Are you burning with a desire to change the way the world works, and bursting with ideas about how to do it? Well before you go and set up that start-up, you’d do well to heed some interesting advice that came out of a session on start-ups at IBM Connect 2017.
One of the two panellists was Neal Cross, the Chief Innovation Officer at DBS Bank. His words were peppered not just with enthusiasm for how important start-ups were (they ‘make the world a better place’ according to the moderator, George Ugras, Managing Director of IBM Ventures, but with caution about how easy they were to get wrong.
Take fintech start-ups, which are well on the way to rebuilding the entire infrastructure of the financial world – at least if you listen to their boosters. Not so fast, warned Neal Cross. He said that lots of fintech start-ups kick off with a belief that banks are evil, and their mission is to kill them off with their fantastic new ideas. Soon they’re having to pivot, thanks to the realisation that they’re more likely to succeed if they work in partnership with the banks, taking advantage of their customer bases, expertise, and ecosystems.
After all banks are trying to do the same thing as the fintech companies – simply arbitrage time and risk, for instance by helping people buy a house, or transfer money to somebody.
Neal Cross’ approach in DBS is to make the entire business transformative, rather than have little pockets of innovation, coming up with cool ideas that then have to be sold to the guys who really run the business. If innovation is embedded in the business itself they’ll get it right, in two main ways:
1. They’ll focus on the real reason for innovation: solving problems, rather than just those cool ideas.
2. It’s all about how those innovations fit in with the business itself, rather than reinventing it. There’s no point coming up with a solution that saves $1 million a year, if replumbing the technology and rewiring the system
costs $10 million in the first place.
All of this leads neatly to the key piece of advice that Neal Cross left for anybody thinking of kicking off a start-up: Find something that’s actually a problem, and solve it by focusing on the business model rather than technology. “Anyone can build a tech platform,” he said. “Tech is really, really easy these days. But only a few start-ups have that killer business model and value proposition that customers love.”
Now off you go: solve the problems of the world, work out how to make it pay, and forget about wasting all of your money on that fancy new tech platform. That’s how to make your start-up really successful.
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