Introduction: Our first speaker is Ajay Banga, the president of the World Bank Group. He's led cultural transformation twice. Once in a phenomenal manner at Mastercard, where he was the CEO for 12 years, and now at the World Bank.

Host: The private sector tends to move faster. The public sector has decades of history, multiple shareholders, stakeholders.

Host: How do you drive cultural transformation when the rules are completely different?

Host: We'd love to hear more. Please welcome AJ.

Ajay Banga: So they say that culture trumps strategy every time and the pun is intended. So that's where we're going to start from.

Ajay Banga: Everyone in this room has built or led organizations. You've all done something of that type. You've shaped teams. You've kind of made decisions under pressure. you have uh lived the reality that culture is not something abstract.

Ajay Banga: Uh you've got your own hard one views on it. No doubt. But I'm not here to tell you that I've figured it out. I just uh have an unusual vantage point. As you said, I've had the chance to be the CEO of a of a public company. That's Mastercard. And and now at the World Bank Group, it's quite different. It's 25,000 plus people with uh 189 governments as my shareholders with 25 uh executive directors resident in my building with 20 advisers each which means a lot of people who want to know what I'm doing. So so so I can't really goof off either.

Ajay Banga: So, what we all know there is that as a CEO I think culture is what determines our success. I think culture is what is the single most important thing all of us work on and and it's easy to talk about it but what exactly is the darn thing and I think what is it and how do you build it are the two most important questions that most of us have to answer.

Ajay Banga: So so in an effort to be faithful to Nicola I I actually have written a speech down on culture which is pretty interesting. I've never done that but I'm going to read this out to you so I don't miss a few things. I spent a lot of time working on this one.

Ajay Banga: I think what culture is depends on your organization. I think regardless of your unique circumstances, culture is the glue. It is absolutely the glue. How people make decisions, how they take a risk, how they work together to deliver whatever your mission is, it's how you drive an organization to say yes if rather than no.

Ajay Banga: Every organization has plenty of people incentived to say no. There are never enough people who say yes if you do it this way. Finding that culture is important. Culture is not a value statement. It is not a poster on the wall and definitely it is not what the CEO says at town halls. It's just not.

Ajay Banga: So at the simplest culture is what gets measured, what gets rewarded, what gets tolerated. But most importantly, it's what happens when you're not in the room. And so that's the culture that I'm talking about. And I think the idea of it's what happens when you're not in the room is what makes it a force multiplier.

Ajay Banga: And the how is where culture lives or dies. Because while everybody's context is different, there are some common things between the public and the private sector. And there are some very big differences.

Ajay Banga: So first, what I call the decency quotient, DQ. I learned very quickly that IQ and EQ were important while I was growing up. But I believe that now what you need in leadership is what's called the decency quotient.

Ajay Banga: And that's I I just named it that. I was making a joke in a town hall and I'd just come out of listening to Warren Buffett talk about DQ. In his case, that was Dairy Queen, the ice cream. And so you could see how my mind works. And I was looking for something to talk about to tell people what I meant and to give a word to what I was trying to explain to them about culture. And this idea of decency quotient came.

Ajay Banga: But decency is not about being nice. It's actually about being fair, direct, and consistent.

Ajay Banga: Tell the truth to your people even when it's uncomfortable. Give that feedback with clarity. Speak up when it's difficult. Treat people with respect. All that. It doesn't actually slow the organization down. It does quite the opposite because it allows you to move faster because people trust the system and it improves decisions because people are willing to challenge and to be challenged and so it actually works in the right way if you do it the right way.

Ajay Banga: Fear drives behavior for a while but it doesn't build judgment. It doesn't build ownership and it doesn't build initiative. Decency does. And so leadership has to feel like a hand on your back. You got to push people forward but not a finger in their face and that's what decency quotient is all about.

Ajay Banga: That's the first thing. The second one is clarity of purpose. In a large organization I think the biggest cultural problem is often not resistance and James can talk to this uh ad nauseum. It's actually confusion more than resistance.

Ajay Banga: clarity in his case in Morgan Stanley. He very clearly delivered a message of what they were going to focus on which was wealth management as the way that Morgan Stanley would grow.

Ajay Banga: Right in and that changed an organization that had multiple ideas of how they would grow to very focused, very simple, very focused. And I think simplicity is the key. And making something simple is actually the hardest thing to do. So people think that in simplicity you've lost detail. Actually conversing in simple terms without jargon is the world's most difficult thing to do as a leader.

Ajay Banga: At Mastercard the company had to redefine itself from a payments processor to a technology platform. How did I simplify it? I united everybody around one set of mission and it said kill cash. Just kill cash as compared to thinking about everything else.

Ajay Banga: And that included technology. It included payments, included analytics, it included data, it included anything that you could do, financial inclusion, working with the downtrodden, getting social security payments into their hands, figuring out digital identities, all came inside the idea of killing cash. It gave them a very clear sense of direction.

Ajay Banga: So at the World Bank, similar issue, how do you kill poverty? And I've got come around to saying instead of having many different causes, let's do this for climate, let's do that for gender, let's build a hospital, let's do a skilling center, let's do schools.

Ajay Banga: At the end of the day, what you're trying to do to kill poverty is to give people a job. not necessarily working for a big company or a small company or as an entrepreneur or just staying in their small farm and being content with the productivity they get by connecting up with technology to a cooperative. I'm just giving you many ways to do this.

Ajay Banga: The point is a job earning is the best way to drive people's hope and dignity. And if you sort of think about this carefully, a friend of mine once said that poverty is both a state of mind and a state of being.

Ajay Banga: Being you can solve by giving grants, by giving aid, by giving donations, by writing philanthropic dollars. Mind doesn't get solved with that. Mind needs you to feel productive every morning, optimistic, feeling that you've got a future.

Ajay Banga: So I think the most important thing is the job gives you both a way to defeat a state of being and a state of mind to drive a nail into the coffin of poverty. That's the clarity that has settled in.

Ajay Banga: And I think once you start doing that you get this multiplier effect of people making decisions on it. The last thing about clarity, just never tire of discussing what you've decided is very simple because leaders get bored saying the same things. Organizations don't get bored hearing it.

Ajay Banga: And I think if you want something to stick, you got to say it again and again and again and again until it shows up in how people make their decisions. That's the that is the second topic.

Ajay Banga: The third is measure what matters. Align your incentives. You guys are all pretty clear on that. At Mastercard, we had some simple metrics.

Ajay Banga: At the World Bank, I had a corporate scorecard. For those of you from the private sector, you will love this. I had a corporate scorecard of 155 items when I showed up. And I tried to explain to my board of those 25 people that 155 items is about 130 too many for a corporate scorecard.

Ajay Banga: Because at 155 items, I will always get an A+ because I would have delivered on 30. and you'll never get me to discuss the other 125. That's how it works. It took a long time. We got ourselves down to 22 items and all 22 now on our website. You can go and click on them and you can track where I am every month project by project on delivering against that.

Ajay Banga: And I keep telling our board sunlight is the best disinfectant. And so transparency of your targets, simplifying them fewer are what we're trying to do.

Ajay Banga: So now all this is lovely but here's the context difference between the private sector and the public sector. In the private sector pressure comes from markets comes from shareholders comes from profit motive performance competition crisis.

Ajay Banga: You got clear levers compensation hiring firing capital allocation. At Mastercard if something wasn't working I could use all those levers jiggle with them fix it quickly.

Ajay Banga: In the public sector the challenge is completely different. We've got a mission, but we also have 189 shareholders, each with a different and nuanced way of looking based on their domestic politics, which they bring to my office every day. You've got long-standing processes. Tenure is long. Risk aversion is very real. We're kind of like an academic institution trying to get real work done. So, you can imagine how complex that is. And you cannot reset that system overnight.

Ajay Banga: And compensation is not a lever of the type that you have in the private sector. So you work all the levers you have. You align teams around the outcomes. You simplify what you say. Simplify structures. You become explicit in what gets recognized. You become explicit in what gets funded. It takes longer.

Ajay Banga: But the principle is exactly the same. If you don't align the system, culture will not move. And alignment comes from simplicity and focus and leading from the front with how you speak about what you're doing.

Ajay Banga: So it's just a closing thought for you. I have told everybody who worked with me over the years that leadership is not a privilege. It's not your birthright. You weren't born with it.

Ajay Banga: It is absolutely what you have to earn. And at some point in your career, someone trusted you like someone trusted me with the responsibility for other people. And at that point, your job changes forever.

Ajay Banga: And so it's not long about just delivering results. It's about creating the conditions where the people who work for you can feel your hand on their back pushing them forward. And that is what culture is all about because actually you're not going to be there to put your hand on their back all the time, but they have to feel it anyway. And that's culture. Thank you very much.