As a rapidly evolving digital landscape challenges established institutions, market structures and business models, how will companies like Suncorp rise to meet new challenges and steady itself to thrive in a ‘new world order’?
While technology has always been a great force in disrupting the status quo, arguably the difference today is the universal presence of technology in our lives and the speed of change.
The success of ‘new’ enterprises such as Uber and Airbnb for example, has been simple – they identified a need, resolved a pain point, innovated with technology and welcomed customers who have in turn embraced a new frontier of service away from the traditional services.
While in a digital era the future of many of our large corporations may be threatened, it’s relevant to ask: so, what? Other than for the investors in those companies, and of course their employees, does it really matter?
In fact, putting customers and products together, in a more efficient way, will arguably drive improved economic outcomes. Whether this is delivered by thousands of micro companies, start-ups or mega platform companies (like Amazon or Google), does it really matter?
More and more we are seeing these two models co-exist. The rise of start-ups and entrepreneurship is on one hand fragmenting industries – but on the other providing opportunities for large scale companies to acquire and buy-in technology and expertise.
Either way, future success will come from being externally focused while having a detailed understanding of our customers and their needs and evolving to cater to those needs.
Put simply, we need to embrace an opportunity mindset amid the rapid change we face, and move forward with an unswerving commitment to what we do best.
For financial services the business model is being challenged by Fintechs while we simultaneously confront increased regulation. The task of becoming more agile in an era of tightening regulation is going to be a huge challenge for Australia’s largest financial services companies.
That challenge of course is likely to amplify as the industry deals with the outcomes of the current Royal Commission - which will invariably add additional regulation and oversight.
All of this comes at a time when the investment horizons of the fund managers that invest in these companies become increasingly short term and/or wedded to the dividends that emerge from profits generated.
Established businesses too have diverse customer bases. Not all wish to transact digitally. Some feel more comfortable dealing with people via a call centre or in a bank branch. They need to take this into account, accommodating the needs of their entire customer base. This too comes at a cost.
To survive and succeed we must first establish the customer as our most important stakeholder. This doesn’t mean that we de-emphasise the shareholder, rather acknowledge the shared interest that exists.
Deliver value for customers - don’t seek to extract value from them. Be attuned to changes in customer preferences. Don’t only manufacture products... if you solve problems and meet needs, profits and more importantly trust will naturally follow.
We need to simultaneously build cost and revenue resilience which will fundamentally reset an organisation from a potential preoccupation with threats and risks to an opportunity mindset.
Businesses should also avoid using a changing and uncertain landscape as an excuse for delayed or deferred investment. To wait until there is clear air could be a very long wait – indeed, it may never materialise. Do you think disruptors, start-ups and entrepreneurs factor regulatory, political or technological uncertainty into their risk appetite? To the contrary, they thrive on it. And we should do the same.
In the long-term view, to survive and thrive in this change, we need to cultivate strategic innovation of our people and incubation of ideas.
And we must treat incumbency as an asset. Relationships with customers are hard won but easily lost.
Ultimately, we need to continue to earn our social license to operate. Nothing facilitates an adaptive organisational culture more than to create a galvanising purpose. And that is a purpose far broader than just making money.