Harsh reality is a step forward from delusion

By Steve Young
13 March 2019

Gartner developed their excellent Hype Cycles to educate and inform on the promise of emerging technologies. It has five key phases that plot the lifecycle of technical innovations. The third phase of the cycle is the “Trough of Disillusionment” where interest wanes and implementations fail to deliver. This is an interesting element of the cycle, as it can ultimately result in greater clarity and improvement as technology moves to the next phase – “the Slope of Enlightenment” and ultimately into the final phase “Plateau of Productivity”.

I am reminded of Gartner’s concept when reading the conclusions for the latest survey from Capgemini concerning the levels of confidence in digital and leadership capabilities in the financial sector. The theme of the survey seems to suggest these aspects are in decline and that the situation is worse than it was in 2012, when they undertook a similar survey. An example is a dwindling in confidence in their business operations, with only 33% stating they now have the “necessary operational capabilities” as opposed to 46% in the previous survey. Confidence in leadership also fell dramatically in IT-business relationships, down to 35% from 63% in 2012.

I have been involved in a number of transformation projects during this period and see positives in the survey results. It is my experience that in 2012 many firms either were in denial or had a lack of real understanding of the impending market changes. I have observed regularly organisations talking in generic terms, over using current buzzwords and creating “noise” without purpose. We could all produce a long list of these buzzwords that have filled the events and conversations during this period – digital, blockchain, AI, Big Data, IBOR, data centric operating models – it goes on and on…

In my view the industry in 2012 was in Gartner’s terms the “Peak of Inflated Expectations” and subsequently moved into the “Trough of Disillusionment”. Typical characteristics being a lost touch with reality, and a growing number of failed or mis-aligned projects. Perhaps the real takeaway from the survey results is that financial firms are now becoming aware of these realities. My hope is that leaders in the industry are awakening to the fact that change must be driven by clearly articulated business needs, client/stakeholder demands and operational efficiency. Technology is a significant and increasingly powerful enabler, but if implemented in isolation it will be a drain on time, investment and capacity. Ultimately, this will result in failure.

Digital transformation is a great example, and fascinating to watch. Those firms who have a clear understanding of the business benefit will be the winners. Meaningful change will occur through a current or future need, not a technology. Focus needs to be on the consumers and stakeholders, both internal and external. Many financial services firms have concentrated on external factors. It is my belief that internal cultural change is equally critical to future success near me.

The survey shows only 41% of respondents indicating that their firm had the leadership capabilities that it required, down from 51% in 2012. I see this a clear indicator that the mist is clearing and firms are starting the journey forward. Investment is needed on internal stakeholders. Leaders must aggressively bring real cultural evolution and actively promote change and integration capabilities.

I believe that the firms that will thrive will be those that think and act differently. This includes changes to organisations – both resources and structures, and an open mind to the influencers and advisors that dominate the industry. New leaders and influencers need to be unearthed and the current establishment challenged. Firms that fail to address these culture challenges will struggle to keep pace.

Capgemini’s conclusion is that the survey is a reality check across the financial services industry. My hope is that the results are an indication that the industry is past the reality check, and awoken to the real opportunities and challenges they face. It is time to embark on the journey of constant change, something the industry has resisted for far too long. Is this survey an indication that the industry has progressed from the “Trough of Disillusionment” onto the “Slope of Enlightenment”? Perhaps we should celebrate these results as a sign that some firms are finally on the road to the “Plateau of Productivity”.