Technology is transforming almost every aspect of our lives at an unprecedented pace and scale.
Emerging technologies – from mobile innovation to big data and artificial intelligence – are enabling more personalized experiences in new contexts. Entertainment has shifted to an on-demand, device-agnostic model. Memories, meanwhile, are logged in shared digital albums; and nearly every part of commerce, from point of inspiration to delivery, is being reimagined. In almost every vertical and in almost every regional market, technology is creating more convenient, secure and engaging touchpoints between businesses and their customers.
As we’ve seen throughout history, this type of disruption not only creates new opportunities but also seismic shifts in consumer behaviour and expectations. The migration to digital and mobile has created new opportunities for businesses to get closer to their customers. Yet it has also created demand for more personalized and more customizable products and services. Today’s consumers want more control over their experiences. They don’t want to be boxed in; they value choice.
Both of these trends are gaining pace as technology creates new experiences and new experiences create new expectations. To maximize the opportunities presented by the digital economy, while also keeping up with customer patterns that can change seemingly overnight, will require a fundamental shift in strategy. To prepare our businesses for the next wave of transformation and opportunity and to produce innovations that can be scaled, we need to work in partnership.
Aligning with historical competitors starts by looking inwards
Working in partnership starts with both clearly understanding and appreciating each other’s unique strengths and competitive advantages. Few companies do that well, but those that do benefit enormously from the leverage that partnerships can bring. Partnering pushes platforms and products into new markets, exposes brands to new constituencies and enables companies to leapfrog the traditional barriers of expansion and scale by using the core competencies of each partner.
And while the benefits of partnership are becoming increasingly clear, the effects of moving from competitor to collaborator will ripple throughout every aspect of an organization and how it operates. Taking a partnership-first mindset requires a business to re-examine and potentially disrupt its traditional practices and old ways of operating.
This starts by taking both an “outside in” (what is our market opportunity and what is the best way to maximize it?) and an “inside out” (what are our strengths and weaknesses in today’s market and how do we build on what makes us unique while filling the gaps in our business?) view of themselves and their industries. It also forces a company to look at itself and ask: what do we stand for and why are we here?
These are difficult questions to ask and answer. They can lead to some challenging discussions internally about the past, present and future of your company. They force your company to acknowledge that your industry is no longer a zero-sum game and that the focus needs to be on growing the overall pie, not just your specific piece of it.
This is particularly true with digital platforms, where the lines between services and competitors can be less clear. It is imperative that each player very explicitly defines a focus area. This provides each company with the confidence that their core businesses are not threatened, and will more clearly highlight the white space that exists within the industry.
Fintech is one industry that has embraced and is starting to truly benefit from collaboration, as partnerships across the sector continue to redefine financial services and expand the market opportunity for each player.
At its core, every company in and around fintech is essentially trying to do the same thing: to remove friction and make payments as seamless, simple, secure and efficient as possible. With that as the backdrop, it becomes clear that every company is competing against the same common threat: cash. The war against cash is a unifying element in this space and we have realized that we can fight it more effectively and get to our end goal more efficiently if we fight together.
The over-reliance on physical money has another dangerous side effect: it keeps people out of the global economy. It has been estimated that more than 2 billion people are significantly underserved by the traditional financial system. Filling in those gaps and bringing that many people into the economy in a real, lasting way is too big a challenge for one company to handle alone. By collaborating across and within the system, we are starting to drive meaningful progress on an enormous and complex global social issue.
At PayPal, we’ve established more than 25 strategic partnerships across the sector in the last 20 months alone. We’ve partnered with financial networks, issuers and acquirers; with major retailers, marketplaces and technology companies. We’ve partnered with leading social sector organizations like the Red Cross and public sector players such as the Indian government. We’ve learned a tremendous amount along the way about our customers, our partners, our industry and ourselves.
What other industries are ripe for disruption? What other customer needs and behaviours can be more adequately addressed through partnerships? What unlikely collaborations will drive more inclusive growth this year? What are the common enemies that companies – even those long held to be competitors – can rally together and defeat? The answers to these questions have started to come into focus and will develop significantly in the year ahead as new strategic alliances are formed and others continue to mature.
Collaboration is a strategic imperative as industries become increasingly digital
Strategic partnerships aren’t just an emerging trend in the financial services sector – rather, it’s emerging as a new core competency for leading businesses across industries. In the auto industry, for example, established companies are adopting a partnership mindset to integrate and leverage emerging technology to create new customer experiences.
Mcity, the University of Michigan’s urban test facility for on-road deployments, has created a public-private sector partnership to support and encourage tech innovation for automated mobility systems, for example. Among those using the Mcity facility to pilot new tech is Ford, who like many of its competitors is pivoting to position themselves for long-term growth in the face of emerging trends in automation. From investing in the self-driving-car industry, through test runs at Mcity, artificial intelligence and advanced sensor acquisitions, partnerships with Lyft and Chariot and a new business incubator hub in the heart of Silicon Valley, Ford’s recent strategic shift to collaborative innovation is building the infrastructure for continued growth – potentially even in new verticals – in the years ahead.
Collaborating to implement technology to address long-standing challenges – or to completely retool how we’ve previously addressed opportunities – is clear in the medical field, too, with the likes of Samsung piloting virtual reality (VR), pain management solutions in local hospitals to create better patient experiences. The trial uses Samsung smartphones and Gear VR to assess the value of this technology as a treatment for acute pain and considers factors ranging from potential side effects to the possibility of decreasing drug dependency.
Interestingly, we’re also seeing fintech firms partnering with non-traditional financial services players to scale their innovations and impact. For example, Walmart’s partnership with fintech startups Even and PayActiv offers its employees better access to financial wellness services. This collaboration is indicative of a new era of change and diverse partnership opportunities. The strategy structure is inspiring big businesses to focus on their core strengths and to take benefit from collaborators to advance customer, and in this case employee, offerings.
Each of these examples demonstrates the power of partnership to better serve mutual customers or to address an urgent need, with more expediency and efficiency than either individual entity could do alone.
Expanding a partnership model in a fractured world
In today’s complicated geopolitical climate – one in which public sector actors have a tendency to turn inward in an effort to protect their economic and political interests – inclusion, connectedness and collaboration are even more vital. As we prepare for the inevitable changes still to come and the complexity of the global challenges facing us, the business community’s spirit of collaboration and forward-looking position on forging strategic partnerships will be critical to developing scalable solutions and impact.
Fostering greater strategic collaboration between and amongst the business, government and social sectors will be a critical driver of innovation, growth and social impact in 2018 and beyond.