MANAGING INNOVATION: COVID-19
Innovating out of a crisis
When it comes to solving problems, Square [literally] wrote the book on it! So it wasted no time coming up with solutions to challenges during the pandemic, says Kaushalya Somasundaram, Head of Payments Partnerships & Industry Relations at Square UK We all think we know what ‘innovation’ means, but do we… ? Four-sided ‘wheels’ to pull carts (squeels, perhaps?) would have been an innovation if some bright spark hadn’t struck on the idea of scaling up a potter’s wheel – and only then after potters had been watching them go round for 300 years. The point is, what’s the use of developing something new, if it doesn’t fulfil a real need? In business terms, innovation is often incremental: identify a problem, solve it and address the next one that becomes apparent as a consequence of the problem you’ve just fixed. At least, that’s the embodiment of the approach taken at Square, the financial services and digital payments company. The brainchild of Twitter co-founder Jack Dorsey and multi-entrepreneur (and professional glassblower) Jim McKelvey, who wrote a book on it, Square was born in 2009 to solve an issue encountered by McKelvey, namely that he was unable to complete a $2,000 sale of his glass products because he could not accept credit cards. To put it simply, small businesses like his, often not on the high street, needed mobile payments but there were too many obstacles in their path. Square’s first product was the Square Reader, which accepted credit card payments by simply connecting to a mobile device’s audio jack. Previously, credit card machines would only work with grounded connections, but this innovation allowed merchants to break free of outdated technology and trade wherever they wanted to, for a transaction fee of 2.75 per cent. That solved their problem but the format didn’t work for all businesses. So, next came the Square Register, a product
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launched in 2017 that transformed the iPad into an all-singing, all-dancing point-of-sale device. From handling $1billion in annual micromerchant payments via its phone Reader, Square entered the restaurant space and sales of $12billion followed. It now offers services such as a dashboard, employee management and payroll, each addressing a problem for its customers that became evident as the business evolved. But then came the biggie. A year after the pandemic redefined our concept of what a problem is, Square produced a report for every country it operates in, highlighting the impact of the crisis on merchants and its own operations. In the UK, it showed the number of businesses accepting online payments with Square had nearly doubled; at least 40 per cent of businesses giving up using cash altogether in just 12 months. The pandemic clearly wasn’t something in Square’s gift to solve; but its methodology meant there was a clear course to take. In an interview he gave about his book, The Innovation Stack: Building An Unbeatable Business One Crazy Idea At A Time, published just as the pandemic took hold in 2020, McKelvey reflected on the huge difficulties created by a global health crisis. “Most of the world-class CEOs I studied for the book were thrown into horrible situations and figured out how to thrive... they woke up in a burning city quite by accident and somehow figured out how to deal with it. “That’s what we need to do,” he said. Small business owners have been dealing with that ‘burning city’ scenario over the past year, resulting in – through necessity – digital transactions becoming the ‘new norm’.
Square recognised the problems yo-yoing restrictions and uncertainty surrounding COVID-19 created for merchants, and responded, during 2020/21, by introducing new hardware and software solutions across its territories. Notably, there was Online Checkout. Rushed to market so that businesses suddenly finding themselves having to trade remotely, could, it allows sellers to accept payments by sharing a simple social link. “We focussed on bringing new tools to the market so that merchants could continue to run with the changing guidelines that were imposed by the Government, initially, and then changing customer preferences,” says head of payments partnerships and industry relations at Square UK, Kaushalya Somasundaram, who joined the team at the start of the crisis. “Shoppers have preferred to limit their personal contact, so accepting digital payments has become essential for merchants. Payments through our Square Online Store [which allows merchants to build an online store for free] increased five-fold at the start of the pandemic. And, since last April, we’ve seen a 15-fold increase in digital payments compared with January. That’s, a massive, massive increase,” says Somasundaram. The majority of businesses have maintained their new modus operandi, which, incidentally, has also been good news for Square’s Cash App, a peer-to-peer payment application that is linked to a debit card or bank account and allows for direct payments to and from individuals and businesses. “It’s fascinating to see businesses pivoting to adapt to a new world,” says Somasundaram. “We’re now seeing www.fintechf.com
