service design network uk conference- mark priestley sdn uk

Why experimentation is the new target operating model

Why experimentation is the new target operating model behaviour

Adaptive Lab are strategic design and delivery partners for ambitious product teams.

In the next 10 years, 40% of the Fortune 500 companies will be gone.

John Olin School of Business, Washington

Since 2003, 236 $bn software companies have been founded.

Atomico

Source: Accenture and CB Insights

$M invested in Fintech companies worldwide

20142013201220112010200920080

2,000

4,000

6,000

8,000

10,000

12,000Disruption creates opportunity, which attracts investors.

technology behaviours competitors regulation

changing

technology behaviours competitors regulation

changing

Smart everything, ubiquitous connectivity, limitless storage …

Cloud computing, PaaS, infrastructure as code, Bitcoin …

technology behaviours competitors regulation

changing

There were 179.6m contactless transactions in March this year.

Up 184.0% from the previous year.

In January 2016, more than$1,000,000,000 was sent using Venmo.

A difference in what a customer expects

perceivesand

perceives

A difference in what a customer expects

andcreates a customer gap

technology behaviours competitors regulation

changing

18

These new companies typically share a common set of characteristics

Small, empowered teams

Focus on doing one thing well

Modern tech stack and approach

Outcome focused

User centred

Data driven

More willing to take risks

These new companies typically share a common set of characteristics

technology behaviours competitors regulationchanging

[Even] though it appears to be some obscure European Commission directive about application programming interfaces, it’s not about technology.

It’s about the future of banking and it’s really important for banks to take advantage of it.

Dave Birch - Director, Consult Hyperion, on PSD2 and XS2A

PSD2

What do these changes mean for banks?

Banking is necessary. Banks are not.Bill Gates - The ex-Microsoft guy

Banks are responding…

• Transformations• Innovation Labs• Digital diversification• Internal agencies• Venture Capital / Acquisitions• Accelerators• Beta banks

Banks are responding…

• Transformations• Innovation Labs• Digital diversification• Internal agencies• Venture Capital / Acquisitions• Accelerators• Beta banks

Banks are responding… but often focus on

changing what they’re doing, without addressing the how or the why.

69% of banking executives didn’t believe retail banks were able to react quickly enough to changing consumer needs.

Adaptive Lab / Research Now

Depending which bank you talk to, they will tell you that anywhere between 50% and 90% of their IT budget is being driven by regulatory changes. It makes change very difficult. Anonymous banking exec

79% of banking executives felt their leadership weren’t knowledgable about digital.

Adaptive Lab / Research Now

This is the third agile transformation I’ve been through in the bank. This time we might be able to make it stick.

Anonymous banking agile lead

To navigate uncertainty you have to understand your environment.

The best way to do this is to experiment.

Experimentation is not trial and error.

Eight experimentation enablers.

An ability to launch stuff quickly, at low cost.

1

Smart thinking around ways to reduce risk.

2

Easy access to customers.3

Funding for products, not projects, or programmes.

4

Backlogs rather than roadmaps.

5

A decision making process built around testing hypothesis.

6

The ability to collect, process and use data.

7

A supportive culture and governance process.

8

A supportive culture and governance process.

A decision making process built around testing hypothesis.

The ability to collect, process and use data.

Backlogs rather than roadmaps.

Funding for products, not projects, or programmes.

Easy access to customers.

Smart thinking around ways to reduce risk.

An ability to launch stuff quickly, at low cost.

Experimentation is an organisational behaviour.

Encouraging and enabling it is key to real transformation.

You need to setup and organise so that you can do as many experiments per unit of time as possible.Jeff Bezos - Amazon