The Hidden Fight of Transformation
The big problem that no one talks about
“The first rule of Fight Club is: you do not talk about Fight Club. The second rule of Fight Club is: you DO NOT talk about Fight Club!”
As the boards of organizations across industries as far afield as banking and insurance, to retail, media, utilities, and telco all grapple with “transformation”, or more honestly in most cases, simple process-modernization; many are creating something of a fight club. Well, sort of. Just as the lives of the characters in the movie had fractured, leaders are realizing that their businesses and indeed, their entire industries, are no longer future-proof. If they ever were.
But change is hard, or so they say. The truth is, the perception of change, and the fear of it, is often far worse than the change itself. But in the human condition, perception is reality. Stakeholders and cohorts with various agendas or patch’s to protect, versus fancy-free change agents, to executives concerned with their fiefdoms, to boards balancing the risk profile.
Yeah, it’s a fight club.
And it seems the now immortal words of Tyler Durden in this cult classic are being channeled by executives everywhere. You do not talk about Fight Club.
Everone’s Boogy Man
Recently in Australia, the chief executive of one of the nation’s market-dominating “big four” banks, the Commonwealth Bank of Australia, testified to a parliamentary hearing about the massive encroachment of Apple into contactless payments in the country.
Indeed, Apple now has around 80% of the market through Apple Pay, and yet it is entirely unregulated as a payments business, doesn’t invest in the actual infrastructure, and pays next to no tax locally. So naturally, there is a degree of concern about market integrity, consumer protection, and yes, the risk to the banks.
But it is not the risk that you think. And no, it’s not the fees revenue, though I’m sure the banks would prefer to have a bigger slice of the pie.
The real problem is that Apple is getting between them, and the customer. Of course, Google’s digital wallet does the same thing, but it's not just payment services.
Global brands like Mercedes and Amazon, and the likes of IKEA and Walmart, and many others, are cutting out the traditional middleman by using software from fintech startups to offer banking, credit, and insurance products.
In recent reporting by Reuters, Matt Harris, a partner at investor Bain Capital Ventures commented:
Embedded financial services takes the cross-sell concept to new heights. It’s predicated on a deep software-based ongoing data relationship with the consumer and business
But despite the bank's direct customer relationship being under attack on so many fronts, you won’t hear them talk about it.
And I reckon that’s because, to do so, would be an admission of sorts that banks simply haven’t got customer engagement right, which is a problem. Because this is not a payments war. It’s an engagement war.
And make no mistake. This is playing out in a lot of other industries besides banking.
In the utilities sector (power, water, and gas)… there is mass concern about increased costs and competitive pressures as the deregulated market provides more choice to consumers. That fight isn’t really about de-regulation though. It’s about the engagement gap.
In the insurance sector… there is great debate about a range of system and market change topics such as the impost of new anti-hawking legislation (the unsolicited cross-sell of insurance products). But that fight isn’t really about consumer protection or revenue constraints. It’s about the engagement gap.
In the retail and e-commerce sector… there are constant tactical discussions about conversion methods and dealing with issues like “cart abandonment”. But the higher value subject for direct-to-consumer business models, looking to solidify lifetime customer value, is not in the transactional process engines. It’s about the engagement gap.
In the marketing industry… there is increasing angst about the depreciation of cookies limiting the (frankly immoral) practice of digitally stalking people on the Internet. But the real issue is not how to remedy the resulting hole in marketing operations. It’s about the engagement gap.
I could go on.
So while companies and industries everywhere are talking about the symptoms, they are super slow to address the underlying causation. Because that, my friends, represents a more fundamental change. A genuine transformation.
Welcome to Fight Club
Business is a very human thing. Our wins come from our talent, and yeah, sometimes from timing and happenstance, but mostly, from talent. Equally, our losses often come from mistakes, errors in judgment, investment (or under-investment) in the wrong things or people, at the wrong time.
In the same way, progress comes from risk-taking and leadership, and stagnation comes from bias, fear, and self-serving.
There are multiple in examples in all fields. Here’s just one.
As the banking sector fights for the direct customer relationship against these new threats, they are only now realizing that their once leading analytics capabilities are now lagging, that the multi-million dollar decisioning tools are now legacy, and that siloed data science teams simply aren’t set up to cope with the nuances of omni-networked and hyper-connected consumerism.
But yesterday's glory tends to feed the status of vested parties, and turkeys my friends, typically don’t vote for Christmas.
Yet in every sector, there are new “challenger brands” or tier two operators, who have a distinct advantage. Perhaps there is less historical investment or mindset to resolve, or their smaller size allows for more nimble thinking. Instead of fighting institutionalisation, they are fighting for investment dollars or talent.
This spurs on the incumbents, and so ironically, some of the best customer innovation that I am seeing is coming from… banks!
But I also see the internal pain they go through to achieve it. As if Apple and Google, and the rise of embedded financial services wasn’t enough, they also have to overcome themselves. Leadership is always personal.
Invariably, the question for every industry and every organization with a growth agenda is how to check the rise of fiefdoms, biased risk profiles, and short-termism.
And yes, how do they win an engagement war?
All the same fights — that no one is talking about — are happening in utilities, insurance, retail, sports, and media. Everywhere you look, in fact. Vested-interest cohorts may come in different shapes and with different protectionist agendas, but the net result is the same.
Protect the patch. Obsess the symptoms. And hopefully, no one will deep-dive the real issues. Thus, we might avoid the perceived trauma of the resulting change.
“The first rule of Fight Club is: you do not talk about Fight Club. The second rule of Fight Club is: you DO NOT talk about Fight Club!”
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Quotes to Think On
The key to change …… is to let go of fear — Rosanne Cash
People don’t resist change. They resist being changed — Peter Senge
Unless you are prepared to give up something valuable you will never be able to truly change at all, because you’ll be forever in the control of things you can’t give up — Andy Law
The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic — Peter Drucker
Remember that on any world the wind eventually wears away the stone, because the stone can only crumble; the wind can change — A.C. Crispin
Where there is power, there is resistance — Michel Foucault
You had better be ready to change your mind when needed, or your mind will change you — Henry B. Wilsonx
Resistance is thought transformed into feeling. Change the thought that creates the resistance, and there is no more resistance — Robert Conklin
When you’re finished changing, you’re finished — Benjamin Franklin
When we are no longer able to change a situation, we are challenged to change ourselves — Victor Frankl
If you don’t like something, change it. If you can’t change it, change your attitude — Maya Angelou
