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(This post was originally written back in 2010 after I did a talk for the National Australia Bank financial advisory team. Sometimes, trends posts don’t bear up well with longevity. I think this one does)
I spend a lot of time speaking to global financial organizations — some of the world’s largest institutions — helping them understand what they need to do from an innovation perspective to stay ahead of fast paced change.
These talks are often aimed at the idea of “how do we need to transition our advisory services — financial planners, investment advisors, insurance agents and brokers — to keep up with fast paced change?” Here’s a laundry list of some of the strategies that I’ve been talking about:
1. Focus on growth
With so much volatility in the financial sector, it’s all too easy to take your eye off of the opportunity ball. As I noted in my remarks for a recent keynote to a group of senior bankers:
“Never before has the need for financial advice for Australians been greater; only 20% of Australians are currently getting professional advice.”
That means there are tremendous opportunities for growth! For many, access to financial advice is still too hard and complicated – that’s why it’s a great time to innovate, in order to build market share!!!!
2. Structure for fast paced change
There are several certainties in the financial sector:
- more business model change
- more sophisticated competition
- continuous business model disruption with new, young upstarts
- continual shifts in consumer behaviour
- technology-driven fast change, such as with the impact of mobile technologies
Quite simply, an innovative financial organization concentrates on aligning its structure and capabilities so that it can change quickly
3. Reshape brand messages faster
Clearly there’s a lot of fast-paced change in financial services with the rapid economic pullback, and it’s critical that financial institutions continue to reshape their brand at the pace of rapidly changing consumer perception.
Noted Jim Buchanan, Senior VP of Consumer Marketing at the Bank of America in an article in Advertising Age, October 2009:
“Six months ago, we were trying to re-assure the market and consumers that we are safe and secure….now consumers are telling us they’re not worried about those things anymore…..What they are interested in is ‘How can you help me manage my finances?‘”
Innovative organizations ensure that the brand message evolves at the pace of a world in which volatility is the new normal.
4. Adapt to momentum of financial consumer change
Quite simply, the new financial client is online in a big way, and smart financial organizations will evolve their service and support message to these platforms. The numbers are staggering; in the case of my Australian keynote, I emphasized that:
- 147 million people interact globally on social networks via their mobile phones – we can expect 1 billion within five years!
- there are 1.6 million Twitter users in Australia – up 1,000% from last year
- Australian’s now spend 16.1 hours a week on the Internet, compared to 12.9 hours watching TV
- 25% of that time is spent on Facebook
The impact is clear: as noted by Mondaq Business Briefing in November 2009:
“Australians visit social networking sites more often than financial services sites.”
The bottom line for financial and investment advisors is that social networks are an extremely effective tool to keep core clients in the loop; as an outreach tool, they’re fast, effective, unique, quirky, and certainly the story of the day.
Financial advisors have to go where the client is going, and should be thinking about how to become socially-networked oriented advisors.
5. Adjust platforms to this changing behaviour
I continue to emphasize with my global financial clients that the impact of mobile technologies on financial services is absolutely massive. Think about Wizzit, a South African service that is essentially a text message based banking system.
The reality is that the new financial consumer expects to be served on new platforms: as noted by Thomas Kunz, Senior VP at PNC Financial:
“Gen-Y doesn’t reconcile checkbooks, and they don’t believe in float. For them, their balance is their balance.”
That’s why PNC has released a “virtual wallet app” available for iPhones. They’re reaching out to this new financial consumer in a big way.
Aggressive change with business platforms provides big opportunity for business model disruption. A key factor here has to do with new client acquisition: what’s happening is the point of origination of the relationship might change as people transition their banking to mobile devices. Opportunity can come from continuing to build the advisor and distribution channel into these new platforms.
And that’s not a threat – that’s a huge opportunity!
6. Leverage off of new peer-to-peer behaviour trends:
The new financial consumer relies more than ever before for advice from their social networks.
Peer-to-peer social driven advice through sites such as TradeKing is coming to the forefront: it’s a service that allows people to share stock tips and research through extended social networks.Does this diminish the role of advisory services — not at all, if you dive in and become a part of the peer-to-peer conversation!
7. Re-orient distribution channels
Here’s another key point: I’ve emphasized to my insurance and other financial clients that the next-generation advisor/broker/agent expects ever more sophisticated technology platforms to help support their role.You’ve got to make sure you are keeping up with their needs. In one survey in the insurance sector, 80% of brokers indicated that the sophistication of the technology platform of the provider would influence who they would choose to do business with.
According to Kevin Murray, EVP and CIO at New York-based AXA Equitable:
“The younger generation of financial professional will almost demand online self-service….they will want to text any questions they have in to the service centre or self-service from their mobile device. We’re going to have to be able to provide that capability. It’s how they will operate.”
8. Build your own peer-to-peer collaborative knowledge networks
The new financial advisor is also thinking socially, and is actively looking for peer-to-peer collaborative knowledge.Imagine building a financial advisory team that is collaborative for ideas, shares insight on market wins, constantly leverages insight from new branding campaigns that work in unique ways, and constantly shares great ideas on new methods of converting leads into clients — that’s how this next generation works!
Back to Kevin Murray:
“They will also want an online collaboration tool to …find answers concerning product or questions from their customers. The X and Y generations are going to demand a different way of selling and servicing their customers.”
What’s it really all about? Freeing up their time to build opportunity, make sales, close deals.
9. Reduce churn through electronic relationships
Hsomething else to think about according to Chief Marketer (October 2009),
“The average brand saw one third of highly loyal consumers in 2007 completely defect to another brand in 2008“.
People are far less loyal, and far more likely to jump ship at the drop of a hat. That’s why continuous innovation in terms of the relationship is critical — and that’s maybe why continually transitioning to new technology platforms such as an iPhone app might
reduce that churn
10. Better, more focused niche marketing
We’re in the new era of analytics and analysis, which provides new opportunities for advisors to reach out to markets previously unattainable. As noted by Money Management Executive in October 2009:
“Financial advisers generally prefer to manage a small number of high-net-worth clients rather than a large number of small accounts, but recent advances in automation technology could change this dynamic.”
11. Innovate hard with the next generation
One of the biggest trends going forward is that right now, we are witnessing the early stages of a massive transition of wealth from one generation to another. The numbers are staggering: we’ll see $12 to $18 trillion in intergenerational wealth transfer In the next 12 years (US GDP is $12 trillion); and by 2053, some $130 trillion will have moved from one generation to another. That’s a lot of money sloshing around — and much of it is going to this new, tech-savvy financial consumer.
12. At the same time, rethink importance of boomer market
It’s easy with all of these points to think that new markets will come from new, uber-hip young people and hot new technologies.
But don’t stop with innovating with that market — also realize that there continues to be huge growth potential with the boomer market. In Australia, baby boomers will control 51% of the nations wealth.
Put that in the context of the reality that there is a huge adoption by Boomers of Facebook. They continue to more aggressively integrate technology into their lives; they’re busy researching health care, insurance, retirement planning and investment advice.
Online makes more sense than ever before — get your advisors there!
13. Evolve the approach
Insurance and financial services are products that are always sold based on fear — they aren’t bought. This reality doesn’t go away because of new technologies. What does change is that technology is a powerful enabler that frees advisors from having to focus on the mundane, routine, time wasting stuff, in order to focus on providing the advice & guidance that advisors can provide. Focus on the core role!1
14. Enact change
Many advisors will be in comfortable, established routines. Change is not easy. That’s why organizations in the financial sector that are trying to be innovative need to help existing advisors focus on the opportunity and the benefits that come with rapid change, rather than being fearful of the change that technology is bringing to the industry.
Bottom line? As I summed up in my talk — “Innovative organizations make bold leaps, in order to keep up — and stay ahead — of a faster future.”
I was in Chicago earlier this week; I had a keynote for the leadership team of a company that’s involved in a sector of the construction industry.
They’ve had some challenges with the economic downturn; they’re also likely to see a resurgence as infrastructure spending kicks in.
But they’re thinking beyond what happens after that — they’re positioning themselves for long term growth — and so they brought me in to stir up some creative thinking as to what they need to do.
The focus of my keynote was the theme: “What is it that world class innovators do that other organizations don’t do?” Here’s some of the insight that I covered.
- World class innovators possess a relentless focus on growth: I deal with a lot of CEO’s at a lot of organizations, and in almost every instance, they’ve engaged me because my message of future growth opportunities resonates with their own attitude. In my view, there are unprecedented opportunities for growth in almost every industry. Spend some time on this blog; read my Where’s the Growth overview and other information, and you’ll come away convinced we live in transformative times that offer tremendous opportunities for growth through innovation.
- World class innovators continually transition their revenue source: they’re focused on ‘chameleon revenue‘. They know that they have to evolve from being a commodity product competing on price, to one that offers a more complex, revenue rich solution. They’re aware that they need to have continuous, relentless product innovation in order to keep their new revenue pipeline full.
- World class innovators solve customers problems – before the customer knows it’s a problem: They excel at anticipatory thinking: where do we need to go with our customers to ensure that we continue to have a strong revenue relationship? What key trends can we ride to maximum advantage that will allow us to provide a constant flood of new, irresistible innovations for our customer base?
- World class innovators source innovation ideas through their customers.: Simply put, they derive new innovation ideas by observing what their customers are doing with their products or services. They know that they aren’t fully in control of the innovation agenda anymore, and that some of the most brilliant ideas are coming from a new source. Notes John Hanks, vice-president, industrial and embedded products for National Instruments: “We have the advantage of working with some of the most innovative people in the world. For example, we could find a customer who is using one of our products in an unexpected and innovative way. It’s then possible for us to take that and add value for another customer, which is one of the ways we can help the innovation process as a whole.”
- World class innovators focus on ingesting fast ideas: there are new technologies, business models, customer trends, product developments, scientific advances and countless other things that are increasing the pace of change. Innovators know that if they plug into the global idea machine, they can constantly discover a tremendous number of insights that help them to move forward.
- Innovators check their speed and focus on corporate agility: they know that to keep up with fast paced trends, it’s their ability to quickly act, react and do that will allow their future success. There’s not a lot of time for debate, studying; inertia is abhorred. They simply DO.
- World class innovators focus on long term wins through constant incremental improvements: they know that some pretty big growth can come from continual small wins and improvement on margins. For example, 7% of power on transmission and distribution lines are lost as heat. Reduce that loss by 10% – and that would equal all the new wind power installed in the US in 2006. That’s why ‘smart grids’ are such a hot topic. Take the auto industry: todays’ typical automotive system uses only 25% of the energy in the tank — the balance is lost to waste, heat, inefficiency. Work on increasing that on a year over year basis, and there are some pretty solid gains through innovation.
- World class innovators focus on skills partnerships as a key success factor: they know that with rapid change, knowledge is becoming an ever more precious commodity, particularly niche oriented knowledge. If they are entering a fascinating new, fast paced market, they realize that there might be but a few individuals or organizations in the world who could help them tackle that new market. They focus on forming fast teams and fast partnerships, drawing a lot of innovation oxygen from that external insight.
- World class innovators focus on pervasive connectivity for next generation product: they know that one of the key trends out to 2020 is that everything around us is plugging together. Soon, every device on the planet will have an IP address on the Internet; we’ll be able to access it’s status and its location. This is transformative stuff, and is one of the primary sources for the next new billions of dollars of revenue in countless industries. Consider the world of HVAC — industrial heating, ventilation and air conditioning equipment: as it is transitioned to the world of “HVAC 2.0”, an intelligent, interlinked, fascinating new world of massive connectivity.
- World class innovators aren’t afraid to back away from big ideas: they know that right now it’s a great time to made bold decisions, and take decisive advantage to forge aggressive new paths against their competitors. While everyone else wallows in aggressive indecision and organizational sclerosis, world class innovators know that it is a great time to do great things.
You know what?
World class innovators win!
Did my keynote go well? Here’s what the client had to say: “Thanks again for your first class presentation! It really hit home and was right on the money!”
Another report on my keynote for 4,000 at the annual meeting of the National Parks & Recreation Association, putting into a concise summary the key trends that I covered (from the Parks & Rec monthly magazine).
“… a solid turn-out of nearly 6,000 park professionals and advocates made the 45th edition of Congress a resounding success. …. The theme, “Looking to the Future,” permeated nearly every facet of the event held at the Salt Center Convention Center.
In keeping with the Congress theme, Looking to the Future, opening session keynote speaker Jim Carroll did not disappoint. The Canada-based futurist built his address around key themes and issues likely to confront the field of parks and recreation in the next 10 to 15 years.
Carroll encouraged the packed convention hall to think in terms of transformation.
Other trends Carroll advised attendees to be aware of included:
- healthcare (we’ll be treated for the conditions we’re likely to have before they set in)
- hyper connectivity (mapping, body sensors, and sports equipment)
- Next-Gen re-engagement
- fragmentation (the result of a faster, more connected world that will shape sports, recreation, and hobbies)
- re-defined communities (society’s big problems will be solved locally)
- water/energy/environmental conservation issues
- demographics (think baseball diamonds that evolve into cricket pitches)
- workforce trends (Gen Y has a radically different set of job expectations than its predecessors)
- gaps in expectations (expect a disconnect between what the public wants and what it can afford)
If someone today were to ask me what the most challenging trend will be for first-world nations to deal with — it would have to the last issue.
I’ve got a lot to write and say about the “expectation gap” issue, and have been covering this in dozens of speeches over the last while.
The “expectation gap” is a trend that will define both the opportunity for innovation, as well as distinct perils for standards of living should it not be carefully managed. And to a huge degree, it relates to the political and social maturity that a country can display as it tries to deal with and manage the gap.
More to come!
The chance that your company, markets, competitors will be the same in ten years is virtually zero – so what do you do about that?
Here’s 10 phrases I often use to challenge my clients — often CEO’s of large, multinational organizations — to think differently about our fast paced future:
- experiential capital: it’s the cumulative experience you gain by trying to do new things. Do you have enough of it?
- momentum management: is this a core capability that your organization possesses – can you steer your team through ever more fast paced change?
- chameleon revenue: is your revenue stream capable of it? Can you keep generating new streams of revenue as old streams disappear?
- global idea cycles: do you tap into the global R&D mind for innovation insight, or is your thinking stale, old, out of date, based on the same old sources?
- idea intensity: can you turn the ideas that are out there into reality quickly enough, or do you lose the opportunities to others?
- energy of engagement: is your brand boring and dull, or edgy and interactive?
- ingestion capability: can you ingest new trends, technologies, concepts, business models … before they’re obsolete … or are you stuck in a hopeless rut of indecision?
- fast teams: can you form them as quickly as necessary to get the faster things done?
- massive incrementalism: the oil industry currently retrieves only 1 out of 3 barrels per well on average. A 1% improvement represents huge revenue gains. Every industry I am dealing with sees small marginal wins adding up to huge tactical advantage.
- depth of boldness: are you still thinking small wins, or large, massive tactical manoeuvres?
In other words, when it comes to the future, are you with it, or are you going to wimp out?
How quickly can you scale if you encounter a new market opportunity? How quickly can you react to a crisis. In this clip, Jim takes a look at the concept of corporate agility