Dave McKay 0:00 

And I see leaders who want to keep take a risk, but keep it quiet. I don't want anyone to see and if I'm successful, I'll tell you about it the day, but then it's hard to marshal resources and excitement and organization if you don't declare yourself

David Novak 0:20 

the fastest way to get stuck in your career. Keep your boldest ideas to yourself. Welcome to how leaders lead. I'm David Novak, and every week I have conversations with the very best leaders in the world to help you become the best leader you can be. My guest today is Dave McKay, President and CEO of the Royal Bank of Canada. He spent more than three decades at RBC, rising through the ranks with a clear sense of values and vision. And what I really admire about Dave is how he puts those visionary goals out into the open. Look, it's scary to go public with your big goals. Believe me, I know because in the back of your mind, there's that little voice saying, yikes, if I fail, I'm going to fail in front of everybody. But that's why you've got to hear from Dave today, because you'll see going public with your big goals is how you build momentum. It's how you attract performers, and it's how you turn big ideas into real, measurable progress. One thing I know for sure, when you go public with something, you can't go back, because it means you're all in to make that happen. And if all that's not enough for you, you'll also hear how RBC leaned into Taylor Swift fandom to drive results. Trust me, Swifties and strategy fans alike are going to love this one. So here's my conversation with my good friend and soon to be yours. Dave McKay,

Dave, you got your first job at RBC in 1983

Dave McKay 1:58 

which means you've worked at RBC longer than Taylor Swift has been alive. When you hear that out loud, what goes through your head? Love Taylor Swift. I don't if you know we were her sponsor for the portion of the ARIS tour in Canada, and we had a great partnership with her in the tour, and it was a massive acquisition opportunity for us to bring new clients into the organization. So for many reasons, whether it's music or business results, love Taylor Swift, yeah, for me, it's been a labor of love. I mean, I love this company, I love the people I come to work with every day. So it's been just a wonderful journey of almost 40 years in total, and just, just love, love every minute of it, mostly every minute. I know how that goes. But your CEO, you can't love every minute, you know, because stuff does happen, you know. But I love getting into the mind of leaders to learn how, how you really make a decision, you know. Walk me through the decision that you made to partner with Taylor Swift, and did the sponsor the Aristotle in Canada? Yeah, music in general has been a big part of our overall sponsorship portfolios. We sponsor golf, particularly in the United States. We sponsor the Olympics and we sponsor music. We're a partner of Live Nation. And even though this wasn't the Aristotle wasn't a Live Nation concert. We know the music industry very well through our entertainment franchise at City National, so the confluence of being in music and supporting a lot of the musicians on the banking side through City National, we knew Taylor's team, and it was really Mary my CMO, who came up with the idea to say, how cool would it be if we sponsored Taylor Swift? I got to give credit to Mary. Mary was a brilliant idea, and it worked flawlessly for us. You know, I read though that this, this move that you and Mary made in terms of sponsoring the arrows to led to incredible results. You know, when you place a bet like that, because this was not, not cheap, you know, how do you balance the the risk versus the reward? It's a great question. You've got to go through, because some of it are soft benefits. Some of them are hard benefits. In this case, and a lot of times, sponsorship is a soft benefit, you can't directly link it to a business outcome, because you could have various offers in the marketplace, other initiatives trying to draw clients. And so how do you pinpoint it to that specific promotion? And golf, a little bit like that, Olympics is certainly like that. But in this case, because we had a ticket inventory to give away, we could link it to a direct business outcome. So we had to make some assumptions up front to say, you know, with this, these type of opportunities, how many people would apply for a new credit card. Would it really draw? I'm sure her brand was, was riding really high when we did deal, and still is riding really high. I don't think was a big stretch, honestly, to say, Will, Will Taylor sell? She absolutely sells. And I have to say, I've never seen, you know, an event draw. People.

People in from around the world. We had customers from around the world come into the cities where she was performing, but the atmosphere of positivity and unification in a world that's being divided and so many levels, was just really special thing to see. So it was brand aligned, which we always have to do. There are some bands we wouldn't align with, but certainly very much brand aligned, outcome aligned, and we could see, you know, a direct impact to our business, as you referenced, exceeded our expectations for sure. So those are the bets you make. You just it's a probability. As you look at the risks, you say, this is a good play. Let's, let's do it. Let's make it happen. You know, Dave, you you've been the CEO of RBC since 2014

give us a snapshot of the company today and how it compares to to when you first took the reins. Yeah, no, it's we've come through enormous period of growth. So our business strategy, I'd say it's the consistency the business strategy has been really important. We within Canada, we're number one in most businesses that we have, whether it's capital markets, Wealth Management, commercial banking, retail banking, we are, we are the number one player with number one market share. And then outside of Canada, we compete in a couple of global businesses that we've done really well in capital markets. We're a top 10 global player, and kind of number nine United States, one of the largest non US based banks. And we compete very well, like you know, Fortune 200 to Fortune 500 we've got a very strong investment banking and markets business in the United States and a global business. So I would say top 10 in the world, in our in our global capital markets business, with strong operations in North America, Europe and Asia, and then the Global Wealth business, another area. We compete outside of Canada, exceptionally well with, again, similar footprint. United States, we're the number five player in wealth distribution. United States, with

a based on a UA, over 700 billion US and AUA, and then a strong presence in Europe, we're the number three player in the UK. So we've got a global wealth franchise. So in Canada, we're all things to all people outside of Canada, we really focus on capital markets, wealth and then commercial banking. In the United States with City National, I made that acquisition my third month as CEO, about 10 years ago, and that's been a really strong acquisition. So outside of Canada, we pick markets and customer franchises we think we can compete in and do well that link back. We're not a global retail bank outside Canada. Some banks tried that and pulled back. So it's our focus and our consistency of strategy and our execution against that has been really, really strong. And we've taken the business from, I think it took over about 110 billion market cap to 250 Well, that's impressive. And when you think about the strategic process that you have, you know, how much do you tweak your strategy every year? You tweak the execution against the strategy, for sure, because, like one of the questions I asked my team, we all talk about why we didn't win or where we didn't do well, but just as importantly, you have to ask your team, why did we win, and is it repeatable? The end of the day, because a lot of leaders assume, or don't spend time thinking we had a great year, exactly which part of the things, all the things we did worked, which didn't, and which ones are you going to repeat, and which ones aren't even repeatable? Like, I don't have Taylor Swift next year. I wish you would go on concert again, on a tour, but I don't have Taylor Swift, so that's not repeatable. So what are you going to do to get 600,000 accounts next year? So helping your team focus on why we want and what you're going to do the same, but what you need to change? So I think you're always thinking about, I call them one of the tactics within this strategy. You're looking at the environment and how the environment's changing in the world of tariffs that we have in the world of AI geopolitics. Are there macro forces that force you to think about serving different segments of the client base, pulling back here, expanding there, serving new markets. So part of my job as a CEO is to constantly look five to 10 years out, where do we need to be? Do we need to be in a different market? Do I need to be bigger in Asia? Yes. Do I need to be bigger in Europe? Yes. Do I need to be bigger in United States? Yes, I do. How am I going to affect that change? What? What does success look like five years, 10 years from now, organic and in organ? So that's a big part of the CEO's job. So I'm always testing, asking, learning, thinking, what if we did this? So you're you're thinking strategically five years out, you're executing one to three against that plan, making sure that you continue to roll forward with strong performance, and you keep a horizon of initiatives. You don't just focus on the next year, but what do we have in the one to three year bucket that's going to perform for us? And then what do you have in a three to five so I think around horizons.

Dollars and making sure that we have a balanced approach and how we spend our $35 billion of nie a year. You mentioned tariffs, and I got to ask you this, you know, you know, how is the Canadian United States relationship really impacting your business today? You know, since Trump has come on and acted the tariffs. And, you know, it's been a lot of vitriol going back and forth. You know, how does, how's this impacting you? I think Canadians are shocked by the vitriol. And we've been closest friends, sharing a common border with balanced trade for 100 years and more. And we've, we've never questioned that. And when you have balanced trade, and each side's winning $400 billion going each way, each year, we trade a little bit more in energy, you sell us more goods and food. But net, net, it's, you know, 404 50 billion. And we should be focused just on growing both, both of those, because both nations prosper from that, and we don't have to do it all ourselves. So we don't understand kind of the narrative and the objective then, as to kind of what outcome are we looking for at the end of the day. So a lot of times being spent a part of it. The administration wasn't confirmed. We didn't the seats weren't there. Now everyone's the administration's in their seat, and therefore I think the dialog is more focused, and we can move stuff forward. But I don't think I think we need to solve for this. I think we're going down a dangerous path that I think we're stronger America, stronger with friends like Canada. I think America success and enormous success and prosperity has come from multilateralism, building bridges to the world, being the free market leader, and I think there's a huge benefit to America in doing that. Going down an isolationist path is a different strategy altogether, and I'm worried about it, to be honest, yeah, I think a lot of people are certainly the markets are, at least at this stage, for sure, and and, you know, Dave, you've spent your entire career at RBC, and it's an amazing track record that you developed, and I can't wait to talk more about it, but I I want to take you back. You know, what's the story from your childhood to shape the kind of leader you are today. I grew up in Montreal, and my family, my father was an entrepreneur, small business owner, and I watched my mother and father run this small business for over a decade, and I watched how hard they were. They we were. We imported high end lighting from Italy. We had the rights to some of the top designers in Italy and in Sweden, and we sold it to high net worth individuals in New York and LA and in parts of Canada for their homes and their businesses. And whatever didn't sell ended up in our home. At the taste our home looked a little bit more like the Jetsons. When I was growing up stuff. People remember the Jets maybe you and I remember the Jetsons, but maybe, oh yeah,

I think I remember that jingle. I won't sing it because I'm not very good at singing. So, you know, watching them work so hard really made a big impression on me and the fun and the challenges of running a small business, when how they dealt with their suppliers, and in those days, your suppliers, when they came in from Italy or Sweden, they came over for dinner all the time. And then we got to know them so well, their families would come over in the summer, and their kids would stay us, stay with us to learn English. So it was very much how business integrated and partnerships. I watched how my father dealt with all stakeholders. When the business its employees, I 10 years old, I was in the warehouse, kind of rewiring Italian lights for Canadian lighting standards, CSA standards, and pulling wires through this stuff and working with with the back office to the sales side. So I saw all elements, and I'll never forget, on one one day, my father took me to the bank. We happened to bank with Royal Bank, that was my only connection, and we were small business customer the bank, and my father walks into the bank and we're going to make a deposit that day, and we were standing in line to see a teller and branch manager comes out and pulls my father out of the line. I don't think we're a big customer, but he liked my father. We sat in the manager's office, so here I am, like nine years old, sit in the manager's office, and my father turns to me and says, We're gonna lend the bank some money today, which meant we're making a deposit. I had to think about that. Okay, didn't think about it that way.

So that was my introduction to RBC. And then I

tragically, I came home from school one day I was 13 years old. My father passed away. And you know that that's a seminal event, where it kind of changed everything in my life and our family's life and the business life. But I.

Learned a lot from him in those years I had him from I remember kind of those early years up to age 13, and I learned a lot about the business world and how to build a business from them. I was incredibly curious individual. It sounds like your father and your mother were very relationship driven. How much do you think that's led to your success in the world of banking, which you've got to build relationships? It's such a great question. It's so true. You think about building long, lasting relationships with customers, your relationship with your employees, your relationship with the board.

We're in a world of relationships and trust people do business with people they like and they trust, right? That's the kind of the rules that you and I have lived by, and everyone lives by. And therefore, how you build that authentically and sustain that over time is critical, and they made a very strong impression on me, whether it was a branch manager or families in Italy that would come over and trust us with their kids, or those employees that worked in the warehouse or in the sales floor, you learn you see and watch

relationships and building. See the ones that don't work as well. You learn as much from ones that fracture a little bit. Not everything's perfect. There's so much to learn there as well. And that made a huge impression on me, and it's kind of the foundation of think how I've operated throughout my entire career is managing and leading and getting to know people across the organization, but really building long term relationships with customers is a part of the job I love the most at the end of the day, yeah, I can see that, because you've got that personality where I'm sure you adapt to everybody, and that's a great leadership skill to have, you know, and you know. So your dad passes away at 13, and as I understand it, your mother takes over the business and runs the business for five years or more in a you know, what leadership lesson did you learn from your mother? Watching her in action? Yeah, she's my hero the end of the day. So here picture this 1310, and six family, very traditional family, kind of middle income house in the suburbs, and she's a housewife, and now she's got to run the company,

and she's got to make the buying trips to Italy, and she's got to kind of build a relation, different relationship, with the families in Italy and Sweden and others. And, you know, I never forget, like we the neighbors would come over, or we go to the neighbors for a week, and she'd go on a buying trip to Italy, and she'd go on a buying trip to Sweden. So I watched her kind of run this business, all elements of it, deal with the loss of my father, and they were very close, and try to raise three young kids at the same time, and we all turned out okay the day. That's

pretty incredible, isn't it?

Unknown Speaker 17:53 

Resilience, absolutely love and resilience.

David Novak 17:58 

Yeah, that's that's crazy. And then you started your career in 1983 you mentioned a little bit earlier that as a co op student in computer programming,

even though you didn't stay in that role for very long, what did you notice when you went to RBC about the culture that really made you want to stick around? Yeah, I think my nickname as a coder was infinite loop. The end of the

Dave McKay 18:26 

day, it was my entry into the bank, and I never forget I really needed a job, and those days when I walked into the branch manager's office were long before that. I guess I was about 18 or 19 years old, and I got a coding job in the international banking division. For me, I started in the tech side as a coder, as an intern at the University of Waterloo, and that's kind of the MIT of Canada, and it was a great program. I didn't love the coding side of things. I really wanted to be on the business side, on the customer side. So when they came to me after, I guess it was, you know, a year and a half of doing this, I was all in to try something different in the bank, but what I loved about the organization was how much they were willing to invest in their employees. Here, they took this young person, I think I was 18 at the time, and they said, We think you have management potential, and we like to train you to lead and to deal with customers. And I said, That's just great. So it was first. It was, you know, investing. I was young person. I didn't hadn't been in any other cultures. I delivered newspapers, been a lifeguard, done these types of stuff to get, buy, mowed lawns. So this was my first big company, and so it was a great learning journey. It was how I worked with my manager. Was how I saw employees dealing with each other, the respect, the debate with passion, but agree on a direction and implement. You could see that not everyone agreed, but everyone got on with it at the end of the day and worked together. So I saw this culture of working together on behalf of the objective. And then when I.

Got into the customer side of things. That's when I really felt the customer centricity. And it was real. Everything was designed to put the customer first. So it's not just talking about it, but how do your reward systems or teamwork in a customer? You see so many competitors, so many companies that divide their employees against the customer, and they fight for the customer, and the customer feels that the ends of the day that, oh, they're fighting for me. It's about them, not me. When you can present yourself as a unified team in front of the customer, and you work out the compensation, the recognition issues that make that fair, you want the customer to feel the power of the organizations working for them, not for yourself. And I felt that when I moved in and I saw how the organization worked. Here's a company, it's got challenges like anyone, but it's customer focus, the systems and the culture work together. And I felt that, yeah, that's such an important point, you know, because, you know, a lot of times people say, save their customer focus, but their systems work totally against it. And you know, as as I was doing my research, and as you were coming up, I heard you talk about this idea of having three jobs at once. Could you explain that? Yeah, it's something I tell young people in the organization, because you're always, you know, as when you were CEO, you're always asked, How did you get here? You know, give me something I can use every day to improve my upward momentum in the organization. And this whole idea of learning three jobs in every job, and it comes to the foundation of you have to increase your knowledge and learning cadence faster than the people around you if you want to move ahead, and therefore that's in your control to do that. And the faster you learn, and the more you learn, the more knowledge, knowledge into value. So I saw data to knowledge to value. So I've always tried to I was always curious. I always had this massive appetite to to learn so learning three jobs is learn your own learn your boss's job, because you sit in these meetings, these team meetings once a week, and you watch your boss. What challenges are they doing? How do they manage your peers? How do your peers interact with your boss? And you want to do that, because one day you might be in that job, and therefore train your mind now as to how it's been done today and how you might do it. And then the third job is learn one of your peers jobs, because you may be lateraled into one of those jobs. So try to learn. And you want to be a good partner to your peers. So the more you know about their role and what they're trying to achieve, the better partner you can be. So if you're staying a year in a job, or two years, if you can learn three jobs every two years, over six years, you've thought about nine jobs. And therefore you accelerate how you think about leading in an organization, the challenges in organization, invariably, I got promoted into my boss's job, and the narrative that I was able to develop was it looks like Dave's done this job already for two years, like he stepped into his two months at the job, and looks like he's been there two years. Yes, because I've been thinking about it for two years. So I'm ready. So you accelerate your ability to add value. You accelerate your learning curve, and you progress through a large organization or small organization much more quickly, and you become a more valuable asset. So I tell all young people,

every opportunity, it's not just one job. That means in 10 years, you might only have five jobs. You want to have 15 jobs in 10 years in your head, that is such a great insight. I mean, that is a tremendous insight in and it worked for you, obviously, because you climb the ranks faster than just about anyone at RBC had ever done before. And when you're coming up like that, you're blowing by a lot of people. Okay, you know, how did, how did you deal with that pressure? Because that does best put pressure on you. All of a sudden, you've got, you know, older people working for you. You've got a lot of things are changing in dynamics there. How did you deal with the pressure? It's a great question. I think part of it is because you've trained yourself to understand the role. You bring a certain amount of credibility in how you talk about the job versus I'm here, I don't know anything. Please teach me. And that's where the animosity can rule. They put this Dave in the job. He doesn't know anything. Why do I have to train him? And you get a lot of that big companies, honestly, if you get to the job and you know the questions they're asking you, you've dealt with a number of these individuals before, you can be more relevant and more focused and create value and build credibility more quickly. So part of it, everything you want to build credibility more quickly. I also had a strong motto for leaders, it's more important to be respected than liked. I have got so many leaders that overemphasize liked. I want to be liked, and it stops you from making the tough decisions. And in many cases, I had to move some people out because I set a very high bar, and I have very ambitious goals, and that's kind of one of the signature I don't feel talk about.

That signature themes I bring to every job is ambitious goals, and many people weren't willing to sign up for that. So you make the change, and you surround yourself with those teams. So partly credibility, partly goal setting, setting an ambition, some people check out from that, and then you rebuild your team around what you want to do, and you do it fast. So tried to stay away from the emotion of being liked the end of the day all the time, but being respected was really important. Hi everyone. It's Kula from how leaders lead. And if you're seeing my face right now, it means you're watching this interview on YouTube. I want to say thanks. Thanks for watching it on YouTube. And if you love the show, subscribe to the channel so you never miss an episode, and if you like one of the episodes, let us know in the comments. You guys, these conversations are incredible, as you know, and if you love them, hit subscribe on our channel. Leave a comment. If you love one of the episodes, it'll help us in our mission to make the world a better place by developing better leaders. And you know, we truly believe that better workplaces, better communities and a better world starts with better leaders, and when you help this podcast grow, it helps us do more of that. So subscribe to the channel. Let us know if you love one of the shows, and thank you so much for listening. Say more about the

David Novak 26:17 

power of setting ambitious goals. It's everything.

Dave McKay 26:23 

It's everything. And maybe I'll start at the top. So when I evaluate leaders in the top, 50 or 100 leaders in our organization, we have 100,000 people. David, I use a two dimensional grid. I on one axis I have personal ambition, and on the other axis I have organizational ambition. And what I'm looking for is both, but particularly, I need to see organizational ambition. We have many leaders who show personal ambition for title, for status, for power, for money, but some of them don't show organizational ambition, and those are the ones who tend to be a problem in the organization. Their status, their blockers, or silent blockers, is about them. They want to get ahead. They're protective. They're not confident. At times, they present a challenge. Ideally, you need both to take on organizational ambition. You need some personal ambition to take risk. So we're always trying to measure Have you set an ambitious goal for the organization at the end of the day, what does that look like? Whether you're running a product, a service, a back office, whatever you happen to do, what is your ambitious goal and will people follow you in that goal? It's okay to have organizational ambition, but lower personal ambition. It means I don't necessarily want to be CEO. Maybe I don't want to be on the group executive, but I want to be part of a team that's high performing, that stretches itself, that's fine, too. So we try to slot people in and say, how are they behaving? Now? Can we coach them if they're off track? But when we think about setting in organizational ambition, it's critical to getting ahead in our organization, and then we have to coach down. It's so easy to fall back into. Let's play it safe. Let's set a budget or a target that we know we can meet, because I don't want to fail, and that is not good the day. So when people set budgets and then we rate it after, well, what's that we had? We have a note, did you set an aggressive target, or did you set a safe target? And if you beat the safe target, maybe that's not good enough. You beat if you missed the aggressive target, that still might be better. So we have a qualitative approach to to our budget setting as well that tries to evaluate up front, how much risk did the person really stake their claim to? The other element, element of taking risks, I firmly believe, is risk taking in an organization about being declaring yourself publicly. We have, I have a lot of leaders, and I see leaders who want to keep take a risk, but keep it quiet. I don't want anyone to see and if I'm successful, I'll tell you about it the day. But then it's hard to marshal resources and excitement and organization if you don't declare yourself. So I really push my leaders, and we're gonna have an investor day in 10 days, and each one of my leaders can get up and declare themselves publicly in front of investors. I'm going to drive the organization to here. These are my KPIs. You can measure me every quarter against it.

That's that's how we play. And I think declaring yourself is another element of ambition and of taking risks. So we push our leaders to say, I'm going to do this, and that's what I've done my whole career, whatever role I took on, I started by saying, okay, took the credit card business. We're third largest credit card business in the country. I said, we are going to double this business in three to four years. And I saw people in the back row of the auditorium rolling their eyes and snickering and saying he's out of his mind. And I go, No, this is how we're going to do it. And then you take these big goals and you start breaking them down. So if we're going to double the business, I need this many new customers. I need each customer to use their product this much. I need to take out this much cost, and you chunk it down. If I need this many customers, how many new products do I.

Okay, and you just break it down into digestible pieces and say, Okay, you're gonna run with this piece. Gonna run it so it sounds scary, but then you break it down into more manageable pieces. And I've always found we see this, leaders who set ambitious goals attract a talent, and leaders who set unambitious goals attract C town be at best, yeah. And the fact is, is that people do not want to go to work and be a part of something mediocre. And you know, one of the things that you know, I've always believed, and you espouse this very clearly, is that once you go public, you can't go back, because you lose your integrity. I mean, all those people rolling their eyes right in the back of the ground. And if you don't do what you said, I mean, how much credibility you're going to have the next time you you get up there, right? And you don't do it, it's a lot more fun. It's a lot more fun. I couldn't agree with you more, you know. And you have, you know, the personal ambition and the organizational ambition, and in spades. And you've used this phrase, you know. Why not me? You know. Well, when did this why not me? Phrase start to shape your thinking now, how early on were you in your career where you started thinking, why not me? Why not me? Kind of came out early in my career when I was a co op student and I joined the firm full time in the 90s, as you pointed out, I didn't even know what the CEO did. To tell you the truth, I was account manager in the commercial bank and training to do that and the branches, and I knew there was a CEO, and I interacted with them once in the first, kind of 25 years. So I didn't know what they did, but I knew it must be an interesting job and an incredible job to lead an organization like RBC. So I, even though I was 21 years old at the time, I said, I think I like to be CEO the end of the day. And had this voice inside my head to say, why not me? Like, why? Why can't it be me? I'm 21 I got a good degree. Think I can create value, and I've off to a good start. So I never dwelled on it, honestly, but I always had this quiet voice in my head that kept in tells, tell someone tells me it's not me. The day, then I'm going to keep thinking, why not me? And I'm going to keep building my career towards that. I had one person try to tell me it probably isn't going to be you early my career. And, you know, I thought about it for a while, I said, I don't think they they're right. Still. Why not me? So I always had this quite I never talked to anybody really about being CEO right up until the last couple of years until I was made CEO, but I always had this quiet confidence that it could be me and Dave, you obviously, and you did push forward, and you achieved it. And you are. You have quiet confidence in you. You exude confidence, okay, and but I have to ask you, you know, you know, did you ever have one of those moments when the doubt really creeped in, you know, about the why not me, or whatever it might be, and then, you know, how did you handle it? I did in a number of cases. I I worked on a few projects where I knew I was going to have to take risk. And, you know, if things didn't work out, I said this, you know, it might not be me that it doesn't work out. So for the most part, I always took that risk saying, you know, if it's not here, it could be somewhere else the end of the day. So I think one of the things that gave me psychological freedom to take risk in the organization, because I was always viewed as someone who's willing to take risk, to take larger bets and to innovate, and I did that because I had psychological freedom. I was never afraid to lose my job. So I got a good degree. I think I'll be okay. I'll find a job somewhere. So I was never worried about failing, and I try to liberate others around me. But there's sometimes we took on projects where it got bumpy. We thought this was the path, this is the path, and therefore this is, this is a little bumpier than we planned at the end of the day. I always put what's best for the organization, and what do we do about this? And if it looks bad on me at the end of the day, I'll wear that. I think it's so important to celebrate success with your your team. They get all the success, and you got to wear the failures that way. They'll continue to take risk with you the end of the day. If it's the other way around, they'll never take risk with you. So I was always mindful of just need this team to be always aligned. And therefore I said, Guys, if this thing fails, I'll wear it. And even with our largest acquisition of HSBC, I continued to say, look, if this deal doesn't go through, for some reason, I'm going to wear that. So I think that part of that philosophy gave me psychological freedom. I honestly never dwelled on all men.

I might not be CEO if I get this wrong, that would have really caused me to be fearful. And I think it's like, it's a terrible hockey analogy, but when teams have a lead and they're continually dumping the puck out of their end, and they're playing defense, invariably, the other team comes down and scores today, it's, it's a back formula. And I never, I never got into the mindset. I got to keep dumping the puck out of my own end to play it safe. I just said, Look, I'm going to play it the way I've always played it. I'm going to stay on offense. I love doing that. And you know, why not me? So you know, when you're coming up, you obviously have to make some big presentations, some big pitches to really get things done. Could you tell us a story the first time you had to present to to your your predecessor, who was Gordon Nixon, as I understand and and What lesson did that teach you? I do remember one I've talked about this internally, but not externally. I do remember one of my first presentations to Gord and the senior management team. I was a senior vice president. I was in charge of our deposit franchise, or consumer deposit franchise, and I just taken it over, and I noticed that we were losing a lot of market share to ings of the world on the high interest savings account, and we didn't have a high interest savings account. And I said, Why don't we have a high interest savings account? Because it's expensive. I said, that's not a very customer centric answer. I said, customer wants it. Why don't we have it? I didn't get a good answer. I said, Well, we're going to build one at the end of the day. And then the team came to me, Do you realize how much money we're going to lose if we build this product? And I said, Do you know how many customers we might lose if we don't I said, well, they said you're going to have to have to go get an approval from Gord to launch this because we don't normally do products that lose money. And I said, Well, this is an investment in the long term of the client franchise, so I had to present to him why I wanted to launch this product and how much money was going to lose. And I never forget, I was sitting around a table of kind of eight senior executives and Gord at the head of the table, and I presented the customer philosophy and building a long term franchise. And this was an important product suite to maintain the customer relationship and not let others get A wedge in. And and then they got to the financials, and I said, you know, the bad outcome is x, and the good outcome is y, and y was still had a negative in front of it, red, let's say, and I never forget, one of the senior guys was looking down at the table. I looked up and he said, are you really here to tell us that you're going to lose money on this product? I go, Yeah, I am. And dead silence around the table.

And Gord, it was a great leader. He leaned back and he said,

But Dave, right. Like, what choice do we have? This is about building long term customer value. Like, we kind of got to do this, don't we? And I go exactly, but I went in there having no idea how he and the team would react, but had conviction that this was good for the long term health of franchise. So I haven't told that publicly before, but I tell that story internally about having conviction about long term value. Here you are. Now you're you used to be pitching the ideas. Now you're getting pitched too. And you know, so how did the earlier experiences that you had, you know, pitching ideas to Gordon or top executives. How has that shaped how you listen and respond to the people who are are pitching you now, you know, it's so important because you you got to recognize how scared it is to come and pitch to a CEO at the day they prepare a lot. This is, you know, they don't get a lot of moments they want to be successful. So you have to empathize with that, that this is a big moment. A lot of work's gone into that, but you gotta also make the right decision for the organization, and therefore you have to get the answers. And I don't know how you found it, but I certainly found that information flows unevenly to the CEO office the end of days. This is not the Harvard Business School where everything's written down in 15 pages. You got to read it the night before and come prepared to discuss like you got to find information across the organization. Some of it's subconsciously changed, and some of it just doesn't come in full format. So a big part of a CEO's job is just getting the right information to try to make the decision and understanding where it's done. So you have to work hard as a CEO to triangulate, I call it, to make sure you understand the dimensions to the larger problem, not every problem. And therefore you have to work with people and recognize some of their tendencies to say, am I getting the whole story or part of story? Do you have the context of how this could impact the organization, or is your because of the role you have in the organization, your context is limited, and you might not see everything else, which often happens. And therefore senior people bring more context, more connectivity of what happens. So as I'm very conscious of context, I'm conscious of the moment in time, and then opportunities to develop an individual.

So if there's holes in the kind of thinking or theory you kind of have to gently walk people through. Doesn't impact this decision. But I said next time, it would be good if maybe we looked at it this way, or we brought a different framework to analyze the problem. But for this decision, I'm okay moving forward or not, so it's always a coaching moment. I try to be conscious of every interaction, like the three for one, how can you help the team and this individual in the short term and the long term? Be better leader, better thinker. We'll be back with the rest of my conversation with Dave McKay in just a moment. But he's not the only leader who understands the power of The Big Vision. Taco Bell CEO Mark King also believes in big aspirations. He says they're key to unlocking new levels of creativity on your team. I believe that we have to try to do something extraordinary, and that changes depending on where your company is, where your brand is, but I just really believe in chasing something that's really out of reach. And I would just say we need a big aspiration. And my aspiration here wasn't fixing the world. It was 10% same store sales growth. Because I believe that if you have this big aspiration and your thinking is here, meaning you don't know how to get there, you fill that gap with creative ideas. And so for me, it's unlocking the potential of people to find new, creative solutions to be disruptive by driving with the big aspiration and filling that gap with creative ideas. Go back and listen to my entire conversation with Mark, episode 163 here on how leaders League, we talked earlier about what you found attractive when you were just joined RBC, in terms of the culture and the work environment. Now, as the CEO, you're shaping the culture. What are you trying to bring to RBC from a cultural standpoint, that's new and different, or you think will take the company the next level? The way I describe it to the team is, when you're the market leader, you're on the open road and there's nobody in front of you to mark like so my competitors get up in front and say, look, hey, we want to beat royal here. We're going to match royal here. We're going to take market share from Royal. So they're targeting you, and you're going down the road, and they're trying to beat you. We have open road in front of us, so we have to take the turns for the first time. And therefore you're really coaching people to think about boldly looking at the road ahead as a number one market player, and how do you coach them to really ambitiously want to take the corners at speed? And as we like to say, let's take the middle of the highway, and let's force our competitors, if they want to try to pass this, to be in the ditch, because we got the middle of the highway and there's not there's no room for anybody else. So as you think about as I call the culture of a winning culture from the front, we are not copying people. We have to create. And therefore you're creating the strategies of the future. You are always scanning for best practices, and we're not arrogant that we don't think our competitors can hurt us. We're always looking over our shoulder to say, are they coming at us? What are they trying to do? So we were very conscious of that, because everybody does something well, but we're also trying to create a culture of you're up front, you got to figure out the next move, and you got to execute it, and you're not copying it from anybody, and that requires a different type of leadership and mindset. It's like a winning team taking the floor. We take the floor, we expect to win. That's our culture. We don't just want to try or do do okay. We expect to win, because our investors expect us to win. I had heard you were competitive.

David Novak 43:41 

You're You're, I'm a little bit afraid to play in golf or anything right now, because I, you know, you're going to take no prisoners and you're going to win. Okay, you know, and competition is a great thing. I mean, being a competitor is a great thing, and something that that I valued in people, but sometimes people can misinterpret it, okay, or they don't quite get what, what you mean by it, you know, how do you help everybody understand the competitive, animalistic attitude that you have? I am hyper competitive,

Dave McKay 44:15 

but I also,

yeah, if you ask me, how do I define myself? It's I know I'm competitive, but I also balance it with the how, because our culture is about the how as well. So it has to be both. If you're 160 years old, we plan on being here for another 160 plus years. So how you do business is is critical, and that's what our clients really value in us is that we'll do the right thing, and we're playing for the long term. So you want to win, but you're not just playing the short term win game. You're playing the long term win game, and sometimes that means you got to give here and you got to give there to get it. So we very much build a culture of the how. How do we play together internally? Do we talked about.

Structuring systems and rewards to promote teamwork like a referral equals a sale. Don't fight over the sale. If you find the customer, this is a better place for the customer, you'll get credit to and your sales target. So referral equals the sale. So you're constantly making sure that you talk to partnership, you talk to client first, you talk to how. And therefore, if you put too much pressure on people and they start deviating from your culture and start doing bad things, bad things for the for the client, bad things overall, then you've got to be all over that. So you can never set a target or set an ambition. It's we will do anything to meet this. That's not kind of the message. It is. We'll be creative. We will lead. We'll take organizational risk, but we have to live within our values and our culture, otherwise we have nothing. So it's the balance of the two that's so important, because you will get wayward players in various businesses that will do some things other pressure, or to do something that's self centric, because they're on a commission structure, and you have to just jump on that so fast, and there's, like, zero tolerance. So it's as you know, winning, but how you win has equal importance in our organization, and we will we celebrate success as a big part of our culture as well. Sticking on this subject to competition. You know, winning is fun. You know, winning there's nothing like but losing stings. I mean, it hurts, you know. And did you ever have a moment or in your career where you really got stung, you know, it didn't turn out the way how you wanted it to? And then how did it influence what you did going forward? Always things you do that don't work. I mean, I've had a number of product launches that haven't worked out. And you used to have to go back and say, did you miss something on the way in, or did you not execute? Well, so was it the idea or the execution, or what? Or just kind of something happened? I mean, I never forget one. It's still these are all public things when I launched the Mike Weir credit card, right after he won the masters at Augusta National, first lefty to win the Masters in 2003

and we launched the Mike Weir credit card. And it was innovative that you use the card, you got your normal points on spend and purchase volume. But we also gamified it for the first time, thinking the business where, each time he won, you got bonus points as a cardholder. So if he won a regular PGA term and it was x, if he won a major tournament like the Masters, if you defend the Masters, you got 3x and so we gamified the loyalty to Mike as a as a Canadian left handed golfer in a world of golf, and it was a good idea, and we were all excited about it, and it didn't do very well, and

we had to pull it. So you go back and you say, what did we miss? At the end of the day, he was riding high in popularity. The car just didn't sell, and it didn't resonate with enough Canadians. And, you know, we missed some stuff along the way, and we could have executed better. You know, other things I put, I put employees into our largest drugstore chain, and we opened up kind of an RBC kiosk, and I had employees there, and I said, Look, there's 10 million non customers that walk into these drug stores like it's the ready aid or the Walgreens of America. How good is that? Like, where are you going to find these customers? They don't come to our branches. So I'm going to put two employees in this kiosk in CVS, and you're going to, you're going to open up credit cards and checking accounts. Well, that didn't work either, because they ended up telling people where the toothpaste was in the toilet paper. Nobody asked them about credit cards. They end up being free employees for CVS at the end of the day, but or equivalent here in Canada. So stuff doesn't work, but they were good tries. You invest time in it, you invest energy. You go back and say, what would we have done differently? And you kind of move on. And I think you just have to kind of say, hey, not having works, let's learn something from it. And often you do learn something and you just pivot to something else to say, Well, if the product looked like this, maybe it would have worked better. And just never be afraid of those moments. You mentioned earlier that you made a big acquisition three or four months into your tenure as CEO, you know,

how'd you muster up the courage to do that? I mean, you definitely were playing it safe. Yeah, I think the investor said, Who is this guy? Three months in, he makes the largest acquisition. RBC is history. Part of the story is, I've been thinking about it for two years. I had the chance to talk to the board about it for two years, about the strategy, or we had a Southeast Regional banking operation in North Carolina. We sold that before I became CEO. I always felt it was so important that we had to have a commercial banking operation in the United States and private banking. So I was anxious to re enter the US with a different strategy, and I had to tell.

Even though I was running Canada, I wasn't even running the US. I didn't know I was going to be CEO. I believed, for the benefit of RBC, I should work on this and think about it, and if I'm CEO, I can execute it. If I'm not, then whoever is will do it. So I was given the freedom to work and think and talk to some potential acquisition targets, and I worked on one that I thought I was going to do a deal with, and then decided not to, and then, but got to know Russell Goldsmith and the goldsmith family, as well as another opportunity. So I, I was thinking about it. And, you know, we went pens down a number of times through that process. So honestly, when I got there, I became, I became CEO. We were pens down at that point, and I had to think, okay, I can make this happen now. It's within my bailiwick to do that, but I had a number of people on my team that weren't sure it was the right thing. I had to convince them to do that. So it was a pretty bold move three months in, because you know, you don't know the job that well. You're learning the job. You're trying to manage all these stakeholders you really want to take on

an acquisition at that point, your largest acquisition. And my instinct was, don't wait. You've got an interested party. They fit the strategic framework that you're trying to do. They culturally aligned to you.

You've got a couple of banks that are in trouble in the US that would want to buy this, that probably aren't able to right now, you got to get it done, even though it's all it's a heavy lift in your early tenure. So it put a fair amount of stress on me to as I was learning the job of being a CEO. As you know that first year is tough to do this three months in the end of the day, but I'm really happy I did, in hindsight. And Dave, it's been so much fun. I want to have a little bit more fun with you here and do my lightning round of questions. Are you ready for this? Okay, all right, the three words that best describe you, I think we covered one of them right.

Besides competitive, I'll let you give me two more. I'm incredibly curious, curious, driven, competitive. There we go. If you could be one person for a day besides yourself, who would it be lead guitars for Pearl Jam? Who would play you in a movie? People think I look like Steve Martin, so I guess would have to be Steve Martin. So people come up to me at restaurants. Are you Steve Martin?

So Steve Martin would have to play Yes. Do you speak French? And if so, please answer in French. You stepped on us. Should be Dang. May You give up

Speaker 1 52:33 

happy? Is it pronounced about or a boot about? Yeah.

Dave McKay 52:40 

Years now,

what's a Canadian saying or phrase that you use that Americans never understand? We use a a lot. What's the one thing you do, just for you, playing guitar really loud in The Man Cave? Your most prized possession, 57 Les Paul or, you know, my my uncle was a policeman in Montreal, and at the end of his career, he was assigned to the Montreal forum was where the Montreal canaans Play a great hock theme. And in 1972 after they won the Stanley Cup, he passed a hockey stick through a locker room for all these great, great, famous, Hall of Fame hockey players, and they all signed it, and he gave it to me for my birthday. So that's pretty cool. Oh, great gift. If I turned on the radio in your car, what would I hear? Sirius XM, Pearl Jam, let's say 22

What's something about you? Few people would know? They wouldn't know I see Pearl Jam 35 times. What's one of your daily rituals? Something that you never miss? Thanks to my wife, I have this green drink that's pretty awful every morning called ag one. Let's say she wants too much. Huberman labs, so yeah, pretty much a ritual with vitamin D keeps the doctor happy as well. So ag one, every morning,

you look, you look very healthy. Dave, she's doing a good job. And that's the end of the lightning round. And good job on the lightning round. Now I got a few more questions. I'm gonna let you go, because I know you got things moving ahead here, and so, you know, such a celebrated career and going forward, Dave, what do you see as your unfinished business? As you know, in big companies, is always internal unfinished business. But for me, it's also continuing to work with youth in the country, a big proponent of helping youth find their way in this complex world, getting them their first job, getting them the training and the skills that they need. Or universities and educational institutions are in a bit of a crisis on both sides of the border, but certainly in Canada, and my unfinished business is, you know, it's good for the organization, because that's the source of talent for the bank, but there's a lot of work to do with our educational institutions and getting us back to kind of the place that's going to allow us to compete and be prosperous as a.

North America, including United States. It's a challenge. So for both sides, I think there's a lot of work to do, and I'm really excited about and the technology that's coming here. We haven't talked about generative AI at all. It's like, super exciting. It's going to change business models. We're going to rewire a lot of things with this. We are well on our way to deploying these technologies today, and it's, it's makes the journey a lot of fun. Last question, what's one piece of advice you'd give to anyone who wants to be a better leader? When I look at leaders and where they are, and even though I talk to CEOs, you don't have to fill the air with everything you got to say when you're talking, you're not learning the end of the day. So when I look at a CEO, one of the there's a lot of tells, as you know, one of the first tells is, did they ask you a question? Did they listen? Or are they just in broadcast mode? So leadership is about learning and listening and reflecting and choosing your spots. It's not about sucking all the air the room, because you don't have all the answers, and you need to get the answers. So leadership's about getting the answers and making the right decisions, not having the answers at the end of day. It's about building a vision

and getting people aligned to it and rewarding them and taking taking a hit if it if it doesn't work. So from that perspective, I really think and take risks.

Take risks and have fun with it. It's a journey you're on. You only get one chance to do this journey. Playing it safe is so dull the other day, and it's not going to work.

The last thing I say dream.

I think really only the dream dreamers are going to win the end of the day, I consider myself a dreamer, because there's so many things you can do in this world now, with tech, there's so much information out there. There's so many levers to pull. Don't be afraid to dream. The dreamers are going to win. Well, that's great advice. And

David Novak 56:54 

you know, I knew I was going to enjoy this, this conversation, but I'm, you know, there's a reason why you've had so much success, and I want to thank you for sharing all your insights. This conversation is chock full of great leadership insights, and I appreciate you taking the time to share them with us. Thank you very much. Really appreciate the opportunity, and I've been looking forward to this. So thanks for the opportunity.

I love how clearly and confidently Dave talks about big goals. He doesn't just think about the future. He brings people into it. I see a lot of leaders who set big, visionary goals, and then they keep quiet about them, and it's understandable, because putting your goals out there means putting yourself out there. But when you go public with a big goal, everything shifts. You create alignment, you build trust, and you attract people who want to help you make it happen. Do that and you won't just move your projects forward. You'll move your career forward too. So this week, ask yourself, What's a big, bold goal you believe in but haven't said it out loud to your team, yet reflect on what that is and why you're holding back. No one gets up every day wanting to be part of something mediocre. Go for greatness. Set big goals and make sure everyone on the team knows they are key to making it happen. So do you want to know how leaders lead? What we learned today is the great leaders go public with their big goals coming up next on how leaders lead. I'm talking with renowned media Executive Mark Shapiro. He's the president and managing partner of WME group, and he's the president and chief operating officer of TKO, the parent company of both UFC that Ultimate Fighting Championship and WWE World Wrestling Entertainment. It's an eat what you kill world, right? People have to deliver now. They need to know the expectations. They need clear feedback. They need performance reviews. They need resources and tools, right? They need they need help getting there. But as long as everyone understands upfront what we're aiming for, what the measure and the metrics of success are,

then it's full throttle to get there, and if you get there, everyone wins. So be sure to subscribe to YouTube or wherever you get your podcasts so you don't miss it. Thanks again for tuning in to another episode of how leaders lead, where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business, so that you'll become the best leader you can be.