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A Note From the Chairman

April 14, 2021


“Predictive failure is being stuck in your ways 
when living in a world that is in a constant state of change.” 


After finishing an interesting book the other day, I wrote this note to myself in the margin of the last page and last I checked, we are all being inundated with change these days.  The book was sent to me by an institutional investor (thank you Adam) and is titled “Innovation Stack” by Jim McKelvey, cofounder of Square.  Because Square is a tech based payments company I assumed the book was going to be about innovative banking technology but I quickly found it was much more. 

Innovation and creativity are applicable to every business.  The author suggests that if all new companies were simply copycat artists then their only real means of competition would be price which eventually would force less quality.  The downward spiral he describes is that as prices fall, all else being equal, product quality and/or service levels would need to be reduced to offset the lesser revenue so that some minimal level of profit could be attained. Eventually customers would be forced to adapt to lower quality. 

True entrepreneurs, however, are more inspired than that.  To them, “copycat” is, in effect, a dirty word.  My dog has one solution for everything, chew it.  Solving the problem of problem solving requires much more than a one solution fits all approach and regardless of their industry, aspiring business owners strive to deliver more, not less. Business owners seek to produce better value rather than merely lower prices and slimmer margins.  The “Innovation Stack” describes an approach whereby sequentially harnessed solutions not only create differentiation, they represent a powerful competitive edge. 

McKelvey highlights Southwest Airlines who he describes as having created a stack based on the idea of delivering affordable air travel to everyone, essentially competing with bus lines rather than other airlines.  To do so meant keeping their growing fleet of planes in the air more of the time and with a full complement of passengers.  Problem one, turnaround time – keep ‘em flying.  They “invented” open seating, A-B-C boarding, no food service, every plane the same make/model, relaxed and fun attendants and incentivized the ground crew.  They flew to cheaper airports and only sold tickets directly from Southwest (no middle man).  These and other “innovations” allowed for a fair fare while still driving profitability.  To their delight, not only did the previous bus riders adopt flying but because of their on-time, direct flight reliability, business passengers adapted to Southwest as well. 

A very basic example are sandwich shops. Every sandwich shop believes it has discovered the formula that makes them better than the one around the corner.  How many different sandwich shops can you name?  The reason they all exist and that prior to the pandemic many were doing well, is due to problem solving.  The creator of each one identified a problem in the form of an objection or a preference and went about creating their own, unique solution.   

Whether simple or complex, problems must first be identified before they can be solved. McKelvey suggests that is the easy part and it starts by simply taking note of what bothers you.  It is like the problem chooses you rather than the other way around.   

We’re doing that at Centrust Investment Holding.  Last year we formed an internal department called Solutions Development.  Their job is to apply technology and process designs to address the needs identified by the rest of the team.  They use agile processes through a multi-step approach to tackle improvements in short but effective “sprints”.  In other words, they either deal with smaller projects quickly or break down big projects into smaller steps where incremental progress is continually released.   Last year this method was used to build, implement and continually improve our process for handling PPP loans even as the rules were constantly changing.  The number of these loans completed by our bankers in support of our customers and the community is mind blowing.  This new development team is able to assist with enhancing both internal processes and projects and with implementation of new customer facing capabilities including new products and services.  They have energy, enthusiasm, are forward looking and approach every problem with an upbeat, can do attitude.  That said, our innovation stack is much more than being adroit with change management.   

And although our development staff are great people, you will likely never meet them.  You will however, feel them.   

Their same sense of service and optimism has been infused into our culture. It is everywhere.  Our strategy depends so much on delivering value added service as being our competitive advantage that we emphasize a well-defined culture constantly and completely in every department.  I know I’ve written about this many times before but our sense of purpose of helping our local communities to really thrive is like a beacon that drives each one of our bankers. 

Making a difference is why we serve small businesses. It is why we volunteer and contribute. It is why our focus is long-term but also why we must be willing to adapt and adopt.  Accepting change involves not being de-railed by the natural feeling of uneasiness that we get when we embrace it. 

So, we are in a state of inquiry, internally and beyond.  What needs improving? What needs to be added? What can we do better?  Where are the bottlenecks or breakdowns? What appears to bother us?  Our response to these questions and others are the bricks that will form our innovation stack, and we find this part of our journey very exciting. 



Centrust Investment Holding Chairman Steven Retzloff

Steve Retzloff, Chairman

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