Starting Up

Redefining Traditional Value Propositions in Banking

2011-10-14T06:35:08Z

The value that banks deliver to customers is changing – that is one of the currents that runs through Joseph DiVanna’s excellent Redefining Financial Services. I’ve been reading this book (and a few others of DiVanna’s) to better understand where my own company, Zafin Labs, fits into the value proposition of banking services in general. We make pricing and billing solutions for banks, and at least when I joined, I struggled to figure out what that meant exactly. On the face of it, it was quite simple – banks apparently required solutions for pricing and billing problems, and we apparently made those. The fact that I do not come from a banking background of course put me at a disadvantage – yes, I had studied finance and to a lesser extent, banking, during the MBA, but I found it difficult to understand how these enormous organizations could not solve their own pricing and billing problems. That all changed once I read DiVanna’s book.

The brilliant thing that DiVanna does in Redefining Financial Services, is to put the problem into context, specifically a historical context. I had never considered why banks existed in the first place – this somewhat obvious question, despite having a history degree and having studied the medieval period when banking was born, had never dawned on me. If you asked me before I read this book why banks exist today I probably would have said ‘so people have a safe place to store money (ie. surplus)’, and while on the surface that is true, there is much more to the historical context than that.

For example I had never considered the obvious implication that someone living in 1250 AD did not at one point say ‘hey, we should have a bank so we can put our extra money in it’ – but if you stop and think about it – of course that could never be true. You cannot conceive of an invention without first having a need (or what do they say? Oh yes, that necessity is the mother of all invention.) So where did that impetus come from? People were beginning to embark on increasingly risky and lucrative international trade, and were finding that disparate geographic transactions were fraught with known and unknown risks, some of which included identity risk, currency risk, credit risk, and goods risk – ie., here I am with these spices in present day Turkey, how do I get them on a boat, get them over to Italy, find a buyer, collect on the goods (in a different currency mind you), and then get my surplus back home again? When you think of embarking on a transaction like that in the absence of a bank, it boggles the mind that international trade ever existed at all. In any case, some brilliant entrepreneur saw that there was an opportunity to provide guarantees on transactions in different forms, and thus value was offered in the form of contracts that could underwrite this precarious trade.

Fast forward to the modern day – and we see that banks are now in the position where some of that value has been eroded through the invention and commoditization of technologies that can deliver that same value much more easily (ie. cheaply), and we find that we live in a world of online only banks pushing margins on much more established, traditional banks.

What DiVanna then posits is that there are still means for banks to differentiate in the face of this competition to deliver more value to customers. One such example is through innovative pricing and specialized bundling of banking products. DiVanna notes that:

“…small businesses – especially one- or two-person shops or home-based freelancers – are not always well suited to a bank’s product and service offerings, which are laden with fees designed for larger retail and corporate clients.”
~ Joseph DiVanna, Redefining Financial Services, page 94.

Redefining Financial Services: The New Renaissance in Value Propositions

This sentence succinctly puts forth the value that Zafin Labs delivers to its client banks – our software solutions work within complex banking systems to pull out meaningful data that can be acted upon, and then to allow banks to innovate by making it easier for example to create new products within a banking production environment. To think of it another way, banking systems have generally been designed with security, and not necessarily agility, in mind. Our innovation is, like the earliest bankers, to see an opportunity (innovation agility) within a difficult problem (complex, layered banking systems). Based on the quote above, there is no reason banks should not be able to offer the right bundles of products to the right customers.

The Preservation of the Problem

2010-10-23T20:30:39Z

“Well, organizations that are founded to solve problems end up committed to the preservation of the problems. So Trentway-Wagar, an Ontario-based bus company, sues PickupPal, an online ride-sharing service, because T-W isn’t committed to solving transportation problems. It’s committed to solving transportation problems with buses. In the media world, Britannica is now committed to making reference works that can’t easily be referred to, and the music industry is now distributing music that can’t easily be shared because new ways of distributing music undermine the old business model.”

- Clay Shirky, in conversation with Dan Pink in the June 2010 issue of Wired Magazine.

Clay Shirky in thought

Good organizations are flexible and not constrained by this need to preserve the problem as Shirky has noted. When I was a tutor for BrainBoost Education, we used to regularly discuss our overall and individual goals. On one hand, the goal of tutoring a student was to create a situation where tutoring was no longer necessary. The goal of the organization was to show that for-profit private education was compatible with tax-supported public education. So, in both cases, we were against framing our service as a solution to a problem. We didn’t say, ‘for students who need tutoring’ because if that was the case then we would always need students to need tutoring in order to have jobs. In the second case, we didn’t say, ‘we exist because the education system is broken’ because that would mean we always needed it to be broken. Instead, we focused on goals that constantly sought to put ourselves out of jobs, because only in that mindset will be flexible enough to adapt to changing conditions and thrive in a sort of evolutionary atmosphere.

At OpenCal, we talk about solving the frustrations of online booking. But in truth, we want to go beyond this. We want to help entrepreneurs and small businesses to grow and thrive by creating online tools that solve actual problems they face everyday. Right now, our context for solving their problems is to build a great calendar and booking system. But we are not focused on the preservation of the problem – we are focused on outcomes that entrepreneurs and businesses want, which, in general can be translated to more time and/or more money.

For now, we have a flagship product that is online appointment software. Deep down, I knew we stood for more than this, but in order to figure that out, I needed to change my perspective of what we were doing. In hindsight, the only metaphor that makes sense to me is imagining one of those 3D puzzles that featured a secret image inside all the noise. One the surface, there is one vision, and underneath, another. Both are related but it isn’t clear from the outset what lies underneath.

Is it just a bunch of dots? Relax your focus... (and click for big)

Consider the case of Zappos. Now, if I say Zappos to you, probably the first thing you think of is shoes, or buying shoes online. If Zappos were committed to selling shoes online, they’d be trying to preserve a problem, which could be defined as delivering shoes to customers through online shopping and sales. And eventually, they’d probably find themselves out of business. Instead, Tony Hsieh, CEO of Zappos, says his company stands for ‘Delivering Happiness’ or ‘Delivering Delightful Customer Experiences’. And because that is what Zappos stands for, it can become anything that fulfills that goal. As Tony has said on numerous occasions, it’s no stretch to imagine Zappos one day running an airline.

So tell me, dear readers, what do you stand for? Are you committed to solving and preserving a problem, or are you committed to something grander, like delivering happiness?

More about Groupon

2011-07-08T20:59:07Z

So I won’t repost the entire entry I wrote earlier today over at the OpenCal blog, but I do think it is worth a read – anyway, I wrote about how to make a Groupon campaign more successful based on some tips I have heard from businesses that have used it and from researching the web. Like a lot of things, the basic message of the post is to go in to these things with your eyes open. You might have heard how Groupon will revolutionize the way you gain customers, you may have heard it can almost destroy your business – what really matters are the details, and getting the small things right, because if you do that, Groupon is one of many, many marketing tools that you can wield successfully in order to gain and keep new loyal customers.

Want to know all the secrets? Go read the post over there.

The Remix Culture

2010-09-14T15:05:59Z

This post is, I guess, about the intersection of an article I recently read in the Globe and Mail and a video I saw on how we have developed a culture that loves the remix. In the article, which is about generating killer ideas, many great strategies stick out, but ‘borrow an idea’ is in there, and that’s one of my favourite. As the author rightly points out, there is very little need to create totally original things. A lot of the beauty of creation comes from combining two things that already exist in an interesting way. Now, I’ll let the video I mentioned pick up where I left off:

Great examples are all around us. What is amazing to me is two particular features that stand out about our culture of remix. The first is just is how quickly these things take shape. For example, it was probably a month ago that the Double Rainbow Guy took us by storm (video here). A day later, I was in Starbucks ordering a double-tall latte, and the guy behind the counter gave me a chuckle when he said, ‘whoa, a double latte all the way’, and two days after that, there was the Double Rainbow remix song (video here), which I heard on the radio a day later.

I mean, it’s obvious that when you give people the tools and you connect everyone and everything, this is where you’ll end up (given hindsight at least), but to think about what this means for the future is perhaps more interesting. Which brings me to the second interesting thing, and that is the fact that no one is generally getting paid to create these remixes. People do it because they can and because they want to create, or share, or are passionate about something. Clay Shirky gives us a term which allows us to quantify the ability of our culture to create further remixes (or other things, for that matter) – cognitive surplus. The video below is well worth the time.

If you can’t imagine a different world, you won’t get there first (part 3 of 3)

2010-09-14T19:48:31Z

(continued from here)

Social media will likely follow this same cycle. First it is everything, then it is nothing and it was all a big waste of time, and then we’ll find out it really is necessary and relevant and important. So after all that, we’ll end up with the equivalent of websites everywhere, of needing a website, but of course I’m talking in terms of tweets or whatever they will be known by then. You will need your check-ins, your facebook fans, your contests, your mentions, your online referrals and reviews, or whatever all of that is known as by then.

So assuming all this is correct, that still leaves us with what to do with that information. I’m not advocating you go and try and invest in social media companies (not that it’s even possible given that they are all generally privately held), but rather that you think about how this changes the way people will interact with each other, and with companies. Then, if you’re like me, you’ll think about what it would take to build a product that will be needed then. For example, consider the intersection of social media, augmented reality (AR), and online booking applications. If we’re connected to each other through smart phones and geolocation, it would not surprise me to have ads or referrals pushed to me when walking past shops in the future (indeed, I’m told this already happens in many places such as Asia). But what if I could then take my phone and point it at a shop – an AR overlay appears and I see that there are a few open spaces for a haircut or maybe a massage in the next 30 minutes and, lo and behold, the reviews are there too – my friend has gone here and gave it 5 stars. Because the time slots are perishable, booking now means I’ll save some money, and that’s great, because not only do I like discounts, but I also like not sitting and waiting for things. Instead, I would love to be able to book that massage instantly and then go grab a coffee or do some quick shopping instead of sitting and waiting for it.

And you know what, I’m sure that product or experience will one day exist. So it’s up to us to go make it, because that’s a better world, and that’s where the tools are telling us we can go.

Here’s another vision of a possible future:

Augmented (hyper)Reality: Domestic Robocop from Keiichi Matsuda on Vimeo.

If you can’t imagine a different world, you won’t get there first (part 2 of 3)

2010-09-14T06:23:33Z

(continued from here)

Well, here’s what I do. I read stories, listen to the news, see what people around me are doing, and then I choose a specific area to consider. So let’s go with social media, and run it through the check-list. Is it super-hyped right now? Check. Is everyone talking about how it will change the world forever and none of us will ever be the same? Check. Has it done anything particularly disruptive so far? Not really. So what does that mean in 10 years? It means that at that time everything will have changed noticeably and we should be figuring out what that will look like right now.

So don’t restrict yourself to thinking about what the technology is right now and how we use it. You need to think in more generic terms than that. First, what is different between twitter and its closest look-alikes – text messages, blogs, and email. Well, the difference is you can only send short messages (or posts), they go to anyone who is potentially listening (generally – there are of course DMs as well), and they tell the public who you are or what you are doing or thinking about. But those aren’t the only things twitter is similar to. It is also similar to google-searching, but instead of asking an indexed set of pages something about what you are looking for, you instead are asking anyone who is listening a certain question in the total set of active and indexed brains at that moment. So, in many ways, twitter is a communication tool, but it is also a specialized recommendation engine. It is like hunch but instead of asking a cluster analyzed data-set you are literally publicly asking everyone you know socially (and people you don’t know) for advice, or a product, or help of some kind.

So, long term, what does that mean? It means that more than ever we will be connected to a greater web of people. But right now you also have to ask why are people helping each other so much through twitter? Is it because we are fundamentally helpful? I think the answer is no. I think the answer actually lies in the fact that we are fundamentally selfish, and currently, because no one knows for sure how this all will play out, you get people being as helpful as possible because they gain status by doing so (whether in the form of followers, or a higher klout score, or any other measure you can think of that exists currently). Moreover, they can get wealth – because everyone is talking about social media and why your company needs it, companies are going out and looking to hire people who can show them how to do exactly that.

Remind you of anything? Seems a lot like the late 90’s when every company needed a website and would pay practically anything to get some skin in the game. And of course we had a bubble and a crash and, lo and behold, 10 years later, you really do need a website and some skin in the game. Remember, we tend to think the world changes forever very quickly, but in truth, it takes some time for the world to become fundamentally different.

If you can’t imagine a different world, you won’t get there first (part 1 of 3)

2010-09-14T06:23:20Z

Here is one of my favourite activities: think about the future in regards to technology, and then think about where we are going, and what people will want, and why, and what they will pay for that. You can’t do this aimlessly (not productively anyway); you must have a specific area in mind.

For example, let’s consider how Apple got to its decision about pushing AppleTV more aggressively. Did they wait to see if people wanted pay-as-you-go programming? Not really, because if you wait for something like that to show up you’re usually too late to the party. They probably looked around the world 10 years ago and started thinking about what the world look like 10 years forward. How would we watch TV? What would we watch? Why? What if p2p sharing goes bigger? In 2000, it clearly appeared that the genie was out of the bottle and would not get put back in. So, barring a p2p blocking technology, the future then was always going to be in finding and stealing entertainment online. Some people would continue to pay cable operators of course, but increasingly (and young folk especially) would be questioning why they would pay $50-100/month when they only watch a few shows a month and having all-you-can-eat cable means you end up watching more shows than you want to anyway. But maybe pay-as-you-go, a model we had been seeing with some cell phone users, might do the trick. You pay only for the stuff you want and none of the crap you don’t want. And the price had to be very low or otherwise you’d be tempted to steal. So, in the future you will pay for each show and it will be streamed live to your television for $0.99. That, my friends, is the future (which is here!)

So consider all that for a moment. Consider that all of these things were set in motion at least 10 years ago. You need to also remember that we as humans tend to overstate the short-term implications of a new technology and understate the long-term ramifications of said technology. It wasn’t long ago when p2p sharing started gaining traction and many pointed to the imminent demise of all commercial recordings. Did that happen? Of course not. But certainly p2p sharing has changed the commercial music landscape dramatically and altered the way we digest music digitally, how artists share it, how they promote their work, all (in my opinion) for the better. But let’s bring it back to today’s world. Yes, all these things were set in motion a long time ago. Yes, there are disruptive technologies being shaped and created every day. Which ones will greatly affect the world in 10 years? How will they change the world? And how can you ride the wave that gets you there?

Groupon: what makes it so irresistible?

2010-09-14T06:23:05Z

Groupon does a couple of remarkable things.

First off, Groupon adds e-commerce to small businesses that can’t do so. You don’t need to install anything (though online booking can help you deal with the onslaught of new business), you don’t need to purchase an https cetificate, you don’t need to sign up for a merchant paypal account. So, that’s actually a pretty huge deal for a lot of businesses.

But this is what it really does: it sells advertising. It signs up however many pairs of eyeballs, probably at least 10,000 in a new city, and then it gives one (!) business all those eyeballs for one day. As a business owner, this is great. I mean, not only do you get to sell stuff online (if you didn’t already), but it’s also as if you’ve had a giant spotlight turned onto your business. All kinds of people that have never heard of you are suddenly lining up to buy your product at a deep discount.

But of course, the question a lot of people are asking is, what are return visitors like? Are you selling your product at 25% of the normal price (you generally need to discount your service at half it’s normal cost, and then Groupon takes half of what is left) for one-off sales or are you creating any loyalty? I would think you’re getting an audition which could turn into repeat visits, but in reality, I think Groupon is the only one getting any real loyalty out of this deal.

Life in a startup: five lessons learned three weeks in

2010-09-20T17:22:40Z

1. Getting customers to try a product that hasn’t launched yet ~~is harder than you think~~ is exactly as hard as it sounds.

ZOMG stock photos are hilarious.

OpenCal is a fine product, and yet I knew getting customers would be difficult and yet, at the same time, I somehow believed it would magically be easier. You can always picture yourself with success at a later point, but to imagine all the little, difficult challenges you have to overcome to get to that successful point is either no fun or way too easy to overlook.

2. Create value now in order to reap rewards later.

This one is obvious, and should have been even more obvious to someone who considers himself a pretty good gardener, and yet because it feels like a race (as you approach the launch date) you always expect results to come in all the time. But like the seeds you set below the surface, sometimes it seems like nothing is happening at all. If you ignore the seeds you may never see the shoots. Likewise, if you stop creating value (because you haven’t seen any results), you will probably never see any positive results.

Similar to what I’ve learned using social media, there is no easy way to build a following. It is (in some ways) hard work and success is hard won. You only get to where you’re going by having faith that what you’re doing is the right thing to build an audience.

3. Make goals every day.

I use the morning meeting for...hmmm, yes, planning sounds nicely innocuous...ha ha ha

Because life in a startup is hectic and everything has high priority and importance, it’s easy to get lost in information overload or stuck on something because it’s not perfect. To help combat this we have very short, daily morning meetings to get us on track and moving in the right direction. What will you do, what do you need to do, what are you thinking about doing. For me this turns into a short list of goals for that day. If they’re not actionable (ie. they do not constitute a discrete action) I break them down into things I can do next. Then I knock them off my list.

How do you stay productive? Do you have a system?

4. Create traditions.

I will never not use awesome stock photos again

In my first week we set up beer o’clock Friday afternoons. If you had a good week we get these going a bit earlier. If not, we might try and get a couple extra things done. In any case, we take time to enjoy the feeling of the week being over, we discuss what we did that was great and where we’re going. It’s a take stock moment that we don’t have to take too seriously. It makes Friday a great day and I already begin to look forward to the next week.

What are your traditions?

5. Celebrate your wins, no matter how small.

These keep you going.

Shout outs:

A big shout out to Darryl Ohrt of Brand Flakes for Breakfast fame and Bill Green of Make the Logo Bigger – I believe you both put me in touch with the awesome stock photos I have been digging via Awkward Stock Photos.

The importance of T-shaped individuals

2011-07-08T17:15:44Z

Most of the content for this post comes from a presentation I gave at a job interview which I did not get; so take that for what it’s worth. For the most part the presentation was well received, however I probably could have used a bit more polish. The idea itself came (not surprisingly) from the good people at IDEO. Or at least, from their words and deeds.

The T-shaped individual.

Here be knowledge, here be expertise

The phrase by itself is quite meaningless. You need to dig a bit and take it apart in order to understand what it means. As a T might look like a person, you have to imagine the height of the T indicates the depth of expertise you have in a given field (generally your specialty.) The cross on top indicates the breadth of knowledge or set of skills you have across disciplines.

Not long ago (at least to my recollection) all we heard about was how the people who were the most specialized would get the best jobs. This terrified me. I abhor specialization. I like to know a lot about a few things, and a little about everything. That’s just the way my ADD-addled brain works. So you can imagine my happiness as I read about how IDEO (the company I clearly idealize) looks for T-shapedness when hiring. They do so because they argue that this leads to better team formation; individuals with varied backgrounds are able to communicate more easily and with more empathy (because they understand each other’s backgrounds somewhat more – of course, empathy itself is something that is looked upon favorably at IDEO when hiring). Instead of occupying silos of expertise, teams are cross-functional – you get recombination and variation (basically like sex with ideas) and in general, better ideas and results.

Great right?

Of course it’s great. But the metaphor is incomplete. I went on to read about the importance of I shaped individuals by Bill Buxton, who, while not actually from IDEO himself, is apparently good friends with Bill Moggridge, the co-founder of IDEO. The difference here is that the bottom of the I is a grounding in practical experience. So, you have breadth of knowledge, deep expertise in one domain, and to cap that off, a lot of experience relevant to that domain.

Giving T-shaped people their feet.

Thank you, BusinessWeek

For my purposes, the presentation had to do with getting liberal arts majors interesting co-op positions, so I argued that while the liberal arts majors are quintessentially T-shaped individuals (pretty much the only reason I have a History degree is because I also got to study Astronomy, Biology, Physics, Spanish, Anthropology, Geography, etc etc) and therefore able to help connect individual silos within organizations, they are in need of their feet (ie. the practical experience that will help them achieve their goals in whatever it is they do in life). Hiring a liberal arts major is akin to giving them their feet. And with these feet they will march off into the world, secure in the knowledge that while they are alumni of a major educational institution, they are also alumni of the first order at your organization, because that is where they brought their heads out of the clouds and got their feet muddy in the practical world of experience.

What does it mean?*

Seriously the greatest image to ever grace this blog.

It means it’s a great time to be alive if you believe in curiosity, creativity, and caring about the work that you do. I used to believe in the world my parents grew up in – the one where you made the decision about what you would do with your life before you were 25, were most likely married, and probably had kids. And that world made me feel very out of place. This is what I’ve known I would be since I was 16: a doctor, a professor, a business guy of some type, a writer, a professional traveler/travel writer, a teacher, back to some type of business guy, and currently a marketing dude. Will that last? I doubt it. I’m pretty sure there are a lot of other hats I want to seriously try on before I die, and I hope that the experiences and skills I’ve picked up a long the way will help tell the story of a very empathic T-shaped individual who is trying to make the world a better place, one day at a time.

*Because I can’t help but try and be funny in the middle of being serious, some of you will catch the reference to the Complete Double Rainbow Guy. If you don’t, go to youtube, and google that immediately.