ING Direct Canada and USA Companies’ Development

Executive Summary

This paper analyzes the case study of ING Direct, an online banking-company founded by Arkadi Kuhlmann. The data on the organization’s income suggests that the business became profitable within a short period. The aim of the paper is to understand the strategy the banker used to lead his company to success. The analysis of the case study reveals the limitations of Kuhlmann’s strategy and suggests possible solutions.

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This report analyzes the case study of ING Direct Canada and its subsidiary, ING Direct USA. It presents the summary of the business development under the direction of Arkadi Kuhlmann and studies the main aspects that led the companies to success. The paper also identifies the problems ING Direct faced and the limitations of the operating system implemented within the organization. In addition, the report presents possible recommendations on improvement of those issues.

Summary of the Case Study

The purpose of any company is to become successful in its field and offer a competitive product. Leadership effectiveness has a significant role in the organization’s performance (Madanchian et al. 2016). The case study I have selected features the story of Arkadi Kuhlmann, a Canadian banker. It describes how ING Direct Canada introduced a direct banking business model based on a simple system of high-rate savings accounts. All of the services of the company were provided over the telephone or Internet. The bank offered 4% interest (Griffin 2017). The organization cleared its expenses within four years of operation and by 2008 had become the largest direct bank in the country. Kuhlmann’s initial investment of US$50 million turned into US$23 billion. In 2000, the banker decided to launch the American branch of ING Direct. Two years later, the organization broke even and in four years became the largest online bank in the US market. At that time, it had more than $92 billion in assets.

Managing ING Direct Canada provided an opportunity for Kuhlmann to utilize his ideas about leadership. He believed that the culture-oriented approach to business was crucial for the success, as well as the only way to adopt innovative strategies for the company’s development. Kuhlmann also insisted that the culture-based leadership was the most effective approach to operating a business in the contemporary world. In his opinion, the current banking industry is associated with constant change, which means that new organizations must have innovative and disruptive strategies to become successful. It is crucial for a company to identify its cause or its motives. An organization’s purpose should be embodied in its vision. A firm should strive to make a difference in the business environment in which it operates. Kuhlmann believed that a compelling vision of the company could “start a revolution” (Griffin 2017, p. 543). The banker identified the fundamental values a company should have to succeed which include self-reliance and independence. Moreover, it is crucial to have a grubstake and an idea that is clear to customers.

Kuhlmann explained the difference between a vision and a mission. In his opinion, a vision is associated with ambition and aspiration while a mission includes a company’s responsibilities. The vision of his company was to promote saving among Americans, and its mission was to facilitate financial products. Therefore, the process of designing and delivering of ING Direct was based on the idea of simplicity. Naturally, it would not be possible without the proper leadership. A company’s leader is responsible for defining its purpose and mission, as well as creating and directing its culture. Kuhlmann believed that the right approach to management of the corporate culture is the best way to attract committed workers. In his opinion, a company should only invest in employees that perceive their job as meaningful.


The case study presents an example of an efficient approach to leading. Kuhlmann proved that innovative ideas and taking risks in implementing them were key to the success of the business. This point of view is confirmed in the study conducted by Coulson-Thomas (2017), where he explains that although the adaptation to change can be expensive and challenging, it has many benefits. Openness to new ideas is often the factor that keeps a company’s products and services relevant and competitive. I believe that Kuhlmann’s leadership strategy was crucial to the success of his organization.

As mentioned above, the initial investment in ING Direct Canada was $50 million. The decision to invest a large sum money into an idea that had not been tested before could make Kuhlmann a bankrupt. However, he took a risk because he believed in the success of the enterprise. In my opinion, Kuhlmann’s persistence and confidence in his business plan were also crucial factors that affected the way he approached his work. His attitude to work can be defined as visionary leadership, a strategy, where leaders’ efforts produce positive outcomes due to the right identification of objectives (Tourish 2014). It should be mentioned that the banker was reelected as a CEO three times from 1997 to 2000 (Griffin 2017). It means that his employees also knew that Kuhlmann was leading the company to success.

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It is notable that the banker decided to leave the company and launch ING Direct USA when his first business was at the height of success. I believe that such decision was associated with risks and stress because there was no guarantee that the new company would follow the example of its Canadian branch. According to Harms et al. (2017), being exposed to stress could have negatively affected the banker’s performance and, consequently, result in corporate collapse. However, Kuhlmann did not concentrate on the possible adverse outcomes of his decision. Instead, he took his executive team with him to apply its experience and knowledge in creating a new business. Such step was a significant contribution to the development of the organization, which can be proven by the fact that only six years later the American subsidiary of ING Direct became the largest online bank in the USA (Griffin 2017).

A culture-based approach to leadership was another factor that ensured the company’s success. The banker switched from the Canadian to the American market, which was much bigger and more competitive. He knew that his service had to be disruptive to be appealing to Americans. It is clear that Kuhlmann made a significant effort in defining his organizations’ cause. He was not scared to contribute to the “big idea” that could improve people’s lives and saving habits (Griffin 2017, p. 543). It is crucial that the banker developed the company’s vision, but the mission remained his priority. He concentrated his efforts on leading Americans back to saving, aiming to change the approach to financial products. Such an ambitious goal prompted the success of ING Direct USA. However, it is necessary to mention the limitations of the company’s strategy that will be presented below.

Identification of Problems

It is true that leadership has a crucial role in the company’s performance. A leader’s approach to managing a company is significant in achieving its goals (Jing & Avery 2016). However, Kuhlmann focused explicitly on situational leadership, which was a task-oriented, not a people-oriented approach (Griffin 2017). He integrated principles of adaptive leadership in his work too, engaging and motivating his employees to change (Arthur-Mensah & Zimmerman 2017). Nevertheless, I believe that Kuhlmann’s strategy lacked people-centered strategy, especially concerning his employees.

Establishing a right working environment is crucial for ensuring a company’s efficient performance. Employees’ perspectives on what is a good working climate can determinate their productivity. Kuhlmann noted that he strived to employ only workers that saw ING Direct’s culture as meaningful to them. However, he did not mention how he stimulated such attitude. According to Dunne et al. (2016), it is necessary for individuals to feel or express positive emotions to process information considering their tasks, be creative, and think beyond common patterns. Although Kuhlmann’s strategy involved the implementation of innovations, he did not ensure that his employees complied with the company’s demands by expanding their emotional capacities. Moreover, he did not consider psychological aspects of working for the rapidly developing company. According to Fairhurst and Connaughton (2014), communication with the workers is an essential part of administrators’ task. The case study does not refer to how the banker tried to improve the employees’ conditions. However, it is possible to assume that people were performing under stress considering how fast the company grew in less than a decade.

I also believe that it is necessary to mention that Kuhlmann’s innovative approach would not work well for all organizations. The ING Direct’s case involved several aspects that lead to success, including a large initial investment into the business plan, and a successful strategy formed by the previous operating experience. In my opinion, the banker offers insightful ideas on developing efficient leadership approach but does not consider the struggles smaller companies may face.

It is necessary to mention the problems the ING Direct could face when it expanded to the American market. Kuhlmann suggested that the “culture-driven leadership” was crucial to the success of ING Direct USA (Griffin 2017). I believe that the banker had to develop a specific strategy to make the company’s services correspond to the needs of the American citizens. It is necessary to mention that the culture-oriented approach demands proper study on the diversity of the markets and thorough strategic planning. In my opinion, Kuhlmann’s success is proven by the growth rate of his organization.


In my opinion, it would be necessary to improve Kuhlmann’s approach to the company’s working force by implementing the team leadership strategy. It represents an employees-oriented view of management and focuses on the interaction between the administrative staff and the team (Santos, Caetano & Tavares 2015). Kuhlmann’s functional approach is mostly centered on achieving the company’s objectives. I believe that it is possible to develop a strategy that involves both people-centered and goal-oriented leadership. Such an approach can improve the effectiveness of task-performing groups, as well as increase their commitment to work.

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Another recommendation is the adjustment of the culture-based approach by expanding its focus from customers to the employees. It is clear that people working for ING Direct USA have different ethnic backgrounds, which means that the company’s culture has to meet their expectations to ensure their productivity. To do so, I would suggest providing diversity training both for the team and the administrative staff to build a strong corporate culture and increase the employees’ dedication to their work. Moreover, it is necessary for the leaders to educate themselves on the issues of cultural differences. This way, the company can establish a welcoming environment and create a safe working space for its employees.

I believe that it is necessary to establish good communication between the team members and their immediate bosses as it can be stressful for the employees (Vugt & Ronay 2014). To do so, the company should promote the idea of cooperation between the workers of all levels and explain it is beneficial. I believe that open communication and consideration of the employees’ suggestions can provide the significant insights for the improvement of the organization’s performance.


Kuhlmann’s goal-oriented and innovative approach caused the success of his organization. His companies, ING Direct Canada and ING Direct USA, became the largest in the field within several years after their establishment. The bankers’ story shows that having the right vision and mission is crucial for business development. The company also has to stay innovative and disruptive to succeed. Kuhlmann’s administration is an example of effective leadership that involved taking risks, making critical decisions, and applying previous experience to create a profitable business.

The banker’s strategy lacks the team-oriented approach. However, it was not an obstacle to the company’s development as its aim was to involve only dedicated employees that valued the organization’s culture. The recommendations include developing the relationship between the administrative staff and the employees to consider the needs of the team members. It is also crucial to establish a welcoming environment for the diverse workforce by providing training and education regarding cultural differences. This way, ING Direct can improve its management strategy and performance not only in the market but also within the company.

Reference List

Arthur-Mensah, N & Zimmerman, J 2017, ‘Changing through turbulent times–why adaptive leadership matters’, The Journal of Student Leadership, vol. 1, no. 2, pp. 1-13.

Coulson-Thomas, C 2017, Driving performance excellence through disruptive innovation and visionary leadership, Web.

Dunne, T C, Aaron, J R, McDowell, W C, Urban, D J & Geho, P R 2016, ‘The impact of leadership on small business innovativeness’, Journal of Business Research, vol. 69, no. 11, pp. 4876-4881.

Fairhurst, G T & Connaughton, S L 2014. ‘Leadership: a communicative perspective’, Leadership, vol. 10, no. 1, pp. 7-35.

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Griffin, R W 2017, Management, 12th edn, Cengage Learning, Boston, MA.

Harms, P D, Credé, M, Tynan, M, Leon, M & Jeung, W 2017. ‘Leadership and stress: a meta-analytic review’, The Leadership Quarterly, vol. 28, no.1, pp. 178-194.

Jing, F F & Avery, G C 2016. ‘Missing links in understanding the relationship between leadership and organizational performance’, The International Business & Economics Research Journal, vol. 15, no. 3, pp. 107-118.

Madanchian, M, Hussein, N, Noordin, F & Taherdoost, H 2016, ‘The relationship between ethical leadership, leadership effectiveness and organizational performance: a review of literature in SMEs context’, European Business & Management, vol. 2, no. 2, pp. 17-21.

Santos, J P, Caetano, A & Tavares, S M 2015. ‘Is training leaders in functional leadership a useful tool for improving the performance of leadership functions and team effectiveness?’, The Leadership Quarterly, vol. 26, no. 3, pp. 470-484.

Tourish, D 2014. ‘Leadership, more or less? A processual, communication perspective on the role of agency in leadership theory’, Leadership, vol. 10, no. 1, pp. 79-98.

Vugt, M V & Ronay, R 2014. ‘The evolutionary psychology of leadership: theory, review, and roadmap’, Organizational Psychology Review, vol. 4, no. 1, pp. 74-95.

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