Articles
Business Review Weekly
When Michael Chaney arrives at the National Australia Bank, chances are he will be carrying the business manual he swears by.
By Tim Treadgold, Australian Business Review, March 2005
If National Australia Bank's (NAB) chief executive, John Stewart, does not have a copy of the Argenti System in his office, he had better get one - quickly. Argenti, a strategic planning technique, is the business bible by which Michael Chaney lives his commercial and personal life. From September, Chaney in effect becomes Stewart's boss as Chairman of NAB, and one of his first questions will almost certainly be whether the bank uses Argenti.
John Argenti, 79, creator of the system that bears his name, says: "I imagine the question would be more like where's your strategic plan?" Argenti now lives in semi-retirement at Suffolk, on the British coast.
Chaney skips lightly around questions about NAB and Argenti. "Like most companies, NAB engages in strategic planning. I have only attended one board meeting to date and have not discussed what process is being used," he says.
He may not have asked, yet, but anyone who has followed Chaney's career knows the answer he wants to hear, because he is the world's leading disciple of Argent. Words of praise from Chaney are liberally scattered across the Argenti web site http://www.argentisys.com and he has applied its teachings at:
- Wesfarmers, where he is in his final months as chief executive
- John XXIII College, a Perth school when he was chairman of the council
- A science museum
- The University of WA Graduate School of Management, where he is patron.
- Other organisations with which he was involved, including a government department.
Chaney's devotion to Argenti is demonstrated by this quote attributed to him on the web site's home page:
"The Argenti system has undoubtedly played a big part in our company's (Wesfarmers) average annual 30% returns since 1984."
The emphasis on financial performance goes to the heart of Argenti, a system based almost entirely n critical measurements such as return on capital, and on determining the big issues facing an organisation rather than focusing on a mountain of small details. The Argenti system is brutal in its simplicity. It says that if managers cannot get the required returns on equity, then the money should be given back to shareholders; there is not justification for being "married to the business",
Mission statements are forbidden because, according to the delightfully outspoken John Argenti, "they are generally just an ego trip for the chief executive". Ego tripping is something Chaney has avoided in his 13 years at the Wesfarmers helm. But, comparisons between what Wesfarmers has achieved and the failures of NAB are impossible to avoid. While Wesfarmers has grown exponentially, NAB has stumbled, last year producing a total return of just 1.8% to shareholders, and underperforming the banking sector by 15% and the overall market by 26%. That result, perhaps more than a currency options scandal and other disasters, saw the downfall of former chairman Charles Allen and chief executive Frank Cicutto.