SPRING 2017
FEATURING DAVID ROGERS Speaker and Author, “The Digital Transformation Playbook”
It takes more than technology. It takes a mindset.
Digital transformation isn’t as simple as plugging in a new technology. But it can begin with the simple decision to become a different kind of organization. – Todd Clark, President/CEO CO-OP Financial Services
The
DIGITAL TRANSFORMATION Issue
T h e M a g azi n e f o r C r e d i t U n i o n I n t r a p r e n e u r s
THE FUTURE OF PAYMENTS
HAS NEVER LOOKED SMARTER.
TMG is now part of CO-OP Financial Services One company. One ecosystem. With a scale of processing second to none. Find out more about how your payments program can benefit from this transformation at CO-OPfs.org/TMG.
CO-OPfs.org/TMG ©2017 CO-OP Financial Services
2
DIGITAL TRANSFORMATION | WELCOME
A Letter From the Editor ear Fellow Thinker,
we review books by some of our featured speakers, so you can review their best thinking at your leisure.
What a pleasure to introduce the premiere
In future issues, look for more of the information
issue of THINK Review!
and inspiration you need to continue your digital
Every
we’ll
transformation journey. We know that transformation
be bringing you the
is a continuous process. We look forward to keeping
big ideas you need to
the momentum going in the months to come.
quarter,
transform your credit union in a format that
Enjoy!
will encourage further thinking. This issue will be hot off the presses just as THINK 17 gets underway. We hope it helps you bring home the THINK experience. In this issue, digital strategy expert David Rogers answers our questions about digital transformation, and author Tom Goodwin explains why, when contemplating the scope of change, the thing credit unions need to change is everything. We explain the digital mindset, necessary leadership and the four C’s of digital
Samantha Smyth Paxson
transformation. Want to see a credit union in active
Chief Marketing & Experience Officer
digital transformation mode? Check out First Technology Federal Credit Union: They are on the job! If you’re fresh off the THINK 17 experience (and even if you aren’t),
THINK REVIEW SPRING 2017
Contributors GAYLE SATO Independent Writer and Editor @gaylesat
REBEKAH ILIFF Chief Strategy Officer AirPR | @rebekahiliff
UWE HOOK Founder and Principal Hook Consulting | @uwehook
CLAIRE BENDIG Independent Writer Groomingdales | @clairebendig
TOM GOODWIN EVP, Head of Innovation Zenith | @tomfgoodwin
TODD CLARK President/CEO CO-OP Financial Services | @toddclarkceo
4
DIGITAL TRANSFORMATION | TABLE OF CONTENTS
6
8
10
18
DIGITAL TRANSFORMATION Statistically Speaking
THIS IS WHAT DIGITAL TRANSFORMATION LOOKS LIKE Credit Union Spotlight
DIGITALLY TRANSFORM YOUR BUSINESS Digital Expert David Rogers Explains How
KNOW YOUR MEMBERS’ JOBS TO BE DONE Start Capitalizing on Unmet Member Needs
21
24
28
32
WHAT JOBS DO MILLENNIALS NEED DONE? Stop the Worrying
THRIVING IN THE POSTDIGITAL AGE Unleashing the Power of Disruption
ESSENTIAL READING For Your Transformation Journey
PHOTO ESSAY Digital Transformation Over the Years
36
38
42
44
THE DIGITAL MINDSET What It Takes
LEADERSHIP DRIVES DIGITAL TRANSFORMATION How It’s Done
THINKING OUT LOUD How Is CO-OP Championing Digital Transformation?
THE DIGITAL 4 C’S Elements of Digital Maturity
46
50
EYES ON THE PRIZE THE FUTURE IS CALLING Launching Innovations for Todd Clark Members Over 50
THINK REVIEW SPRING 2017
Digital Transformation
statistically
Speaking Digitally maturing organizations are
four times
more likely to provide employees with needed skills than are organizations at lower ends of the spectrum. (MIT Sloan Review) Executives estimate that, at best, their companies are
25% of the way toward realizing the end-state vision for their digital programs. (McKinsey)
87% of companies feel that digital transformation is a competitive opportunity. (Cap Gemini)
53% of senior executives say that the top cultural barrier to digital transformation is competing priorities. (Emarketer) By 2017,
20% of all market leaders will lose their
dominant position to a company founded after the year 2000 because of a lack of digital business advantage. (Gartner) Nearly
two-thirds (65%) of staff believe senior
management’s digital knowledge is average or less. (eConsultancy)
6
This Is What Digital Transformation Looks Like By GAYLE SATO
They aren’t here to accept the status quo. The team at $9.5 billion First Technology Federal Credit Union in Mountain View, Calif., knows that digital is a monumental challenge for credit unions. They just aren’t very interested in that narrative.
by the member. “We also leverage the analytics Naveen is working on to understand our end users better,” Choy says.
Take First Tech’s VP of Digital Analytics, Naveen Jain. Faced with the Gordian knot that is credit union analytics, Jain didn’t throw up his hands. He convened a summit. The first Credit Union Analytics Summit, hosted by First Tech, brought together about 125 people from 55 credit unions, representing 10 percent of the industry. This year’s Summit, held in March, drew more than 250 people from over 125 credit unions, representing 15 percent of the industry.
omnichannel solutions, and APIs as a platform. But even more impressive is the strategy. Choy, whose roots are in the tech industry, isn’t especially bothered by what can’t be done. He and his team talk about the possibilities as if they are, in fact, possible. “We shouldn’t be dismayed
The product ideas are cool: a next-generation suite of native apps consistent with a mobile-first strategy, frictionless
“There are a lot of credit unions struggling as we go on our data journey,” Jain explains. “It is to our benefit to join hands with other credit unions and be collaborative and learn from each other. This market can represent a very interesting opportunity [for vendors]. Joining together gives us unparalleled strength.” Elsewhere at First Tech, Frank Choy, VP of Digital Products & UI/UX Design and a team of 16 product managers and designers are contemplating the member experience. They use a Scrum/Agile process framework to facilitate fast development. They employ design thinking to facilitate building products for the member, 8
DIGITAL TRANSFORMATION | THIS IS WHAT DIGITAL TRANSFORMATION LOOKS LIKE
about disruption within fintech,” Choy says. “Rather than being intimidated, let’s partner with disrupters or learn from them.” Digital transformation might have been inevitable for a Silicon Valley credit union called First Tech. Still, here’s proof that being a technology-forward credit union isn’t a contradiction in terms.
“Credit unions have a big advantage,” Jain says. “Their complexity is smaller; bureaucracy is limited. We can move very fast. We deployed a marketing automation system: The whole decision-making process and the implementation with complete back-end integration with core and CRM was done in less than six months. At other institutions, this could be a multiyear effort. The ability for us to move fast is our competitive advantage.”
“We strive to be a player. If we develop our back end with scale and the corresponding front end with scale, there’s no reason why we can’t achieve what big banks are doing.” – Frank Choy THINK REVIEW SPRING 2017
Digitally
TRANS
10
FO
R O M
YOUR BUSINESS
Digital Transformation Expert David Rogers Explains How By REBEKAH ILIFF Every business that predated the internet now faces the same challenge: How to transform to compete in a digital economy? From the financial services industry to global retailers, whether we like it or not, technology has forever changed the way we tell stories, interact with customers, build products, and ultimately generate value for the economy.
THINK REVIEW SPRING 2017
12
DIGITAL TRANSFORMATION | DIGITALLY TRANSFORM YOUR BUSINESS
Digital transformation isn’t about technology; rather, it’s about strategy and new ways of thinking
In his timely book “The Digital Transformation Playbook,” globally recognized digital expert David Rogers argues that digital transformation is not about updating your technology. Rather, it’s about upgrading your strategic thinking. Based on Rogers’s decade of research and teaching at Columbia Business School and his consulting for businesses around the world, “The Digital Transformation Playbook” shows how pre-digitalera companies can reinvigorate their game plans and capture the new opportunities of the digital world. His core argument is that traditional businesses and organizations (think GE or The Metropolitan Museum of Art) must rethink their underlying assumptions in five specific domains of strategy: customers, competition, data, innovation, and value. He reveals how to harness customer networks, platforms, big data, rapid experimentation, and disruptive business models – and how to integrate these into your existing business and organization. As someone who has spent years attempting to get people and companies to “think differently” about the public relations industry through applying big data, artificial intelligence, and machine learning, I was excited for the chance to sit down with Rogers to learn more about his experience, book, and thoughts on the future as we make our way through the digital age.
THINK REVIEW SPRING 2017
Rebekah Iliff: Okay, first tell me: Why did you write this book?
to adapt to the digital economy – but at the same time they are still generating money from legacy business, products, etc. So how do you operationally optimize the existing business units that are profitable while at the same time launching other business models that take away resources?
David Rogers: So many books offer advice for digital startups, but “The Digital Transformation Playbook” is really the first complete treatment of how legacy businesses can transform to thrive in the digital age. It is meant to be an indispensable guide for executives looking to take their firms to the next stage of profitable growth. This is not a simple task for any business.
That is an inherent challenge. The way funds are allocated does play into this. Taking money from profitable parts of business and exploring is a risk, and it’s unwise to just randomly scattershot. A business has to first figure out how to place smart bets and commit money based on market validation.
Ultimately, my goal was to illustrate every strategy in the book with real-world case studies, from Google and GE to Airbnb and The New York Times. With practical frameworks and nine step-by-step planning tools, I have essentially distilled the lessons of today’s greatest digital innovators and made them usable for businesses at any stage.
RI: It kind of sounds like being a venture capitalist. DR: Exactly. That’s exactly what it’s like. And by the way, media companies tend to do better at this (publishing companies, content-driven companies, etc.) because they are used to thinking this way and are constantly looking for opportunities to rethink the way budgets are allocated because things change so rapidly.
RI: What do you love about teaching and coaching global business leaders at Columbia Business School? DR: I teach executive education, so my students are those who are later in their careers and have a tremendous amount of real-world experience. They have great questions, based on challenges they are facing at a senior level, and they have really interesting problems to solve – all of which are critical to leadership aspects of their business.
RI: What are some of the best examples of companies doing digital transformation well? DR: There is a range of different types of companies. The Metropolitan Museum of Art is a nonprofit. They don’t have a lot of direct competition, but they need to be relevant without discarding the core experience of being in the museum. They hired a chief digital officer to understand how art exists in the digital age. They have started doing some really cool things like documenting the story of a piece of art, and people all over the world are watching these videos. They are also creating mobile games (like “Murder at the Met”) to increase audience engagement during museum visits. It’s creative and impressive to watch an organization like a museum effectively lead the way for global businesses.
As a teacher, I get to test frameworks and models with the real business world very directly. My students come to the table with a wealth of experience and knowledge so it’s fun to hear all of the various perspectives in the room. It’s the kind of experience where there is learning on both sides. Of course, someone has to take the role of “structuring the experience,” which is where I come in, but I am also learning from them. It’s the best of both worlds.
RI: What do you think is the number-one issue that keeps legacy businesses from investing in digital transformation?
Another interesting example is GE. They want to be known as a digital industrial company and have been moving out of financial services and consumer goods to be more focused on innovation around things like power plants, jet engines, and hospital equipment. They essentially figured out how to add the software (data) onto the hardware (equipment), then they ultimately changed the whole strategy of the company around this idea.
DR: Funding allocation can be a big holdup. Ironically, the worse shape you’re in, the more money you can usually get access to as a business leader. The general challenge is that a company is acutely aware that the market is changing, and they know they need
14
DIGITAL TRANSFORMATION | DIGITALLY TRANSFORM YOUR BUSINESS
RI: What does genetic makeup of a digitally transformed company look like? DR: This is the key message of the entire book: Digital transformation isn’t about technology; rather, it’s about strategy and new ways of thinking. You have to learn about your customers and competition. You have to think about the role of data within the organization, as well as innovation, and how you manage the risk. Leadership is critical, and you need to have a mandate from the very top of the organization that digital transformation is a priority. You also need to have the processes in place. I don’t believe you can go into a traditional retailer or magazine publisher, or midsize bank or financial services company and change overnight. People are going to be resistant. The goal is not to try to change everyone’s mind to get things to happen. You need a few key critical players and leaders at the top who can set the vision, then define what it will look like with the transformation.
must be alignment with employees who are implementing the changes.
RI: How is storytelling an important part of the digital transformation? How are companies doing this differently? DR: First and foremost, companies have to shift the paradigm of how they think of customers, from passive targets that they are persuading to dynamic networks that are interconnected. Traditional companies use a kind of broadcast approach. But now customers are so much more connected to each other, they can shape each other’s points of view. You have to take a different approach.
your customer, and it’s most impactful when they tell your story for you. – David Rogers
As far as communication, you are still a steward of your brand – but you’re not the only one shaping it.
THE DIGITAL TRANSFORMATION PLAYBOOK DOMAINS
STRATEGIC THEMES
KEY CONCEPTS
Harness customer networks
reinvented marketing funnel path to purchase core behaviors of customer networks
Build platforms, not just products
platform business models (in)direct network effects (dis)intermediation competitive value trains
Turn data into assets
templates of data value drivers of big data data-driven decision making
CUSTOMERS
Additionally, you need three key processes: funding, metrics, and incentive. We spoke earlier about funding and what it takes to reallocate resources. In terms of metrics, I’ve seen banks think they can go from a traditional business to an entirely digital platform and measure success the same way they’ve measured a traditional business. It doesn’t work like that. Additionally, people need to be incentivized to change, and there
The best influencer is
COMPETITION
DATA
Innovate by rapid experimentation INNOVATION
Adapt your value proposition VALUE
divergent experimentation convergent experimentation minimum viable prototype paths to scaling up concepts of market value paths out of a declining market steps to value prop evolution
©2016 David L. Rogers. Excerpted from “The Digital Transformation Playbook” (Columbia Business School Publishing). Visit www.digitaltransformationplaybook.com.
THINK REVIEW SPRING 2017
If you’re someone at the top, you should set up a process for ensuring those who are customer-facing have a voice.
16
DIGITAL TRANSFORMATION | DIGITALLY TRANSFORM YOUR BUSINESS The best influencer is your customer, and it’s most impactful when they tell your story for you. One of the ways I talk about this is the idea that every business today needs to think like a media business. With the old model, you create a message and push it to your customer. There is still a place for that. But when you think like a media company, you figure out how your customers will choose to tune in, while helping build relationships between your brand and other customers. Ultimately, whether you’re in the financial services industry or the entertainment industry, you have to talk to your customers in terms of what they need and not just what you want them to hear.
RI: Is the financial services industry well-positioned for digital transformation?
In an advanced economy like the U.S., we need to keep reinventing a given category, not by looking backwards, but rather by looking for ways to innovate that don’t rely on external factors. If you’re looking at it just from the point of view of economic impact, bringing back coal or garment factories to the U.S. doesn’t do this. Businesses who invest in their customers, and can upgrade their strategic thinking about those five core areas I mentioned, will begin to create – from the inside out – market opportunities that are rooted in data, real customer needs, and innovative thinking. It begins with assessing our assumptions about the way we run our businesses, deciding what we want our impact to be, then ultimately asking the right questions. From there, real transformation, digital and otherwise, is truly possible.
DR: Generally speaking, I think this industry has a few advantages. On the plus side, they tend to have a pretty clear view line on the customer. They tend to know with whom they are dealing (unlike omnichannel businesses), and how it relates to everything they’ve done before. On the flip side, the finance industry has historically been profitable, so there’s not really a sense of urgency around change. Additionally, in terms of liabilities, there is a tremendous amount of regulation (similar to the pharmaceutical industry), which can also lead to a mindset of, “We can’t innovate; it’s too hard,” and ultimately be an excuse to stay the same. My advice: If you’re someone at the top, you should set up a process for ensuring those who are customer-facing have a voice. That’s a good place to start, because they generally are the ones who truly understand the customer and likely have a treasure trove of information (data) that will prove useful for transformation.
“The Digital Transformation Playbook” by digital expert David Rogers is the first complete guide for businesses seeking to transform and thrive in the digital age.
RI: Last but certainly not least, in your opinion, what would the economic impact be if legacy businesses could transform? DR: The short answer is that companies would become much more customer-centric, and this would ultimately increase productivity and value creation within an organization. Right now, we are not seeing growth in terms of output to the economy; it’s more about financial maneuverings that increase value to the shareholder.
THINK REVIEW SPRING 2017
Know Your Members’
DONE JOBS TO BE
Why do you buy a lawnmower? Most people would
products and services come and go, the foundational job
answer “to cut the grass.” This is certainly true. But when
to be done does not go away. This underlying notion is at
a lawnmower company starts to dig deeper, they might
the heart of the jobs-to-be-done theory. It helps credit
find that the real purpose of buying a lawnmower is to
unions understand that members don’t buy products and
keep the grass low and beautiful, make an impression on
services; they seek out various solutions at various times
neighbors, or increase property value. Knowing this could
to get a wide array of jobs done.
help the lawnmower company fine tune their product
Innovators who discover what jobs consumers are looking
roadmap by revealing that there’s really no reason to add
to complete are more likely to create highly competitive
fancy features to the lawnmower: The job consumers
products or services based on new market insights.
want to get done is straightforward. Instead, the
In the process, they create viable growth strategies.
lawnmower company might want to explore developing a
Automated toothbrushes with sonic waves are replacing
special grass that doesn’t need to get cut and starting a
manual toothbrushes because they make the job easier
new business line.
to get done. The same is true for skin patches that deliver
As Theodore Levitt said, “People don’t want a quarter-
medicine effortlessly, the internet taking the place of
inch drill; they want a quarter-inch hole.” People buy
libraries, and self-cleaning glass making life easier and
products and services to get jobs done. And while
squeegee-free.
18
DIGITAL TRANSFORMATION | KNOW YOUR MEMBERS’ JOBS TO BE DONE
How would the jobs to be done methodology work for you? By focusing on the job to be done, credit unions can seek out unmet member needs. It turns out that when customers are executing a job, they have a set of metrics in mind that define the successful execution of that job. These desirable outcomes can be captured as actionable member need statements, replacing the inputs credit unions typically record and use to create new products and services. By focusing on new solutions, credit unions can help accomplish more and even target people who will pay the most to get the job done best. It could be the basis of a whole new business.
THINK REVIEW SPRING 2017
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DIGITAL TRANSFORMATION | WHAT JOBS DO MILLENNIALS NEED DONE?
What Jobs Do Millennials Need Done? Stop the Worrying By
CLAIRE BENDIG Chapman University, Class of 2017
A perspective on what Millennials need from financial services as they launch their adult lives.
With graduation rapidly approaching this May, financial responsibility is at the forefront of my mind. Rent, car payments, utilities, college loans, job placement, and graduate school expenses are becoming a reality as I get ready to toss my graduation cap airborne. What are a credit union’s “jobs to be done” in preparing me and my millennial peers for the financial responsibility of total independence?
THINK REVIEW SPRING 2017
A
lmost
I
They offer a means to reach attainable goals, but they can
know has debt from
also further a Millennial’s financial liability. Incentives
college, and many of
certainly motivate me to be more proactive when it comes
my peers worry about
to my finances. Millennials will educate themselves if
how they are going to
digital learning tools are available. Credit unions need to
manage. When entering
develop apps with learning modules that teach different
Chapman
aspects of finance in a simple way. By offering solutions
I a
everyone
hoped
University, that
bachelor’s
degree
would
guarantee a career path. Students like me go to prestigious, expensive universities with the hope of job security. With a projected graduation date,
“Credit unions need to develop apps – with learning modules – that teach different aspects of finance in a simple way”
most students are faced with piles of debt and no
on how we might better deal with debt or
understand
our
money in everyday terms,
financial
institutions can do the job of pointing us
career, often due to the fact that the undergraduate degree
toward financial stability. We’ll take it from there.
is losing value as more and more people have access to a degree. Going through the public school system in Southern
Claire Bendig is graduating from Chapman University this
California, matriculation from high school to college
May with an emphasis in Creative and Technical Writing.
was expected. As my graduation date arrives, I have the daunting realization that I have to set my own expectations: I am independently responsible for my career path. Financially, I feel unprepared for the practical aspects of life, like how to earn enough money to have a roof over my head. I think this anxiety is rooted in a lack of practical education. We spend hours memorizing dates and names, but are not being taught how to do our taxes. We instinctively love learning, but are not given the environment to do so practically. Credit unions can play a huge role in lessening the anxiety. As a millennial, I live my life in a digital universe. Credit unions can reach me through media and educational programs, especially if they’re digital. Financial institutions need to realize the potential for profit by grooming their future sources of income as they go out into the world. Investing in the student and providing the tools to manage and track their finances can turn into a long-term investment that ultimately goes right back into the system. Credit unions can motivate students with share-secured loans and credit cards that can help a young person establish credit. But credit cards are a two-edged sword. 22
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hearts and minds have joined forces to bring you greater capabilities in even the smallest places.
Unleashing the Power of Disruption:
Thriving in the Postdigital Age By
TOM GOODWIN
H
ow would you build your business if you started it now? Knowing what you know about consumer behaviors, new expectations, the new possibilities that technology affords us, and the accelerating pace of change? I’m guessing many businesses would look rather different. Companies have good explanations for the way things are, so it’s easy to see why startups have it easier, but do you think your customers care? Are explanations or excuses enough, or must you adapt, rebuild, or die? Now, not everything is changing, not all businesses face existential threats, but it’s certainly wise to be open to all change. Here are some guiding thoughts and questions to consider:
transformative power. Businesses made the mistake of adding electricity to existing processes, sprinkling change around the edge and incrementally. Factories, for example, saw only marginal improvements by using electrical motors to drive the power belts that were previously steam-powered. They saw further small gains by making each machine powered by smaller local motors as they were then able to alter factory layouts to be more efficient. What is key is that at each and every stage businesses felt they’d understood the full potential of electricity. Yet only in retrospect was it clear they’d got it wrong: What electricity really changed was everything. Electricity should have been core to reimagining business from scratch. Factories could now be placed near ports, not near energy sources inland. Factories could be near large centers of population closer to workers and consumers. Factories could, by leveraging the full power of electricity, be shaped in entirely different ways, with totally new, smaller machines, and make entirely new
The power of digital disruption is transformative, not iterative
products in entirely new ways. We are at the same point in the digital age as the
Electricity didn’t change the world overnight. It
marginally improved factories of the past. We have
took decades for industry and society to unleash its
24
DIGITAL TRANSFORMATION | THRIVING IN THE POSTDIGITAL AGE heads of digital, digital strategies, digital departments
retail to governance, healthcare to democracy, banking
and tech companies. We’ve built on in small ways, we’ve
to transportation, digitalization, mobilization and entirely
garnished what we’ve got, and everywhere around
new expectations and dynamics will transform business
us companies think they’ve done enough. They boast
and destroy generations of incumbents.
about technology in annual reports; they’ve a digital department or an innovation laboratory. It’s innovation as a gesture. They show they get omnichannel commerce because they’ve put iPads in store. It’s innovation for PR, with a single plane using biofuel in one engine to get the headline.
What role does a bank play in a mobile-centric world of people who have never seen let alone written a cheque? What becomes of retailers when the fundamental unit of economics favors brands with no expensive real estate? What does insurance look like when cars drive themselves? What does healthcare become when our
From electrification and again from computerization
phones know more about us than anyone ever? What
in the 1970s, we learn that the transformative element
replaces the smartphone?
is often spoken about the most when it’s not yet used. When a technology is really here, it blends into the background; it’s noticed only by its absence. Technology merely unleashes the power of what’s possible for an age of new consumer expectations, rather than just being something shiny at the side.
We have many new opportunities and threats. What becomes of brands in the age of codified online trust or auto-replenishment? How can local businesses compete on a scale with global companies? Who wants to own when they can just pay for access? Yet not everything changes.
The companies that have unleashed the fastest growth and generated the greatest value creation in the shortest possible time have done so by building for the new world and with technology at the core. Digital isn’t a thing: It’s everything. From Uber to Facebook, Amazon to WeWork, Airbnb to Alibaba, Slack to Netflix, digitalfirst companies are here. Yet these aren’t the final
Change is here. It’s not entirely predictable or evenly distributed, but by looking at technology and society, and the context of the past, it’s possible to shine a light into the new, to be ready to adapt, and to see what to ignore and what to embrace. One way to do this is to understand the thinking behind the paradigm leap.
winners; they are not the only ones to succeed. From
“It’s this process of design parameters, slower incremental improvements and a paradigm shift where everything changes that best describes the world around us.”
THINK REVIEW SPRING 2017
Unleashing the power of the paradigm leap
barely bigger than a cassette tape, improvements were marginal. The very peak of Walkman design came as the very worst personal CD player was made.
When the iPhone launched in 2007, it was both the best phone the world had ever seen and Apple’s first phone.
We’d made a paradigm leap. We went from ever smaller,
Tesla’s first ever car set the standard for the entire car
incremental design improvements towards an optimal
industry. From Dyson’s first vacuum cleaner to Nest
goal to a whole new canvas for design. We now had new
Labs’ first thermometer to Uber’s first taxi business to
criteria to optimize, new design constraints and new
Amazon’s first attempt at retail, it seems that the real
problems to solve. We could now skip tracks and get digital
step changes in how things are done come from outside.
sound, batteries lasted longer and the device was far
Have these companies succeeded at changing the game
thinner, yet skipping remained an issue until antishock
despite a lack of experience, or because of it?
was developed. Notably all the criteria that once held back the cassette player were different, the problems new, and
I believe what we witness is the leap from a world of
the expertise needed wildly different. Laser engineers
possibilities to another, a leap from one paradigm to
replaced electromagnetic sensor designers, and so on.
another, the notion of evolutionary funnels where optimal solutions suddenly jump.
The Discman became marvelously cheap, remarkably thin, far better than every music device ever made. Then
Design follows a process. Parameters are set, the right
music moved from physical discs to data, and we jumped
combination of criteria that are fixed and those that are
the paradigm of MP3 players, where once again all bets
flexible. Over time, consumer behavior and technology
were off. And then again to streaming: We no longer need
continually refine the process. The first personal
a musical player, just an app on phone. At every stage the
cassette players were massive, expensive, had terrible
new era demanded totally new assumptions and different
sound quality, skipped badly, offered awful battery life,
thinking, and a step change in performance was noted.
and best of all didn’t even have a rewind function. Over
Often, the dominant player changed, the incumbent built
a period of years everything got better. We got Dolby
on the expertise of the past.
sound, rechargeable batteries, rewind buttons – it got to a point where the improvements got smaller. It was
It’s happened in many forms, the era of VHS, the era of
easy to reduce the size initially but once the players were
DVD, and now the era of streaming on demand. The era of
26
DIGITAL TRANSFORMATION | THRIVING IN THE POSTDIGITAL AGE goods by horse to goods by canal to goods by railway and
ensure that the assumptions we make are based on
next largely by road. In high jumping, all records tended
reality, not guesswork, or more likely still, thinking
towards one optimal goal until the Fosbury Flop changed
from the past. Endless user testing at Nokia showed
everything.
that people didn’t want an iPhone – until they did. Red Bull marketers made a product that no focus
We have paradigms in other areas. We have architectural
group ever wanted. The New York Times has a
styles as fashions that all coexist. We then have reactionary
paywall despite “nobody ever being willing to pay
movements against them where all rules change. We see
for news.” Ensure in all the work you do that fixed
them in science: We form theories to make sense of a
assumptions about what is possible and what people
current world, that all bind each other to existing thinking,
want are tested to destruction daily.
until someone forces a leap forward we accept the earth isn’t the center of the world, or the caloric theory of heat, and then together the world makes progress towards a new, better, more useful theory of thinking.
3.
Plan for new paradigms. Businesses experiencing faster rates of change need to be beyond fast. They need to be anticipatory. It’s
It’s this process of design parameters, slower incremental improvements and a paradigm shift where everything changes that best describes the world around us. It just
hard to see all of the changes, but themes emerge. Despite new technology, humans end up being more predictable than expected. Selfies seem random
typically feels more complex.
unless you accept the human need to be validated.
Some tips for your business based on this:
more than choice. Every business needs to focus on
1.
Sites like Hotel Tonight show that people want ease
Work around people, not technology, but keep technology at the heart.
likely changes and what they mean, especially, and this is the hard part, where trends combine. What does your business look like in a world of self-driving
The reality of the modern world is, people don’t
cars, and blockchain, and mixed reality headsets,
consider competitive sets the same way businesses
and AI, and many other factors at the same time?
do. Uber doesn’t compete with FedEx, but if I can see
Even more, think of the role your company plays
my car, my driver’s name, rating, and when they will
and how it proliferates and evolves over time. Do you
turn up, I now expect this of my logistics providers,
sell cars or mobility? Are you in the accommodation
my airlines and everyone. If Amazon can reply to
business or the leisure business? How does a wider
every email, I now expect my bank to. Modern times
platform allow you to succeed in new ways?
mean modern expectations. We now have the most spoiled, flippant generation ever. We need to be
There are many other thoughts to consider, but this offers
very aware of what tools and possibilities are at our
a cursory glance into the ways for businesses to be best
disposal, yet relentlessly focus not on them as the
prepared, most agile, most likely to succeed. The future
product, but as the ordinance to serve people better
doesn’t care about why you failed. History is written by
than ever. Thrill them, manage their expectations,
the winners. Not everyone has to change, not everything
and they become our advertising.
is changing, but to keep your eyes ahead, to study trend lines and dreams, to write your own obituary and imagine
2.
Fix the right assumptions.
how things failed, these fast-moving times need people to
What we’ve learned from paradigm shifts is that
look down the road further ahead. And companies that do
expertise and traditional thinking allow us to
this will make the most of the greatest time ever to work
progress towards a marginally better solution, but
in business.
ensure we can never make leaps. Instead, we should
THINK REVIEW SPRING 2017
READING ESSENTIAL
FOR YOUR DIGITAL TRANSORMATION JOURNEY Developing a yearly
Digital technology is transforming entire industries,
conference and daily
including financial services, within a very short time, and
updates to our content
there is exponentially more change to come. In “Digital to
platform requires an
the Core,” Mark Raskino and Graham Waller of Gartner,
open
never-
Inc. explain how leaders today must bring digital to the
ending curiosity and
center of everything they do. They discuss how digital
constant
learning.
businesses will cause greater disruptions and require
Instead of sharing the
more significant organizational and business model
hundreds of books we
changes than the internet of times past ever did.
mind,
read throughout the
Digital to the Core, MARK RASKINO AND GRAHAM WALLER
year, we wanted to
Executives must understand the critical forces driving
trim them down to four
digital to the core of products and services and learn
books you should have
how to redesign their industries, remodel institutions
in your office, on your
and reinvent themselves to take digital to the core of
eReader or nightstand:
their leadership. A guide for leaders looking to make bold strides in their digitization journey, this book identifies
“Cities in the past were built on riverbanks. They are now built along highways. But in the future, they will be built based on availability of optical fiber networks and next-generation infrastructure.”
three major disruptive forces in the digital era: • Resolution Revolution: allows us to accurately measure and precisely control things and events. • Compound Uncertainty: requires that leaders assess the tipping points of technology, culture and regulation. • Boundary Blurring: occurs when the digital and physical worlds merge and alters industries as we
– Narendra Modi, Prime Minister, India
know them.
28
DIGITAL TRANSFORMATION | ESSENTIAL READING These are the challenges faced by credit union leaders today. Technology is an amazing opportunity to reinvent themselves with customer-focused digital products. “Digital to the Core” offers real guidance on forming a detailed plan for moving forward, using real-life expertise from people who are ahead of the digital transformation game. This requires you to:
“Once you understand what jobs people are striving to do, it becomes easier to predict what products or services they will take up and which will fall flat.”
• Remake yourself: Who do you need to be and how do you have to change to become a digital leader? • Remodel your credit union: What does your credit union need to become, and how will you redefine your institution? • Remap your industry: How do you need to change your world view, and what credit union paradigms do you need to rethink? “Digital to the Core” offers realistic advice to develop strategies, create digital concepts and become a more dynamic organization. This book is a practical guide to make the leap to a digitally transformed organization. While “Digital to the Core” delivered an insightful overview of the challenges credit unions are facing and opportunities opening up, the next book focuses solely on the members and their needs: The Jobs to be Done concept explains that customers “hire” products to accomplish things – or better, jobs – in their lives. When the products that they’re currently using make it difficult to get a job done, they’ll start
Jobs to Be Done: A Roadmap for Customer-Centered Innovation, STEPHEN WUNKER, JESSICA WATTMAN AND DAVID FARBER
looking around, possibly firing those products in favor of new ones. Just think back to the time when there was no Lyft and Uber and you had to get transportation. It was raining and no cab stopped for you or you had to compete with others for one. When you were finally in a cab, you
“Jobs to Be Done: A Roadmap for Customer-Centered Innovation”
by Stephen Wunker, Jessica Wattman
and David Farber is a guidebook for moving your credit union forward on the digital transformation journey
had to check to see whether you had enough money with
by considering which jobs your members need done.
you or whether the driver accepted credit cards. Looking
The team of authors claims that most companies are
back, there were so many pain points around getting one
innovating the wrong way. They’re making what their
basic job done: getting from point A to B.
customers say they want. This might lead to incremental
THINK REVIEW SPRING 2017
innovation, but it’s unlikely to ever disrupt a market.
“The Digital Transformation Playbook” was written
Steve Jobs famously said, “Customers don’t know what
for legacy companies, like credit unions, to make use of
they want until we’ve shown them.” The key for credit
digital tools to compete with upstarts and to innovate
unions might be asking why their members want specific
faster. With a new awareness of the digital environment,
things and developing products that members don’t even
credit unions can ride the wave of digital transformation
know they need.
into a new world of long-term innovation. Innovation has always been around, the difference from years past
Follow the step-by-step guidance of “Jobs to Be Done,”
is the pace of innovation created by
and you will be prepared to deliver
technology.
innovative and transformative solutions for your members that are original and
This increasing pace requires new
profitable.
answers and models. Just search “books about innovation” with Google,
Members need to get jobs done. But
and you’ll get more than 77,400,000
what are the jobs credit unions need to
results. Yes, the innovation field is filled
get done? And how should they answer
with a lot of mediocre thoughts based
the increasing demands of members and
ever-more-forceful
on recycled ideas and insights. And then
competition
there are the few books that provide
from banks and fintech startups? This is
fresh points of view, ways of thinking
the leadership and executive challenge
and of applying creativity to work.
examined by Columbia Business School
“The 4 Lenses of Innovation” by Rowan
faculty member and THINK 17 speaker
Gibson belongs to those chosen few.
David Rogers in his insightful book “The Digital Transformation Playbook,” which answers these questions and
The Digital Transformation Playbook, DAVID L. ROGERS
provides a complete guide for legacy
The book describes Four Lenses – or tools – you can use to embark on a process of innovation. Based on a
companies on how to transform to compete in a digital
foundation of neuro-scientific knowledge about how the
economy. And yes, Rogers explains in his guide that digital
human mind works, it encourages readers to recognize
transformation is not about upgrading your technology,
their own creative genius. The four lenses provide us the
but digitally enhancing and upgrading your strategic
ability to find and explore fresh perspectives. Rowan
thinking. To prosper in the digital age, businesses need
Gibson calls them “four perceptual lenses” to uncover
to rethink their underlying assumptions in five domains
insights and opportunities:
of strategy – customers, competition, data, innovation,
1.
and value.
Challenging
Orthodoxies:
questioning
deeply
entrenched beliefs and assumptions and exploring
“Increasingly, our competitive assets may no longer reside in our own organization; rather, they may be in a network of partners that we bring together in looser business relationships.”
new and highly unconventional answers. Think Martin Luther, Newton, Elon Musk, Apple stores and Chipotle. Innovators are often seen as troublemakers, contrarians, heretics and rebels; their challenge of orthodoxies becomes the cradle of creativity. 2.
Harnessing Trends: recognizing the future potential of emerging developments, and using these trends to open up new opportunities. Think Amazon
30
DIGITAL TRANSFORMATION | ESSENTIAL READING
“Creativity is like a muscle. If you don’t use it, you lose it.” Kindle, Starbucks’ mobile payments app and Waze.
design thinking, companies need to balance technical
Innovators are not necessarily futurists, but they
R&D with customer research to meet the unmet needs
are imaginative and have an ability to use the power
and frustrations that everyone else is simply ignoring.
of change. As Rowan Gibson says: “Innovators tend to have a wider field of view and an amazing sharpsightedness.” 3.
Building on the four lenses of innovation, Gibson offers an eight-step innovation process for organizations, explaining how Archimedes, Einstein and Edison used
Leveraging Resources: un-
this method to their, and
derstanding our limitless
humankind’s,
capacity for redeploying
The
skills and assets in new
304
ways,
or
illustrations, bringing the
contexts. Think Disney,
whole subject of creativity
Corning
and innovation to life.
combinations and
Amazon’s
expansion into numerous
book pages
contains of
full-color
This book will challenge
fields. Successful innova-
your thinking pattern. It
tors develop, stretch and
will help you travel through
synthesize resources, and
the creative journey we
focus on organizational
all need to take and help
creativity. The 4 Lenses of Innovation, ROWAN GIBSON
4.
advantage.
you
rethink
everything.
Ultimately, in the words it
Understanding Needs: paying attention to issues and frustrations others
shares from noted strategic branding apostle Steve Zelle,
have ignored, and experimenting with new solutions
it will help you recognize that “The creative process is
to problems. Think Dyson vacuums, Nest and Diane
chaos wrapped around structure and held together by a
Hevin (women-only gyms). Based on human-centered
sprinkle of magic dust.”
THINK REVIEW SPRING 2017
PHOTO ESSAY Over the course of barely half a century, digital technology has transformed nearly every aspect of our lives – and the pace of that change continues to accelerate.
DUBAI Over just a few decades, Dubai’s connected culture has helped give the United Arab Emirates the world’s tallest building and a 78% smartphone-user ranking that’s also the world’s highest.
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DIGITAL TRANSFORMATION | PHOTO ESSAY
Photo credit: NASA
COMPUTER POWER A modern smartphone has at least 100,000 times the computing power of an early IBM mainframe computer from the late 1950s.
WAREHOUSE Advanced warehouse facilities such as Amazon’s now employ digital automation and robotics to pick and pack an order with less than a minute of human involvement.
THINK REVIEW SPRING 2017
ADOPTION RATE OF TECHNOLOGY From 1939 to today, an estimated billion TV sets have been sold worldwide. Since Instagram’s release in 2010, it already has attracted over half a billion active monthly users.
BOOKS A 6,000-book collection used to be limited to public libraries or the homes of a privileged few. A modern digital e-reader can put them all in the palm of your hand.
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DIGITAL TRANSFORMATION | PHOTO ESSAY
MUSIC A typical 1970s-era audio cassette holds 60–90 minutes of music, while a modern smartphone only slightly larger can hold enough digital tunes to play for days – with no rewinding.
COMMUNICATIONS Into the 1960s, dialing someone’s number meant using an analog phone with an actual dial. In the digital era, a few taps can have you talking eye to eye on FaceTime®.
THINK REVIEW SPRING 2017
THE
DIGITAL MIND SET “A digital mindset requires us to see old problems and old processes with new eyes. It is a different way of thinking about customers, services and process. It’s faster, iterative, and adaptable.” – Deloitte
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AGILE AND ADAPTABLE
FLEXIBLE ABOUT TIME AND SPACE
COMFORTABLE WITH AMBIGUITY
TAKING RISKS AND EXPLORING
CONNECTING THROUGH IDEAS RESPECTFUL OF DIVERSE PERSPECTIVES OPEN TO LEARNING AND COLLABORATION
“Digital isn’t merely an add-on; it’s a way to think differently about business models, customer journeys, and organizational agility.” – McKinsey & Company THINK REVIEW SPRING 2017
Leadership Drives Digital Transformation
D
By UWE HOOK
igital leadership is a buzzword that’s making its rounds in C-suites and executive offices. Whenever the word “digital” is used, people can leap to the conclusion that it’s all about technology. However, research studies and real-life examples show that the strength of digital technologies
– social, mobile, analytics and cloud – doesn’t lie in the technologies themselves. Instead, it comes from the way companies integrate these technologies and use them to transform their businesses and the way they work. The history of business is full of stories of companies that focused on technology without investing in organizational structures and capabilities to ensure implementation of strategies and long-term impact. Each story tells the tale of a hot technology with a high price tag that was successfully implemented but never used to its full potential. Or of a failed implementation of enterprise software that fell short of expectations. The reasons for these disasters are often the same: The organization didn’t change mindsets and processes or build cultures that fostered change.
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DIGITAL TRANSFORMATION | LEADERSHIP
Digital leadership requires digital strategies that transform
plan. It’s vitally important to combine the skills and traits of executives who were “born digital” with those of who “go digital.”
Your digital strategy drives digital maturity. An MIT Sloan study revealed that only 15 percent of respondents from
Executives in traditional companies with legacy skills
companies at the early stages of digital transformation
tend to be savvier in influencing others, rely more on
say that their organizations have a clear and coherent
lateral influence in their roles, and are far more social
digital strategy. Eighty-one percent of digitally mature
and empathetic than their digital counterparts. They
firms have a comprehensive strategy and communicate it
are stronger in building relationships and influencing
effectively. Do you need a digital strategy? Ask yourself
others – critical capabilities, given the scope of
these questions:
most digitization strategies. In contrast, born-digital executives tend to be motivated more by independence
•
Who are my competitors in the new world? Your
and structure, and prefer narrowly defined or single-
traditional competitive set may no longer be the
focus roles requiring depth and specialized knowledge
competitive set going forward.
skills. Given the need for digital expertise and peopleoriented culture in organizations, credit unions should
•
How fast do I need to act? When disruption
consider deploying a hybrid strategy that combines the
happens, sometimes it actually takes quite a long
strengths of both segments. It also reduces the risk of a
time. In other cases, it can be very swift, requiring
culture clash between independent, digital executives
bold moves. Maintaining the balance between
and the more traditional members of a team.
sustaining the status quo and shifting quickly to a new model is critical if you’re going to maximize value. •
Where exactly is the value from digital? Many firms mistake digital transformation with digital marketing, narrowing the set of levers and aspirations. Digital unlocks endless opportunities: the ability to fundamentally change how productive your assets are, the ability to leverage data and your member base in a different way, and the ability to actually develop innovative new propositions that were unimaginable just years ago. Can you use your assets more effectively by using data?
Leaders need to lead the digital transformation journey
Great achievements involve great risks Digitally transformed companies are considerably less risk-averse than their peers. The graveyard of failed companies is littered with examples of the old saying that the costs of inaction almost always exceed the costs of action. Risk taking requires executives to change their mindsets, acknowledging failure as a prerequisite for success. Leading by example helps change the mindset of employees who are risk-averse. Encouraging employees to be bolder is especially important in digital business transformations. To effect change, credit unions may have to take deliberate actions such as gamification, risk encouragement and tapping into already existing virtual communities.
As a famous quote goes, “Great leaders don’t tell you what
When it comes to culture, coherence is of utmost
to do; they show you how it’s done.” The majority of suc-
importance. Coherence should extend beyond the lines
cessful digitally driven companies have a digital agenda
and boxes of the organizational structure to all ways in
that is being led by a single person or group. Leaders need
which processes align and drive cross-organizational
to go beyond saying digital is a good thing. They need to
collaboration, as well as the practices around talent,
lead by example and support the team by helping them
including hiring, incentives and role modeling. It’s
understand how their work fits into the overall business
imperative for leaders to avoid creating internal
THINK REVIEW SPRING 2017
competition within business units. Successful digital players create independent and stand-alone entities rather than cannibalizing legacy business models. This should be coupled with driving accountability and empowerment.
How to get started The end state of digital transformation is about strategy, leadership, culture and technology. To position your credit union to move forward into a digitally transformed future, business leaders should ask themselves these questions: •
What is your digital strategy beyond implementing new technologies? Are you targeting improvements in innovation and decision making and, ultimately, transforming your credit union?
•
Does your credit union culture foster digital initiatives? Do you encourage collaboration and encourage risk taking?
•
Is your credit union confident when it comes to its leadership’s digital fluency? Is leadership fluent in understanding what can be accomplished at the intersection of business and technology?
Answering these questions will help your credit union get started and develop organizational strength to keep pace with digital technologies.
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Thank you for giving kids like Zhania every chance to get better.
PUT YOUR MONEY WHERE THE MIRACLES ARE.
ZHANIA, 8 YEARS OLD SICKLE CELL DISEASE AND CARDIOMYOPATHY PATIENT
Thanks to the expert care at her hospital, Zhania is one of the first children with sickle cell disease to successfully receive a heart transplant. Children’s Miracle Network Hospitals® donations helped fund the developments and devices used in her surgeries. Zhania’s new heart is set on fully enjoying her favorite sweet treats, video games and summer vacations. On behalf of the 10 million kids treated annually at Children’s Miracle Network Hospitals, we salute America’s credit unions for Putting Their Money Where the Miracles Are! Learn why children’s hospitals need community support to help kids like Zhania and find your member hospital at CMNHospitals.org and facebook.com/CMNHospitals.
CMNHospitals.org
Give Today to your children’s hospital
Thinking Out Loud
How Is CO-OP Championing Digital Transformation? We’re talking about digital transformation with CO-OP’s President/CEO Todd Clark.
THINK REVIEW: Do you think credit unions are aware of the urgent need for digital transformation?
consumer segments? What can you do to measure up to the Amazons of the world? That’s the kind of standard we’re trying to set here at CO-OP, so that when your members are looking for a real-time, pay-anyone P2P experience, they can use your card with Zelle. When they want to track their transactions on their smartphones in real time, they can use CardNav.
TODD CLARK: The credit union industry has always been willing to embrace change and technology, so there isn’t a gap there. But the scale and the pace of change is easy to underestimate – not only for credit unions, but for every single business vertical including banks. Maybe for everyone.
It’s also important to listen to your customers’ pain points and wants when you’re considering new technology or channel experiences. You want to use the customer’s voice before investing in innovation.
If you think about how Open Table has changed the restaurant experience, or how Uber has changed transportation, it doesn’t seem like anything in financial services has come close yet. Even the big names in payments innovation that are out there – take Venmo or Square – those are features around existing products. There’s not an enormous amount of net new. We need to take a larger view, and when I say “we,” I’m including CO-OP.
TR: Is that something we can help our clients do? TC: It’s something we should help them do, absolutely. We have a tremendous amount of our clients’ data. Philosophically, we’re of the opinion that all the data that we have should be available to our client credit unions to run their queries against. Practically, that’s a goal we’re going to keep working toward in the months to come. We’re integrating so our clients have access to more data. And we’re improving interfaces so they can understand that data more readily for actionable insigths and decisions. A few of the ways we’re doing that: a set of APIs and a new, upgraded Business Intelligence tool that we’re going to be introducing some time in 2017.
TR: What can credit unions be thinking about if they want to meet the needs of digitally minded consumers? TC: Consumers are looking for things to be easier, faster, better – every day of their lives. You can start by asking yourself: Does your member experience meet your expectations as a consumer? Who are your target 42
DIGITAL TRANSFORMATION | THINKING OUT LOUD
Q&A WITH
TODD CLARK
TR: That speaks to some of the technology that enables digital transformation. But how do credit unions provide the leadership that makes agility possible? TC: My best advice is to be deliberate and measured in your approach but don’t be afraid to take risks, to try new things, to fail forward. And you won’t advance the ball at all if you aren’t willing to change yourself. One of the questions I would ask of a CEO is, “How many apps do you have on your phone, and how many do you use on a daily basis?” If it’s less than three, you might need to think about resetting your self-expectations. We’re all empowered in the digital era. Everyone you work with has insight, inspiration, relevant experience. Mine that. Make sure your organization is uncluttered enough to recognize opportunity and act on it quickly. CO-OP will be right there with you, doing the same in order to enable credit unions to succeed in this digital era.
TR: Is this a conversation we can continue as we all undergo the process of digital transformation? TC: It’s not a choice. It’s a must. And the conversation will continue, because this process is an ongoing intentional
effort for CO-OP and for the credit unions we work with. Digital transformation isn’t as simple as plugging in a new technology. But it can begin with the simple decision to become a different kind of organization.
“Everyone you work with has insight, inspiration, relevant experience. Mine that.”
THINK REVIEW SPRING 2017
THE digital 4 C’s digital transformation is driven by strategy, not technology
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DIGITAL TRANSFORMATION | THE DIGITAL 4 C’S Maturing digital businesses are focused on integrating digital technologies, transforming how their businesses work, while immature digital businesses remain focused on solving specific business problems with individual technologies. How do you break through?
with digital trends. Only 19 percent of immature digital companies share this belief. One of the most important skills of the new workforce is the ability to conceptualize how digital technologies and behavioral trends will impact your business. Just as important is the ability to adapt quickly to change, adjust and create new opportunities. Credit unions need to fill skill gaps and, at the same time, reduce the risk of losing their most valuable employees.
Digitally reimagining your credit union requires a clear digital strategy, backed by leaders who nurture a culture that is capable of reinventing the organization. This is nothing new: It mirrors previous technology evolutions. What’s unique is the importance of risk taking as a new cultural norm – one that requires digital companies – Didier Bonnet, Senior VP Capgemini to attract the right talent.
“The only wrong move when it comes to digital transformation is not to make any move at all.”
Clear strategy drives digital maturity: According to MIT Sloan, only 15 percent of companies undergoing digital transformation say they have a clear and coherent strategy. Lack of a digital strategy is the biggest barrier to digital maturity for companies in the early stages. Eightyone percent of digitally mature companies have a clear and coherent strategy. It’s imperative to think of technology as a means to a strategically potent end, not as an end itself.
Cultural norms for the digital age: Digitally maturing companies
take more risks than their peers. As Cisco’s John Chambers said: “We began working on the internet of everything more than seven years ago. The market wasn’t ready for it. In that instance, we had the courage to keep going without over-investing to the point where we were betting the company on it.” Culture needs to support collaboration and creativity. We are not suggesting that only leaders need to change their mindsets: Employees often fear taking risks more than their leaders do. Encouraging employees to be bolder is an important part of the digital transformation process.
Creative vision to transform: Traditional strategy approaches can’t prepare credit unions for the future. A few years ago, we simply could not have predicted the revolutions in data, communications and user behavior we are seeing today. Rather than analyzing current capabilities and developing a strategy, credit unions should work backwards from a future vision. Rethinking your business helps you define new solutions and stimulate demand for new capabilities.
Digital maturity will be achieved through a mix of strategy, culture and leadership. To move confidently forward into a digitally transformed culture, ask yourself these questions:
Conceptualize the impact on skills: Seventy-five
• Does your credit union encourage digital initiatives? Risk taking and an increase in collaboration requires a cultural mindset change. Consider which aspects of your current culture could increase the speed of your transformation progress.
percent of digitally mature companies believe they have the capability to create the skills necessary to align
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” – Charles Darwin
•
Does your credit union have a digital strategy that goes beyond implementing technologies? Maturing digital organizations target improvements in innovation, transforming how the business works.
• Is your leadership digitally fluent? Digital leaders understand what can be accomplished at the intersection of business and technology. Leaders drive the strategy that transforms their credit unions.
THINK REVIEW SPRING 2017
Eyes on the
PRIZE
Consumers 50 and older are the real face of digital transformation. It’s not just because this diverse group was born into a predigital world. It’s because they are transforming themselves – and being transformed – by current technology.
on innovations to help credit unions connect older members with digital solutions for some of their essential challenges. We began with our LaunchPad project. Members of the THINK team from CO-OP joined folks at Mastercard Labs for an intensive five-day innovation sprint with the goal of coming up with a concept, building a prototype and presenting a go-to-market strategy. The result: OASIS, an omnichannel,
New markets exist, even within your current membership.
Credit unions have a huge stake in helping older adults through the process of digital transformation. That’s why CO-OP, Mastercard and OpenIDEO have spent much of the last year working
46
personalized, and intuitive financial platform based on a deep understanding of the challenges and constraints of older adults. Among the functions were shared capabilities that allowed adult children to help their older parents manage money digitally. On to the THINK Prize 16 Financial Longevity Challenge! Using OpenIDEO’s online innovation platform, thousands of participants worldwide viewed and collaborated around 310 submitted research posts and 136 distinct ideas for im-
DIGITAL TRANSFORMATION | EYES ON THE PRIZE proving the financial lives of adults 50 and older. The Challenge brought together credit union thinkers, design students at NYU, innovators from the OpenIDEO community and experts from AARP. We held hackathons and live workshops. In the end, five top Challenge ideas were selected to share the $10,000 THINK Prize 16 and continue developing their ideas.
What did we learn from this process? Not only did we gain insight into the worlds of aging adults – and innovators both inside and outside our industry – but we got a glimpse into just how possible it is to create, refine and develop new ideas. New markets exist, even within your current membership. The possibilities are inspiring.
How might we create financial services that support the dreams and obligations of those 50 and older?
THINK REVIEW SPRING 2017
THINK Prize 16 Final
bit.ly/ChallengeTopIdeas
RIGHTSIZE
THIS NOT SO RETIRED LIFE
FRIENDLY ATM
Supporting folks who need to adjust their home size through complex
A podcast that spotlights inspiring individuals and their nontraditional approach to “retired life.”
A safer way of interacting with ATMs that increases the confidence and convenience of credit union members aged 50+.
emotional and fiscal processes.
LEVERAGE THE TRUST PEOPLE HAVE IN CREDIT UNIONS TO CREATE PERSONAL PENSIONS
INCUBATOR CLUB FOR CREDIT UNION MEMBERS An “incubator” for credit union members, where they can pursue their small-business dreams and connect with their community.
Create personal pension products for individuals and distribute them via credit unions.
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Follow the Prize Learn more about the LaunchPad experience at CO-OPthink.org/launchpad
Get the stats on 111 million consumers who are 50+ at CO-OPthink.org/fintech50
See inside a live THINK Prize 17 innovation workshop at CO-OPthink.org/thinkprizeworkshop
Find out all about the THINK Prize 17 Financial Longevity Challenge on OpenIDEO’s innovation platform at bit.ly/FinancialLongevity
THINK REVIEW SPRING 2017
The Future Is Calling
A
By Todd Clark
s we are putting this first Digital Transformation issue of THINK Review together, we are undergoing a macro transformation of our own that encompasses much more that the digital realm.
Change is happening in great, giant leaps. With the addition of TMG, now we have a team of 1,500 tenured and talented colleagues – all of them just as committed to the credit union movement as we’ve been here at CO-OP – ready to take on the challenges of innovating and executing on new technology. We’re glad, because we’re full of ideas. Along with our work with Feedzai, we’re developing a solution to enable clients to offer Zelle, Early Warning’s new P2P payments network. We’re also integrating our product lines to create a single, omni-channel client experience, developing a robust line of business intelligence solutions, honing our consulting skills for our clients – I could go on.
I’m writing this during a week of great transition here at CO-OP. We are welcoming our longtime strategic partner TMG into the CO-OP family. We’ve also just announced our partnership with Feedzai, a San Mateo, California–based company that’s going to help us develop a new machine learning/Artificial Intelligence tool to help our clients better combat fraud and benefit from a robust line of analytics products.
Going full digital is a big opportunity, and great work is ahead of all of us to realize that vision. But something interesting happens when you take great giant leaps: The future gets closer. What was hard to envision months ago suddenly comes into focus. The road forward is clear. Are you ready?
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PAYMENTS FUEL GROWTH. CO-OP FUELS PAYMENTS.
EMPOWERING MEMBER
Payments Networks Member Service Growth and Retention Services ©2017 CO-OP Financial Services
Balancing relentless security and a seamless experience is the surest way to capture your share of the 52% of all transactions that card payments will represent by 2019. Created for the betterment of credit unions, CO-OP helps you strike that balance to achieve top-of-wallet status—and grow. Get empowered at CO-OPfs.org.
JOIN US Digital Transformation Webinar Series: Jobs To Be Done June 7, 2017 11 a.m. PT/2 p.m. ET Register at CO-OPfs.org/THINKwebinar
©2017 CO-OP Financial Services
From the THINK 17 conference, to THINK Review, online insights and events year-round, the THINK innovation platform is your non-stop resource for ideas and tools that advance the credit union movement and empower your growth. Whether or not you joined us at THINK 17, be sure to see what comes next at our Digital Transformation webinar on June 7. It’s one more way to accelerate your own digital transformation journey with the power of THINK—The Catalyst for Better.
Join your intrapreneurial colleagues at
CO-OPthink.org