Breaking Patterns: 2016 European Markets Symposium

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What do Air BnB, Netflix and Dyson have in common?

They were all founded by individuals who detected an overlooked need in the marketplace and addressed it through innovation. These founders broke with the traditional models employed by their competitors to meet the demands of consumers in a new way, catapulting them from humble startups to established leaders in their industries. But how can we learn from these businesses and achieve similar success in our own industries? Senior executives sought to answer that question during BBH’s 2nd Annual European BBH Markets Symposium, Breaking Patterns, on 17th May, 2016.

The New Paradigm: Disruption from Above and Below, Zanny Minton Beddoes, Editor-in-Chief of the Economist

09-06-2016 10-36-38To set the scene, Zanny shared her thoughts on the disruptive dynamics at play in the broader macro environment and described how the geopolitical and economic outlook is fueling the current populist and anti-establishment backlash. Factors such as a downturn in China, Brexit, political movements in the US, a refugee crisis in the Middle East and Europe, and an oil crisis in Russia, could all have a more significant impact than we realise, and it’s therefore crucial that we change paradigms if we’re to accurately assess the landscape and extent of potential change. Zanny prescribed a wholesale reimagining of the government and its role in equipping people to deal with the broad based globalisation in which we find ourselves today.

Don’t Get Disrupted: How Established Firms Transform Themselves from Within, Charles Leadbeater, Author and Innovation Strategist

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Companies considered established or even successful, often believe that they don’t need to innovate or think about change. According to Charles Leadbeater however, this complacency can be the curse that allows disruptors and new thinkers to enter into the incumbents’ space, leaving them to potentially become “stranded assets”, such as in the case of Uber and the traditional taxi. Charles shared that incumbents with established models often reach a point where they feel they’re going to lose competitive edge and relevancy unless they take action to change.

So what can you do if you’re an established player worried about a fintech disruptor with little back office technology, entering the space through methods such as peer to peer technology or a robo platform and artificial intelligence, and dramatically reducing the costs of what you do?

  • Look at new things in new places – innovation often happens in the margins
  • Collaborate and create new mixes – disruptors do not always displace incumbents and often the blend of both generates the best ideas
  • Learn fast in action – innovation is not just about new ideas, but learning quickly, eradicating failure and moving on
  • Be honest about what works and what doesn’t – challenge the status quo
  • Understand your purpose and what you really stand for

Breaking Patterns: A Panel Discussion

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To conclude the symposium, senior industry representatives joined a panel discussion to debate how fintech firms, new distribution channels and changing demographics are impacting product and distribution strategies, and how managers that reward thoughtful innovation can achieve “game changing” results.

Moderated by Alan O’Sullivan, Managing Director at Brown Brothers Harriman, Bryon Lake, Head of Invesco PowerShares, EMEA; Cillian Leonowicz, Manager, Strategy and Operations, Deloitte; Iain Plunkett, Group COO and CTO, Aberdeen Asset Management; Tony Stenning, Head of Retail Retirement, EMEA; BlackRock, and Charles Leadbeater participated in an engaging discussion around the impact of fintech and innovation; how to change perceptions to drive demands for investing; active versus passive investing; smart beta; and a rousing debate on roboadvisors. All agreed that investors are looking for better outcomes and ways to engage with consumers.

“We need to completely rethink how we engage with people – traditional methods won’t cut the mustard”, said Tony Stenning, who also felt it was important to level the playing field and make investing as easy as acquiring debt. According to Iain Plunkett “it all ends with the consumer story and customers will ultimately define how the market runs”. Iain also stated that in a fragmented industry, the supply chain will play a big part in defining the future and some are going to think very differently about how they partner to win. Bryon Lake believed putting the client first whilst redefining who that is in a broader sense and being extremely transparent will be important, “pulling back the curtain on what it is we’re delivering to clients”. For Cillian Leonowicz, disintermediating the manager and passing on value to the investor will be the game changer.

With industry profits of $102bn in 2015 and assets projected to be $100trillion by 2020, as Charles argued, some may believe that innovation isn’t required. However change is already happening and with funds now available via ATM machines in China and other countries, technology and innovation is significantly lowering the barriers to entry. This pace of change is only set to increase as investors continue to require outcome oriented solutions, greater levels of transparency and more cost efficient ways of engaging and receiving advice. A firm’s ability to break patterns and look at things differently will therefore be fundamental to staying ahead of the game.

We hope to see you at next year’s event!