Paulina Ignatowska-Zaremba is an innovation design expert at Bank Pekao S.A.. She develops materials on the future of the banking sector and finance, and conducts trend workshops. In the Innovation Lab, she conducts the process of trend analysis, thanks to which she prepares the bank for changes by identifying opportunities and threats stemming from trends.
Bank Pekao S.A. Innovation Lab has recently started using trends in its project work. What exactly do you do and what is your role in the bank?
One of the tasks of the Innovation Lab is to look for, observe and test various practices that support corporate innovation. This innovation consists of, among others: building an innovation culture, developing cooperation with innovative and agile external entities such as startups, as well as support in creating innovations, preceded by exploratory research. As the Innovation Lab, we want to prepare the organization for changes and provide support in building a customer-centric approach and competitive advantage of Bank Pekao S.A., also in those areas we have not focused on before.
With the establishment of the Innovation Lab Office, we started activities that support the creation of internal innovation. In 2021, we developed a process for working with trends and signals of change. We created a team in the Innovation Lab that teaches how to work with trends, prepares materials about trends, conducts workshops with employees from different units of Bank Pekao S.A., and deals with trend-based ideation. We encourage employees to generate bold and innovative ideas in response to identified trends. Especially those that can have an impact on our bank.
What exactly are trends in the banking industry and how do they differ from signals of change?
Trends are changes in some area that are large enough to be easily noticed, but not global enough for us to consider them the norm. In the banking sector, for example, the trend in 2021 was Invisible Banking, which shows how digitization, the development of the Internet of Things (IoT) area or voice services are changing the way we use financial services. As a consequence, new needs and technological possibilities of building solutions for customers are created.
Signals of change, on the other hand, are smaller events, services or products that suggest that a change in some area may soon occur. It’s a small issue that may gain importance in the future. We are not sure if this event will turn into a trend or fade away. Here an example is the withdrawal of cash from Sweden, which has the least cash in circulation in the world (about 1%). Retail outlets are appearing there that do not accept cash. Does this herald a systemic departure from the traditional form of money? We don’t know yet, but as a bank we can already contemplate such a change and its impact on our industry.
Why did you decide to work with trends and signals of change? Is it the right tool for an organization like a bank?
By analyzing trends and signals of change, we gain information about the environment of the organization, but also the environment of the project or business problem. We learn about the context, i.e. the current social situation, changes in economic sectors, new technologies and their capabilities, as well as customer expectations. This knowledge is extremely important, because it helps all companies and teams better understand whether they are definitely solving the right problem. It also provides an opportunity to seek and build competitive advantages.
But what if business doesn’t have this knowledge, doesn’t analyze changes and doesn’t explore potential future scenarios?
This is well explained by Clayton Christensen’s Breakthrough Innovation Theory, who posed the question: why do big businesses fail or lose relevance at some point? Upon deeper analysis, it became clear that it is not a matter of poor management or a focus on internal bureaucratization. Well-run companies that are focused on the needs of key customers and develop the most desirable products also experience failures.
Christiansen calls this system of supporting key products and customers the value network. It is powerful because it builds the strength and quality of a large organization’s operations. Through it, the organization refines and optimizes its operations for the best possible sales and service. But these activities have one weak point: they make the organization inflexible. It may miss changes, opportunities and threats that come from the market. When I say “threats,” I mean innovations that are unpopular and don’t offer – and here’s the key word: yet – as much customer value as the organization’s current offerings. On the other hand, “opportunities” are new needs and ways of meeting them that a business can respond to innovatively and stay ahead of the competition.
There are many companies that did not notice the threats or underestimated them. They had a secure position in the market, were sometimes leaders, and after a few years they struggled financially or ceased to exist.
Can you give examples of companies that ignored trends and it did not work out for them?
This was painfully felt by KODAK, which focused its business on selling Kodachrome photographic film. Thus, it missed the opportunity that came from entering the digital photography market. The threats were also ignored by Blackberry in the context of the emergence of the iPhone. The same was true of VHS tape rental giant Blockbuster vis-à-vis Netflix.
So what can you do not to miss opportunities and threats? Competition doesn’t sleep, and there are plenty of trends. How do we know which trends to bet on?
Our way is to constantly work with trends and signals of change. We closely observe the environment of the banking and finance sector, we analyze it and draw conclusions. We prepare our own materials, the so-called trendbooks. We have also developed a process of trend analysis in the Innovation Lab in which we gradually involve other bank employees. Together we consider which phenomena are key from the perspective of Bank Pekao S.A.
What does this process consist of and what did you develop it on?
The first step was to use the resources we already had. First of all, the knowledge of my colleagues from the Innovation Lab: Michał Szewczyk, Dawid Horodecki and my humble self. All three of us have gained experience in the area of trends in external companies, creating trendbooks for various organizations and using this knowledge in project work. Together we form a team dealing with the topic of trends and signals of change. Together we organized our work around the FIND, FIND, APPLY triad, proposed by Els Dragt – an experienced trendwatcher and trend researcher who worked for Nike, among others, and authored the book “How to Research Trends”. We adopted her method to our own needs.
Can you talk about how the design work goes at each of these stages?
The FIND stage is to analyze the phenomena and select those that can have an impact on our customers and the future of banking. At this stage we focus on looking for important and interesting phenomena from the perspective of our organization.
The first effects of this work are already visible. We have published “Trendbook 2021: The Culture of the Nanosecond”. It is a publication for internal use which gathers key trends for the financial and banking sector. It presents them from the perspective of an individual (customer, employee). We have described 20 trends, grouped in 7 key areas for the bank. Each trend consists of a description of a phenomenon, conclusions, directions of development as well as examples and signals of changes. We attached a Trend Map to the Trendbook, which structures the whole material.
On this material we work at the second stage, that is ZROZUM, but already together with the organization and business units. We prepare educational and informational materials, including articles, presentations, and then distribute them in the organization. In December 2021, we organized a trend countdown to 2022. These activities make the bank’s employees not only better understand what banking may look like in the future, but also learn methods of working with trends. They think about the impact of trends on business.
At the third stage, APPLY, we continue our workshop work with trends. We work out conclusions that help us understand what results from the evolution of a trend and how to prepare for changes. This stage allows us to think about a given phenomenon in the context of our organization, verify ideas and increase the chances of implementation. It supports ideation, designing new solutions and looking for opportunities to develop the project and adjust it to the changing world.
What have you managed to work out with the organization so far? What value did your activities bring?
So far, we have delivered two cycles of workshops and supported an internal talent program with trend knowledge. The first cycle of workshops allowed the bank’s employees to better understand trends and analyze the opportunities and threats they pose. We drew conclusions on the potential impact of a given trend on the organization. We also managed to build a broader perspective on the impact of the mapped phenomena on our bank. We achieved this thanks to our employees, as they bring very valuable domain and operational knowledge from inside the organization.
The second series of workshops we conducted with leaders of business divisions. Our goal here was, among other things, to propose ideas for new initiatives and important directions. We managed to achieve this – there were several dozen preliminary ideas, 10 of which were deepened, presented and discussed with the decision-makers of Bank Pekao S.A. Some of the ideas were adopted as improvements to ongoing initiatives.
Do you have plans for future activities? What’s ahead of you in 2022?
We want to reach out to more people in the bank so that working with trends becomes a commonly known and used tool in the organization to inspire both at the stage of defining and searching for challenges and generating solutions. We are also in the process of preparing further studies on trends. This time we are focusing on key business areas for the bank to inspire even more in the area of competitive advantages. We have ideas for workshop and inspirational activities. However, we do not deal only with trends – they are part of the ideation process and our approach, which seeks to transform the bank and look for market advantages in a different way.
The article was written in cooperation with Bank Pekao S.A.