A culture of conviction: An interview on organizational transformation with the former CEO of Société Générale

When Frédéric Oudéa joined Société Générale in 2008, he was tasked with helping the bank recover from compliance and supervisory control issues related to a fraudulent multibillion euros trading scandal, just as the global financial crisis was setting in. However, these difficulties proved to be just the start. The European sovereign debt crisis, rising geopolitical tensions, technological disruption, regulatory change, pandemic, and now rising interest rates and inflation are just some of the challenges Oudéa has encountered during his 15-year tenure. As he steps down as the company’s CEO, he will begin a new journey as nonexecutive chairman of the French pharmaceutical company, Sanofi. Oudéa recently spoke with McKinsey senior partner Sandra Sancier-Sultan about his tenure and the transformation journey that Société Générale has pursued. Their discussion has been edited for clarity and length.

Sandra Sancier-Sultan: After 15 years as CEO of Société Générale, you’re now the longest-serving bank CEO in modern European history. You’ve seen significant changes to the banking sector in that time. How are you thinking about those changes? What has surprised you most in that time?

Frédéric Oudéa: It’s been a remarkable last 15 years—a period of tremendous crisis and transformation, both leading up to and following the financial crisis of 2008 and 2009. There were questions about the bank’s liquidity as the Greek debt crisis washed across Europe and the eurozone sovereign debt crisis unfolded. This created an environment of uncertainty and led to the disappearance of some banks as institutions. More recently, in 2020, we had the COVID-19 pandemic, and then the Russian invasion of Ukraine took everyone by surprise and created further disruption. Since then, we’ve also faced the escalating challenge of rising interest rates. This period of unprecedented events has challenged client and shareholder confidence, and this has been compounded by increasing geopolitical tension, which is here to stay. The world in which banks operate today is more fragmented than it was 15 years ago. Risk cycles are shorter and more extreme, and regulations have fundamentally changed the industry. As a result, we’ve had to continually adapt to a bumpy road and, at the same time, profoundly transform how we serve our clients—notably through technology. For me, as CEO, this has meant being clear about the bank’s direction. We’ve had to combine certain long-term transformations with an ability to react quickly and adapt—a kind of tactical agility.

We tried to anchor the direction for the bank around a few long-term trends and convictions. There are limits to a full international expansion in a more fragmented banking world, so, therefore, we made portfolio adjustments. We had the conviction that digital transformation was going to have a profound impact on the retail banking model, hence our early and massive investment in Boursorama, which is now the leading direct bank in France. At heart, we’re a service company that creates value by focusing on long-term client satisfaction, so we set our focus and the heart of our culture on client centricity.

I also believe that setting the direction to work together and behave was important in my CEO role. It was important to me that this way of working—the culture and the behaviors we demonstrate—was consistent with my personal values. I also tried to make this constant over time, during both good times and times of crisis.

Sandra Sancier-Sultan: We interviewed you ten years ago when you were five years into your tenure at the bank. At that time, you spoke about having a long-term vision that makes sense in any circumstance. Since then, you’ve seen more than your fair share of challenges as CEO. Is there one overarching lesson you’ve taken from the experience?

Frédéric Oudéa: It was interesting to reread that interview and remember what it was like in those days. I spent the beginning of my 15-year tenure in the CEO chair as a kind of fireman, moving from one crisis to another. That eased a bit between 2013 and 2019, but I still spent a lot of time putting out fires. In retrospect, these experiences taught me that even if you prepare for crises by running through potential scenarios, the crises that occur are often not the ones you had a scenario for. I felt that coming into the role, and it has continued to prove true. The best recipe to manage these crises lies in the culture of your teams. I’ve come to see that the key enabler is the way people behave with one another and the working environment they create. Ten years ago, I told you that although the public role of the CEO is essential in a crisis, no single person can manage a crisis on their own. That’s still very much the case. Leaders need the support of a strong team to feed their energy and determination, and I relied on mine. There were some really hard times for us, and seeing how strong they were made me a better leader.

What I would add to what I told you in 2013 is that crises and disruptions also represent formidable opportunities to accelerate transformations. The way you handle crises makes you stronger and sets the organization up to take on bigger challenges that you might not have imagined earlier.

Crises and disruptions also represent formidable opportunities to accelerate transformations. The way you handle crises makes you stronger and sets the organization up to take on bigger challenges that you might not have imagined earlier.

Sandra Sancier-Sultan: The financial-services sector has weathered many scandals and crises in recent years. Like many banks, Société Générale has faced challenges. When we spoke with you a decade ago, you talked of remaining calm as a leader and instilling clear decision-making processes in your team. What advice would you give to a CEO who is struggling against seemingly insurmountable challenges?

Frédéric Oudéa: I would advise other CEOs to focus on finding solutions. Building trust in your teams is important, but it’s empty faith without workable solutions. Leaders and management teams must find many solutions with agile thinking. The whole organization needs to be focused on finding solutions, and not just in times of crisis.

Things will not unfold as you planned in your annual or long-term plan, and the biggest crisis you plan for is not the one that will happen. So there is a significant difference between your preparation for crises and the capabilities and skills needed for the actual challenges you’ll face. When that time comes, facing those challenges requires concentrating your energy on finding the solutions—what I call “tactical agility.” The whole organization needs to be able to find and execute solutions. This does not come about just through methodic planning. It comes from building the culture, which is all about the way people work with one another. Colleagues need to feel comfortable thinking outside the box and solving problems at all times. Protecting this culture is the most important aspect of leadership, particularly through crisis. The solutions may not be immediately clear when a crisis arises, but the culture and values will guide you, and the capabilities of your team will enable the action.

Sandra Sancier-Sultan: You talk about culture often and how it sustains an organization through crisis. In our work, we know that culture is an integral part of the success of a company’s transformation. In moments of crisis, how have you prioritized building and nurturing Société Générale’s culture?

Frédéric Oudéa: It goes beyond culture. I would call it spirit—team spirit. What is the spirit of the organization? A company’s spirit is shaped by its people. I always tried to lead with conviction and build a way of working together that made it comfortable for employees to participate and contribute so that they could use their skills and knowledge to serve clients in the best way possible. The financial crisis was difficult because of the changes in spirit required to recover from it. For us, we needed to create the right motivation and culture to build the spirit needed to serve clients well. We needed to empower our people to develop their entrepreneurial spirit so they could make the right choices for our clients. We needed to build a way of working together that made it comfortable for people to participate and contribute. For example, I’m particularly proud of one fact: nine out of ten Société Générale colleagues say they feel they can go to a colleague for help.

Things will not unfold as you planned in your annual or long-term plan, and the biggest crisis you plan for is not the one that will happen. So there is a significant difference between your preparation for crises and the capabilities and skills needed for the actual challenges you’ll face.

Sandra Sancier-Sultan: You’ve made some big bets on direct banking with Boursorama and moved into an adjacent industry with ALD [Automotive] as a European mobility leader. What led you to make these moves?

Frédéric Oudéa: In the cases you mention, we decided to start building new businesses just after coming out of a severe crisis. We saw that there’s opportunity in crisis. We had put in the work to strengthen our culture and spirit. As I said, the people model is very important to how an organization responds to crises and challenges. Once we saw that we could come out stronger again, it built our confidence. We felt it was a good time for us to be bold and invest in new businesses and accelerate our transformation.

Sancier-Sultan: Change is famously difficult. It’s human nature, really. How did you make the case for change and innovation? How did you bring the organization on board?

Frédéric Oudéa: Banks are under extreme pressure, and the wrong incentives can lead to the wrong behavior. As a leader, I had to send strong and sound signals and model the desired behaviors. Moving the organization was the result of creating teams whose members enjoyed working to solve problems and were empowered to do so. We focused on our culture and our conduct early on. I saw great value in creating ambassadors of the culture and spirit, and they helped bring the wider organization on board. They served to create a connection at all levels of the organization with the spirit we were trying to build.

For example, we measure our commitment to clients rigorously, and that’s visible in our actions, which translates to role modeling. I measure how I spend my time and am very rigorous in spending at least one day per week meeting clients. Clients are our most important focus as an organization, so my time reflects that. It’s this consistent way of behaving. I want to be consistent in my convictions and show my colleagues and our clients that we walk the talk.

To communicate that kind of thinking out to the entire organization, we first focused on developing the leadership model we wanted, starting with the top team. Then we extended that out to the top 60 leaders, and after that, we extended down to the next level, which gave us 1,400 ambassadors of that spirit and culture. It rippled out from there. The key to success here is ensuring they’re aligned through the right remuneration framework. This includes both individual objectives and a significant portion of incentives that center on collective goals. The remuneration incentives have to reflect the common values of the organization. For example, we tie about 40 percent of variable compensation to collective objectives for the top 25 executives.

By building a community this way and correctly tying remuneration to success, we defined how leaders needed to behave with peers, and this sent a clear message to the entire organization. We found that resistance to adjusting to our system of valuation and leadership model was limited. I worked closely with our CHRO [chief human resources officer] to implement all of this because that helps communicate the spirit and culture to the rest of the company. Most importantly, I felt that what we were doing was consistent with my own personal convictions.

Sandra Sancier-Sultan: There’s significant innovation in the financial-services sector, especially with the disruptive forces of fintech, cryptocurrency, and AI. How have you thought about navigating these new tools and the competition that comes with them, especially considering the speed at which technology advances?

Frédéric Oudéa: Again, role modeling the desired behavior was critical to how we drove change. When we understood that technological change required us to innovate, we moved to bring innovation as a goal to all our companies. I invested a lot of time getting trained with the help of young digital colleagues. The top team went through a similar journey, including, for example, a corporate project where each of them would sponsor one internal start-up. This also helped reinforce our spirit and culture. Those at the top had knowledge rooted in older ways of innovating and knew they needed to learn from younger talents. That helps instill respect and prevents people blindly following leaders because they have more seniority.

Sandra Sancier-Sultan: As you’ve prepared for this new chapter in your career, how have you thought about ensuring a positive succession and the continuity of the company’s ongoing transformation?

Frédéric Oudéa: I feel I’ve left Société Générale proud of a smooth succession process and without ever having compromised my commitment to fairness and client loyalty or my own convictions about how we frame our culture and how our people work together. This is what let us manage our challenges and crises—our presence in core moments, our consistent long-term loyalty to clients, and our integrity. We may face other challenges in the future, but we have those core values—that spirit—as our foundation. And personally, I feel very grateful for the fabulous human experiences I’ve had with the people of Société Générale.

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