The value that banks deliver to customers is changing – that is one of the currents that runs through Joseph DiVanna’s excellent Redefining Financial Services. I’ve been reading this book (and a few others of DiVanna’s) to better understand where my own company, Zafin Labs, fits into the value proposition of banking services in general. We make pricing and billing solutions for banks, and at least when I joined, I struggled to figure out what that meant exactly. On the face of it, it was quite simple – banks apparently required solutions for pricing and billing problems, and we apparently made those. The fact that I do not come from a banking background of course put me at a disadvantage – yes, I had studied finance and to a lesser extent, banking, during the MBA, but I found it difficult to understand how these enormous organizations could not solve their own pricing and billing problems. That all changed once I read DiVanna’s book.
The brilliant thing that DiVanna does in Redefining Financial Services, is to put the problem into context, specifically a historical context. I had never considered why banks existed in the first place – this somewhat obvious question, despite having a history degree and having studied the medieval period when banking was born, had never dawned on me. If you asked me before I read this book why banks exist today I probably would have said ‘so people have a safe place to store money (ie. surplus)’, and while on the surface that is true, there is much more to the historical context than that.
For example I had never considered the obvious implication that someone living in 1250 AD did not at one point say ‘hey, we should have a bank so we can put our extra money in it’ – but if you stop and think about it – of course that could never be true. You cannot conceive of an invention without first having a need (or what do they say? Oh yes, that necessity is the mother of all invention.) So where did that impetus come from? People were beginning to embark on increasingly risky and lucrative international trade, and were finding that disparate geographic transactions were fraught with known and unknown risks, some of which included identity risk, currency risk, credit risk, and goods risk – ie., here I am with these spices in present day Turkey, how do I get them on a boat, get them over to Italy, find a buyer, collect on the goods (in a different currency mind you), and then get my surplus back home again? When you think of embarking on a transaction like that in the absence of a bank, it boggles the mind that international trade ever existed at all. In any case, some brilliant entrepreneur saw that there was an opportunity to provide guarantees on transactions in different forms, and thus value was offered in the form of contracts that could underwrite this precarious trade.
Fast forward to the modern day – and we see that banks are now in the position where some of that value has been eroded through the invention and commoditization of technologies that can deliver that same value much more easily (ie. cheaply), and we find that we live in a world of online only banks pushing margins on much more established, traditional banks.
What DiVanna then posits is that there are still means for banks to differentiate in the face of this competition to deliver more value to customers. One such example is through innovative pricing and specialized bundling of banking products. DiVanna notes that:
“…small businesses – especially one- or two-person shops or home-based freelancers – are not always well suited to a bank’s product and service offerings, which are laden with fees designed for larger retail and corporate clients.”
~ Joseph DiVanna, Redefining Financial Services, page 94.
This sentence succinctly puts forth the value that Zafin Labs delivers to its client banks – our software solutions work within complex banking systems to pull out meaningful data that can be acted upon, and then to allow banks to innovate by making it easier for example to create new products within a banking production environment. To think of it another way, banking systems have generally been designed with security, and not necessarily agility, in mind. Our innovation is, like the earliest bankers, to see an opportunity (innovation agility) within a difficult problem (complex, layered banking systems). Based on the quote above, there is no reason banks should not be able to offer the right bundles of products to the right customers.
“Well, organizations that are founded to solve problems end up committed to the preservation of the problems. So Trentway-Wagar, an Ontario-based bus company, sues PickupPal, an online ride-sharing service, because T-W isn’t committed to solving transportation problems. It’s committed to solving transportation problems with buses. In the media world, Britannica is now committed to making reference works that can’t easily be referred to, and the music industry is now distributing music that can’t easily be shared because new ways of distributing music undermine the old business model.”
- Clay Shirky, in conversation with Dan Pink in the June 2010 issue of Wired Magazine.
Good organizations are flexible and not constrained by this need to preserve the problem as Shirky has noted. When I was a tutor for BrainBoost Education, we used to regularly discuss our overall and individual goals. On one hand, the goal of tutoring a student was to create a situation where tutoring was no longer necessary. The goal of the organization was to show that for-profit private education was compatible with tax-supported public education. So, in both cases, we were against framing our service as a solution to a problem. We didn’t say, ‘for students who need tutoring’ because if that was the case then we would always need students to need tutoring in order to have jobs. In the second case, we didn’t say, ‘we exist because the education system is broken’ because that would mean we always needed it to be broken. Instead, we focused on goals that constantly sought to put ourselves out of jobs, because only in that mindset will be flexible enough to adapt to changing conditions and thrive in a sort of evolutionary atmosphere.
At OpenCal, we talk about solving the frustrations of online booking. But in truth, we want to go beyond this. We want to help entrepreneurs and small businesses to grow and thrive by creating online tools that solve actual problems they face everyday. Right now, our context for solving their problems is to build a great calendar and booking system. But we are not focused on the preservation of the problem – we are focused on outcomes that entrepreneurs and businesses want, which, in general can be translated to more time and/or more money.
For now, we have a flagship product that is online appointment software. Deep down, I knew we stood for more than this, but in order to figure that out, I needed to change my perspective of what we were doing. In hindsight, the only metaphor that makes sense to me is imagining one of those 3D puzzles that featured a secret image inside all the noise. One the surface, there is one vision, and underneath, another. Both are related but it isn’t clear from the outset what lies underneath.
Consider the case of Zappos. Now, if I say Zappos to you, probably the first thing you think of is shoes, or buying shoes online. If Zappos were committed to selling shoes online, they’d be trying to preserve a problem, which could be defined as delivering shoes to customers through online shopping and sales. And eventually, they’d probably find themselves out of business. Instead, Tony Hsieh, CEO of Zappos, says his company stands for ‘Delivering Happiness’ or ‘Delivering Delightful Customer Experiences’. And because that is what Zappos stands for, it can become anything that fulfills that goal. As Tony has said on numerous occasions, it’s no stretch to imagine Zappos one day running an airline.
So tell me, dear readers, what do you stand for? Are you committed to solving and preserving a problem, or are you committed to something grander, like delivering happiness?
So I won’t repost the entire entry I wrote earlier today over at the OpenCal blog, but I do think it is worth a read – anyway, I wrote about how to make a Groupon campaign more successful based on some tips I have heard from businesses that have used it and from researching the web. Like a lot of things, the basic message of the post is to go in to these things with your eyes open. You might have heard how Groupon will revolutionize the way you gain customers, you may have heard it can almost destroy your business – what really matters are the details, and getting the small things right, because if you do that, Groupon is one of many, many marketing tools that you can wield successfully in order to gain and keep new loyal customers.
Want to know all the secrets? Go read the post over there.
Groupon does a couple of remarkable things.
First off, Groupon adds e-commerce to small businesses that can’t do so. You don’t need to install anything (though online booking can help you deal with the onslaught of new business), you don’t need to purchase an https cetificate, you don’t need to sign up for a merchant paypal account. So, that’s actually a pretty huge deal for a lot of businesses.
But this is what it really does: it sells advertising. It signs up however many pairs of eyeballs, probably at least 10,000 in a new city, and then it gives one (!) business all those eyeballs for one day. As a business owner, this is great. I mean, not only do you get to sell stuff online (if you didn’t already), but it’s also as if you’ve had a giant spotlight turned onto your business. All kinds of people that have never heard of you are suddenly lining up to buy your product at a deep discount.
But of course, the question a lot of people are asking is, what are return visitors like? Are you selling your product at 25% of the normal price (you generally need to discount your service at half it’s normal cost, and then Groupon takes half of what is left) for one-off sales or are you creating any loyalty? I would think you’re getting an audition which could turn into repeat visits, but in reality, I think Groupon is the only one getting any real loyalty out of this deal.
1. Getting customers to try a product that hasn’t launched yet
is harder than you think is exactly as hard as it sounds.
2. Create value now in order to reap rewards later.
This one is obvious, and should have been even more obvious to someone who considers himself a pretty good gardener, and yet because it feels like a race (as you approach the launch date) you always expect results to come in all the time. But like the seeds you set below the surface, sometimes it seems like nothing is happening at all. If you ignore the seeds you may never see the shoots. Likewise, if you stop creating value (because you haven’t seen any results), you will probably never see any positive results.
Similar to what I’ve learned using social media, there is no easy way to build a following. It is (in some ways) hard work and success is hard won. You only get to where you’re going by having faith that what you’re doing is the right thing to build an audience.
3. Make goals every day.
How do you stay productive? Do you have a system?
4. Create traditions.
What are your traditions?
5. Celebrate your wins, no matter how small.
These keep you going.
A big shout out to Darryl Ohrt of Brand Flakes for Breakfast fame and Bill Green of Make the Logo Bigger – I believe you both put me in touch with the awesome stock photos I have been digging via Awkward Stock Photos.
Most of the content for this post comes from a presentation I gave at a job interview which I did not get; so take that for what it’s worth. For the most part the presentation was well received, however I probably could have used a bit more polish. The idea itself came (not surprisingly) from the good people at IDEO. Or at least, from their words and deeds.
The T-shaped individual.The phrase by itself is quite meaningless. You need to dig a bit and take it apart in order to understand what it means. As a T might look like a person, you have to imagine the height of the T indicates the depth of expertise you have in a given field (generally your specialty.) The cross on top indicates the breadth of knowledge or set of skills you have across disciplines.
Not long ago (at least to my recollection) all we heard about was how the people who were the most specialized would get the best jobs. This terrified me. I abhor specialization. I like to know a lot about a few things, and a little about everything. That’s just the way my ADD-addled brain works. So you can imagine my happiness as I read about how IDEO (the company I clearly idealize) looks for T-shapedness when hiring. They do so because they argue that this leads to better team formation; individuals with varied backgrounds are able to communicate more easily and with more empathy (because they understand each other’s backgrounds somewhat more – of course, empathy itself is something that is looked upon favorably at IDEO when hiring). Instead of occupying silos of expertise, teams are cross-functional – you get recombination and variation (basically like sex with ideas) and in general, better ideas and results.
Of course it’s great. But the metaphor is incomplete. I went on to read about the importance of I shaped individuals by Bill Buxton, who, while not actually from IDEO himself, is apparently good friends with Bill Moggridge, the co-founder of IDEO. The difference here is that the bottom of the I is a grounding in practical experience. So, you have breadth of knowledge, deep expertise in one domain, and to cap that off, a lot of experience relevant to that domain.
Giving T-shaped people their feet.For my purposes, the presentation had to do with getting liberal arts majors interesting co-op positions, so I argued that while the liberal arts majors are quintessentially T-shaped individuals (pretty much the only reason I have a History degree is because I also got to study Astronomy, Biology, Physics, Spanish, Anthropology, Geography, etc etc) and therefore able to help connect individual silos within organizations, they are in need of their feet (ie. the practical experience that will help them achieve their goals in whatever it is they do in life). Hiring a liberal arts major is akin to giving them their feet. And with these feet they will march off into the world, secure in the knowledge that while they are alumni of a major educational institution, they are also alumni of the first order at your organization, because that is where they brought their heads out of the clouds and got their feet muddy in the practical world of experience.
What does it mean?*It means it’s a great time to be alive if you believe in curiosity, creativity, and caring about the work that you do. I used to believe in the world my parents grew up in – the one where you made the decision about what you would do with your life before you were 25, were most likely married, and probably had kids. And that world made me feel very out of place. This is what I’ve known I would be since I was 16: a doctor, a professor, a business guy of some type, a writer, a professional traveler/travel writer, a teacher, back to some type of business guy, and currently a marketing dude. Will that last? I doubt it. I’m pretty sure there are a lot of other hats I want to seriously try on before I die, and I hope that the experiences and skills I’ve picked up a long the way will help tell the story of a very empathic T-shaped individual who is trying to make the world a better place, one day at a time.
*Because I can’t help but try and be funny in the middle of being serious, some of you will catch the reference to the Complete Double Rainbow Guy. If you don’t, go to youtube, and google that immediately.
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