Boards lack technology expertise. An early Harvard Business Review article in 2005 established that “a lack of board oversight for IT activities is dangerous; it puts the firm at risk in the same way that failing to audit its books would”. Even in 2019, we come across executives who get their emails printed, or hear about the deputy chief of the Japanese governments cybersecurity strategy office not using computers at all. This is technophobia at the highest level. While boards tend to address the gap by nominating a higher percentage of tech savvy new members, this organic process is too slow. Too slow to remain competitive. We contend that organizations must learn faster.
Without an Organized Learning framework, companies inevitably chase the next big thing. They deploy capital to bring in a leading edge technology, only to realize that they have a solution in search of a problem. The learning outcome is “we will never do that again”. In a world where technology has become a commodity, it is imperative to start with the customer, to start from the outside-in, and work back to the technology. An understanding of advanced technologies will help the art of the possible, but not be the starting point. Without such understanding, boards will stay conservative and default to not approving new initiatives.
Following instead a well-structured path of Learning — Venturing — Capital will seed innovation. Learning generates insights to understand potential and limitations. Venturing takes action with low cost agile pilots at fulcrum points. Finally, prudent allocation of capital provides necessary acceleration. This process and thinking needs to be institutionalized.
Our Organized Learning framework starts from the top. The board needs to be a role model and walk the walk. However, learning includes everyone in the organization, from executives to execution. High potentials play a special role as catalysts for the tomorrow. Learning initiatives are centered around specific topics such as innovation models, human-centered design, advanced technologies, platforms, etc., The key is to define the path for the assimilation of these technologies into the business.
For that, a “house view” needs to be developed that clearly articulates the economic value and addresses key questions. Is this technology a threat? Is it an accelerant within the business? Is it something consumers demand? And is the market ready for it? The house view lays out what the potential of a technology would be, and lays the foundation for decision making on the venturing side, to define where and how to experiment, and develop a good understanding of switching costs. Naturally, to minimize switching cost, an organizational and technical design that allows for the plugging and unplugging of components as required is desirable. That creates a true platform for innovation. Learn faster, venture faster, capitalize faster.
© 2019 FinMirai KK
FinMirai is the leading Japanese Venture Studio enabling Japanese Financial Institutions (JFI’s) to accelerate their innovation transformation through a proven framework of learning, venturing and capital. Through our venturing program, FinMirai enables startups co-ventures to localize and connect in to networks of JFI’s.
Norbert Gehrke is a General Partner at FINMIRAI, Founder & Representative Director of Tokyo FinTech, and an advisor to several FinTech companies, including Advanced Blockchain AG, asvin GmbH & Tontine Trust. As a former Goldman Sachs and Barclays Managing Director in Technology, Norbert is passionate about the work of leading critical enterprise-wide, cross-functional initiatives from strategy through technology implementation that transform organizations and innovate by applying leading technology and exploiting data.