BUSINESS FAILURE: WHAT LESSONS HAVE YOU LEARNT?

BUSINESS FAILURE: WHAT LESSONS HAVE YOU LEARNT?

Failure is a recurring theme in today’s business world, making the exit plan section an important part of every business plan. It is a struggle to find a perfect definition of business failure, but for the sake of this piece, failure is defined as the end to the existence of a business – end of survival, creating loss for investors and creditors alike.

There should be no shame in business failure; if it does happen, it should be analysed and findings documented. Business failures could stem from a huge number of factors ranging from business models, resourcing, strategy implementation, poor planning to bad product development and even poor product road map. There is no silver bullet to a successful business but a combination of factors which are peculiar to individual business. Location and timing also plays a huge role in the success or failure of a business; therefore, it is imperative that entrepreneurs should pay attention to details and take time to analyse their successful and especially failed business because it could become the pivot for their next venture. If there are no analysed and documented lessons learnt especially from failure, the same events are likely to happen again. Business management and entrepreneurship should be more about pragmatism than belief, it requires focus on actual events than emphasis on assumptions and optimism. See things for what they are and not what you want them to be, be honest to yourself and the team around you. Identifying and admitting a problem is the first step to solving it.

The absolute necessity to analyse business failure is to understand the high and low points with emphasis on exposing the pinch points in the business life cycle. The experience from a business closure can be associated with positive attitudes and should / can be used as a stamp of authority to challenge underlying assumptions and methodologies. Failure should strengthen entrepreneurs and give them a war chest – “I have been there and done that, I know what I am talking about” … However, this is a function of how the individual learn and ability to change their business practise that led to failure.

How entrepreneurs treat failure is a function of individual personality – individuals with optimism learn from failures, and are prone to making sense of the failure in a more beneficial way i.e. failure could serve as a motivation to move on to the next. Ucbasaran (2013) suggested that optimistic individuals are more likely to treat adversity as a challenge to transform problems into opportunities and rebound quickly from setbacks, but the same cannot be said about pessimists. Failure sometimes induces grief and triggers self-doubt that often creates obstacles not just to learning from mistakes but also from applying any knowledge that could have been learnt. Therefore, the experience and value that can be derived from a business failure is a function of individual perception and approach, however, the experience is invaluable and can serve as a springboard to launch the next venture.

Do not be ashamed to analyse and talk about failed projects, it is important not to waste the experience, at least the knowledge of how not to do things.

Failure is not when you try and don’t succeed, failure is when you are afraid to try or stop trying because of other people’s perspectives and opinions.

To analyse your business failures and prepare for the next venture, feel free to contact the author on Twitter: @Emeka_Nwonu or drop him an email on Emeka.nwonu@crystalpearlconsulting.com

Instagram: @Emeka_Nwonu

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BLOCKCHAIN APPLICATIONS IN THE UK CONSTRUCTION INDUSTRY

BLOCKCHAIN APPLICATIONS IN THE UK CONSTRUCTION INDUSTRY

 

Reports by both the Latham Report (Construction the Team, 1994) and Egan Report (Rethinking Construction, 1998) respectively both suggested that the UK does not get full value from public sector construction; there is a broad consensus that construction underperforms; there are low levels of standardisation; fragmentation of the public-sector client base; and that there are poor and inconsistent procurement practises leading to waste and inefficiency. Consequently, in May 2011, the Efficiency and Reform Group published the UK Construction Strategy with the intention to reduce cost of public sector construction by 20% and stimulate growth in the entire construction sector. The construction business environment is changing, with speed and efficiency becoming the basis for competition, even more important as investors are constantly seeking cheaper and more effective alternatives. Therefore, the construction sector needs innovation in processes as much as she needs in materials, and this is evident in the popularity of innovative construction practises such as Just-In-Time (JIT), Off-Site Production (OSP) and very recently, mandated by law in 2016 is Building Information Modelling (BIM). Construction project management methodologies have continuously evolved, giving rise to Lean, Agile and Production thinking methodologies.

Taking a cue from the finance sector where the blockchain, though is in its nascent stage, is being tipped to re-engineer business processes and fill the trust void in business transactions. With benefits such as reducing transaction times from days to just a few minutes; instant verification and authentication of documentations using smart contracts technology, I am sure the blockchain technology can positively impact processes across the construction value chain.

POTENTIAL USE CASES OF THE BLOCKCHAIN IN THE UK CONSTRUCTION SECTOR

INTELLECTUAL PROPERTY

The blockchain which can be used as a digital vault to protect and secure value can provide a secure registry of intellectual property for the manufacturing industry with little cost compared with the current cost and long winded process of IP registration. If the manufacturing industry adopts a blockchain for patent with the rules clearly defined and enshrined in a smart contract to be executed by the blockchain, it has the potentials to transform the entire patent and IP registration process with speed, process efficiency and transparency. Agency, legal and coordination cost will be eliminated or drastically reduced. Furthermore, traceability, authentication and visibility of modifications and updates will be easier on the blockchain because of its structure and use of cryptography.

PROCUREMENT

The blockchain can transform the entire procurement process to become more seamless and reduce transaction times. The blockchain can support native payment systems that would not need third party verification or backend to process transactions. The smart contract will authenticate and validate transactions on its network real-time with full traceability of who does what and when. This would also reduce cost associated with administration of procurement and generate electronic documents as against the traditional process which includes use of hard copies of documentation and authentication by third party.

 

COLLABORATION

The blockchain has potentials to enhance collaboration to increase efficiency and cut cost which is a focus of most construction initiatives. It can make interface seamless and on time as it allows everyone on the network to see information and updates real time. Furthermore, it can improve collaboration on projects, among companies and in the entire construction sector in the following ways.

COLLABORATIVE CONSUMPTION

There are very many collaboration tools that companies use to manage interfaces and collaborate on joint ventures (JVs) or joint projects, but most of them need central intermediaries (Third Party Companies) which can be eliminated by blockchain to verify and authenticate information, leaving human interface at the heart of operations. Furthermore, with the blockchain, the construction industry can establish a sharing system (sharing economy) where they can book / share equipment and make settlements over the blockchain network. Most companies would rather gain access to equipment when they need them than acquire that equipment, thus potential to reduce CAPEX and operating cost. If there is a trusted network less prone to manipulation, I am sure businesses will participate in such an equipment sharing arrangement like in the peer-to-peer sector. Businesses will be more than happy to pay for only what they use and when they use it against ownership cost. A blockchain powered pay-as-you-use system will complement a Just-in-time system in construction. The blockchain can support an industry wide system for planning and tracking projects from a regulatory and governance point of view.

COLLABORATIVE WORKING

Collaborative working is on the increase as companies especially in the construction and manufacturing industry have joint projects and manufacture bespoke equipment which requires cross functional teams and inputs. The blockchain will provide a secure network which is accessible but controlled and governed by smart contracts to ensure credibility and integrity of information provided. The beauty of the blockchain is its promise of a real time distributed ledger and its ability to replace batch processing with instant real-time processing of every single transaction or update which can then be grouped into a block, signed using cryptographic technology and stored safely. Project execution models such as BIM and JIT could thrive on the blockchain network as they rely hugely on information networks. The blockchain will remove third party verifications and eliminate a lot of cost associated with human interface as the teams will work on same documents real-time in a digital environment supported by smart contract and cryptography for validation and authentication.

SUPPLY CHAIN & LOGISTICS

The blockchain technology can enhance supply chain security, reduce fraud and cut bottlenecks that arise from third party verification in supply chains. Logistics involves a lot of documentation that are currently faxed based or posted such as bills of lading, invoices and other documentation authenticating shipments, however, I am of the opinion that these documents can be automated using the blockchain and consequently, increase efficiency, reduce delays and slash the cost associated with managing logistic operations.

Supply chain financing is another area apart from supply chain management that the blockchain can re-engineer. Invoice settlements can be automated over the blockchain for members of the network without the need for a third party and this would drastically reduce transaction time to minutes and minimise delays across the supply value chain.

At Crystal Pearl Consulting, we are currently exploring the use of blockchain to support the cost and efficiency improvement drive of the UK government for the construction industry from both business and technical points of view. To see what we get up to, follow us on Twitter: @Crystalpearlco. Or online at Http://www.crystalpearlconsulting.com. The latest UK Government Construction Strategy can be found online at: https://www.gov.uk/government/publications/government-construction-strategy-2016-2020 UK Government Construction Strategyy-2016-2020

 

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DIGITIZED BANKING Vs. DIGITAL BANKING: A COMPARATIVE ANALYSIS

DIGITIZED BANKING VS. DIGITAL BANKING – A COMPARATIVE ANALYSIS

The emergence of new generation banks competing on the basis of using digital technologies to create innovative banking products have increased the discussion around digital banking. There is a huge shift in the banking paradigm, thanks to digital technologies; banking and financial services has moved from banking halls to mobile phone apps, transaction have changed from being processed in batches into real-time payments while customer service is shifting from human manned helpdesk to AI powered chatbots and robo-advisors. To see more on the big shifts in banking and financial services, see a previous blogpost here (Big shifts in Banking). The use of technology to compete in banking has created two distinct kinds of banks namely; the Incumbents (Big Four) and the Challengers. The incumbents are the renowned banks that have been around over time offering conventional banking services in branches and mobile, while the challengers are the technology focused banks and most have no physical branches but are cloud based operated via Apps. Oops!, did I just say ‘Apps’ ? That was a client’s exclamation, “there is an App and option of going online instead of the physical branch” he further said, trying to explain how digital their banks are and the digital offerings available to them.

WHAT IS DIGITIZED BANKING?

In my opinion, mobile banking is only a subset of digital banking. Digitization which is often wrongly interchanged with digital transformation is more about the formats in which information is managed. In the context of banking operations, banks have moved from analog method of managing information and transactions in person via a branch to include options of carrying out the same transactions via a mobile device or over the internet. For mobile devices and web based systems to function and process transactions, they need information in digital formats.

Digitized banking emphasizes digitized options to undertake routine operations and offer the same services but using different means; online instead of in branch, but it offers nothing new in terms of product or service, it is still banking as usual but via a different medium, maybe mobile or internet. In other words, digitized banking is the automation of standard banking process by digitizing information to enable digital systems to process them. Is digital banking any different? Let’s get in there.

DIGITAL BANKING – CREATING NEW OPPORTINITIES

The word digital banking like digital transformation encapsulates enabling, improving, and developing banking models / systems/ and processes by leveraging digital technologies. Just like digitized banking, digital banking requires digital data but the difference lies in the context and use of data. While digitized banking is more about data and records management systems to provide alternative methods of performing standard banking functions, digital banking is about systems of customer engagement and insight in addition to the usual processes leveraging digital data and processes.

Truly digital businesses are data centric and emphasize digital as the core of their operations; They work differently using digital tools such as mobile devices and technology that makes them more mobile. They use digital technologies such as cloud computing to enhance collaborative working and unified real-time communication, all of which creates new opportunities to engage differently and offer different products and services that create value for both customers and businesses.

Digital banking enhances personalization as it leverages technology to understand customers by better capturing and analysing their data to offer advice and best products in real-time. Bank statements used to be a list of transactions for a given period, but now the digital banks actually tell customers how much they spent on each retailer or on a particular type of product. Digital technologies have helped banks develop products that evoke emotion and create a much more personal relationship between banks and their customers. Banks like Monzo and Starling think money is social and puts a social spin in banking which makes it a toast of millennials. Savings and financial wellness are a lot easier these days as digital bank accounts offer personalise financial advisory services. Budgeting and financial planning are offered as part of banking products. Personalisation is continually on the increase with specific banking products aimed at certain segments; Coconut a new bank account yet to launch promises to help freelancers with a bank account that offers real time tax calculations and invoices as part of its package to save freelancers time and help them get invoices paid on time.

Digital banks like Monzo are building their own core banking solutions in-house which promises to offer something different from legacy systems that is always the excuse for lack of innovation by incumbent banks. Technology businesses like Leveris and Temenos are developing new generation core banking solutions which promises to reinvent banking. Teams like 11FS are working with banks to reinvent business processes and service delivery models using digital technologies. Where would this take us with regards to banking in the future? Only time will tell, but I am sure it will create unique customer experiences.

In my opinion, digital transformation should impact all aspects of a business, drive new processes and change leads to entirely new markets, new customers and expand business frontiers. Digital banking should be a shift from the old brigade regarding banking processes and products including customer engagement, increased analysis and utilisation of customer data to provide insights and enhance product / service personalisation.

Digitized banking is a digital make-over, mobile banking is a subset of digital banking but there is a lot more to digital banking than just digital channels of banking as usual such as mobile platforms. With this in mind, I wonder why the new generation banks leading in innovation, redefining process and creating much more efficient banking models are being perceived as challengers, when they are actually setting the pace for the future of banking. The supposed challenger banks in my opinion are not competing on the same basis as the incumbents, rather they are creating new market spaces

For your thoughts, opinions and / or criticism, please share them in the comments section. To further continue or explore any particular aspect of this discussion on Digital Banking Vs. Digitized banking, catch the author on Twitter: @Emeka_Nwonu

 

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FIVE KEY ELEMENTS TO DEVELOP A CULTURE OF INNOVATION

HOW TO BUILD A CULTURE THAT STIMULATES INNOVATION

This is the third of my three-part series on organisational culture. Innovation is one of the most popular mantras in business at the moment, and it is only sensible to conclude this series of post by highlighting the factors that support and promote a culture of innovation in the work place.

“To build and establish a culture is hard, but it is even harder to sustain a culture”

Culture is not the result of a single decision but the product of a process or processes. There are a couple of factors with interdependencies that make up organisational culture. To better understand the building blocks of culture, see my previous blog post on the ‘factors that impact organisational culture’ Here. More so, how to manage and sustain organisational culture could be found Here.

The determinant for sustaining a culture is a function of how the leadership, management and power tools are aligned or geared towards the culture of interest. Therefore, the factors that can breed a culture of innovation can be succinctly stated as strategy, structure of management and communication, support mechanism and leadership that encourages creativity in the work place.

FIVE ELEMENTS THAT SUPPORT AND PROMOTE INNOVATION in the WORKPLACE

If a business wants to stimulate creativity and innovation, they must reduce control on how their employees work, employees want to be trusted – if they are trusted to take initiative, they take responsibility since the initiative is theirs. The employees must be able to express themselves and play a key role in decision making regarding the tools they use and how they decide to go about their work. The business will share its goals and objectives and trust employees to deliver them. Some researchers actually associate innovation in the workplace with egalitarian culture, flexible schedules, few meetings and interdisciplinary project teams.

LEADERSHIP

Strong leaders don’t just point in the direction, they lead the walk towards the target. Leadership that clearly communicates their vision make their followers think expansively and invest in their ideas. If the leadership makes the message clear and simple, relatable and always repeat them, it becomes a norm in the workplace and forms part of the values and work ethos. A leader that emphasizes innovation and lauds creativity will imbibe those attributes on the followers because leaders / entrepreneurs influence how their admirers / followers behave.

OPEN COMMUNICATION

Organisations that want to be creative must stay open and listen to employees. Creativity is inspired by individual experiences and can only manifest when the individuals are allowed to share their experiences either through their work or actions. Interactions both in formal and informal sessions should be encouraged, because through them, norms and values are shared with opinions expressed. Creative minds are open to varying perspectives and can flourish when allowed to express themselves without fear. Therefore, companies aiming to be very innovative must be able to listen to ideas and suggestions. They should also be able to embrace failure and learn from it. Very many innovations were from unintended results. Businesses must be ready to keep trying, they have to try new ideas and methods over and over until desired goal is achieved.  “I have not failed, I just found 10,000 ways that won’t work” Edison.

COLLABORATION

Innovation is a team sport. Although, not always novelty, it is always a different idea or introduction of how to create value. In other words, innovation means to do things differently for positive value, and as thus would require a different perspective or a fresh idea. As no human or organisations has monopoly of knowledge, cross-functional environment and teams will be necessary so as to foster sharing of ideas for improved operation and value creation. Outsiders often bring new ideas or perspectives, so businesses that want to be innovative must be ready to work with other organisations, set-up and utilise cross-functional teams in the workplace.

FLAT MANAGEMENT STRUCTURE & AUTHORITY

A management structure that gives employees authority and responsibility over their work will foster creativity and innovation. Flat management structures eliminate all the long approval process and long winded communication lines that are associated with corporate bureaucracy which can impede innovation. A culture which gives employees ownership of their work and full responsibility for delivery will often challenge the employees to be at their best and deliver, since they will be allowed to decide how to go about their job in a manner that is best for them.

REWARD AND RECOGNITION

Recognising, appreciating and rewarding creativity will always spur employees to do more. Recognition and appreciation will not always be in the form of financial inducements or bonuses, but can be awards for the month or quarter, mentions in monthly office bulletins and other non-financial forms to avoid causing problems and dissatisfaction among employees.

Firms that want to develop an innovative culture would have to redefine their metrics and incentives to reflect the status they want to achieve. As things change, goals should change with new targets and associated reward systems.

For your comments and criticism, catch the author on Twitter: @Emeka_Nwonu or Email: Emeka.Nwonu@crystalpearlconsulting.com.

You can find most of his works on www.crystalpearlconsulting.com/blog/

 

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DIGITAL CHANNELS AND THE RESURGENCE OF HEALTHCARE DELIVERY IN NIGERIA

DIGITAL CHANNELS AND THE RESURGENCE OF HEALTHCARE DELIVERY IN NIGERIA

HEALTHCARE IN NIGERIA

Advancements in technology have brought about innovations leading to disruptions in a variety of industries leading to affordability and convenience to customers. However, healthcare remains expensive and inaccessible to many people (60% of the population) especially in the rural areas of Nigeria. While most literature and researches point to the lack of trained personnel, I attribute the poor level of healthcare delivery to outdated business models considering the efficiency, affordability and penetration of communication equipment and advancements in information technology in the current era of digital systems. There is a lack of trained personnel but the available resources are not optimally utilised under most existing healthcare delivery models in Nigeria which I consider outdated.

ISSUES IMPACTING ACCESSIBILITY TO QUALITY HEALTHCARE

Gone are the days of ‘one size fit all’ solution, it is imperative to analyse the issue of poor access to quality health care in the context of geographical location because of the various levels of technological advancements and adoption across the world. In the context of Nigeria, the health system is facing a major human resource crisis with mal-distribution of the available work force and the increasing brain drain (WHO). Considering inflation and economic downturn, it can be argued that the cost of expensive health technology and fee-for-service of physician also contribute to making healthcare unaffordable. However, from a personal experience growing up in Nigeria, fragmented communication system in Nigeria between healthcare providers, duplicate testing and the absence of vital information affects both outcome of care and economic prospects of getting quality healthcare. The information storage and retrieval systems does not promote sharing among health practitioners, often leads to poor referrals, and even when you are referred to another clinic or hospital, they waste time and resources by repeating all the tests previously carried out, sometimes the patients die before the new set of test results are out for treatments to commence.

Post treatment follow-up is expensive because patients have to travel to hospitals or remain in hospital for post- treatment follow-up; taking up bed spaces and stretching available resources and facilities which could have been used on more critical issues.

ICT ADOPTION AND THE RESURGENCE OF HEALTHCARE DELIVERY

I am of the opinion that immediate access to medical records could be the difference between life and death. Health professionals could do with a central database or information system to enhance collaboration and improved quality of referrals and follow-up treatments post admission. The main issue is lack of information sharing and collaboration, which is currently being fixed by technology startups. For example, a health startup, Lifebank makes blood available when and where it is needed. Previously, patients have to go from laboratory to laboratory to see if they have blood and the right blood type, but now they can do it with ease and convenience over their mobile phone, saves time and consequently saves lives. The All Purpose Medical Information System (APMIS Platform) is working towards aggregating health information for ease of retrieval and use, further saving cost from unnecessary repeat tests because they healthcare providers did not know it previously existed.

Awareness to improve knowledge and aid epidemic prevention can be better done using the mobile technology such as ‘Bulk SMS’, considering the huge penetration of mobile phone in Nigeria. As the mobile telecommunication networks spread through Nigeria, innovative products such as reaching doctors via video calling platforms like skype or whatsapp could save patients from travelling. Opening up channels for reaching healthcare professionals using ICT will reduce pressure on hospitals. Follow-up of patients post treatment can be done via telephone, reminders and prompts for patients to take medications can be communicated via text messages, even diagnosis is quicker for algorithms such as IBM Watson when there is enough information. I am aware of privacy issues and security of information, but the benefits such as life and good health outweigh whatever loss that can arise from evading privacy in case of a hack or breach. Namibia and Kenya are evidences of places where ICT have transformed the health care landscapes in Africa, and it is revolutionising the Nigerian healthcare sector.

ICT as a replacement for manual book keeping, medical records storage and procurement will improve service quality and reduce time spent on retrieving information and other administrative tasks, thus freeing personnel up for more important jobs.

ICT have the potential to support continuous monitoring of patient’s health status at home, freeing up hospital spaces for more severe issues, rapid diagnosis by clinicians, and timely effective therapeutic interventions by health officers from remote locations using basic communications technologies such Skype and Facebook. Furthermore, an app known as Meditell enables hospitals assist their patients in taking their drugs through reminder alerts

Social media has become a cheap means for mass dissemination of information, public enlightening campaigns can be effectively undertaken using basic social media tools such as twitter. Furthermore, the potential of ICT to capture process and systems performance data will aid analysis, control and policy formulation for improved healthcare methods. Even medical queries and information sharing platforms such as MedEnhanz, Dokilink and Numa all create communities for questions to be answered by professionals and information shared, thus reducing ignorance and self-medication to a large extent. Blogs like Lindaikeji and Bellanaija are wonderful outlets for public health campaigns.

In conclusion, to improve healthcare accessibility and delivery quality in Nigeria and Africa in general, value innovation and not only technological innovation is required. It is not just a function of having the latest technologies, but about how processes are optimized to create maximum value. The current revolution in ICT is changing the landscape with the emergence of health apps and technology startups offering various services and products using innovative channels and smart models. In a country of about 180 Million people, there exist over 151,018,624 mobile phones (NCC Link), it is obvious that there is no better way to reach the people than altering the status-quo and embrace ICT such as mobile phones and internet technology in disseminating health related services. Mobile technology stretches through all geographical zones in Nigeria, even in rural locations that do not have local health facilities, therefore, mobile health platforms could potentially fill the gap. Innovation of value using ICT will further improve access and quality of healthcare in Nigeria in a much more cost effective manner. The healthcare providers have to move with trends in the society and continue to adopt models that supports changes in their external business environment.

To further explore any part of this article, comments or criticism, you can catch the author on Twitter: @Emeka_Nwonu or Email: Emeka.Nwonu@crystalpearlconsulting.com. Some of his other works could be found on www.crystalpearlconsulting.com/blog/.

Also, feel free to get in touch should you require any help with developing appropriate business models and operation strategy for your business.

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MANAGING AND SUSTAINING ORGANISATIONAL CULTURE CHANGE

MANAGING AND SUSTAINING ORGANISATIONAL CULTURE CHANGE

Fitting a square peg into a round hole is not possible, something must be given. For organisations to be successful in this era of constant change to the external business environment, businesses must be prepared to continuously evolve and change with time or risk losing market share. The complexities of change in today’s business environment is sometimes overwhelming for organisations, considering the speed at which things change and trends fade. There has never been a greater demand for flexibility, responsiveness and efficiency in business than now because of constant technological changes, leading to increased competition and regulator changes, all of which often requires changes to business models and management styles. Therefore, If the culture which is the current way of doing things inhibits progress in the strategic direction, it is due a change.

CULTURE CHANGE – NO STANDARD BUT STRUCTURED APPROACH

I do not think there is a particular standard or approach to managing culture change because it is a function of where you are and where you want to be, which varies from place to place. Moreover, what works for Company A is not guaranteed to work for Company B because ever company has its own DNA; core competence and beliefs. Culture comprises of interdependent attributes such as goals, roles, processes, communication styles, management approach, attitudes and assumptions, which mutually reinforce a system. Therefore, changing or altering just an aspect of the culture might not be successful because of interdependencies – Single fix changes might be beneficial for a short time, but loses its flair over time because that particular change or set of changes might not be in line with the basic beliefs of the members of staff of the company.

APPROACHES TO CHANGING CULTURE

There ae various approaches to changing organisational culture, but if you are at the crossroads requiring a culture change, it is either you sack a lot of people and replace them with people who share your beliefs and vision or you work with existing staff to chart a new course for the business, which is always a better option. I opine that a better way to instil culture change is to involve he people you want to change their culture, help them understand the new direction and they will be more invested in the success of the new culture.

Three involvement approaches to changing organisational culture are described as follows;

TOP-DOWN APPROACH: Each member of the leadership team drives the change through their own teams. Managers and team leads are tasked with ensuring their teams understand and work in the new corporate direction.

FOCUS GROUP APPROACH: A representative sample is taken from across the company to share ideas about the new culture, get insights, exchange opinions and relay messages between management and staff. Its success depends on how the communication flows- 2 way rather than one way.

CROSS-COMPANY APPROACH: This approach involves people from across the company coming together to learn and voice opinions about the new culture and their change implications. This could be done using Town-hall meetings or even questionnaires. This method involves everyone as much as possible.

BEST APPROACH

Unfortunately, there is no one-size fits all or best approach. Each approach has its own merits and demerits, suitability of approach depends on very many factors which includes timeframe, type of change required, attributes of existing staff to adapt to change, resources to drive and manage change. However, if there is clear leadership support and involvement it always spurs the followers on, but if there is a breakdown in communication, ideas become unclear, confusion sets in and failure is the case.

SUSTAINING A NEW ORGANISATIONAL CULTURE

It is difficult to introduce change, but even more assiduous a task to sustain change, especially as it would alter some of the existing preferences which some of the staff may or may not like. Therefore, it is important to develop a sustainability strategy to ensure the culture is aligned with organisational goals, strategies and every other aspect of the organisation including day-to-day operations.

I proffer a three-step approach to changing and sustaining culture namely; create and communicate the new culture, properly manage the new culture implementation in stages / create a management system that supports the new structure, then finally enforce the culture with rules and regulations with consequences clearly spelt out.

“Leadership; management and Power tools in a sequential order”.

Leadership involvement and constant support is important for successful culture change, it shows clear vision and direction, but successful organisations do not depend solely on people but on systems to ensure continuity. Management structure and style is defined in alignment with the vision of the leader to ensure the culture is entrenched in every aspect of the company – eliminate inconsistency and confusion regarding implementation. Then finally, ensure there are methods of coercing the staffs to abide by the new rules such as aligning reward systems to culture, clearly stated punishment for disobedience etc., all of which will ensure that the new culture is not negated because there are consequences.

To change your organisational culture to align with your corporate goals, to further explore certain aspects of this piece or to continue the discussion, catch the author on Twitter: @Emeka_Nwonu or

Email: Emeka.nwonu@crystalpearlconsulting.com. Please, feel free to checkout some of his works on www.crystalpearlconsulting/blog/

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ORGANISATIONAL CULTURE: FOUNDATION FOR SUCCESSFUL STRATEGY IMPLEMENTATION

ORGANISATIONAL CULTURE – THE FOUNDATION FOR SUCCESFUL STRATEGY IMPLEMENTATION

Organisations, just like people are a product of their experience, and cannot give what they do not have. From my experience in dealing with businesses to set out a strategy or align their strategy with their organisational goals, I realized a problem which a lot of businesses overlook. Businesses have failed to build, nurture and develop a culture, but rather follow supposed current buzzwords and trends. “We have agile trained project managers”, “we have digital teams”, “our steering committee ensure our projects are run in an agile manner” are just some of the quotes that I hear often – guys, seriously? My response to them is “truly agile firms don’t just have agile project teams, everything about them from day-to-day operations is agile in nature”.

ORGANISATIONAL CULTURE – AN EXPRESSION OF CORPORATE DNA

The culture of an organisation is shown in their everyday operations and not reserved for special projects or situations. Using one of the most common definition, “organisational culture is a system of shared assumptions, values and beliefs, which governs how people behave in the workplace”.  It reflects who they truly are and is usually a very good indicator of what they are most likely to accept and how best to approach them. Organisational culture includes the shared beliefs, norms and value within an organisation. Culture has two levels; the visible which includes dressing, language, social interactions and working methodologies, but also invisible which include beliefs and value system. The culture has a strong influence on people in an organisation and dictates how they function – both management and staff inclusive.

At a deeper and less visible level, culture refers to the values shared by a people in a group, often invented, discovered or developed as the group learns to cope with its problems of external adaptation and internal integration, and the culture tends to persist even when that particular group has left. Anyway, to fully understand the complexity of organisational culture, it is important to explore the existing theoretical perspectives namely; Integration; Differentiation and Fragmentation perspectives respectively. Unfortunately, this piece is not interested in theories but on the practical aspects of culture and strategy implementation – how strategy and structure intersects each other.

FACTORS THAT IMPACT ORGANISATIONAL CULTURE

EXTERNAL BUSINESS ENVIRONMENT:

The general business environment in which an organisation operates will hugely impact its culture. Socio-cultural influences will influence individual opinions about issues such as payments and rewards, status and communication methods. Furthermore, the specific market environments influence culture, Financial services sector is risk averse while stock brokers are deal oriented. On top of this market orientation is where he organisational culture evolves. Market conditions and industry dynamics such as speed of change, competition, changing customer behaviour and technological advancements will also impact the culture of an organisation.

LEADERSHIP

There is not much evidence between leadership and culture empirically, but the existence of a credible leader reduces anxiety and increases belief among members. Organisational culture is hinged on the external environment where the firm operates, and changes to the external environment are often stemmed by thought leaders. Transformation and changes in the workplace are not for the faint hearted because there is no 100% guarantee it will yield positive effects therefore, it requires someone with ambitions and confidence in themselves and their ideas to drive such change. My Research corroborate earlier assumptions of Pettigrew (1979) and Schein (1991) that a founder influences the culture through own ambitions, and that the interactive process between entrepreneurs and their followers set the standards of doing things. More often than not, members of staff emulate and buy into the ideas of their boss. The founder’s prescription often set the standards of how things are done, although, sometimes the founder’s idea is not wholly accepted, so the culture development journey involves conflict, negotiation and compromise. However, businesses require strong leadership to develop culture and identity.

INTERACTION (FORMAL AND INFORMAL)

Everything about culture is in the context of a group – the identity of a group of people, and how the individuals in the group interacts with each other whether in a formal or social setting is a huge determinant of how much they can bond and how successful hey could be as a group.

Management style and designs of the hierarchical and reporting structures are things that have an impact on decision making and how quick information can be relayed, consequently, determines the speed with which action can be taken. These form the values and basis of acceptable attitudes / standards. The management style impacts corporate culture as it either decentralises power or concentrates power within certain levels / strata – consequently determines how operations are planned, set and managed.  The informal socialisation process and events helps team members tell stories, discuss myths and is a means of sharing insights of what is and should be termed acceptable or unacceptable within the group.

It is sufficing to say that since the environment evolves and so does businesses, the organisational culture should be built in such a way that it can also continue to evolve and change with times if the organisation does not want to be left behind. Managing organisational change and its key success factors will be discussed in another post.

SUCCESFUL STRATEGY IMPLEMENTATION: ALIGNMENT WITH CULTURE IS IMPORTANT

Organisational culture is a key factor for effectiveness and standardisation and the alignment between a chosen strategy and corporate structure determines how successful the strategy implementation will be. Just like in sports, the coach selects team because of their personal attributes such as speed and endurance to match the particular strategy planned to counter an opponent. The strategy (game plan) also forms the training methods and all.

Sometimes, supposedly good strategies that have been proven to work still fail in certain firms, it is not because the staff are not good or that the strategy is bad, it is often because of culture-strategy misalignment. For strategies to work successfully and goals achieved, culture and strategy must be aligned at the most basic level. Goal setting must be aligned with and supported by systems, policies, procedures and processes within the organisation.

Agile cannot work if decision making is not decentralised – if we have to go to the PM or MD for every decision, then the agility and its savings will be lost to a bureaucratic culture. A lean organisation emphasizes lean in all her operations and not just in special projects else savings will be lost elsewhere. Truly digital company digitizes its operations as a whole and fully embrace digital technology without reliance on special projects or digital management teams and units. The true identity of a business should be entrenched in her DNA and reflected in her operations. Strategies should be selected based on alignment with core competencies of staff and corporate culture.

In conclusion, the more a strategy is in line with the values and shared beliefs of a business and her staff, the more likely the strategy will succeed. Whatever it is you envisage for your business, communicate and share the values with your team. Align your goals with your culture and you are on your way to glory. To change or better align your organisational culture with your corporate goals or to further explore the discussion, catch the author on Twitter: @Emeka_Nwonu

Email: emeka.nwonu@crystalpearlconsulting.com

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THE BIG SHIFTS IN BANKING & FINSERV

THE BIG SHIFTS IN BANKING AND FINANCIAL SERVICES

There is a major shift in the external business environment as a result of advancements in technology especially the information and communications technology. We are increasingly becoming a digital society signifying a paradigm shift from Analogue to mobile digital systems. The rise of digital systems has influenced how we perceive and transact business, especially with regards to banking and financial services in general.  While different people have described this shift in paradigm using various terminologies and analogies, to me, it is simply a shift from tangible to intangible banking. It signifies a move from focus on banks to interest in banking services; from vendor to service. Some of the very notable shifts are described as follows.

INTEREST FROM PROVIDER / VENDOR TO SERVICE

Banking consumers have shifted their interest from the vendors or service providers to the service they receive. Customers do not just buy products these days but pay for experiences. Customers look beyond the product or service they purchase or subscribe to, and rate service providers from the entire customer experience perspectives which includes; quality of service, options to select preferred channel of communication or doing stuffs, ease of website navigation and a host of other stuffs that eases the customer journey.

BATCH TO REAL-TIME TRANSACTIONS

Gone are the days when, you make a transaction and wait for the batch to be processed. Back-ends are being replaced by technologies such as blockchain and Distibuted Ledger that enable transactions in close to instant. People transfer money and it is received in a matter of minutes if not seconds. Customers want instant gratification, and this has pushed banks to strive to enable transactions as quick as never thought was possible.

FEW INCUMBENTS TO MANY PLAYERS

The increasing role of technology has seen the number of players in the financial sector increase tremendously. There were times when it was just a few players that customers patronise, now the financial services sector is continuously opened up to new players with changes to regulations resulting from changes to the external business environment. Evidence is in the emergence of challenger and neo-banks, not to include Fintech firms and start-ups focused on unbundling financial services on a daily basis. Collaborations via API will champion the next wave of influx into the banking sector.

Regulations such as PSD2 and Open-banking are aimed at increasing competition in banking and financial services sector, reduce barriers to entry and pave the way for more players to come into the industry.

WHOLESALE TO RETAIL FINANCIAL MARKET PLACE

Previously, incumbent banks offer wholesale of products and services, mostly on their own terms. Customers get services bundled up even when they do not need some of the services they still have to pay because they all come in a bundle. Currently, customers can pick and chose the services they actually need, thanks to the emergence of disruptive fintech firms and technologies. There are now online financial market places to pick and choose at will. Customer-centric rather than product-centric.

STANDARD TO PERSONALISED PRODUCTS

The financial service industry is moving from the era of a one-size fits all products to much more personalised banking services. Banks now attempt to tailor products and services, with some offering multiple channels (Omni Channel) of performing banking activities. Thanks to big data, target markets are further segmented and banking needs for specific groups are better serviced. The use of AI and machine learning in banking also makes it easier to get insights and understand customer behavior and shopping / spending habits

BRANCH TO MOBILE

Financial transactions have gone mainstream digital with the emergence and huge penetration of mobile phones. Most customers have banking Apps on their phones and can conduct basic banking services such as checking account balance, making payments and transfers via their phone apps as long as they have internet access. This change has seen banks reduce the number of branches they operate as branch patronage reduces while mobile continues to increase.

CASH TO DIGITAL PAYMENTS

Customers have moved from using cash to mobile payments to an extent that the thought of a cashless society is looking certain. Mobile payment methods are increasingly becoming a norm, some options such as Applepay and Androidpay apps now come pre-installed in our mobile phones. There is a big shift from cash to cards and mobile payment systems. Data is increasingly becoming the new money.

RISE OF AI & CHATBOTS

The type and level of human interaction in banking has continued to change over time with the rise of artificial intelligence and chatbots. Artificial intelligence has revamped customer service as consumers can solve problems and get answers to queries from AI powered Bots. Time has also been of essence in banking, customers want instant gratification and to achieve anything close to it, bots had to come to the rescue. Personalisation and consumer-centricity is becoming a new basis for competition.

To provide your thoughts or criticism, kindly use the comment section below or catch the author on Twitter: @Emeka_Nwonu

 

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Payment Service Directive (PSD) 2 – Meaning & Implications

I cannot help but feel the buzz in the air about the new Payment Service Directive (PSD) 2 and how it will revolutionise the payments sector in the European Union. Perhaps, I thought it pertinent to explore and understand the new regulation, analyse why a second one is required and its implications for the payment sector in general.

PAYMENT SERVICE DIRECTIVE (PSD)

The Payment Service Directive (PSD) is a payments related legislation in Europe which aims at regulating payment services and the Payment Service Providers (PSPs) in the European Union and the EEA member states. The final adopted text of PSD was ratified in 2007 and was transposed into national legislation by all EU and EEA member states by 01 November 2009. The PSD’s purpose was to increase pan-European competition and promote the inclusion of non-banks while protecting the rights of consumers as well. In fact, the PSD standardised the payment sector (payment products, infrastructures and legal standards) across EU as it clearly stated the framework within which all payment service providers (banks and non-banks) must operate.  The PSD is the rule book used by the umpire; the European Payments Council (EPC) to set market rules and the business conduct rules. Since the directive is set and the rules of engagement clearly defined, what is the essence of a second directive?

PAYMENT SERVICE DIRECTIVE (PSD) 2 – A SHIFT FROM BANKS TO SERVICE DELIVERY

PSD2 is an evolution of the existing payment directive. The new directive is necessitated by the requirements for enhanced customer protection, security and reach of the existing directive to include new types of payment services and platforms. The revised directive is aimed at increasing competition in an already competitive industry as the EU embraces the digital economy, and make the EU’s single market fit for the digital age.

In the case of PSD2 it can be argued to have fostered innovation as its benefits include an increase in competition and options / choice because it reduces barriers to entry by facilitating market entrance for regulated non-bank players (Payment institutions & fintech) as long as the conditions are met. Increased transparency is another benefit of the PSD2 as information requirements for PSPs are now set and rights and obligations linked to payment services such as execution time, refund rights and the liability regime have been reinforced.  To technology companies or Fintech, the regulation provides an avenue to enter a booming sector where tech can be leveraged to provide services and multiple channels – a brilliant opportunity. PSD2 will see banks lose a certain leverage which they had over non-financial firms which is being the proprietary custodial of customer data. Banks have to make customer data available and accessible.

For the banks, it is a reason to change (compliance), some would even say that their space is being invaded and their sector opened up to non-financial services firms. They are being forced to embrace certain innovations to please the customer and do things in a different way than they would have loved to, they just have to comply – arm twisted with cost implications, why not let demand and supply decide.  For the customers, the PSD2 makes them king, they are spoilt for choice and options.  The customers have the most to gain from PSD2; increased competition will reduce service charges and lower fees. It further improves customer protection against fraud, possible abuses and payments through enhanced security requirements.

In other words, it can be argued that the PSD2 is literally a further confirmation of technology being entrenched into financial services and human lives. Furthermore, let us look at some possible trends that will be driven by the directive.

TRENDS TO LOOK OUT FOR

PRODUCT PERSONALISATION: Through using bank’s APIs, it is easier for non-banks to offer more personalised products and experiences. The use of APIs will create much more segmented products depending on their business model and target segment, which I am sure will create new market spaces. Innovation will become the order of the day.

PROLIFERATION OF SERVICE PROVIDERS: With the PSD2 directive, there is a reduction in barriers to entry, as it makes it easier for non-banks to enter the payments sector, as long as they meet the stipulated requirements which is made clear and free of ambiguity.

INCREASED COMPETITION: PSD2 will increase competition. As consumers are becoming more digital and mobile in their approach to banking and lifestyle in general, businesses will recognise this trend and tap into it. I am of the opinion that Fintech firms cannot compete with banks on core banking products such as overdrafts, loans and mortgages but will thrive on creating new market spaces which the banks will struggle to dominate such as personalised and consumer-centric products and experiences. This will be easy for Fintech than banks based on the number of customers, size of businesses, management structure and speed of decision making – less silos and committees.

IMPROVED SERVICE DELIVERY: With increased competition, service improvements will become a given as consumers will go for operators or service providers with the most value and not dependent or hooked on just brand names.

CROSS-BORDER TRADE; The PSD-2 cuts across the entire EU thereby increasing standardisation. Therefore, location is not a problem and as thus customers can freely make payments without worrying about their right status because of their country of origin or where the Payment Service Provider (PSP) is registered.

Finally, there is a huge shift in the banking models with innovation becoming the main basis for competition. Innovate and create more value for customers or you lose customers to a more innovative competitor. The era of focus in vendor or service provider which are mainly banks seems to be eroding, and is being replaced by emphasis on the service that is provided.

Lookout for the next post on ‘The big shifts in Banking Business Models’. For your thoughts and opinions, please share them in the comments section. To further continue this discussion on PSD2, catch the author on Twitter: @Emeka_Nwonu

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REGULATION AND INNOVATION – FINTECH IN FOCUS

WILL REGULATION INHIBIT OR FOSTER INNOVATION – FINTECH IN FOCUS

Whether regulation inhibits or propels innovation depends on who you ask.  Fragmented evidences from different scenarios and perspectives dominate debates among policy makers and businesses regarding levels of regulation, if at all any form of it is considered necessary.  This piece is focused on the complex relationship between regulation and innovation in the economy with emphasis on the innovation enhancing potentials of some regulations and approaches, as well as certain factors that could make regulation a clog in the innovation wheel.  There is some awareness of the regulations and innovations debate, more often than not in the form of complaints from businesses and anecdotes – well, it’s time to form an opinion about regulating fintech.

REGULATION AND INNOVATION – MARRIAGE OR DIVORCE

The relationship between regulation and innovation is a complex one and cannot be described without application to a particular context to avoid ambiguity. Regulatory frameworks are important factors influencing the innovation ability of companies, industries and even economies, but its impact have been assessed as a rather ambivalent one, thus depending on the kind of regulation and the different types of innovation. In general, the negative effect of compliance cost, which are relevant in the short run, is compared to the long run effect of regulation which can generate further incentives for innovative activities. To succinctly state the point, the short-term impacts of regulations are often negative for innovation because it forces people to adopt rules even when they don’t want them, in contrast to the long-term benefits which could have multiplier effects such as environmental or social benefits.

I am of the opinion that the impact of regulation on innovation depends on the kind of regulation and the current state of the industry at the time the new regulation is enforced. Furthermore, the relationship between the regulatory body and the industry, the policy formulation process and the composition of the regulatory implementation committee will go a long way in increasing positives from regulation and provide a proper environment for innovation to thrive. However, a culture of compliance should not impede innovation.

REGULATING FINTECH – DOES INNOVATION AND REGULATION MIX?

A shift in paradigm to digital systems represents a shift in status-quo, in fact a disruption of the legacy systems and processes which gave rise to a product known as Fintech. The digital economy is about the technology to enhance processes and not just ownership of knowledge or data. Fintech is not doing anything new or alien in banking, it has only revolutionised processes using technology. Fintech has potentials to transform back-ends of banking through the use of innovative technologies and by default the early users are stuck to fintech products, thus a rise in challengers and neo-banks. It is sufficing to say technology creation or innovation is like art, it involves creativity which is a product of analytical and problem solving prowess. Fintech firms tend to solve problems in the imminent society and not a ‘one size fit all’ solution, so as the society evolves, so does the problems change and by default the technologies required to alleviate those problems.

From a business perspective, today’s technologies like blockchain, smart contracts, big data, bots, analytics and AI have the potentials to produce exponential improvements in efficiency, quality and cost. Let us allow market forces via demand and supply decide. Businesses without customers will be forced to innovate, keep up with trends and stop using regulation as a shield. Fintech is only using digital channels to transform analog operations and systems, so why do we need a new set of regulations? There is a ton of regulations for the Fin (financial) services, why not let the technology be a factor of differentiation and competition? In my humble opinion, and I stand to be corrected, regulated industries operate outside market-based systems, competition is reduced as they form cartels and increase oligopoly to maintain status-quo. Companies in regulated industries agree to a wide range of concessions including guaranteed access, price controls and extensive licensing requirements which slows down innovation.

This piece is not advocating for immediate and complete elimination of all regulations, because customer protection, fraud reduction, safety and adequate insurance are still important issues that justifies government continued oversight in businesses including banks and fintech. However, it calls for avoidance of regulatory capture – where government failure occurs when a regulated industry gains influence over the regulatory agency and commercial interests of special groups are prioritised instead of public interest. This would reduce formation of cartels and death of the term ‘big fintech firms’ before it is formed.

To see more of the author’s thoughts, you can follow him twitter at: @Emeka_Nwonu

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