When John S. Varley became the CEO of Barclays Bank, in 2004, he inherited an enviable legacy: Barclays had dispelled the reputation it had acquired, at the end of the 1990s, of being a financial underperformer and a possible takeover target. Indeed, from 2000 to 2003 the bank's economic profit grew by 56 percent, its cost-to-income ratio fell by nine percentage points, and its shareholder returns were in the global top quartile. Barclays had become a high performer.

Yet all was not well. Varley was acutely conscious that Barclays still had much work to do to ensure that its strong financial performance would be sustainable. What he calls the company's "franchise health" had to be strengthened and, in some places, transformed. As he told us in an interview:

"Employee engagement and customer satisfaction are the proxies for future growth and profitability. In some parts of our business, the engagement and motivation of our employees, our service for customers and clients, and our track record of innovation are first class. But there are other parts of Barclays where we would not consistently be held up as exemplary. For several years, the focus on initiatives to improve financial performance dramatically crowded out...