Today the reality is that smart incumbents are working with, rather than against, technology firms.
It is increasingly clear that collaboration and partnership are becoming core competencies for any successful business. For example, in my last blog I identified the ability to form effective partnerships as a key stepping stone to achieving a transformation in digital risk management.
If you stop to think about it, this is a telling sign of how thinking about technological disruption has changed.
A few years ago, the conventional wisdom was that tech firms were going to eat established businesses for breakfast. On one side, start-ups had the potential to strip away value like a shoal of piranhas. On the other, Jaws-like technology giants were poised to swallow the unprepared in one gulp.
Today the reality is that smart incumbents are working with, rather than against, technology firms. That is certainly true in banking, where external partnerships are increasingly important both to identifying proofs of concept and to developing them at scale. In most cases that means working with a combination of FinTechs and RegTechs, specialist service providers and giant technology companies.
In large part, this change reflects the willingness of established firms to adapt their business models and embrace a more collaborative approach to innovation.
But the potential disrupters have evolved too. At the smaller end of the spectrum, many FinTechs have accepted larger firms as partners. That has enabled established businesses to assimilate their capabilities via alliances, joint ventures or acquisitions. KPMG’s acquisition of Cyberinc’s digital identity business, which will be integrated into our security consulting practices around the world, is a case in point.
At the larger end of the spectrum, the tech giants have harnessed their unique capabilities to develop new services for business. For example, search engines now collaborate with non-technology firms to help them achieve smooth, near-instant insights into customer data.
Amid this wave of collaboration, it’s tempting to ask if there are any ‘rules of thumb’ that can help to smooth the path of partnership.
I wish I could say “yes, just remember one thing!” But reality is rarely that simple. After all, every company takes a different approach to managing agile development. Common features include the use of incubators, innovation labs and devolved centres of excellence.
Even so, I do see some themes emerge time and again. In particular, many firms struggle to move from proof of concept to transforming business processes. All too often, ‘reality bites’. In other words, grand plans get tripped up by obstacles such as moving to scale, integrating with other processes, ensuring appropriate backup and resilience, protecting data or maintaining current services.
So when it comes to innovation, keeping an eye on these practical hurdles may be more important than identifying exciting POCs. That may seem like a simple insight, but in my experience it’s crucial to harnessing the full benefits of collaboration and getting lasting value from innovation.