Get ready to reap the rewards of the ideas boom
With Australia in transition from a resources-led boom time to an era of technology-powered innovation, is your business already reaping the rewards of an ideas-fuelled economy?
Beyond government rhetoric, the ideas boom is fuelling new ways to redefine entire industries and turning traditional models upside down around the world. A recent global survey into the economic impact of digital technology found it will drive US$20 trillion in revenue growth by 2018.
“The ideas boom is a great call to action from the government, with national support for science and innovation,” comments Pratham Karkal, Head of Innovation with Macquarie Banking and Financial Services. “But it's also a significant opportunity for the services sectors to unlock new channels for engagement or customer service, and new ways to maximise the advantage of their data.”
Ian Marshall, National Head of Legal for Macquarie Business Banking, says he’s seeing a sense of empowerment across many professional service industries.
“For example, the legal sector fundamentally hasn't changed for many years. Now, with so many interesting lawtech start-ups coming through Australian incubators, firms are realising they can do things differently, create ideas that succeed globally, and change the way they structure their business or service clients.”
One year on from the Federal Government's pledge of $1.1 billion1 to fuel our nation's ideas-led future prosperity, what have we learned?
Lesson #1. Innovation can mean many things
Ben Perham, Head of Personal Banking with Macquarie’s Banking and Financial Services, says it’s important not to define innovation too narrowly. “Innovation is a broad concept. Some people focus all their energy on that moment of brilliance, a game changing idea. But sometimes it can be subtle and incremental, and that’s just as powerful. It can achieve the same amount of business change.”
Ideas are intangible – we can’t mine them from the ground or even predict their value. So what is really triggering this ideas boom?
“Technology is not just changing your business. It's changing the way you meet future customer expectations – and they are the ones driving this change,” says Marshall.
“There's a generational shift behind this as well. Generation Z is the first generation born into a digital world – and by 2025 Generation Z will be 27% of the workforce and major users of professional services.”
Lesson #2. Trust can trump a start-up
Perham believes financial services was relatively immune from disruption – until about three years ago.
“The amount invested into fintech has increased five times over the past three years. It’s a wake up call for established industries to transform.”
However, he points out that incumbent businesses can benefit from a first-move position. “For example, the rise of robo-advice start-ups in the US has attracted a lot of attention. But Vanguard's Personal Advisor Services platform has achieved four times the revenue of Betterment or Wealthfront.”
He says established brands have the advantage of consumer trust. “To succeed, you need a great customer experience, trust and a strong brand. Building those last two elements takes time and money.”
Digital technology will drive US$20 trillion in global revenue growth by 2018.
Lesson #3. It's time to adjust your mindset
Ideas are everywhere – but how do you bring the best ones to the surface, and work out what’s worth pursuing?
“When we talk to clients about technology, we encourage them to break down the entire workflow of their business – from front end client service through to back office,” says Marshall. “It’s about challenging what can be automated, or done differently to push your people up the value curve. There are innovations available in the market to assist with that – or you can come up with new ideas internally.”
Karkal says an innovative culture is crucial. “Unless you embrace diversity of thought in all levels of the business, ideas won’t flow freely and it’s harder to identify what to pursue.”
“You need to coax people out of the mindset they can't take risks or fail,” emphasises Perham. “In financial organisations that can be difficult – it’s a balance between protecting shareholder capital, and the imperative to innovate and adapt.”
Karkal warns against spending time on a solution to a problem that doesn’t really exist. “We’ve seen this happen, where people assume a need exists and build without validation. When it’s released to market, no one is interested in buying it.”
The agile development approach – ideate, prototype and test – also ensures you launch before competitors have time to catch up.
Lesson #4. Co-creation is king in an innovation ecosystem
Co-creation is rife in an ideas boom – Marshall gives the example of law firms holding hackathons with their own clients. Macquarie has established joint ventures with clients and vendors (such as PropertyIQ) to bring new platforms to market, and plays an active role with incubators such as Stone and Chalk, Innovation Bay and Heads over Heels.
Macquarie also often collaborates with its clients to help them get ideas off the ground sooner.
“That might start with a conversation with a Relationship Manager, who can introduce you to other parts of the bank such as Pratham’s team or our own technology team,” explains Marshall. “We may have seen similar ideas, and can connect you with tech partners or incubators.
Spark some new ideas with our reading list
Marshall, Perham and Karkal share their must-reads and top downloads for the summer break.
- The Innovator's Solution: Creating and Sustaining Successful Growth – Clayton M. Christensen, Michael E. Raynor
- The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses - Eric Ries
- Business Model Generation: A Handbook For Visionaries, Game Changers, And Challengers – Alexander Osterwalder
- The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future – Kevin Kelly
- The Future of the Professions: How Technology Will Transform the Work of Human Experts – Richard Susskind
Subscribe and download
- Startup daily – how to guides, success stories, and resources
- Angelist.com – list of global startups, search by industry
- Banking4tomorrow – blog by Brett King
- Inspiring innovation to the max – Scott Anthony’s TedTalk