Finding the entrepreneur within: the challenge confronting banks


Australian banks are in the spotlight. Growing imbalances fuelling Australia’s superheated residential property are making ratings agencies nervous. But that’s not all. Banking industry commentators, and even banks themselves, have raised concerns about the challenges of transforming IT to meet the digital needs of customers.

Earlier this year NAB group executive Renee Roberts acknowledged the situation, saying: “Banks are very complex and have always struggled with their technologies”. This is a bank that spends $1 billion a year on IT. Research conducted by analyst firm TechMarketView reported in highlights the difficulties faced by large retail banks – not the least of which is replacing legacy IT systems. Ever tried changing a jet engine mid-flight?

Now consider the success of Australian companies like and Appliances Online – companies that quite literally came from nowhere to dominate their respective categories in less than a decade. What lessons do they teach banks and other large organisations wrestling with change?

Let’s look at the company founders – entrepreneurs – those unorthodox thinkers whose super-sized brains fizz and bounce from one lightbulb moment to the next. People like Freelancer founder Matt Barrie are unlikely to gravitate to a career in banking, so why should we expect banks to exhibit the same entrepreneurial flair? Exactly. We don’t. But here’s why thinking like this is wrong.

Entrepreneurs are everywhere

In his book The Lean Startup, Silicon Valley entrepreneur Eric Ries pitches the idea that entrepreneurs are everywhere, and the accepted view that more of them work in places like Silicon Valley is attributed to the freedom they have to shine – a freedom that rarely exists in large established companies. What’s more, others argue that even the most famous entrepreneur of our time (and certainly the richest), Bill Gates, while showing obvious entrepreneurial savvy, enjoyed certain advantages – luck, even – that few others had: being in the right place (California) at the right time (when there was access to computing power unavailable to most). 

Could it be that timing and circumstance are just as critical to entrepreneurial success? 

The availability of smart technology to manage complex processes, deliver scale and connect people is changing the definition of entrepreneurialism. Eric Ries dispels the image of pizza-scoffing garage dwellers and instead highlights the importance of situational factors that allow entrepreneurs to flourish. 

"Everyone thinks they're crazy, and then fast-forward, boom, all of a sudden they are on the cover of magazines," he says. "But what makes you an entrepreneur isn't what kind of noodles you eat, but rather the context in which you operate." – Eric Ries

Culture is key

Most large companies understand the limitations of traditional corporate culture and have introduced programmes to encourage innovation. However, the results rarely take a company in a significant new direction. 

Size is a stumbling block. Big companies do big things; start-ups do little things, which are usually cheaper and happen much faster. Big companies are geared to scale, and the projects that get attention are big – with big goals, big budgets and big ‘rules’ that govern attention and resources.  

Smaller projects don’t fit this mould. Consequently, they don’t flash on the company’s radar. Something this small can’t be important, the thinking goes.

The trouble is, often it is so-called small ideas that are the seeds of innovation driving quantum change and improvement. And unless a company can re-tool its innovation processes to test, develop and scale these ideas quickly, they’re lost. 

So what happens to the company’s thinkers and innovators? Frustrated by missed opportunities and unfulfilled vision, they disengage, their ideas walk out the door and the status quo prevails. It’s dangerous territory, because change is accelerating, and without processes to test and validate new ideas quickly, a company is vulnerable to faster moving competitors.

Didn’t see that coming 

Established companies underestimate the speed of change at their peril. Consider driverless cars. Only a few years ago they struggled to drive straight on a racetrack; today California is in the process of legalising driverless cars for roads across the State. What does this mean for car makers? For urban and transportation planners? And how about renewable energy, popularly dismissed for its inability to support base load power (wind doesn’t always blow; sun doesn’t always shine)? Tesla’s Powerwall is gearing up for its Australia debut. The prospect of living entirely off grid is almost here. What will this disruption mean to the future business of electricity networks?

Time to tinker with the jet engine

Innovation shouldn’t mean having to change the jet engine mid-flight. Every company big and small has access to entrepreneurs. The trick is to establish the right climate and systems to unlock and test ideas, and deliver at scale in a way that doesn’t ask the company to put everything on the line.

Platforms like Salesforce are a good place for big companies to start: platforms that allow them to build, measure and learn like a start-up, and then execute at an industrialised scale.

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