Fintech – investing in failure.

From a very young age, especially here in Asia, we counsel our children to work hard if they want to succeed in life. We invest our time, and our money, in schooling, tutoring and extra-curricular activities to give our kids the best skills, and opportunities, to make their own way in the world and to succeed in everything that they do. This doesn’t come without its own set of controversies of course, someone far more qualified than I can expound on the merits, or otherwise, of ‘tiger-parenting’, but it is a mind-set that we carry with us from school, through university and into our working lives. The pursuit of success is ingrained within us and the carrot of financial reward dangled in front of us not only by parents and teachers but by employers.

And therein lies the problem – at least from a fintech perspective.

I attended the KPMG / American Chamber of Commerce 2016 FinTech Forum last week, here in Hong Kong. There was some fascinating, and lively, debate across topics such as blockchain technology, government and regulatory oversight, local and regional innovation and the dearth of talent coming into the industry. The news of a limited talent pipeline might come as a surprise to many, particularly here in Hong Kong, recently cited as ‘the world’s most connected place’- SCMP - May 2016. One reason for this was given, with real life examples, as the being down to the ‘tiger mom’ effect. After investing so many years into a child’s education and development it is still seen as ‘better’ (read ‘safer’) to join a bank, a professional services firm or MNC in a junior, often dull, position where one can work through the ranks and into management. Safe, predictable and, yes, profitable. Thanks Mom, job done.

Innovation demands risk.

Fintech, insurtech, app development and start-ups are, by their very nature risky with a significant proportion doomed to fail. Look to Silicon Valley and failure is worn as a badge of honour - We tried, we failed, we learned and, next time, we will do it better – but that attitude goes against the grain of everything that business is ‘supposed’ to stand for. Corporate culture and start-up culture are so radically different that it can seem difficult, if not impossible, to marry the two – but in some companies, in some very surprising spaces, this is beginning to change.

Freedom to fail – attracting top talent.

Banking and insurance, the epitome of the suits-wearing world, have been making strides to attract young, hungry, inquisitive and fearless employees to work in innovation labs and spin-offs with one, over-riding, mantra. “It is OK to fail”. In fact, employees are not only given the freedom to fail but failure is expected and encouraged. Leaders in the technology space understand that for every project that succeeds and, ultimately, generates revenue then there are going to others, perhaps many others, that will fall by the wayside. This, of course, doesn’t necessarily sit well with the finance department who are always looking for returns on investment. However I know of at least one, leading international, financial institution that is running an innovation lab ‘off the books’, safe from the interference of the finance and HR departments, and they are, I am sure, far from the only ones to be running similar programmes.

Here lies the dilemma for ‘traditional’ business, and parenting. If we want business and society to evolve then we need to learn to let go of the apron strings and encourage failure because from failure will come success, and financial reward, and that is exactly what we have been striving for all along.