In a business environment with accelerating rates of change, the power to compete and win is shifting radically from corporations to ecosystems, from leveraging internal assets to accessing external networks, from a traditional operating focus on efficiency to dynamic open innovation. Welcome to the Collaboration Economy and the new source of competitive advantage for firms that want to thrive in our new business climate.
With many cross-industry projections saying that we will see more change and innovation in the next three to five years than we have seen in the past thirty years, firms need to be less insulated and become more synergistic. No one company and management team in isolation can practically keep up with the hyper-changing complexity of our modern business world.
Firms need to leverage their knowledge and experiences with others fighting the same fight or addressing similar challenges. Deeper connections need to be formed between firms that can lead to an ecosystem of resources built on mutual interests. These ecosystems tend to function as open platforms adding substantial new capabilities to all. It is now up to how firms can creatively connect with one another that determines how successful they can be. This puts a whole different spin and a new reality on what “networking” really means and how it is being strategically applied to meet today’s challenges.
Greg Satell - a transformation & change expert, top innovation blogger, and bestselling author of Mapping Innovation and Cascades: How to Create a Movement that Drives Transformational Change – has done extensive work in exploring and writing about this new business dynamic of platforms and ecosystems. His blog is a great resource on the topic and the mindset you need to take advantage of this trend:
“In an age of disruption, the only viable strategy is to adapt….The objective is no longer to claw your way to the top of the heap, but to nudge your way to the center of the network…..Successful enterprises can no longer prosper merely by deploying assets efficiently, but must effectively manage and deepen connections… In a networked world, the best way to become a dominant player is to become an indispensable partner.”
Understanding and applying this new business dynamic can be a powerful competitive strategy. As an illustrative example, FLX Networks– a U.S. based financial services distribution technology firm – has built their distribution services offering into a technology platform and membership community. They are focused on the B2B “space in between” of asset managers, wealth management firms, and advisors in the US. The US market alone is a $50 trillion product market and it takes about $50 billion annually to make that market function from sales, marketing, and data perspectives.
By designing their services into a “network of networks” they have stated that this approach positions themselves to be able to revolutionize the working relationship and experience that occurs between asset managers, financial advisors, and wealth management firms. They further state that this platform and network structure helps their network members better access technology, talent, current insights, strategic partners, and dramatically change the ways they can successfully compete in a rapidly changing industry environment.
Mark Spina, President and COO of FLX Networks states:
“The financial services industry faces a generational transition away from its traditional engagement model, which has been interruption-based and heavily dependent on this high-cost implementation model, grudgingly accepted by the asset managers along with their target audience of wealth management firms and advisors. A cross-current of macro events, including the pandemic, technological innovation, and regulatory evolution have created the necessary momentum for a more invitation-style of engagement and experience to be introduced through a community platform.
The key learning we have experienced in the development of our offering is that sitting at the center of a network creates a terrific vantage for building a platform. The challenges and trends are easier to see and it allows you to curate specialized business services, scalable relationships, and a more economical and sustainable distribution experience with less friction and inefficiency between members.
We have been talking about creating “Synthetic Scale” as a way to reinvigorate or better compete. Scale has been a driving objective for many in the asset and wealth space. As a select group of firms have achieved that goal and accumulated massive scale, it’s made it more challenging for others to compete. By joining a community and leveraging the shared Solutions and buying power of the community, firms or even business units can forge a path to growth.”
While it is clear to see the power of establishing platforms and networks, it is vital to remember that each network participant comes with their own considerations and priorities. There is a need for educating participants about the potential of this new business dynamic and how to implement and apply modular and on-demand solutions. The goal is to build the platform into a functioning business community.
In our current business environment driven by an accelerating rate of change, it is important to encourage firms to experiment. While well worn, the expression that “doing things the same way and expecting different results” is still very much an operating belief of many firms. Whether it’s a large experiment or small one, there is significant value in trying new approaches. This can run across an entire business, a subset, a product type, a channel, a geography, or some combination thereof. The opportunity to experiment abounds.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We operate as a business innovation platform and educational resource with FinTech and financial services firm members to openly share their unique perspectives and activities. The goal is to build awareness and stimulate open thought leadership discussions on new or evolving industry approaches and thinking to facilitate next-generation growth, differentiation, and unique community engagement strategies.