This issue’s question

“Steve Jobs: ‘Innovation distinguishes between a leader and a follower.’ Discuss.”

One of the most powerful forces at play in today’s world is innovation. It is in the journeys that companies and industries undergo; transforming themselves to be able to survive, compete, and stay at the top of their game, where we witness the power of this force. However, no matter how innovative companies may become, there is one thing they will always need: customers. This is where a true leader will identify the qualities required to leverage their innovative capabilities and bring their customers with them on the journey, to achieve greater things!

The term, leader, possesses many connotations when examined in different contexts. It is probably wise to make a distinction between the qualities required to be (i) a leader of a team and (ii) a leader of a product or service in your industry. I believe the quote by Steve Jobs refers to the role he played in leading his industry to revolutionise the technology domain and build the World’s Most Admired Company (Fortune, 2019).

There is no question that innovation played an integral role in distinguishing Steve Jobs from others. Yet, when we examine the term “follower” alongside the term “leader”, we tend to place negative connotations upon it. More specifically, in commerce, we tend to view a “follower” as someone or a group that is behind a leader in their industry or sector, and therefore must be failing, inadequate or unsuccessful. Today, for the first time in the evolution of our planet, it is possible for organisations to take a leap by embracing the technology and change that will catapult their departments/companies into the future. In some cases, this leap involves learning to follow a tried and tested path. For who would become the leaders, if they were not first the followers?

There is no shame in following a proven or successful solution invented by another company, even a potential competitor. After all, isn’t that what business is about?

Let’s consider one of the world’s largest companies: Amazon. They track the products that are most successful on their platform then sell it themselves; this is the most crude form of ‘following’ the lead of others!

A paradigm shift has occurred in organisations. Those who are followers may assume leadership roles and those who are leaders can take followership roles and this can prove to be a transforming force within organisations. Yet, this can only happen when leaders and followers become involved in a symbiotic relationship. We must start viewing leaders and followers as processes rather than positions in which both leaders and followers collaborate with integrity, commitment and shared purpose to bring success and vibrancy to an organisation.

I am not saying that innovation is a bad thing, however, not everyone is an innovator, and therefore, not every leader is innovative. The power of this interdependent relationship allows followers to develop qualities an accomplished leader should display and allows leaders to develop the qualities a successful follower should display. Often, people become great leaders through the process of teaching, learning, and observation. The truth is that the role of one is not greater than the other, and both contribute to organisational effectiveness. The key is identifying your strengths and playing to them!

Dealing with substantial change can be very difficult. In today’s globally connected society, people and companies have more access to information than ever before. With this influx of information, however, comes the potential for radical change. Oftentimes, people and companies are resistive to adapting when faced with unfavourable obstacles. In these uncertain situations, it is crucial to take the late Steve Jobs’ thinking to acknowledge that change can be positive and be used to your advantage. The best companies are always proactive when it comes to change and never rely on the ‘easy’ path; rather, they continuously seek innovation on all fronts.

In an ever-increasingly digital world, it is imperative to explore and adopt new technologies to innovate where time and resources may not be in your favour. The leaders that choose to embrace the inevitable change and obstacles today are the ones that will ultimately be remembered as pioneers and disruptors of tomorrow.

Given the ominous nature of the situation GE was presented with at the outset of the plan for US$20bn in dispositions, it was crucial to take Jobs’ thinking and put it into action. We know dealing with substantial change is often very difficult and that the best companies seek innovation on all fronts, and this is especially true in an industry like trade finance that has been, and continues to be, intensely paper driven in an increasingly digital world.

In GE’s case, it was absolutely critical for the company’s survival at a time where no other solution was available in the marketplace. GE’s adoption of new technologies and advanced analytics shows how innovation can overcome challenges where time and resources may not be in your favour. We are proud to be pioneers and disruptors in this field, and hope that as more companies take on similar challenges, the trade finance industry can separate itself as innovative leaders in the treasury space.

Treasury is rightly centred on risk management. Borne out of countless market meltdowns and funding crunches over the decades, it’s about ensuring the business has enough funding and liquidity to grow whilst managing downside risks. The goal is to ensure the business stays afloat, even in the most volatile interest rate and currency markets. This risk averse culture and ‘governance’ mindset sees treasury tightly controlling bank account opening and payment processes – all of which makes perfect sense.

However, this has led to a strong tendency to hire lots of accounting and finance types into treasury. The result is that many treasuries lack the forward-looking technology skills required to support the transformative changes that many businesses are going through today.

For decades, business models and the financial services that supported them have changed very slowly. This enabled treasuries to stay on top of changes and effectively fulfil their role of supporting the business with new financial services relatively easily. Run an RFP every three to five years for services like cash management and you were done!

Now businesses are under huge pressure to digitise and transform their business models with a whole set of different financial demands and services required, for example, new online sites with dynamic FX management and payment gateways to support ‘direct to customer’ sales channels. They don’t have time to wait for treasury to come up with the answers and often engage directly with fintechs who are agile and quick to respond to their needs. As a result, business increasingly bypasses treasury to source new financial services. This creates a headache for the treasurer who is left trying to manage the liquidity and risk aspects of these new solutions after the fact.

In response, some forward-looking treasuries have started hiring their own software engineers and data scientists. They can now proactively ask ‘What do you need?’ instead of ‘Why haven’t you consulted us?’

Treasurers need to be more like Steve Jobs and lead innovation on the financial services available to support the business as opposed to operating on a ‘business as usual’ basis. In other words, most treasurers still exist within the old ‘Nokia’ defined universe of services rather than looking towards the availability of new ‘iPhone’-like services. It’s now a question of how to innovate and keep pace with an increasingly digital world and growing customer expectations.

Equipped with this knowledge, treasurers can proactively advise and support the business with the new services required. But how do you get there? The first is diversifying the talent pool within treasury to include more people with strong technology backgrounds. The second is embracing change by upskilling the knowledge of the entire team. Connecting with forward-thinking banks and major fintechs to learn about what is happening in the market. The third is engaging with the business on the changes that are impacting them and bringing the knowledge treasury has acquired to the table.

In trade finance, today’s early adopters of fintech propositions will become tomorrow’s role models. Fintechs offer banks various opportunities to innovate in trade finance, with or without blockchain! As fintechs are now viewed as partners more than competitors, I believe that it is the time for established trade banks to place their bets as they seek to position themselves as leaders rather than followers.

Much has been said about the notion of ‘fintech disruption’. About five years ago, emerging technology companies identified as ‘fintechs’ were often seen as attempting to create the next wave of competition, fighting established financial institutions (FIs). Roll forward to 2019 and we can see that this largely negative tide has turned.

If there is to be any disruption, it is now generally accepted that it won’t be driven by those highly specialised technologists per se. On the contrary, recent fintech news reports many ‘bank – fintech’ adoption contracts. If anything, this shows banks are finally recognising the value brought by these agile innovators to their own business models and strategic objectives.

From my own perspective, from the trade finance space, fintechs are bringing highly specialised offerings that differentiate drastically in approach versus the traditional software development model. Based on their key characteristics we can see that fintechs:

1. Are laser focused on specific segments and value propositions; they often become the best at it, at least when they don’t get distracted.
2. Are very agile and will consider their early adopters as partners in their product development roadmap; co-design becomes the norm.
3. Are best positioned to take advantage of recent technologies whilst caring about the need to integrate seamlessly with banks’ legacy systems; co-existence with banks’ internal systems is a top priority and a no-brainer.
4. Sometimes operate common communications or trading platforms and are therefore creating new eco-systems for financial institutions, their clients and/or funders; platforms often become new sales/distribution channels for banks.
5. Are not biased by legacy revenues (eg software license fees) and technology models (eg traditional messaging versus APIs) – they want to demonstrate their value add in the fastest and most cost-efficient way.
6. Want to prove themselves by facilitating adoption without forcing their clients to take a CapEx decision (eg software license acquisition); this drastically reduces risks for early adopters.

As a consequence, partnering with fintechs can bring many benefits to transaction banks, their clients and their investors. These include:

• Short time to market thanks to use of cloud-based platforms.
• Non-intrusive technologies ensuring seamless integration with existing systems.
• Low set-up cost and usage-based running cost.
• Optimal user experience.
• Continuously and fast evolving feature sets.
• Strategic enablers for banks to participate in eco-systems.
• Best at combining legal and business expertise with latest technologies.

Trade banks which don’t grasp the fintech opportunity quickly will face intense competition from new FIs entering the market which are ready to find ways to benefit from the fintechs, to differentiate and to gain market share. This can only serve to benefit corporate treasurers.