Domain Expertise as a Source of Innovation — Bill Winters, CEO Standard Chartered
The Industrialist’s Dilemma — March 5, 2020
When we ended our class with Bill Winters of Standard Chartered, we knew that we had just seen an unbelievably insightful session from a leader who brought experience, intelligence and optimism to the global opportunities in front of his company. As we completed another case focused on how The Industrialist’s Dilemma is impacting global companies, the students seemed to hit their stride internalizing both in how products and organizations need to change when blending digital and physical, but also in how the students processed the unique contexts in where these opportunities play out depending on the part of the world in which companies operate.
What we didn’t realize as we finished is that this would be our last session together due to the coronavirus outbreak. And while we will wrap up the course with a remote video session this upcoming week, we can take comfort in knowing that our session with Winters was one of the most thoughtful and educational experienced in one of our classes.
Global Businesses Need Global Partners
As we discussed Standard Chartered’s history of doing business across Asia and Africa, one of the questions that arose was how a bank like Standard Chartered could serve local areas better than banks that are headquartered or domiciled in a particular country. Winters pointed out that Standard Chartered has been doing business in many of these areas for almost 150 years, and has established relationships with the companies and organizations that operate throughout the regions where they do business (the bank is actually on the currency in Hong Kong — it is definitely part of the locality…).
But Winters also highlighted that by doing business in many of the smaller countries across these regions, the bank has the ability to provide services to large multi-nationals (e.g. Coca-Cola, etc.) and can bring a reputation and set of operating standards that are often not available with smaller, local players. And while the size of the business in each these countries may not be large enough to attract a substantive presence from larger global financial institutions, Standard Chartered is well positioned to support global corporations by bringing a professionalism and trust that others in these regions cannot. This brings the benefit that the services Standard Chartered offers can act as a wedge into obtaining other business with these large global organizations outside of these countries and regions.
Looking at it differently, it is this geographic spread and diversity that becomes a competitive advantage for Standard Chartered. As Winters pointed out, this isn’t diversification for diversification’s sake; rather, it is diversification that enables Standard Chartered to help when supply chains reorganize due to global trade conflicts, and the bank has the ability to use a local footprint that is spread over a large number of localities to help their clients conduct business in a rapidly changing world — in ways that local banks cannot and in a way that large global banks choose not to.
FinTech As the Savior?
A big part of our discussion surrounded whether or not the bank is more threatened by “big tech” (e.g. Amazon, Alibaba, etc.) or the blocking and tackling regulatory challenges of running a bank in a variety of countries. One thing that caught our attention was Winter’s comment that new FinTech companies create opportunities for Standard Chartered to form new partnerships in order to serve customers better while leveraging the balance sheets of other organizations. As Winters pointed out, while the large tech companies do present competitive threats given their size and resources, none of them has substantive physical footprints in the countries where Standard Chartered does business. In addition, the rising number of new FinTech companies offer a compelling number of new technologies that Standard Chartered can make available through partnering relationships in regions where these disruptors do not operate.
Stated differently, Standard Chartered benefits from the billions of dollars in venture capital used to develop new technology solutions (which the bank could not afford to develop on its own) and through partnering brings new and improved solutions to customers more quickly than they otherwise would be able to do. Standard Chartered can thus establish a digital footprint in areas because they have a physical presence. To Winters, new FinTech companies are an opportunity, not a threat, against the large digital disruptors.
When Doing Well and Doing Good Is a Business Strategy and not a Marketing Tagline
An unexpected part of our class surrounded the history of the bank, and whether or not a company headquartered in the United Kingdom brings the baggage of colonialism as an anchor to its activities. Winters offered one of the best explanations of how doing good and doing well can work to a company’s advantage that I have ever heard.
By building upon relationships that have existed for multiple decades, the bank has the ability to influence and shape social issues in a way that helps local economies grow while also being economically beneficial to the corporation. Winters shared how Standard Chartered took over $4 billion on its balance sheet to help finance the construction of clean energy in India, and was able to do so because of the history of its doing business in the country. For Standard Chartered, the discussion of climate change did not start with a lecture on “doing good” or “saving the planet” to a developing country that needs energy for its people, but rather it began with a discussion on how Standard Chartered could use its balance sheet to help India transition to more and cleaner energy that would be cost effective for the region. By participating in policy development, and by having a long-term local presence, Standard Chartered has been able to become even more deeply integrated into the localities where they do business. And by being engaged during times of change (political, economic, etc.), or by “running towards the disruption,” Winters shared how the bank, as an incumbent, is able to do well and do good at the same time, and is able to use its balance sheet to help their clients, the regions in which they operate, and also support the long-term financial success of their own organization.
Oh, and they can help the planet, too, when they do this…
I Don’t Normally Play Commercials in Class….
But this time I made an exception.
#YNWA
Final Thoughts
Every year the course has a theme that reveals itself as the quarter unfolds. This year our theme was the global nature of The Industrialist’s Dilemma. While we did cover three companies in North America, we were able to more broadly explore organizations in South America, Europe, Asia and the Middle East in ways that we were previously unavailable to us. And by looking at both disruptors and incumbents in all of these regions, we have begun to see similar patterns come to the forefront — of companies learning how to use data to support customers better, of companies leveraging local footprints and knowledge to fend off competition, and of companies having the need to figure out where to partner and what to develop on their own in a rapidly changing world.
After five years the issues and lessons of The Industrialist’s Dilemma are as timely and relevant as when we started. But the subtleties and implementations are becoming more nuanced the more we learn. Max and I are looking forward to next year and seeing what the future will teach us when we begin our sixth chapter together.
