The biggest danger is to act with yesterday’s logic

I don’t think anyone can be in any doubt that we’re operating in a VUCA environment today, with extreme levels of Volatility, Uncertainty, Complexity and Ambiguity.

Despite this realisation, we also know disruption is nothing new. When we think back through recent years there have been a number of high-profile failures among successful organisations that have failed to adapt to changing circumstances. Look at the now defunct Borders bookstores and what’s happened at Kodak. Undoubtedly these are two classic cases of digital disruption (or maybe even digital destruction), where technology fundamentally changed customers’ preferences and buying behaviors. Interestingly, most commentators on the Borders and Kodak stories point to their failures as a failure of leadership and perhaps more importantly, culture. Both companies failed to adapt to those changing circumstances, despite both recognising the changes that were taking place. That's an important point companies need to hear and heed. It’s not just a case of understanding what's going on externally but understanding how you respond and adapt the way the organisation operates.

My favourite Peter Drucker quote is highly relevant in this context - “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic.”  This for me is the most important lesson for all organisations to consider when operating in the VUCA environment that we find ourselves within.  How do we avoid relying on the same old ways of doing things when the changing circumstances require us to think and act very differently to be successful in an increasingly digital economy.

Customers’ expectations are changing rapidly, with increasing demand for more ‘frictionless’ digital experiences across all industries. This is being driven by the types of experiences that customers more regularly experience with companies like Uber, Amazon and Google to name but a few. The experiences being delivered through these companies have ‘raised the bar’ of expectations across other industries, especially financial services.  We are undoubtedly now operating in a customer experience economy, rather than a product economy as a result.

Another important factor for us to consider in financial services is the changing nature of ‘trust.’  Rachel Botsman is a global expert on trust and explains how ‘trust’ is shifting away from large organisations, towards more distributed communities and in some cases complete strangers.  The idea of jumping into a car with a complete stranger or letting someone you don’t know stay in your house or lending a complete stranger a thousand dollars seem ridiculous and yet they form the basis of the business models for Uber, Airbnb and Lending Club respectively, which have a combined market capital of over $100 billion dollars.  

We also have to consider how new competitors such as Tyro have successfully entered the financial services market with business models orientated around delivering high quality customer experiences at a rapid pace and at low cost through utilisation of modern technology and working practices – certainly not “acting with yesterday’s logic”. In 2016 Tyro processed $9bn dollars through their payments systems and operate with a little over 200 colleagues.

These are the driving forces as to why here at Bankwest we are investing significantly in the adoption of new ways of working and the very latest cloud technologies.  To be successful in the future we know we have to be far more proactive to our customers’ rapidly-changing needs. Unlike many other organisations on a transformational journey, this change is happening across our entire business, not just in technology. In fact it would be fair to say we see technology as the second stage of the transformation. What really starts and underpins it is the culture that’s in place - getting the right capabilities into the organisation through coaching and recruitment, operating in the right way with a diverse and inclusive environment and empowering our people to drive the highest possible levels of innovation and creativity.

What differentiates today’s successful digitally orientated organisations is their culture and the manner in which they do things. We’ve learnt from these organisations and are embarking on an organisation-wide transformation, moving to a new operating model where we’re creating multi-disciplinary tribes within the organisation, and thereby dissolving that age-old distinction between technology people and business people. This will enable us to move to a future with different teams working together permanently, deeply understanding customers through a greater use of analytics, using design-thinking capabilities and then rapidly designing features based on the insights those analytics give us to deliver what really matters for our customers.

That's a very different mindset and operating model to the way financial services organisations have historically worked. Going back to Drucker’s quote, it will ensure we're not stuck using “yesterday's logic” to deal with today’s turbulent, yet undoubtedly exciting, times.

While we’re still early on this journey, the level of passion, energy and creativity we are already experiencing gives us massive confidence in our strategy and outcomes for our customers and Bankwest.



What a great view of the future for the financial services industry, but also the services sector as a more general indicator of what is approaching and how leaders need to provide an environment where performance capability is allowed to take centre stage. Thank you.

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