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Market Disruption Panels – Sharpening Your Focus on the Future

Date: Jul 11, 2019 @ 08:00 AM
Filed Under: Business Planning

The subject of “disruptors” has received much attention in the last few years, and for very good reason. The pace of change is accelerating, and some say we will experience more in our lifetime than any generation before us. The first personal computer was introduced only 40 years ago, yet today just about every person walking down a street carries one in his or her hand. The world’s largest accommodations provider owns no real estate (Airbnb), taxi companies own almost no taxis (Uber, Lyft), a movie house owns no cinemas (Netflix) and the most valuable retailer has no inventory (Alibaba). Only a few decades ago, business disruptions were less frequent and less pervasive. Today, they are the new normal. Dissatisfied customers drive disruption. Innovation and technology create the path forward. The digital revolution alone has fueled countless technology disruptors – cloud, big data, augmented/virtual reality, blockchain and so many others that are creating real impacts. Each industry is faced with more opportunities and challenges than ever before, and equipment leasing and finance is no exception.

Amidst these rapid changes, Key Equipment Finance has committed time and resources to the subject of disruptive forces. We felt it was important to develop internal discipline and rhythm around this effort and incorporate it into our regular business protocol. So, we formed our market disruption panel, a best practice we thought we’d share with others.

Structure and Planning Set Foundation for Effective Disruption Analysis
Key Equipment Finance’s market disruption panel exists to surface opportunities for new markets and products, and to identify new risks to manage and mitigate. It also helps form strategies for how we will interact with future customers and employees as expectations and behaviors change. It forces us to take a deep look at the rapidly evolving environment around us and determine how we must change to stay competitive and grow.

The panel consists of executive-level leaders across all disciplines and is an extension of our senior leadership team. Business and vertical leaders as well as executives from credit, underwriting, asset management, legal, operations, strategy and human resources all have a seat at the table, which is led by our President, Adam Warner. Product development and other subject matter experts also are involved to help present material and facilitate discussion, often highlighting potential parallels and intersection points with any of our current business strategies.
 
We began our market disruption panel four years ago with a bi-annual cadence that best fit our needs, devoting at least a half day for these formalized meetings, with updates on subjects provided quarterly or as necessary. Our panel meetings typically occur adjacent to our senior business review sessions since all panel members are typically on site. Having everyone physically present and free from regular responsibilities is more conducive to a high level of engagement and interaction.

Disciplined Approach Fills Gaps in Preparation for Disruptions
With today’s rapid pace of innovation and change, we’re all guilty of some level of “future gap.” According to an Institute for the Future study, 53 percent of Americans say they rarely or never think about something that might happen 30 years from now – yet 180 million of us today should expect to still be alive in 50 years. With the increasing pace of change, our future gap blind spot grows and becomes more detrimental. Established companies in mature industries, such as equipment leasing and finance, often focus on process improvements that can yield incremental gains while failing to recognize the impact of large disruptors before it is too late.

We can all think of segments of our industry negatively affected by market disruptions completely unforeseen only a few years prior. Our market disruption panel is an effort to develop a proactive process to keep certain disruptive innovations top of mind, track the disruptor evolution and better prepare for anticipated impacts to our business model(s). It’s also an opportunity to think outside of the box and play the role of futurist in a strategic manner with organizational relevance. This helps us guide our entry into new markets, manage risks, adopt to changing customer behavior and attract and retain new talent.

Tracking Reveals Disruptor Implications

Graphic of Market Disruptors Chart Key Finance

The sample illustration shows a much-simplified classic 4-blocker that we use to illustrate disruptions and potential impact to Key Equipment Finance. Any business that needs to get its arms around the rapidly changing environment should start mapping known changes in terms of timing and potential impact unique to its operations. For example, one company may feel a huge impact from trade tensions while another may not. Getting clarity about what needs research and what issues have significant impact really helps executives focus, stack resources accordingly and build knowledge on new topics.

At Key Equipment Finance, we identify, capture, explore, disseminate and track disruptors as they evolve. To avoid making perfect the enemy of good, we start broadly, then refine as more data becomes available. Oftentimes, our path is forged based on a combination of categories distilled after further research, relevance with our current lines of business, or new market implications.

Once on our “dashboard,” we monitor and track the targeted disruptors to build fluency on these subjects across our business, giving updates as topics evolve. The amount of attention given to any disruptor will fluctuate over time depending on its evolution and how we feel it might impact Key Equipment Finance through either a new market opportunity or possible threat to existing business or portfolio valuations.

Our goal is to incorporate relevant findings and roll them up into business initiatives and strategies. This could result in possible entry points into new markets or the need to re-allocate resources within our business to match shifting future growth potential. It will also provide guidance on how best to proactively manage and mitigate new risks.
 
External Sources and Internal Expertise Inform Strategy
We use information from a variety of outside sources, including content from innovation watchers along with well-known and established technology providers and market intelligence firms. We also utilize pockets of technical expertise from within our organization. Of course, we also find it very important to pay attention to changes in behavior from our own clients. Feedback from our customer-facing personnel in business development, program management, sales and other areas provides a reality check and substantiates the external information.

Here is one example of how our study of certain disruptors has influenced our work:

  • Digital/fintech – The digital transformation, use of cloud platforms and companies such as Amazon Web Services (AWS) have drastically reduced the time and expense necessary to launch a new company or product. Subsequently, the emergence of fintechs and slick application program interfaces (APIs) have opened the door for just about any company to begin offering banking-like services. Fintech joined our list of disruptors as part of a discussion of competitive threats. Through our research, it morphed into a larger discussion of how digital investments – both internal and through third-party partnerships – could benefit Key Equipment Finance and its clients. Our work in this area has helped form our own digital roadmap and better understand how outside forces are allowing new and some very unlikely competitors to emerge by taking advantage of a digital redesign in the plumbing (infrastructure) of banking.

Consider Disruptor Analysis Benefits
As the pace of change quickens, perhaps your organization can benefit from taking a fresh approach that differs from the traditional analysis. Consider establishing your own disruptor panel and employing the discipline necessary to dig deeper into topics that may seem overly broad or futuristic when compared to your current thinking and business objectives. Change is a process and not an event. It has been said that disruptive change carries with it a wave effect. Like someone yelling “Cannonball!” before jumping into your pool, you might escape the initial splash, but it will be impossible to avoid subsequent waves. By sharing one of our best practices, perhaps your organization can avoid a disruptive splash and instead leverage the subsequent waves of new opportunity.



Michael Wood
VP - Product Development | Key Equipment Finance
Michael Wood is VP - Product Development for Key Equipment Finance. Wood is responsible for monitoring client and market trends, including identifying disruptors that create new market opportunities but may also produce risk to existing business models. Prior to his current role, Wood served as VP – Global Program Management, dedicated to Key Equipment Finance’s largest technology vendor relationships. Wood joined Key Equipment Finance in 2000 as Regional Business Manager, Northeast, National East and Central regions, and was promoted in 2007 to Business Unit Manager for syndications, aircraft, vendor and energy. Previously, Wood held operations, management and marketing positions of increasing responsibility with CIS Corporation.
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