Stefan Thomke

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REV: OCTOBER 28, 2002

STEFAN THOMKE

Bank of America (A)
The banking industry is ripe for innovation. We need to grow through value creation and excellent service that is appreciated by customers as opposed to price alone. — Milton Jones, president, Georgia Banking Group “I wonder if we’re being ‘overrewarded’!” exclaimed Warren Butler to Amy Brady, the executive responsible for Bank of America’s Innovation & Development (I&D) Team in Atlanta, Georgia. As an executive in the consumer bank’s quality and productivity group, Butler led innovation and process change in Brady’s group, which was responsible for testing new product and service concepts for the th bank’s branches. In the company’s elegant 55 floor conference room on a day in May 2002, the two prepared for a team meeting on an important strategic decision that would affect how experimentation would be done in the I&D Market. Seeds of change were in the air at Bank of America. Indeed, earlier in the day, Butler had escorted an astonished visitor, a European banking executive, on a tour of some two dozen real-life “laboratories” in Atlanta. Each was a fully operating banking branch, yet in every location new product and service concepts were being tested continuously. Experiments included “virtual tellers,” video monitors displaying financial and investment news, computer stations uploading images of personal checks, and “hosting stations.” (See Exhibit 1 for a selection of experiments carried out in a single branch.) Currently, the I&D team had 25 bank branches in Atlanta in its experimentation portfolio. Senior management, however, had now offered them additional branches across the country that could expand experimentation capacity by nearly 50%. This offer appeared a vindication of the I&D Market project, which had been launched as an experiment itself only two years earlier. This reward posed some tough questions. Would increasing the size of its innovation laboratories aid or inhibit the group’s ability to develop new product and services? What would be the effect on the group itself? The issue of whether it was a dedicated research and development (R&D) operation or not had yet to be resolved. And, finally, what kinds of expectations would be placed on the group if its size were to increase so dramatically?

________________________________________________________________________________________________________________ Professor Stefan Thomke and Research Associate Ashok Nimgade prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2002 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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Bank of America (A)

Bank of America: A Pioneer in Banking
Many innovative banks have gone out of business, often because they deviated from the “best practices” followed by most. — Rick Parsons, executive vice president, Strategic Projects When Bank of America was formed in 1998 through a merger between California-based Bank of America and NationsBank of North Carolina, it could be proud of a long and rich history that spanned more than 150 years. Under its last CEO, the colorful but controversial Hugh McColl, the company had gone on a three-decade-long acquisition binge that resulted in a truly nationwide bank. In the fitting end to an era of hunting, McColl left his last annual meeting wearing cowboy boots and jeans on his way to a turkey shoot in...
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