How can small fintech firms stay fast, agile and innovative as they grow? It is a question being asked across the country as Britain’s fintech firms strive to go global, writes Deborah Davis
Moving from the startup phase can be a difficult path to navigate successfully. At the beginning small firms are using their agility and fast decision making to drive creativity and prioritisation but as they grow into established players, they must avoid bureaucracy from setting in, to foster innovation.
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It is a problem that many small firms experience but one I’ve seen solved with the right culture and working environment.
As a previous senior executive at PayPal, I witnessed the firm’s desire to keep innovating as it grew by promoting collaboration. Though challenging for a company of over 15,000 staff, a sense of speed, simplicity and a continued focus on the customer helped it bring improvements to its online and mobile products and launch new products to market in months instead of years. This is one of the reasons why it still holds such a prominent position in the payments industry.
Now as a Non-Executive Director of Intelligent Environments, an agile fintech firm, I’ve seen how Britain’s small tech upstarts are using techniques like hackathons to stay innovative as they scale.
But what else should growing fintech firms do to stay innovative?
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By GlobalDataThe origins of innovation
Of course there are numerous techniques which can be employed. The most logical is to find what made the firm innovative in the first place, and ensure these conditions remain or else recreate similar ones.
Quite often the origins of innovation are easy to spot if you go back far enough.
For example, small companies are generally close to their customers. They use this intimacy to innovate and solve real problems. Customer-led innovation just comes naturally to them.
Furthermore, ‘thinking big’ and considering all possibilities spurs creativity. While decision making is fast and usually dependent on only a couple of people, making the company quick to respond to feedback and new ideas. Finally, the excitement of boxing clever and outsmarting established players with limited resources energises the team, pushing them forward to even greater ideas.
Once a variety of factors have been identified, fintech firms can develop a strategy to sustain this magic, keeping innovation on track.
Eliminating politics by smashing silos
An important step is to avoid bureaucracy which can often be a barrier to innovation. At PayPal, when former President David Marcus took over the reins, one of his first actions was to co-locate development teams so they spent time working with each other rather than attending formal meetings.
The rationale being scheduled meetings limit collaboration. Instead, he removed the office partitions and set up open collaboration areas. This, according to Marcus, meant co-workers were always working and communicating with each other, giving the business a continued startup energy and feel.
Staying agile
Another way to inject this startup energy into a larger firm is to create small teams which act as mini businesses. The music streaming service, Spotify, does this very well by dividing up its firm into small business units — which it calls ‘squads’. Each one is run like a startup in its own right.
Each squad takes a different Spotify feature, for example playlists, and develops its own minimum viable product, then regularly releases updates. Each squad has its own workspace with a flat management structure.
A squad member then leads on making connections with other squads. This way of working has helped the service to keep one step ahead of competitors, delivering frequent updates to an already disruptive technology.
Refocus on founding values
Core values are at the very heart of a company’s innovation culture. They are used as a reference point for hiring, firing, motivating and rewarding employees. As a company grows it is important these values are not forgotten.
A culture that encourages open communication is a great platform for innovation. Everyone feels they can make a real difference. Coupled with a shared – vision of what the company is aiming to achieve and what the future holds, employees are empowered to innovate.
Communicating these values can take many forms. Integrating values into new employees’ orientation training programmes is an example. While recognising and rewarding the behaviours of people who are demonstrating values in real time is a great way to build the culture and encourage innovation.
Think big: go disruptive or go home
It’s often helpful to provide some space for ideas to be developed and implemented. Hackathons, Dragons’ Den style contests or providing staff with allocated time for side projects are all effective ways of stimulating creativity.
At Intelligent Environments, we run regular innovation labs, brainstorm sessions where our developers, testers and designers are given free rein to develop new concepts. Some of our best products have been developed during these sessions. For example, we created the world’s first smartwatch banking app which allows users to check their account balance and recent transfers on their Pebble smartwatch.
While at Google, employees are allowed to spend 20% of their working week on their own side projects, giving them the capacity to develop disruptive concepts.
The art of the possible
Breakthrough innovation is never easy, regardless of company size. However, by creating the right conditions within the business, Britain’s rapidly growing fintech firms have a fighting chance to keep innovation levels high.
The age of the "agile corporate" might be upon us.
Deborah Davis is non-executive director, Intelligent Environments
