Innovation versus yesteryear corporates

There are many in the industry today, who believe that disruption came almost like a tsunami, out of nowhere and swept away all existing trends, processes and practices in place. Whereas, the universal truth of life is, that change is the only factor that is inevitable. This is the first advice I give to all the firms that I mentor.

Firms today need to be ready and proactive in their approach towards anticipating change at all times, changes also increase in speed today and happens more and more, leading in many situations to mass disruption, as in this case. And I speak from experience. I have been part of disruption since the 1980’s. I dedicated 23 years to being part of leading DHL through disruption of the international postal industry. There was a need back then, to identify the impact of globalisation and global marketplaces would have on the entire supply chain. Such a philosophy holds true even till today. Disruption is part of our planet and population evolution and it is exciting to be part of it.

In the last few years, I have mentored several firms seeking advice on how they can survive this period of rapid change, and retain value in their consumers eyes. They have needed to start with one important point - coming to terms and acknowledging that, some action needs to be taken. Brace, and then embrace.

It’s understandable that firms which have been in businesses for the last four to five decades are used to operating in a certain way and with a set perception. In today’s workplaces, culture and general business practices seem almost unrecognisable for those who have travelled in time and landed in this millennial generation.

Ask any sixty- year-old today to describe what it was like to do business in the seventies, in Singapore. It’s hardly surprising to hear narrations of how business owners relied on the pages of their thick directories to find suppliers. They resorted to communicating through trunk calls, telegraph, and posting letters. Facsimile machines were later introduced to transmit paperwork. In those days, accountants manually maintained the T-ledgers and other books of accounts, storing it in the cupboard for years at a time.

For trading activities, banks were the most common source of financing. All transactions were by cash or check. Banks during those days would assess companies based on their reputation and require a personal guarantee against the amount. Despite the lack of technology, many older Singaporeans are still able to recall fond memories of how business thrived through the vibrant ports of Singapore.

Fast-forward to today – several firms with traditional mindsets have found themselves stuck in a non-transient limbo. Wanting to move forward and adapt to these rapidly changing times, but unable to understand how to do so. Change is not easy, agreed. Firms become victim to a strong degree of inertia, when it comes to experimenting and adopting practices which have not been heard of in the past. In all fairness, this struggle can also be attributed to the lack of knowledge or understanding regarding evolving business practices.

Innovation, has become a hyped buzzword across many sectors of the economy. Truth is that, it is the driving force which has transformed the way businesses operate. Thomas Alva Edison, an American inventor famously quoted “There’s a way to do it better. Find it”. In these few words, he sums up the concept of continuous progression. In this age of disruption, progression is the only way forward. It is important to enable the migration of yesteryear corporates towards adopting innovative practices.

From an advisor’s point of view, innovation can be viewed as an art, and a science. An art, because there is no fixed formula which can inject innovation into existing processes. It is a mindset which should be used as a guiding philosophy to cultivate the process of idea generation and continuous progression. The financial services sector has somewhat latched on to the notion of an innovation lab to generate innovation within the firm. Spending billions of dollars on innovation labs and accelerators, however commendable, cannot be a standalone effort. Firms that cannot opt for similar investments can still work towards innovation and agility.

There needs to be a significant development in creating an open culture of sharing which can then lead to a creative thought process development amongst employees. It needs to be integrated into the agenda and list of priorities for senior management. Innovation is a science because it needs to be implemented in a systematic manner, and then on tracked, and measured periodically against the corporate goals set. Most importantly, there needs to be a multi directional communication flow on the importance and the impact of an innovative mind set.

Last year, the American Enterprise Institute stated in one of its reports that only 12% of firms continued to remain on the Fortune 500 list. Meaning, only 60 companies have survived on that list from 1955 till 2016. These include firms such as Boeing, General Motors, IBM, PepsiCo, Pfizer, Johnson and Johnson, Kraft Foods, etc. The report further states that several names which were on the list in 1955 are now unrecognisable, forgotten companies today.

Factors such as technological advancement and the rapidly shrinking world have disrupted industries and impacted the lives of billions across the globe. Commerce, which has typically been associated with marketplaces, has gone digital. The forming of digital marketplaces has become a game changer in many industries.

As of 2017, half of all online customers are regularly making purchases in digital marketplaces. By the year 2020, nearly 40 percent of all online retail is expected to be housed in marketplaces. Services which further cater to marketplaces such as eBay, Amazon, Alibaba, Lazada, have sprung up in recent years. Payment providers like Paypal, Tencent, Alipay have used digital wallets and other such services to further simplify remittance, foreign exchange and online payment. It’s just about time that we many find a concrete answer to the legalisation of digital currencies.

There was a time when people were exposed to the idea of artificial intelligence only through futuristic movies and sci-fi novels. However, robotic technology has redesigned processes and introduced innovative products in several sectors. Mark Zuckerberg’s introduction of Jarvis, Tesla’s announcement of driverless cars, and Apple’s use of Siri, launch of digital cryptocurrencies like Bitcoin, just to name a few, have already started making heads turn in surprise.

Needless to mention how smart technologies have been introduced into healthcare, logistics and manufacturing industries. Turning to the financial sector, a growing number of robo-advisors can accurately allocate the modern investor’s funds with minimum costs and maximum ease.

An increasing number of financial platforms are achieving success in disrupting B2B banking functions such as invoice financing, corporate loans, etc. An open-minded approach towards such solutions, that bring convenience as well as better rates and terms than banks, is required.

Millennials working for yesteryear corporates, may face resistance towards the idea of integrating financial technology into daily processes. Millennials and their demand of newer forms of technology has fuelled the wave of disruption. Clearly evident with the success of firms such as AirBnB, Grab, Uber, and so on. Therefore, it is very important for this education process to start from bottom-up instead of top down.

An old fashioned analog watch tells the same time as a smart watch today. Yet, there is a vast difference between the two. One serves the basic need of knowing the time, whereas the other provides detailed information of all sorts. Although it is somewhat difficult to argue the benefits of one over the other, it’s clear that products of this day and age are designed to meet the evolving needs of customers today.

Innovation and disruption are two unending roads which run parallel to each other. What the future holds, is the branching out of these roads into newer terrains. The world has witnessed the Industrial Revolution, the computer driven era, the digital era and now, disruption of all things. What a great exciting era we now live in.

Business’ which still operate in a traditional manner need to analyse the impact of specific technologies on every aspect of their organisation and change or be changed.