The business world has changed enormously.
In the 25 years before the recent financial crisis there was a stable period where businesses could rely on predictable models for business planning. Although past performance was not a guarantee, business planning was often based on the last four year performance being extrapolated into the next three to five year business planning.
Then ten years ago, everything changed. In the aftermath of the financial crisis, we are still experiencing instability and the digital age has fully kicked in too with Fintech, AI and blockchain currently at the forefront.
The Financial Services industry is being challenged, especially in its own services to clients by the many disrupters which have sprung. They often succeed in a short period taking significant market share. For example, TransferWise, which created a successful business by addressing the large fees for (foreign) currency transfers, is now looking at a >$1Bn market valuation.
What can the established companies learn from these disrupters and apply to their businesses before they are eaten or cannibalised?
It is not merely creating incubators in funky office spaces to (or trying to) develop in-house new technologies. Neither can an organisation simply buy and implement the newest IT technology out of the box.
So, what is the secret? Cap Gemini research has demonstrated that companies which invested in digital infrastructure without investing in transformational leadership to support new processes, actually became on average 11% less profitable.
Perhaps the secret lies in creating a digital culture? Research from Brilliant Noise has highlighted four culture characteristics which are succeeding in the digital era.
Be Customer Centric
The old way of doing business by pushing products and services to clients no longer works. Neither is it about doing better what the company does today, it is more about what the client wants and how they could be better served. Pull in the ideas from the market and respond to what customers need and deliver in a way the customer wants through technology and give it a personal touch.
The classic hierarchical set up of companies does not support a world where internal and external networks and connections spark ideas and innovation and gets things done faster. In organisations which have open networks of interconnected people, information and ideas will flow quicker, opportunities responded to faster and decision making more rapid. All of these are essential to be able to move to market in the most agile way.
Be Biased for Action
Many companies still operate based upon getting permission and reach consensus before decision and action is taken. If a culture changes to one of bias towards action, companies can lean forward into the future instead of being pulled back or waiting till blessing is given. The appetite is there. Employees do want to participate more therefore managers and leaders need to create the conditions for action and move out of the way. The likes of Apple and Google are considered champions in this and have integrated this in their DNA. Still leaders set out direction of travel but then hand ownership to their people.
Be Purpose Driven
Companies spend much time on setting out their mission and vision, few however also state their purpose and even fewer make that purpose one that resonates with employees and customers. The big driver these days remains the return for the shareholder instead of a clear sense of purpose into everything a company does. However, the company should be aligned with its customers.
These four characteristics are definitely key when it comes to digital, and Peter Drucker’s quote “Culture eats strategy for breakfast” is even more pertinent.