Thriving On Change

With all the current political and technological turmoil, I thought it worth sharing my thoughts on the increasingly difficult juggling act of operating an established global business.

The pace of world change is accelerating at an ever-increasing rate and that change offers both opportunities and threats. Some companies, even good ones, simply react to events as they occur, sometimes too late (remember Kodak and digital photography? Or Blackberry and the smartphone revolution?). Others are more proactive, foreseeing the change coming and taking action to avoid threats or even turn them into into opportunities. The most forward thinking organisations actually engineer market change to create opportunities for themselves and corresponding threats to others.

The drivers of change are many and the power of technology is perhaps the most front-of-mind.  We have always-on mobile, cloud computing, the Internet of Things and Artificial Intelligence becoming a reality. 3D printing could transform manufacturing, drone technology has many peaceful (and less peaceful) uses, and blockchain technology is predicted to revolutionise the future of financial transactions. 

The increasing power of technology has in turn unlocked our ability to analyse data.  We can now merge internal information with publicly available data and even social media to identify insights previously unseen. We know more about our customers than ever before.

And in order to satisfy our seemingly insatiable appetite for power and speed, Quantum computing will replace tradition silicon-based technology, using atoms and molecules to perform computer memory and processing activities, offering previously unimaginable capabilities and further opportunities. And so the merry-go-round continues…

In parallel, sometimes fuelled by new technologies, social values are changing. The so-called millennial generation – to some extent our workforce of now and our leadership of the future – think differently, and have different values and expectations and aspirations to my own generation. Importantly for us, these individuals are not only our own employees, as they mature and achieve more responsibility, they are increasingly our customers of tomorrow. Lots has been written about this generation – connected globally, always-on via social media, more collaborative, more inclusive and more demanding in terms of service and immediacy. It would be foolish to ignore these characteristics. 

On top of these trends, or perhaps because of them, the world is globalizing. Way back in 1995 the Economist published an article by Frances Cairncross entitled “The Death of Distance”. She argued that the power of mobile, of the Internet and of technology in general would make geography irrelevant. This was forward thinking, perhaps even far-fetched - remember this was just a year after Jeff Bezos founded Amazon in his garage!

It may have taken over 20 years, but her predictions have largely materialised. Many country-denominated market boundaries have been replaced by a global marketplace and Jeff Bezos has moved on from his garage to bigger things. Fuelled by global movement of capital and resources, companies routinely take advantage of global labour cost arbitrage, with operations in lower cost environments. 

It is interesting to note, however, that as the true impact of these developments on society becomes clear, anti-globalisation sentiments seem to be increasing, with perhaps the UK Brexit vote being the most tangible pushback to date.

Companies in all markets are leveraging these trends to disrupt the old models, to disintermediate, shorten and simplify the value chain. Uber uses its mobile app to allow consumers to connect directly with drivers. Crowdsourcing provides services from a community of individuals rather than a single supplier – for example providing non-bank funding. Amazon, effectively a wholesaler and distribution company, connects direct with consumers, and actively encourages sharing of reviews and feedback on products and services. 

In our own insurance space, so-called “Insurtech” companies are created with the objective of “reimagining insurance”. These organizations, unconstrained by legacy systems and processes, are looking specifically at how they can disrupt current business models. 

Sticking rigidly to the old ways of working whilst all around is changing is folly. It was Jack Welch of GE who said “When the rate of change inside an organisation is slower than the rate of change outside, the end is in sight. The only question is when.” And undoubtedly the rate of change outside is fast. But as always, it’s a balance. 

We need to make a judgement call on which of the new technologies will succeed. Which should we invest in and which are hype? What is real and what is noise?  How quickly will change happen – overnight, or in five years’ time? How quickly is “millennial thinking” changing customer expectations? How should we balance short term shareholder performance, with long term investment for the future? And how much should we invest in change and transformation as opposed to continuing our business as usual?  

We need to stay vigilant. It’s not a black/white, day/night scenario – change sneaks up and the balance shifts, perhaps imperceptibly, but it all adds up until a tipping point comes.  We need to be ready for it, so these questions don’t only need to be asked once - they need to be asked continuously. Some of these will never materialize; for others, it’s not a question of if we need to move, but when, and at what speed. 

I started by talking about the juggling act of operating a global business in a fast changing world. Change is now a constant and as I reflect on it, amongst all of the uncertainty I believe there is one fundamental truth – the business which has the closest relationships with its customers and listens to its own people will succeed. What is happening to our customers’ businesses and industries?  What are their challenges and opportunities? How are they interacting with their own customers? How can we give our customers the confidence to help them succeed? And what do our people think – after all they are multi-form customers in their own right? 

The company that can see through the eyes of its customers and look to exceed their expectations will be the one with the brightest future.

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