Gihan Perera is a futurist, conference speaker, author and consultant who gives business leaders a glimpse into what's ahead - and how they can become fit for the future.
Taking a regular fresh look at how you do business is an essential part of leadership.
In the early 1970s, Intel was the world’s only source of computer memory chips (the underlying technology for storage space in computers – and later, in phone and tablets). But by the end of the decade, Intel shared the market with about a dozen competitors.
Meanwhile, Intel was also working on another emerging technology: microprocessor chips (the technology that performed the calculations and ran the programs in the computer). In 1981, IBM chose Intel’s microprocessors for its new ‘PC’, and that gave Intel two strong products.
Memory chips were still the largest contributor to revenue, but that business was being threatened by Japanese competitors, whose products were not only cheaper but better. Intel was losing money on memory chips, but because it was still such a big part of their business, they were reluctant to let it go.
Debate raged inside Intel, with different factions among the senior leadership arguing vehemently – and reasonably – for different strategies, such as focusing on niche markets, tackling the Japanese competitors head-on, and abandoning the memory chip market altogether.
One day, after yet another debate that didn’t achieve anything, Intel’s president Andy Grove took his CEO Gordon Moore aside and asked him: “If we got kicked out and the board brought in a new CEO, what do you think he would do?”
Moore didn’t hesitate: “He would get us out of the memory chip market.”
Grove replied: “In that case, let’s walk out the door, come back in, and do it ourselves!”
With this simple change of perspective, Grove broke the deadlock at Intel and led to decades of Intel domination in the microprocessor market.
Your job is to look at the big picture.
One of the biggest challenges you face as a leader is to manage the competing priorities of short-term operations and long-term vision. You’re expected to take responsibility for long-term strategy, but you might be swamped by operational tasks – especially in this industry, which is being constantly battered by enforced change.
Strategic planning takes time and effort, so many leaders defer it “until there’s a better time”. Unfortunately, there will never be a better time, so it’s essential you invest the time now. As with financial investments, a small investment of time now reaps large rewards later.
At Intel, Andy Grove and Gordon Moore recognised their in-house battles were irrelevant in the wider market. That was true a generation ago, and it’s just as true today.
Now you must look even wider and further.
In our connected world, the biggest changes to your business will almost certainly come from outside the industry. That’s not easy to accept when you’re frantically trying to keep up with the constant changes happening in the industry. But if you ignore outside changes, you’re vulnerable to disruption.
When Accenture surveyed Australian CEOs about disruption, the vast majority (more than 80 per cent) thought the biggest disruption would come either from existing businesses or from inside their industry. That’s like trying to drive by constantly looking in the rear-view mirror.
Less than one in five admitted that disruption could come from start-up businesses outside their industry. And yet, that’s exactly what we think of when we hear the word ‘disruption’. Companies like Uber, Amazon and Airbnb were all disruptive outsiders, who were late to the party in their respective industries.
It’s all well and good to compare yourself with yourself, so you can keep improving. And it’s sometimes even worth looking at the competition, so you can strive to be (or continue to be) the market leader. But that won’t protect you from outsiders stealing a march on you.
What worked in the past, won’t work now, and it won’t work in the future – especially in the financial services industry, which is already adapting and changing at lightning pace.
The numbers back this up.
These are just a few statistics that highlight the significant changes coming to financial services:
20 per cent of financial organisations are already using AI, with 41 per cent planning to in the next year (according to Econsultancy and Adobe).
82 per cent of global financial services companies are collaborating with fintech companies as partners rather than competitors (PwC).
Regtech (regulatory technology) will increase 500 per cent by 2020, from $10 billion in 2017 to $50 billion (G2 Crowd).
By 2020, consumers will manage 85 per cent of their interactions with banks through chatbots (Gartner).
Your business might only be a small fish in a big pond, but the ripples will affect you. As a leader, your role is to take this external perspective and look at your business as an objective observer. Ignore what you already know, and approach your future with an outsider’s mindset.
As responsible planners, you caution clients that “past results are no indicator of future performance”. But do you apply the same thinking to your own business? To be fit for the future, train yourself to take an interest in everything new – especially from outside the industry – and consider its impact.
For example, if anti-ageing technology raises life expectancy to 100, 120 or even longer, that will affect the financial advice industry in many ways. Just consider:
The retirement age will rise, which will affect superannuation and long-term investments.
The concept of retirement might disappear altogether, and clients will want access to their money at any time.
Businesses can tap into the wisdom and experience of employees for longer.
Workplaces will have more generations of people working together.
Population growth will increase the burden on taxpayers.
Governments will offer new tax incentives to individuals and businesses to support societal changes.
Norms around relationships and marriage might change.
None of these changes are guaranteed, but that’s not the point. By opening your mind and broadening your perspective, you’re considering them as possibilities.
Broadly, you can imagine their impact at four levels:
1. Replace: It completely replaces something you do, and makes that function obsolete.
2. Assist: It improves your operations, so you can be more efficient or effective.
3. Elevate: It eliminates that function, so you can do more important things instead.
4, Transform: It creates completely new opportunities, beyond what you already offer.
Some people think immediately of the worst-case scenario, such as assuming robots or AI will make you obsolete. That’s the ‘replace’ scenario, but it’s not very useful. It’s also usually further away than most people think.
For example, remember all the fuss about robo-advice a few years ago? Instead of fearing this technology, smart financial planners embraced it and used it to assist their current work and elevate them to offer better services.
Taking this ‘What if?’ perspective often raises more questions than answers, but that’s not a bad thing. These become a valuable starting point for digging deeper and exploring new opportunities. Even if you can’t implement these ideas immediately, at least you can consider them.
Whatever the outcome, taking this fresh perspective is an essential part of your role as a leader. Your future depends on it!