Herd-like Behavior Breaks Banks, Not Tech

Joerg Schreiner


In a spectacular display of herd-like behavior, the banking sector is rushing into a technological arms race, with the exception of one remarkable company. Unlike others, this bank does not believe that closing technological gaps or possessing superior technology will give them the necessary competitive edge to survive in an increasingly digital world. It learned one lesson more than their peers from the example of tech-driven digital disruptors like AirBnB, Uber, Amazon and Apple. What most other banks learned is that digital technology can raise their efficiency, and contribute to defend against future threats.

Tech sure is important for the future of banks, but it might not be the most important factor deciding about survival in the long term. The real threat for banks would be to loose their dominant position as intermediary of financial transactions. Judging by their actions, the majority of banks are either unaware of this threat, or they have no clear idea how to deal with it. So they play it safe, or at least they think so. If other banks invest into technological capabilities, then they do, too. Playing the game in the same way at least keeps them in the game. Each nervously eyeing their peers, and imitating each others moves, they focus on an age-old survival strategy: In a herd, the strongest ones can save themselves, while the weakest ones are most likely to fall prey to predators.

Becoming the strongest among peers seems the best bet for survival. In the case of banking, it is not. If banks can not defend their strategic position as intermediary of financial transactions, then they all will disappear sooner or later.

Think Like a Predator, Not Like Prey

Except for banks like Monzo, who know how to make themselves irreplaceable. London-based bank Monzo focuses on creating new value propositions for customers. And judging by their numbers, quite successfully. In march 2016, Monzo’s crowdfunding campaign raised one million pounds in record-breaking 96 seconds. One year later, their next campaign raised another 2.5 million pounds from loyal followers. VC investors start lining up with money bags, similar to ten thousands of Monzo’s clients to get a piece of the company: A prepaid debit card, coupled with a smartphone app. Wait a minute; clients queuing up for old-fashioned technology like this? It appears to be ludicrous. Other banks and fintechs have been aggressively marketing similar, more feature-packing mobile apps and multi-channel services for more than five years. Yet within merely 1.5 years, Monzo has succeeded to grow a significantly larger fan base than comparable fintechs: More than 400.000 clients.

Monzo knows how to create customers. They focus on solving their problems. Customers don’t need shiny, elaborately complex technological products if these don’t solve any of their problems. For example, what kind of customer problem do all the banking-led blockchain start-ups solve? Or self-service portals that place the main burden of interaction on their users? In short: None. Monzo, on the other hand, continues to grow because they make dealing with financial aspects of life much easier for their clients. And that is how they defend their position as intermediary for financial transactions: Their clients want Monzo to be in this role.

For example, many of Monzo’s current clients are young adults with limited financial budgets. For them, maintaining control of their spendings is a real issue. Delays of several days until purchases appear in their bank account statements make them nervous. They need fast confirmation that their account still is balanced, before daring to continue their shopping spree. Monzo’s card is widely popular for these young adults because it gives them immediate financial control about their budgets: The smartphone app registers and shows every transaction done through the Monzo card within minutes, together with the current balance. In addition, the app automatically categorizes purchases and allows users to put monthly limits on each category, thereby warning users from overspending for non-essentials, e.g. drinks or shopping.

Customer Journeys Start in Life, Not in Business

For most banks, customer journeys usually start when their clients want to transfer money. For Monzo, they already start when their clients’ needs are likely to involve financial transactions. And aren’t there a lot of financial transactions in our lives? How about playing intermediary for most or even all of them? This is the opportunity that I see Monzo preparing to grab. It explains how the company might be able to obtain one billion customers five years from now — you read correctly; one billion, not one million! — as recently claimed by their CEO Tom Blomfield. Debit cards are  just Monzo’s entry point into a much larger market. Much larger than traditional banking.

Monzo already announced how they aim to incorporate their app into many more customer journeys. For example, they want to offer services to switch their clients to less costly providers of gas or electricity automatically, thereby reducing monthly bills. Similarly, they plan smart software to auto-switch their clients’ saving accounts to providers offering higher interest rates. Open banking regulations like PSD2 make it possible to easily integrate services from many other industries into financial customer journeys. Monzo’s CEO even talked about making their clients aware of the best deals for shopping grocery. I imagine the list of announcements could easily extend to the integration of services from insurance or mobility providers. From the perspective of these industries, it would mean that Monzo would become the new go-to platform to easily acquire new customers. It would turn Monzo from a bank to a business intermediary for many types of professional services.

Dumb Use of Smart Technology Won’t Save You

The banking sector is one, but by far not the only industry that has fallen into a common trap of digital technology. Obsession with much-hyped, technologically challenging end products is currently blinding entire industries to the more immediate strategic threats and opportunities in the digital age: To smartly and swiftly combine proven technology with new services into irresistible value for customers.


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Learn the secrets of FUTURE LEGENDS – Business in Hyper-Dynamic Markets, praised by business leaders:

This must-read equips leaders with game-changing knowledge and conceptual approaches for the future of business.” 

“The book does not just add to the number of publications arguing businesses must become radically more adaptable and innovative than they are today. It is also a “how to” guidebook on making those changes – and the best one I have read to date.“

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Amazon Operates Like Genghis Khan’s Armies

Joerg Schreiner


Amazon today dominates markets like Genghis Khan’s armies dominated battlefields some 800 years ago. Back then, Mongolian troops could shock and awe their enemies like nothing else. Today, similar feelings creep up spines of business owners when they hear how Amazon buys Whole Foods, or how General Electric bows to the lure of Amazon Web Services.

The eerie feelings have the same origin: Like the Khan’s armies, Amazon displays speed, flexibility and coordination of their forces on a much higher level of performance than anyone else can dream of achieving. Studying Amazon, I realized that the similarities with the Khan’s troops go even deeper than that. At the heart of both organizations lie operations that excel at dealing with opportunity.

Quickly act on opportunities

The Khan’s army was organized and trained for interoperability and independency at all levels, starting from units of 10 men all the way up to 10.000 men. Acting mostly independently, but always in close alignment with adjacent units, commanders could deploy multiple units of varying size and specialization to act on the tactical as well as the strategic level with force, speed and purpose. Similarly, Amazon can very quickly pull together resources and start new business operations. Its broad presence in many markets, and its wide array of business and technological capabilities facilitates acting on many different opportunities. More importantly, and similar to the Khan’s army, Amazon pushes decision-making down its chain of command, expecting local leaders to take entrepreneurial risks with full profit-loss accountability.

Quickly adapt and reconfigure operations

The Khan’s riding archers were masters in mobile warfare, fluidly adjusting to new circumstances, emerging threats and opportunities. Being only lightly armored, they would never attack a target head-on, but surprise enemies with speed and maneuverability far above the enemies capability to effectively react. Similarly, Amazon’s speed and diversity of operations allows it to repeatedly surprise markets with the quick launch of businesses in new markets. Relying on software to connect their independently operating professional services, Amazon can easily combine the necessary capabilities for any business operation. Additionally, it can quickly scale operations up and also down, mitigating risks that are usually associated with underperforming operations.

Quickly become aware of new opportunities

The Khan had a courier communication and espionage network delivering military and trade intelligence that few foreign kings could even imagine at the time. Army commanders were given broad freedom how to carry out their missions, trusting their local judgment of situations and the intelligence provided from their own scouting operations. Similarly, Amazon uses its deep knowledge of consumer behavior, its vast array of connected operations across many markets, and the judgment of their customer-facing business units to spot new opportunities. Paying no heed to hierarchies and existing structures, Amazon expects every employee to point out inefficiencies, issues reported by customers and ideas for new business. Using its flexibility and presence across markets, Amazon can quickly start probing market reactions before committing significant resources to a promising business idea.

In case of the Khan’s armies, their overall agility made them dominate battlefields of the 13th century. Will history repeat itself, making Amazon’s agile business operations dominate markets in this century? Analyzing Amazon’s strengths and their disruptive ventures into established markets is the best advice I can currently give to business leaders. They need to learn to think and act like Amazon to survive and profit in highly dynamic markets brought along by digitalization.


Discover how to set up your own business operations for agility and innovation across markets.
Learn the secrets of FUTURE LEGENDS – Business in Hyper-Dynamic Markets, praised by business leaders:

This must-read equips leaders with game-changing knowledge and conceptual approaches for the future of business.” 

“The book does not just add to the number of publications arguing businesses must become radically more adaptable and innovative than they are today. It is also a “how to” guidebook on making those changes – and the best one I have read to date.“



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Back to Day One

Janka Krings-Klebe


After one year of exciting and challenging work, Laurence is happy: He just got praise from a customer who his company was unable to acquire for years. Now Laurence feels like he is back in the early days of the company, where flexibility was the norm. A time when it was not bogged down by processes and bureaucracy that slowly engulfed the company since then, while driving flexibility, innovation and customer-orientation out. For years, his company had been getting stuck in dangerous routines, disconnecting it from market needs. Laurence and others felt that this puts the company’s future at risk. It had to acquire new fields of business, with customers that were different. Business in general was becoming more and more volatile, with increasing competition on international level. The company had to change, but previous attempts all had failed. Laurence had feared that the company was unable to change its ways, making it impossible for Laurence to win new customers. What changed in the company, that made this last attempt successful?

This time, the company focused on the customer experience. All operations had to contribute to this effort. The company started with reorganizing the front-end to get closer to the customers. Therefore, a new organizational structure called „Product teams“ was built. These teams were equipped with profit and loss responsibility to enable fast decisions on customer needs. Earlier, due to unclear and complicated decision paths, customers often had to wait. At this point, Laurence turned from a engineer into an entrepreneur. As a member of a product team, Laurence had full authority to act on business opportunities and customer requirements. When a new business opportunity came along, Laurence and his team could now turn this opportunity into a successful business. Therefore, the team had to redesign the value-stream, using as much synergies and strengths inside their company, for example using local presence and global distribution.

Inevitably, these changes to the established processes required many changes in the back-end. Front-end teams and back-end-teams had to develop new collaboration routines. The changes cascaded back into a wide range of cross functional departments. This was the make-or-break point for the product teams. Would the company’s legacy business system insist on established processes and force the product teams back into old behavior? Fortunately, the leadership team supported the new setup. Processes were adapted to the needs of the product teams. Over time, many processes between front-end and back-end were examined and changed, tearing down silos and bringing back the flexibility from the company’s early days. For Laurence, this opened the path to success.

As advisors, we observed and coached leaders in this industrial case study. The case demonstrates how to bring a company back to what Jeff Bezos calls Day 1: Clearly focus on seamless collaboration in value streams to achieve business value for the customer. Remove everything that stands in the way of this strategy. It will be necessary to tear down walls, barriers to change, and comfort zones, adjust behavioral norms, and cope with all kinds of open and hidden resistance. Top leadership needs to provide air cover to bring along the required changes into the back-end. Only top leadership is powerful enough to protect and guide those who implement the necessary changes. Guiding these efforts requires top leadership to make the needs of the customer-facing front-end a priority in their own daily routines. Are leaders in your business ready?


How to do this? We explore breakthrough concepts for this challenge in our book
FUTURE LEGENDS – Business in Hyper-Dynamic Markets.




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