Execute with Two Speeds & Govern with Three Roles – Keys to Digital Execution

DIGITAL DISRUPTION IS not a new phenomenon. But the opportunities and risks it presents shift over time. Competitive advantage flows to the businesses that see and act on those shifts first. We are entering the third, and most consequential, wave of digital disruption. It has profound implications not only for strategy but also for the structures of companies and industries.

In the first wave of the commercial Internet, the dot-com era, falling transaction costs altered the traditional trade-off between richness and reach: rich information could suddenly be communicated broadly and cheaply, forever changing how products are made and sold.

In the second wave, Web 2.0, the important strategic insight was that economies of mass evaporated for many activities. Small became beautiful. It was the era of the "long tail" and of collaborative production on a massive scale.

Now we are on the cusp of the third wave: Scale. Big—really big—is becoming beautiful. It’s about platforms and scale demands a bold, new architecture for businesses.

Financial Services is not immune to digital disruption. If anything, it’s most susceptible to disruption behind only Media and Telecom, according to Russell Reynolds Associates.

 To ride the third wave of digital disruption, financial services companies will need to execute their digital strategy with two speeds and govern with three critical roles:

 First is disruptive -- the rapid adoption of new options for business growth, such as launching a new mortgage servicing solution that establishes a platform ecosystem around the core mortgage experience

 Second is transformational -- financial services companies need to change their core business by reshaping their digital customer, enterprise, and operational strategies.

 The second element of achieving ‘scale’ is through a governance model that places three critical roles, “entrepreneurs” at the center of leading digital execution:

1. Technology Entrepreneur: the architect of the bank’s future capabilities. This entrepreneur introduces new concepts, such as intelligent enterprise or platform-based thinking, to render the enterprise more open, scalable and flexible across its tech environment.

1. Banking Entrepreneur: A banker with entrepreneurial spirit balances risk and business viability by maintaining sustainable banking value. This entrepreneur - typically an experienced banker - understands the relationship between value and risk, and is familiar with the bank’s business model of capital, revenue flows, costs, the regulatory boundaries, and how bank-centric business models operate.

1. Digital Entrepreneur: A role that anticipates customer desires and predicts trends and behaviors in the digital ecosystem. This entrepreneur brings customer-centric thinking and shapes the banking ecosystem, developing a portfolio of business options while working on the revenue digitalization and process digitization agendas.

 
Leadership teams of large incumbent banks know they need to move rapidly to react to digital disruption. But while each bank has its own digital journey, executing at the right speed, with the right governance model and mind-set can be a fast track to success.

Follow Me: @safwanzaheer