Hortz: Why do businesses need to transform themselves now?
Smith: In the April 2011 edition of Fast Company, a comment attributed to the Babson Olin School of Business stated that within 10 years (2021), a full 40% of all Fortune 500 firms will be out of business. With the advent of new technology, trends come on the scene and become part of the landscape virtually overnight. Our mainstream lexicon now includes words that previously were found only in science textbooks and that reflect the compression of time: “cyber,” “virtual reality,” “nanosecond,” “flash trading,” etc. All organizations need to become more nimble and agile, willing to try new things and to reinvent themselves every so often. Otherwise, an organization may find itself “leapfrogged” by the next iteration of product, delivery mechanism or communication tool and, thus, wind up on the corporate casualty list.
Hortz: Do you think that financial services companies want to, and can, transform?
Harrison: Absolutely. Maybe. Historically, for whatever reasons, the financial services industry has been a slow transformer in comparison with other industries. There may be a self-fulfilling aspect to this statement in that a McKinsey study of financial services executives found that more than 50% of those polled believe that it is harder to innovate in our industry than in others. Primary causes given for this overriding belief were the pressures to produce short-term financial success with the accompanying resource allocation challenges, and the lack of organizational mechanisms/infrastructure for handling change and driving innovation were mentioned as a secondary concern.
Hortz: So, how exactly can companies transform themselves?
Harrison: The first real step is deciding that one needs to change and then creating facilitated, open dialogue within the organization. We assist in the facilitation process to open minds to new possibilities. Next, an infrastructure, such as an incubator or innovation council, needs to be created and developed. Pilot projects should be undertaken and then thoroughly evaluated before a full launch into the firm or marketplace. We want to dispel the notion that transformation is just about technology. New technologies are, most often, a downstream result of a transformation process that starts at the strategic decision level.
We believe that the financial services industry has to realize that it is at a tipping point that will decide which companies are the next Kodak and which are the next Google. Now is the time to develop new business models and operating processes that will support the dynamic growth needed for the changing financial services industry. We work with a variety of clients at every level to equip and prepare them for the future. Even though it may seem daunting to some, we are excited about the impending and inevitable transformation of the financial services industry.
Hortz: Gentlemen, thank you for sharing your provocative insights into the financial services industry. I understand that you have some unique thoughts on how to run transformation programs and manage innovation projects. I look forward to having that conversation in the near future.
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The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial services firms. We position our members with the necessary ongoing innovation resources and coaching to drive and facilitate their growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors -- Innovation Equity Partners, Pershing, Ultimus Fund Solutions, Fidelity, Voya Financial, MeridianIQ/AdviceIQ and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information or to join click here.