During the CEE SME Banking Club Conference 2018 in Warsaw (October 29-30) John Mark Williams moderated several panels, including the one on digital transformation and agile approach in SME Banking. Olena Gryniuk talked to John right after the Conference about business agility and Breakthrough program John was running in Santander UK.
You are heading Agile Business Consortium in the UK. What is the purpose of that organization and how your everyday job looks like?
The Agile Business Consortium is a global leader in promoting business agility. Founded in 1994 as a not-for-profit organization, it pioneered Agile Principles and continues to inspire new developments and thinking, such as the role of innovation at the heart of the Framework for Business Agility. Our mission is to lead, enable and promote business agility worldwide. Agile businesses work faster, better and deliver greater value for money — delighting customers, motivating staff and driving additional profit. Agile practices improve all aspects of an organization, from HR and finance, to project management, product development, and organizational change.
What does agility mean for you?
Business agility is a mindset. It gives organizations the fl exibility and adaptability to respond rapidly to business change. More than that, it helps organizations achieve the ability to predict amidst uncertainty and to position themselves to meet the complexity that characterizes today’s business and social world.
During the CEE SME Banking Club Conference 2018 in Warsaw this October you moderated a Panel on digital transformation and agile approach in SME Banking. Except for ING Bank, representative of which we had during the Discussion Panel, which implemented an agile way of working in the SME business line, do you know many banks that did this as well? Do you believe that banks, being probably the last stronghold of waterfall methods and being very much traditional and hierarchical organizations, can become agile?
There are a few other large banks who are deliberately engaged in developing business agility — Barclays would be a prime example. Yet, many more are becoming more agile in their thinking, as they embark on the journey toward true business agility. This is driven by two things. The first, on the supply side, is the need to transform themselves in a market where traditional banking models are being rapidly dismantled and disaggregated by challengers from outside the banking field — a classic case of disruption. The second is the demand side need to satisfy customers who are increasingly expecting similar levels of service from their bank, as they receive from the slickest and swiftest of service providers in every field. Customers transfer their expectations — if Amazon or Google can use AI to predict what I want to buy or what information I need to gather, why can’t my bank predict how my finances need to be managed, and do that for me? Certainly, banks can become agile — whether or not they will, depends on how soon their senior management wakes up to the fact that business agility is not a fad or a fashion — it is a necessary competency for still being in business in the future.
For almost five years, you were the Head of the Breakthrough Program in Santander UK, which was the program scale-ups — fast-growing SMEs. Could you tell us more about the program? Why have you decided to create a special program for scale-ups? How are the needs of scale-up different?
Santander UK’s Breakthrough program was the first real attempt by a bank to become customer-driven in the SME space. We approached it by adopting a very simple mantra — ‘This is not Banking. This is Business Growth’. Most importantly, it wasn’t the bank’s business growth that we focused on — it was the growth of the SMEs. A year of deep research showed a range of needs that characterized SMEs, only one of which involved finance. I built the program around the five core functions of a business — Strategy, Marketing, Operations, People and Finance. Whilst the bank could provide all manner of financial support for the SMEs, the other elements were delivered through a network of partners, with the bank acting as a platform through which SMEs could access support to meet all their major challenges.
We ran events large and small, bringing together SMEs with a wide range of experience, to learn from and mentor each other. We ran trade missions to countries across the globe, either where Santander was strong, or where we had close connections with SME-orientated banks, opening markets for businesses by putting them directly in touch with international customers, suppliers and partners. We held Master Classes with iconic businesses, such as Google, McLaren, Saatchi & Saatchi and many more, who opened their doors to the SMEs and showed them how to become a large business, the challenges they might face, and how some of them might be overcome. We worked with the SMEs on their talent acquisition dilemmas, supplying them with talent management development, and mentors, either directly or again through our partner network. And of course, as a bank, we had a finance proposition, including a £200m Growth Capital Fund and myriad other facilities for operational or international finance for growth.
The thing which defined the programme was the emphasis on scale-ups. The original research had identified that small percentage of SME businesses who were responsible for the majority of economic activity and job growth, and we moved very quickly to focus the benefits of the Breakthrough programme on that cohort. Scale-ups are different in three ways. The first is that they are growth-focused. That may sound strange, yet not all SME businesses are orientated toward growth — many are lifestyle businesses, and scale-ups represent a small percentage — maybe 6% or so — of the marketplace. Secondly, they operate at pace. They know the value of time in the life-cycle of a product or service, and they also understand almost instinctively that their competitors who are also scale-ups, never stand still. And thirdly, they understand risk. Not the popular image of the entrepreneur — taking huge risks and hoping for the best. True, entrepreneurial scaleups operate by assessing risk, and then deciding on the basis of experience and appetite, what risk they will accept.
This means that the needs of the scale-ups are very specific.
What were the expectations of scaleups towards the Bank? Did they expect to get from a Bank a piece of advice on their business, a matching with potential partners or other nonbanking services?
Scale-ups want a bank that will work with them to achieve growth — and which understands that growth is not a straight-line on the graph. It fl uctuates over time, yet the faith in growth remains in the scale-up — and they want that faith to be shown by their bank. They want a bank that matches their pace, whether in payments for overseas initiatives or decisions on working capital support. And finally, they want a bank that is prepared to share the future with them — not one that is traditionally, and cripplingly, risk-averse.
They certainly want advice. They also want a bank that recognizes that growth is a function of innovation; innovation is a function of ideas; ideas are a function of connections. The most valuable benefit provided to SME scale-ups by the Breakthrough was the connections we were able to facilitate. We connected them with one another, with customers, with suppliers, with partners, with talent and ideas and finance. The biggest difference between SMEs and large corporates is that large corporates are connected everywhere — SMEs are poorly connected. Whether it is through technology or contacts or services, a bank that connects its scale-up customers is a bank that is adding value for them.
What is the effect of the Program?
Santander’s Breakthrough program is still running, reaching more businesses than ever now. It transformed thinking within the bank and was rolled out across the Santander global group as Santander Advance. I am proud that Santander Breakthrough is still motivating and supporting SME businesses in the UK, and its children, as Santander Advance, are benefiting SMEs across the world.