Value creation and innovation in the banking sector - Part2

11 December 2015 Written by 
Published in Integrated thinking

Human capital

Even before integrated thinking[1], you need to begin with “first who then what?”

Trustis the very first thing you need to underpin and or address. In a real world scenario, there will be a spectrum of trust – from total distrust to complete trust[2]. Only with trust can you align interests, growing the economic pie and sharing same equitably. In the real world, you will need to have a system to ensure that interests are aligned, and the best way is to ensure that negative externalities do not come into play to disrupt the ecosystem. Easier said than done, but absolutely vital. It is therefore helpful to start with baby steps, focusing on core values such as honesty, competency, care and empathy. The human capital is the collating point and the medium of collaboration will need to be cloud-based as well as social-centric[3]. The aim is to provide transparency and accountability so trust can be fostered. This will speed up an organization into a responsive entity. It is easy for a rogue player to crash the collaboration.

Integrated thinkingis an approach that holistically encapsulate best practices fusing purpose in being (mission), vision, big [hairy] audacious goals, strategy, execution and business processes into one seamless, responsive entity with a compelling value proposition that is transformative yet sustainable.

The challenge is to be vigilant to prevent negative externalities from creeping into the system. It is a human judgement error issue and the best way to counter this is to create awareness and education. Decision(s) that follow the Metaphysics of Quality framework is likely to prevent hard forking from occurring. There must be in place standards on corporate governance[4], risk management[5] and capital management and business processes that will allow for an objective evaluation of the veracity of the digital banking model and how it fits into the overall strategy. Tests should incorporate procedures to determine “use case[6]”, especially a clear understanding as to whether it constitutes disruptive innovation[7] or not e.g. bitcoin, block chain, IOT, XBRL etc.


A board oversees the long-term success of the organization, the direction taken, endorsing its vision, purpose and strategies. It is accountable for the organization’s performance and to act in the best interests of the organization.

It sets the cultural and ethical tone with frameworks designed to encourage honest, ethical and corporate socially responsible behaviors. The entire organization must live and breathe within this context.

In addition, workarounds are, at times, necessary when two differing ideologies (trust versus trustless) collide. Within one context, it will appear to challenge an existing order and compliance will kick in to snuff out first budding signs of creativity. The board must possess the wisdom in weighing in whether such creative and innovative initiatives can sustain value creation and serve the interests of the organization. A portfolio approach has the qualities in expanding network, growing the pie, sharing equitably and mitigating externalities; and can be an effective risk management tool. If it is performed transparently, there would even be better.

There must be clarity when articulating the business model posing tough questions e.g. what needs are intended to be served? Can simple, low-cost solutionsserve an under-served market and generate above average growth? What does serviceentail?

[1] Holistic framework embodied in <IR>

[2] Another school of thought is to go trustless. A variation will be to increase the pool of collaborators serving as eyes for checks and balances and growing the pie to mitigate the temptation to cheat

[3] An approach is to socialize with leaders in a natural environment to suss out their values, beliefs, and behaviors. An individual with two value systems is said to be suffering from cognitive dissonance.

[4] Governance for innovation and risk management so there is no time wasting, relentlessly focus on the use case by asking tough questions: what are your competitive strengths, core competencies and vision (purpose), BHAG?

[5] Decentralized (consensus) approach to eliminate negative externalities and not catering to narrow vested interest.

[6] May require treating a transformative project as separate unit with a different business model, growth expectation, and ask what job customers need done, segment customers by job

[7] Example: “..a closed blockchain system would partly preserve their information advantage..” may not be the disruptive innovation that will fend off challengers. It merely defers the timing. Also not in alignment with open source and meeting the lower cost to revenue metric.

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