (02:08):
Thank you for having me.
Liz Ramey (02:10):
Tom, we're so excited to have you be on the show and talk to us today about a really cool topic. But before we dive into that, I'm curious just to get to know you personally a little bit more, is that okay with you?
Tom South (02:25):
Liz Ramey (02:26):
Fantastic. Well, so I'd be curious. Where's the best place that you've ever traveled and why?
Tom South (02:34):
That's a good question. I was worried you were going to ask me what kind of tree I would be. So, this is a good question. The best place I've traveled -- you know, I took a trip about a year, a little over a year ago to Guadalupe, a small island between North America and South America, ostensibly to climb a volcano there. Although I had a lot of rum while I was there, as well. And I would say the volcano climb was pretty spectacular and quite an experience. And so that's probably my, at the moment, my most favorite place, although I will say I had a family vacation in St. Petersburg that rivaled it last, two years ago. So those are my one and two -- I'll have to flip a coin on which one's the actual favorite, but I think the pictures from St. Petersburg were spectacular, but the memories from the volcano and surviving that were probably better.
Liz Ramey (03:20):
Drew Lazzara (03:21):
Sounds like an awesome trip.
Tom South (03:22):
They're both great. They're both great.
Liz Ramey (03:23):
So, Tom, you know, other than being known as the traverser of volcanoes, what would you like to be known for?
Tom South (03:35):
Hm, that's probably a deeper question. You know, it might sound a little corny, but I'd like to be known for being a wonderful parent, a wonderful son, grandson, brother, and husband. If I could nail those things, I think the rest of it is gravy at that point.
Liz Ramey (03:56):
Hm, that's great. So aside from technology, I know that, you know, just in your role, you have to be somewhat interested in technology. But aside from that, I would love to hear about what your favorite topic or topics are to research. You seem like somebody who's very curious. So, I’d love to hear what you’re studying.
Tom South (04:15):
I've got, you know, much like my travel, it's probably hard for me to pick one. I've been a long-time amateur purveyor in physics. So often read a lot of physics related books, even fiction books. In fact, I mentioned I had a college-age son at home, and I just handed him a book called QED on quantum dynamics. And he seems to be pretending to be interested in it, so that's good. One of my favorites. But on the other side of the coin, I do read a lot of history, both nonfiction and fictional history.
Liz Ramey (04:47):
That's great. Well, it sounds like you are an avid reader, and that seems to be one of your interests. I'm also curious about other things that you do outside of work.
Tom South (05:00):
Oh yeah. Well, I'd love to be super-- I‘d love to have a super interesting hobbies, like skydiving or learning Sanskrit, but I'm doing neither of those things. I have been really working on fitness, like I joined a basketball league last year. I'm entering a swim program, a competitive swim program at the pretty ripe old age I won't name. So I've been branching out on some physical interests. About five years ago, my doctor told me I was in great condition for a 70 year-old, of which I was not close to 70. And I took that a little bit of offense to that. And so I've been really trying to work through that. I had a pretty bad car accident then, too. So I've really been working on fitness related stuff. But I've also been trying to nurture the other side of myself. I just joined the board of the Illinois Make-A-Wish Foundation, and I'm actually really committed to expanding my activities on the philanthropic side of my life. And so, besides that, I've got kids ages 19 to one, so I have a pretty narrow range of interests here at home. So that keeps me pretty busy at this point. Don't put me in charge of strategic planning clearly.
Drew Lazzara (06:10):
Tom, you sound like a Renaissance Man. I think this is an exciting primer for our conversation today ‘cause I think we're going to get to a lot of interesting places during the conversation, but thanks for sharing some of your personal life with us. We appreciate that.
Tom South (06:23):
Drew Lazzara (06:25):
So, we're here today to talk about what it means to make trust a differentiator in your organization. That's the big question this week, and I wanted to start that kind of broad conversation by kind of grounding it in the moment that we're in… I think the context of 2020 has made a lot of individuals and a lot of organizations take stock of where they're at and reassess some of the things that are important and valuable and meaningful in terms of both their business outcomes and their personal lives. So, trust is something that I think people are looking at right now in a unique way. And I wanted to start by just asking, how are you thinking about this idea of trust in your organization as a leader, especially in the context of 2020?
Tom South (07:05):
Yeah, that's a pretty powerful question for a firm like ours here. I work at Northern Trust. We actually included the word in our name, just to be safe. And for those that don't know, it's an over 130 year-old financial services organization that serves clients all over the world. Although it's our original kind of heritage started with a personal trust in helping families and small businesses and endowments. And so, trust is a big part of our business, but I think that to really explore a topic like this, you have to explore what trust is really. And I think there are two themes there that I continue to come around. And, this was a topic I was researching at one time when I was earlier on in my career at the company. Trust tends to be viewed as generated by, if you think about it, vulnerability, authenticity and expertise.
And those are an interesting combination of things. And in the professional space, in your career space, you don't really talk about words like ‘vulnerability’ that often, but it's one of the key ingredients to really trusted relationships. So, I think that's an interesting kind of framework to think about is in terms of generating trust in any relationship, personal or professional or anything in between.
(08:20) But I think in terms of businesses like ours, we often are put in a position to know a tremendous amount about our clients. It helps us serve them better, but you really get pretty deep into a family's history, their philosophy, what they believe in, and how they behave in a lot of ways. And that's the best way to know the most you can about them, it allows you to provide the greatest level of service.
But I think there's an interesting division, and not just in financial services, but in a lot of a lot of businesses, where you sort of have transactional relationships, right? There's plenty of businesses with whom I do business all the time. And I think they're very effective at doing that thing, whatever that thing is. But I don't know that I would describe myself as having a ‘trusting’ relationship with them. And then there's a relationship like the ones we attempt to generate and sustain where, like I said, you share a lot of detailed information. It's much less transactional and much more of a sustained and mostly advice-driven relationships or service-driven relationships.
(09:22) And I think those require different cultivation. And for someone like me that has got a long technology background, I think about the dimensions of trusted relationships in a increasingly digital environment. And to your last point of your question, which is an interesting one, is how does this moment, when I say this moment, the world we sort of live in, globally right now in the pandemic era, what does that mean, right?
And I worry about that a little bit, and I think that's also an opportunity, but the concern part comes from things like vulnerability, authenticity are not things that are easily conveyed digitally. I think expertise, there's a lot of room to display expertise digitally, but I think vulnerability and authenticity are pretty hard to come through.
And so for firms like ours that have had, really, certainly we've invested heavily in digital capability, and our clients can do all kinds of things with us digitally. But we've always viewed our digital experiences for our customers and clients to be complementary to the in-person experiences. They may have lowered the frequency of some of those, they may change the dynamics of those in-person encounters and experiences, but they were always a part of a whole, not the whole. And I think over the last, you know, certainly this 2020 so far, we've seen significantly less of our clients and our prospects.
Liz Ramey (10:56):
It seems Tom like, and tell me if you disagree with this, but it seems like that piece you were talking about with the authenticity, a part of trust, it seems like in this digital world, if you're offering expertise through quantitative data, then you really miss that authentic relationship, or the authenticity piece, as opposed to adding that kind of more qualitative data. And the qualitative is where you gain a lot of that authenticity. Would you agree with that statement? And how do you guys do that, if that's possible?
Tom South (11:37):
You know, it's interesting observationally, post the financial crisis of 2008 and ‘09, the confidence and trust in financial services organization was a little low, and by a little low, it wasn't good. And you saw, if you go back and look at the media representations of that time, and, you know, JD Power and everybody else, you just saw people's view of financial services, institutions was pretty low.
And yet everybody doing business -- I still swipe my card. I still write checks. I still do all those things at that time. So, the transactional nature of our relationships was quite intact, but the trust component of that was it was a little low and maybe with good reason. That's a different topic for different discussion.
But I think that our view is – and if you go back in the history of, you know, providing advice to families -- there was a time when it was almost entirely qualitative, if you go back far enough. And increasingly particularly on the pure investment side of our business, and we do more than investment advice, we'll do estate planning and philanthropic planning, and all kinds…. We tend to provide quite a multidimensional set of services, which we think is part of our differentiation.
But if you think about a big driver of wealth management firms is their investment advice. The clearly, the industry sort of broken into a couple of pieces, and part of that industry became extremely quantitative. And we certainly did some of that, but they became extremely quantitative. And the logical end of that was sort of the -- it's a word I don't hear used as much -- about the ‘robo advisors’ were an entirely quantitative, almost entirely quantitative, evidence of expertise or advice to their clients. And some of them quite successful, too, in several I've been a member of and tried to see how they work and experienced that myself.
(13:28) And then there were firms that went a much more qualitative space and focused on this broad, comprehensive array of services and advice. And there's significantly less quantitative levers to pull when you're doing, you know, philanthropic advising, small business liquidation advising, things like that. And so I’d say, I would articulate our firm is striking a balance between the two. Our investment business, certainly -- in fact, I just read are our five-year capital markets assessment. It's an awesome piece of quantitative work. It's really fantastic, but we combine that with this qualitative component because of the multidimensional service.
And we never believed one would win out over the other. And it's sort of that same balance between the digital and in-person experiences. We continue to maintain that a balance of those two things was important. I think there's some pressure on us to be able to deliver not just expertise digitally, but start to incubate and curate authenticity and trust at the end with our clients through these digital channels. So that this in-person experience isn't a requirement.
And I see this as one of the great benefits to our industry and to certainly to my firm that can come out of this is… There's a great cartoon that was posted on LinkedIn that I re-posted a couple of times, and I kept believing in it, where it had this board room meeting going on the left, and these folks saying, 'Hey, our digital transformation is going to take five years.' And there is this COVID-19 wrecking ball coming at the window, that board meeting saying, ‘Not so fast, you know, you're going to rethink the pacing of that.’ So, I think our industry's going to rethink the pacing of that transformation. But I believe to my core that our firm will continue to view the relationships as multidimensional. And there's not a time I can foresee in which we would become a purely digital-only firm. But by increasing our digital ability to deliver authenticity and develop trust, I think we can reach more customers. It's one of those positives I see likely coming out of, for our business, out of this situation.
Drew Lazzara (15:35):
So, Tom, I'm listening to you talk, there's a lot of words that you've used, and trust overall is one of them, that has an emotional component. You know, it's not a super precise thing that maybe you can quantify, but there is an emotional component to it. So, I want to think about how you start to reflect these values, these emotional things in the way that you do business and the way that you operate. But before we get there, I want to ask maybe just a simplistic question. You talked about having these certain transactional relationships with other organizations or brands. You know, I think of like, you know, a Honda is reliable. I trust it because it works. It's got a good engine. It's going to last me a long time. Or, I know that the package from Amazon is going to show up on my front door. There's a certain kind of reliability in that relationship, but when it comes to these emotional things, do you actually believe there's a substantive difference in the quality of what you can give your customers in the marketplace based on trust and emotion? Do you see that as actually a differentiator, as long as you're producing results? Or, are the results the only thing that matter?
Tom South (16:34):
You know, I think there's an interesting difference in -- I'll take two firms, which I have extremely high regard for, Amazon and Apple, for example. I think that Amazon's rewriting the book. I started my career in the logistics business, and they've really rewritten the book, more than once, and I have a huge amount of respect for what they've done, both the technology end their business, which I have some pretty good friends that work there and it gives me some insights into that – and the reliability. I really think they've got an extraordinary model in terms of what they do, but I wouldn't say that I have a ‘trusted’ relationship with them or that I have a great affection for them. I have a huge respect for them, and I have a transactional relationship in my personal day-to-day with them.
(17:18) But I think about Apple on the other side of that, and Apple makes amazing products and have been doing so for a very long time. But we ought not kid ourselves. When you look at those most respected brands out there, people actually love the ethos. There's other things they love about them other than just a device and or the service. And so, there is something special being delivered. Their products carry a premium in the marketplace. Still, it isn't solely the products’ features. There are certainly other makers that compete on features year in and year out. You might argue that. But there's people that love what they're about, the way they think about data protection and privacy, the way they do some other things. It doesn't make them better or worse than Amazon. They're both extraordinary historically… history making, successful companies with unbelievably visionary leadership.
But they've got different, a little bit different feelings they illicit from their customers, right? So, to translate that to our business, I think the very same thing exists. And I believe that to my core, and we continue to try to invest in experiences that continues to steer the way we think our differentiation is.
And I'll give an example -- and I won't name any firms because I've got respect for all those competitors. But there's plenty of firms with whom you have the relationship in the financial services industry -- and they may have your mortgage, and they may have your checking account, and maybe a CD or something -- people still have those. But but I don’t know that you've built a deep relationship with them. It's, you know, you use the ATM, and you occasionally see a teller or a banker.
(18:54) But if you go into to our business and these relationships we've cultivated -- I've been at the wake and funeral for our clients, and I'm in IT for goodness sake. I mean, I'm not on the front lines of our client relationships. I've heard of our servicing folks and our wealth advisors being at the christening of the children of our clients, being a part of their life in some ways.
And I've been in meetings with families where a matriarch or patriarch is near the end of their life, and I hear them talk to their children about their advisor at the table, saying you have to -- these are the people I trust to help you get through this and carry on. And I mean, it's a really powerful, powerful concept.
In post the crisis of the financial crisis 10 or 12 years ago, a lot of firms came out of that, looking at the way we had been advising clients on investments and took a good look at whether they really understood those investments and how they would perform under duress. And there was certainly plenty of duress in those few years.
(19:56) And we had tons of clients calling to say, please get me out of the markets, I can't stand what's going on. And the idea that they understood clearly diversification strategies and those kinds of things kind of fell apart for the industry a bit. And we weren't the first, I won't say, but we were certainly very early to incorporate some more behavioral finance components into plenty of Nobel-winning, really rigorous, quantitative work in that space -- back to tie the other question to this.
And why do I say this? Because what we moved to was a goals-based model, which a lot of people use -- I'm not going to sit there and say, Northern Trust invented this by any measure. But we certainly moved very aggressively, certainly for us, a pretty conservative firm, moved very aggressively into this space. And why do I bring this up as relevant to the topic? Because I was part of the group to build out our tools for the quantitative piece, having experience in our asset management investments group. And I helped build out the behavioral finance piece. And boy, did the question interactions change. You know, we used to ask questions like your risk tolerance. What do you, what's your reaction about a 10% market down?
(21:00) And the goals-based piece says, what do you want your family to be known for when you're gone, right? Where would you like your children to live? How would you like to… you know, these really got very personal questions. And I've actually been through this process myself as a client of the firm, as well. And boy, the first 10 or 20 questions have nothing to do with my risk appetite. They asked me about my children, my legacy, my educational needs of my family, my family's philosophy, the beliefs we have. We were not asking those questions, at least in bulk, as a standard practice, a decade or two decades ago.
So not only do we believe there's a differentiator and a premium to those brands for whom the ethos and set of practices build this deeply intertwined, trusting relationship. We built tools and technology around it. We built a tool for that goals-based conversation that we actually went through in front of our clients with them, collaboratively filled this out. And I've been, like I said, been through it a number of times, it's quite an interesting conversation, and I have seen clients get emotional. And again -- you go to a party, you ask somebody how they're doing, they say, ‘great.’ You ask them if they're happy, that's a totally different question, you know? And so, the goals-based conversations we have tend to have that latter sort of impact, and they get really deep really quickly. And I think that's what's allowed us to be, continue to be, a really, for our industry, a high-growth firm over the last 10 years in a time in which a lot of firms are trying to find their footing.
Liz Ramey (22:24):
I wanted to comment on what you just said, Tom, about that – asking people how they are versus asking people if they're happy. And I know I've tried to be really deliberate in my response to those questions, especially with my team that I have at work, in making sure that my response is authentic. And I don't just – I think it's really important, especially right now and through COVID for any executive to be authentic and build that trust during this time. And share with them kind of your own unique experience.
Drew Lazzara (23:02):
Another thing, Tom, that struck me as you were walking through some of those examples is you illustrate really well how you're helping your clients to open up to you and to feel as if they can trust you so they can be vulnerable. I'm wondering on the flip side of that, how you as an organization demonstrate vulnerability? You know, it's a such an impersonal thing to be in an organization and a business. So how does that work for you and in Northern Trust demonstrating the same kind of reciprocal vulnerability and opening the door in that direction? And how do you scale something like that in a way that is conveyed across your client base, rather than on kind of a person by person basis?
Tom South (23:45):
That's the hardest one, you know, and I – earlier on in my career at the firm, I had a lot of questions around this. In fact, I often felt like my job was to make it appear that I had every answer to everything. And I think I thought that was the right sort of posture.
And one of the best mentors I ever had in my career handed me a book that had gone or had been going around our wealth management business when I first got involved with them since probably 10, 10 plus years ago. And it was a book called Getting Naked. It's quite an unusual book, starting with the title and moving on from there. You imagine my surprise at a very buttoned-up wealth management firm when somebody handed me this book, I said, ‘Okay, I'm game here.’ But boy, it describes two different firms – and one extremely, extremely polished, extremely we have no matter what your problem is, we have an answer, right?
And to some extent, that's the way I was sort of conducting my business and the way I had, even before I'd been at Northern and consulting, I was doing it. And the other firm was saying, I don't necessarily have a canned answer to every one of your problems. What I can assure you is that we will work through it together, and my sole interest is in your success.
And I think that Northern – and I kind of caught this being at the company – I certainly didn't walk into it. I walked into it with a lot more ego and hubris. I didn't mention humility as a part of that equation, too, but it certainly plays into it, but I did not walk into the firm like that. But over time, I've really, it's been a very positive influence in that, from my perspective. And so, to give you an example of that – I've got one really great example. I'll be a little bit careful of the details of it, but we had a large client that was going through a very difficult life change at one time, a divorce and the wife in this relationship had reached out to us for help. And we bid against a number of other firms and we ended up losing the proposal.
(25:42) And I had talked to this person because this person came from a tech wealth sort of background, brilliant person, by the way, great, great person to chat with. So, I'm in a meeting with them at one time. And I heard we lost the business, and I'd sent a note saying, ‘Hey, sorry, we won't be doing business with you, but best of luck and this and that. And I remember – our team, you know, kind of took the feedback around our proposal and our fees and everything else, and they were pretty good natured about it. But about three weeks after we had lost that business, the person who had been proposing that had seen an article on a tax situation that might advantage this particular person.
And so she sent along a note and said, 'Hey, I know you're going with somebody else, you know, best of luck, but I want you to see this tax thing. You should tell your new advisor about this, because it could really save you a lot in positioning this thing you're doing for your children really positively long-term from a financial perspective.' Now there's nothing in it for us to do that. And usually there's a little bit of sour grapes that comes after you lose a pretty, this is a pretty meaningfully sized piece of business.
Drew Lazzara (26:40):
Tom South (26:41):
But what's interesting about it was the person got this note and actually changed their mind on the business and came back to us. I remember -- I only know this because I met with her again later on, and she told me this exact story. And said, ‘Your person, you know, we told you lost, we didn't want -- kind of cut off communication and still were coming to me, trying to help me, even though I had just sort of broken up with you kind of thing.’ Right? And so, there's sort of that, ‘Hey, even if you didn't pick me, I still want to see you succeed.’
And there's sort of an admission that we didn't win, but we understand why you did what you did and we're going to kind of move on. And I see that play out in other situations where we make a mistake with a client. Certainly, every firm has occasional things that don't go the way you want. I've been on some of those with clients. I mean, we walk into the room saying, ‘This didn't go the way you needed it to.’ Right? And we own it. And I think part of that comes from the fiduciary heritage at the firm, which took me a number of years to get my head around.
‘Cause I had been at other firms where the one thing we never wanted to do was to take a loss on a mistake or something else. We always want to push it to the client or whatever we could do. And then I came to Northern Trust, and boy, we just said, ‘Hey, whatever happens, the client's interest is first.’ We're going to walk in the room and say, we own it, the issue, we're going to resolve it. And just, you'd be surprised what that gains you under stress situations, right? Bad markets, other family issues that you're trying to wrestle. When they know there's someone on their side of them, that is their own hardest critic and always has their interest at heart, that's a sort of professional vulnerability, and lack of self-interest that we try to evidence. And the challenge for me is always to try and build technology and digital experiences that continue to further that. I'm confident our people are deeply steeped in this fiduciary mindset that has been around for a century plus, and everybody that walks into the place either adopts it, or they probably don't find a good fit at the firm.
But the idea that you can convey that digitally is increasingly the magic that has to happen, the secret sauce, whatever, whatever term you'd like to put to it. And that's the piece where we're going to spend some time and continue to spend some time. I'm researching how to engage in experiences that continue to further that, and don't put distance between us and the client in a way digitally that we don't intend to.
Liz Ramey (28:51):
That's so interesting. It sounds like, you, as a CIO, are committed to the company's mission, trust being a part of that mission. And so I'm curious to know how you have come to this as a CIO to influence your organization, to maybe even invest in more expensive technologies or more complex technologies in order to pursue that the mission of trust and authenticity with your clients.
Tom South (29:31):
Well, that's a work in progress. It's a journey really. I've been in this role a couple of years now, and we've been working really hard on a lot of people and culture. Some kind of IT culture things that matter in this space. And one of the things that we're trying to do is we had become pretty contractor heavy. We had a pretty big mix, for awhile there, of our Northern Trust people and third parties.
And, you know, I talked a little bit in this conversation about how the effect the firm’s culture had on me and changed the way I not only work, behaved at work, but certainly changed the way I behave just generally. And that's pretty hard to adopt when large chunks of your organization are from other firms who have their own cultures, which probably are quite successful, but different than ours. So, one of the first things we did is we talked to our IT teams and said, 'We're betting on you,' right? And we're going to, we continue to, and we still continue to this day, to continue to shift away, not completely, but shift much more in favor of our employees and our Northern Trust partners, we call them.
And then therefore, we think that client-first, fiduciary overlay, trust-driven relationships, humility kind of component to what we do. It's easier to take hold. The culture can affect those folks more substantially. But in addition to that, the other thing we've spent a lot of time on is remembering that IT has a deep, deep expertise and a critical role at the firm. But we work on the behalf of these businesses that need to grow and need to service their clients, and different than a pure tech firm, where tech is the sole product, you know, we're part of a service delivery model as a whole.
And in addition to the thousands of IT people, there are thousands of operations people, and thousands of client service people that all have to work together. So, we try to approach, and we continue to instill in our folks to be very firm in our expertise, but very flexible in the fact that we are a service organization in a lot of ways. So, we provide a lot of unvarnished advice. We speak our mind, we have our ideas and say on things, but we also make sure we understand that the client-facing partners, the client-facing teams have to represent the client interest. And that's where we've got to make sure we focus our efforts.
(31:47) So we've tried to really instill this, you know, service mindset, but expertise driven. And then the third thing I'd mention around this is again, when you shift, we've been hiring -- literally shifting hundreds of people a year -- away from this kind of consulting base. The kind of key themes for the firm: service, expertise, and integrity. Those are the kind of key corporate mission objective items. And we've been trying to really talk about those with our organization. So, I'm going to sit there and tell you that a big part of my efforts in the last, first two years in this role have been around people and culture and talent and less so about the specific technologies.
But, I would say now that we've sort of had really gotten pretty far down the path on those things, I feel really good about those things. I feel like we've made a lot of progress, and importantly, that the folks who run our businesses feel like they've seen that progress. In fact, our president of our corporate institutional business, he said, 'Boy, when there's trust and alignment between us and IT, there is nothing we can't accomplish.' And I loved that quote from him. I've used it a dozen times, at least, ‘cause that's what we were aiming for. And when I heard that, I said, ‘Okay, now we've got to start to focus on the technologies that could come to bear.’ Where can we start more deeply integrating machine learning and analytics and things like that into our digital assistance. We're spending lots of time talking about all those kinds of things that now it gets interesting. I can – I'm not saying not focused on talent, but we've made enough progress where we can start to interweave where our expertise can really provide leverage and value. And so it's a kind of an exciting new lever to start pulling at this point for us.
Liz Ramey (33:29):
Oh, wow. Yeah, I love that. That's great.
Drew Lazzara (33:32):
So, Tom, you were talking earlier about this challenge of the moment in terms of making a digital experience that incorporates these human emotional values and, and how, you know, you can port the human experience into the digital as we move increasingly in that direction. It occurs to me that maybe all of us are going to have to wait and see how people begin to interact more personally with technology, particularly as they get used to sort of this pandemic era that we're in and they've had to make some of these changes. So, I'm thinking, you know, there's going to be changes to the way people get their education. There's going to be changes to the way people get their health care delivered to them. So, a lot of really big, important parts of people's lives are going to have to be ironed out in this digital space. So as you're kind of waiting for people to figure out what they're going to do with technology and how they're going to trust it in their lives, do you as an organization think of opportunities to bolster the social digital experience? Are you thinking in terms of what impact you might be able to have as a firm in closing some of the digital gaps, the technology gaps that might help people trust it more and therefore improve your position as someone who could help them?
Tom South (34:41):
Well, there's a sort of a macro topic there and a more micro topic for us. My firm locally, I would say I am actually both incredibly excited and have a great concern over some of the very things you mentioned, Drew, which are very powerful. You know, education, the big one, huge amount of accessibility to education, but only to those folks that have pervasive internet access, laptops, space to work, things like that. And if you start to, while I might've thought that internet access in the big cities, in developed spaces, was largely pervasive, it's far from it. And so there's a gap there, and that gap could either increase the space between opportunities and equality or could decrease it if we address it. And so probably a topic for a different discussion, but I hope if we take this opportunity to close some of the connectivity gaps, that are often, not always, but often the cause of socioeconomic differences, so that accessibility to these things can be equalized. And I actually think if that happens, on a personal basis, that there's a great lifting up of folks in an era of huge sensitivity around inequality.
Now having said that, when I think about our own firm, I think there's an interesting interplay between Liz' last comments and questions and yours. I think the one question around social, you know, our clients and people in general had been trading off connectivity and convenience for privacy for a long time. I think about Facebook and Twitter and a number of other platforms. You've been sharing, we all have been sharing tons of information in return for connectivity, information, convenience, those kinds of things. And I think it's been actually pretty amazing to see how far that's gone.
(36:44) But if you go to Facebook or Twitter or something else, you still will find topics that are not widely posted upon. People's financial information is a good example of one of those. I can go to -- I'm not a massive Facebook user. I'm more of a Twitter newsfeed kind of person. But you'll find all kinds... I can find out what for friends of mine had for dinner yesterday and where they vacationed, but they're not posting their W-2 and they're not posting their financial plan or how much debt they have, you know, it's just not a topic. And so I think that there's still a gap there, right? Of that, of trading off that information.
And so we would on a long-term basis, like to aim for a place that you could get the convenience, you could even start to get the connectivity. Haven't figured that out yet, but in some sense, but without making that trade off of privacy and confidentiality. We think that's a line that we don't see clients necessarily heavily willing to cross. So, we're not convinced that that trade off is exclusively the only one. I think if you look at the firms that I mentioned, which are very successful firms, but in the end, the user is the product, right? Your data is the thing that they sell in terms of their business model. That isn't – far from our business model. We've resisted any hint of using that data for virtually anything other than servicing our clients. So I think that, it may be a long answer to your local question about our business and financial services, but we would aim to find places where you didn't have to make that trade off and be able to still be able to get some of the benefits of some of that. And the industry hasn't figured that out totally yet. But we believe the evidence and your behaviors and your social media and your day-to-day lives still proves that gap exists.
Liz Ramey (38:25):
We'll have to have another whole episode about that topic. We can – let's the three of us watch The Social Dilemma, and then we can just have an entire episode talking about this particular subject. So Tom, we had an episode that we recorded with Dan Wulin, who is the head of data science and machine learning at Wayfair. And we always like to close our sessions, kind of taking a step to the side, not necessarily on target as far as the topic that we're talking about today, but we like to ask executives to pose a question for the next guest. And so, Dan has actually posed a question that we would like to ask you. And he said, how do you manage the maintenance of existing products or projects? He was thinking of this, in kind of thought the models that they develop, right. But so how do you maintain, the maintenance of existing or projects versus doing just pure innovation?
Tom South (39:31):
Well, that's ever the dilemma, particularly for folks in roles like mine and probably Dan's, as well. Because the existing stuff, that tyranny of today's stuff, can really consume you. And to make your sole focus, that is sort of a long-term growth inhibitor. And so on our side, what we've been trying to do is rather than make this a bet against maintaining the current, we've been trying to discipline ourselves to one, think about, overtly think about, pure innovation as a discreet activity. And we put some parameters around that to make sure we're not telling ourselves it's innovation when it's really just a little brushed-up version of the thing we would have done anyway.
But what we are starting to think about innovation for us is - can we create hybrid experiences in both personal and digital that they haven't seen or gotten anywhere else, and maybe they can't get anywhere else. And we think that's a combination of data we have about them, data we have about clients like them, anonymous as it might be to them, the deep expertise, and that overlay of cultural belief I talked about for our folks, and our digital kind of properties and engagement within that we have today. And so those ingredients we think come together. And so we may not be putting spaceman out, like Elon Musk did, which was one of the coolest things I've seen in the last few years, but that's not the innovation that we aim at – we aim to provide unique experiences that engender, obviously, those deeper relationships and more sustained relationships. And to the extent that we can do, create something that they've never seen before, like when we first built that goals tool, and did this really comprehensive family review in front of them. When clients kept telling us, boy, I've never seen anything like this, that was innovation to us.
The fact that they've never seen anything like this in a financial services industry. There was a number of companies been around a century plus. When our clients tell us you never seen anything like it, that reinforced that that was innovation on our end. And so, we aren't aiming at moonshots, but we are aiming at differentiated experiences that we think are compelling to our clients and prospects and keep them in the relationship with Northern Trust for the long term.
Drew Lazzara (41:45):
Yeah, Tom, that's great. It's really kind of inspiring to hear about you talking about innovation in those terms, and it makes you feel excited to be, you know, a potential client of yours. So I think we could probably talk with you for another three or four hours, but in the interest of your time, we'll close out with the question we always end with, which is, you know, if you were speaking with a senior leader at a business, what would be your Next Big Question for them?
Tom South (42:09):
I've got a, quite a topical one, but pretty philosophical. And I posed this at a distanced, but social get together I was at last weekend. Boy, you want to shut a party down, it did it pretty quickly, but I'm curious, for leaders in general, are they more anxious for us to go back to quote "normal," or are they anxious for us to never go back to normal and why? I think that's an interesting question for folks.
Drew Lazzara (42:42):
Yeah, absolutely agree. I think that's a huge question that we’re going to have to be working our way through in the next several years. So, Tom South, thank you again for being here today on the show. This was awesome. Really appreciate your time and your thoughtfulness and your approach to your work.
Tom South (42:56):
Oh, it was my pleasure. And thanks to both of you.
Liz Ramey (43:00):
Thanks, Tom. Thank you, again, for listening to The Next Big Question. If you enjoyed this episode, please subscribe to the show on Apple podcasts, Spotify, Stitcher, or wherever you listen. Rate and review the show so that we can continue to grow and improve. You can also visit Evanta.com to explore more content and learn about how your peers are tackling questions and challenges every day. Connect, learn, and grow with Evanta, a Gartner company.
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