September 19, 2018

Change in the financial sector – three observations

Over the past couple of years, I have had the opportunity to dabble in numerous projects for FMCG clients. Recently, however, this pattern has shifted and I have worked on several projects in the financial services sector, giving me a chance to engage with the challenges and dynamics impacting this sector.

Across all areas of commercial activity, there is increasing focus on innovation. In mature markets, growth is slow and it seems that the best opportunities to deliver against revenue targets come from not simply tweaking the existing but taking a fresh approach. When it comes to the financial sector, innovation is undeniably taking place, but a lot of this is driven by the external context, rather than established players deciding for themselves to do things differently. How money is managed is changing rapidly – thanks to changes in technology and the accompanying shifts in consumer expectations and habits. What is most interesting of all is the way that this new of ‘doing things’ is most apparent in emerging and developing markets, with mature markets lagging often behind.

Think about mobile money – this initially got going in Kenya. And now look at where the most sophisticated mobile payment ecosystems exist – there are in China. In mature markets, we are hobbled by our legacy systems which make switching to quicker and more convenient processes hard. Moving to contactless payment didn’t require waiting for the technology to be invented (that was around a long while ago); the delay came from having enough retailers who had installed the pay points that could accept this payment method. In emerging markets, it has been possible to build the infrastructure from scratch, using only the latest and best, which can work seamlessly across all types of digital processes and systems.

Mature markets are not only behind the curve in innovation. Some might argue there is a backlash as well as momentum to maintain the status quo. In an article earlier this year, Victoria Cleland, the Bank of England’s chief cashier, mentioned that she does not use contactless payment cards for personal spending – in part because she is yet to trust the technology completely. In Sweden, though the country is making rapid progress towards becoming the world’s first completely cashless society, there are growing concerns it is causing problems for the elderly and other vulnerable groups, as well as recognition that phasing out coins and notes could put the entire country at risk should Sweden encounter a serious crisis or war.

My final observation relates to how our relationship with money, and those organisations whom we talk to about money, is changing in the core fundamentals. In the UK, being able to buy a house is not a realistic aspiration for those in early adulthood. First-time buyers now wait longer – on average, they are seven years older than in 1960, and likely to be in their late thirties. In the face of this situation, some decide they will simply rent. Likewise, buying a car no longer seems such a critical entry milestone to adult life. Instead, there is great aspirational appeal in not being tied down, and instead taking the opportunity to experience life and work in a more flexible manner. I paint an extreme picture but only to bring out what challenges this presents for financial organisations.

If people are no longer buying houses or cars, gone is their opportunity to establish a long-term relationship with customers by providing them a mortgage or loan; if people are not slotting into standard regular jobs, gone is the opportunity to have salaries deposited in a nice and steady manner to build up bank capital; and with a desire to travel and focus on experiences, gone is the need for credit cards and other vehicles to facilitate spending.

It is a world for the brave, with the greatest innovation found not quite where and how you might expect it.


July 2, 2015

Cultural Strategy

Filed under: Business,Consumer Trends,Marketing — by xrematon @ 7:45 pm
Tags: , , ,

Cultural Strategy

Last year, I was recommended the above business book by a colleague. I duly ordered the tome and it sat there on my bedside table sadly gathering dust. I think it was the rather dull black cover and too-broad-to-be-meaningful-or-inspirational title that put me off.

It turned out to be a surprisingly good read, most probably because it contained what I naturally tend to look for in reading material – namely, stories. I should be clear that these ‘stories’ are in fact case studies, but gripping nonetheless through their ‘before’ and ‘after’ transformations.

The nature of these transformations form the core idea being put forward in the book : using cultural innovation to drive business success. Instead of taking a building a better mouse-trap approach (improving through technological improvements/tweaks), or focussing on mindshare marketing (trying to own an abstract and generic attribute), this approach proposes championing a better ideology, which already sounds more compelling than the other options.

There are some examples where following this path has delivered resounding results. I would put the work done by the authors for Clearblue pregnancy tests as my ‘favourite’ story. The Clearblue product was ostensibly no different to all the others in the field. To cut through, Clearblue was advised to challenge the norms of the category: patriarchal medicine addressing women in a superior and condescending voice and a presentation of women as passive and married. Instead, Clearblue followed the advice to embrace body-positive feminism that revelled in the delightful details of pregnancy and ovulation tests including showing pee splashing over the stick and sexual appetite and action. Success and soaring sales followed.

In contrast, I found the account of Marlboro less convincing. This, admittedly, is not an example of the authors’ handiwork, but one where they describe how the agency and the client developed the Marlboro brand over several years. After multiple attempts, they eventually succeeded in creating a new cultural symbol: Marlboro Country. In hindsight the nature of this achievement is clear, but I would be tempted to argue that during the process itself, it was more a case of playing around with different creative routes (the geographic ‘Malboro Country’ failed; the cowboy archetype ‘Marlboro Country’ failed; the patrician cowboy failed; the gunfighter myth ‘Marlboro Country’ failed; the modern ‘Marlboro Country’ failed). Perhaps this story has value in showing us how hard it can be to work through the cultural strategy approach, however obvious and intuitive it may seem once it has been realised.

Even though I don’t have any brand managers to hand whom I can try to persuade to abandon brand bureaucracy’s ‘iron cage’, I will have to see if I can find a new cultural ideology for French horn practice, which puts it outside of the usual associations of homework and chores. Rather than my son thinking it is a duty and an obligation associated with learning, he should understand it’s about freedom and personal expression. I’m not sure the neighbours will be so pleased as the volume goes up.

April 29, 2012

Innovate out of problems

Filed under: Business,Innovation,Sustainability — by xrematon @ 8:23 pm
Tags: , ,

I’ve been doing some research on different corporates and the one that intrigued me most was Nike. I must confess I have become a bit of a fan as a result. In reading about their recent product launches, I came across Flyknit technology which produces a ‘shoe-cum-sock’. The trainer is made with the bare minimum amount of material and seems to be mostly woven to create an upper part of the shoe which is virtually seamless.

Nike’s trying to recreate the sensation of running with no shoe at all – but this is no emperor’s new clothes. There are several reasons why Flyknit  should mean gold stars for Nike.

  1. The resulting trainer is lighter – it weighs 160g which is about the same as a large apple. Being lighter has many advantages – not simply for the runner:  it means it costs less to transport; and that it using less material.
  2. It requires only two pieces to be sown, compared to the 38 for another popular model (the Air Pegasus 28). This means it takes less time to make and requires less labour.
  3. The knock-on of the point 2 is that the human effort required to create the shoe has been considerably reduced – so much so that Nike could make the shoe anywhere in the world rather than having to go to places where labour rates are cheap. With one innovative swoosh it could do away with that reliance on factories which have been such a thorn in its side for a long time.

But it does make me wonder – what will those workers in the factories that are no longer sewing Nike trainers do instead? It comes back to that old conundrum – is a bad job better than no job at all? Time for more innovation…

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