Swathes of businesses thought they were immune to disruption – until they weren’t. The changes that digital is bringing to every corner of the economy are huge and inexorable.
In particular, digital has drastically changed the finance industry, but for too long the focus has been on fintech, e-commerce and digital distribution – not on the business change that is needed for incumbents to survive. Creating digital leadership at senior management level and building a digital mind-set across the organisation will create the customer focus and culture needed to thrive in the connected age.
Overcoming addiction to the status quo.
Our natural preference – or cognitive bias, to use the scientific term – is to preserve the status quo.
Acknowledging the need for change and announcing a vision to the company is rarely enough – though this, and a few high profile “digital initiatives”, are where many boards stop. It’s the reason that when we benchmark companies’ digital maturity we often find a “vision gap” between a board and teams on the ground. Typically a board or C-suite in the finance industry will say that the company has a good strategy for digital, while workers will report that they cannot get new ideas or digital programs moving fast enough.
Listen to your teams. Benchmark where you are and measure your progress. Organisational change can be extremely complex and won’t happen overnight. Being able to demonstrate the successes along the way can be very effective for the momentum of the project.
Organising for the customer.
The customer is the main cause of change and reason to change. They don’t care about your internal structures, or the way you’ve always worked. If a competitor can provide a better experience, in the places and platforms your customers use,they will switch. To compete with financial disruptors don’t focus on what they’re doing – focus on what your customers need.
People before technology
It is dangerous to think that digital transformation is about achieving efficiencies by adding in technology to replace or reduce the need for people in financial organisations. While efficiency may be an outcome, it is not helpful to make it the sole aim. It is the culture and the design of the organisation that must be addressed to take advantage of the opportunities.
A helpful lesson from history is the delay in productivity boosts that electric engines brought to industry in the early 20th century. Traditional mills and factories that replaced massive steam engines with massive electric engines saw little in the way of cost savings or ROI. It took 30 years and new generations of managers to see the advantages of putting hundreds of smaller electric engines at individual workstations. And then the genius of Henry T Ford to reimagine a maze of workshops as the modern production line.
We can wait for the disruptors to change the finance industry or we can set about reimagining it for ourselves.
There are three things a board in the finance industry can do to build a customer-first digital culture and capability, and give their organisation the best chance of success.
- Create a digital mindset for leaders
Our mindset is the collection of big things we know about the world combined with our beliefs. It’s our worldview and the place we start from in trying to make sense of anything, or when solving a challenge.
Financial leaders already have mindsets that they have built from years of experience – how to set direction, how to take people with them, how to manage their own energy and focus to be the leader their people need.
For the digital age, they need to add some foundational pieces of knowledge about the nature of the changes happening to the world, how it affects the financial sector and the ways of working that are most effective in responding to these challenges.
Leaders must develop critical thinking skills in four key areas: strategic context (the world), customer behaviors (how digital is changing them), ways of working for teams, and personal use of digital tools.
- Build your capability
Developing a digital mindset for board and C-suite leaders in the finance industry is just the beginning of change in an organisation facing up to the challenges of new competitors, customer behavior and technologies. Next they need to develop the capability of their organisation to work in new ways – partly this is spreading the core beliefs and insights of a digital mindset, partly about training in new skills that are required and also about giving permission and license to start doing things differently.
- Break down silos
In the experience of Brilliant Noise’s consultants, the best way to build momentum for change is to move as quickly as possible from talking and planning to actually working in new ways. Nothing is more important than breaking down the silo structures that formed in twentieth-century organisations – an effect which causes inertia in myriad ways – from politicking to different approaches to measurement.
Cross-functional teams – first as pilots, then as the norm – are the way to move from silos to a more agile, networked working culture.
The waves of change will continue, but a financial organisation with clear digital leadership, investment in ongoing capability building and a collaborative culture will be best placed to thrive.