THE ROLE OF LEADERSHIP IN DRIVING EMERGENT STRATEGY
There is, of course, no easy recipe for banks to face impending disruption. How marketplace lenders can successfully compete with banks in the long run is equally difficult to answer.
One thing is certain: banking and credit are in flux, and the way customers will borrow in the future will be different to the way it is today. Instead of charting a digital roadmap for companies to adhere to over several years, doing business in a fast-changing environment needs a strategy that emerges as the road unfolds. Strategy formation in a company revolves around the interplay of the ever-changing environment, the organizational bureaucracy that seeks to stabilize the impact of the environment, and leadership, which mediates between the two forces.14Options for strategy emerge from anticipated and unanticipated opportunities, and the real challenge is to find the right balance.15 With a strong leader who understands how to strike that balance, companies will find it easier to cope with a disruptive environment. Instead of dismissing ideas and innovations as immaterial or unproven, managers should keep an open mind. This will help them see the opportunities and dangers in their market and react to them as they see fit. When emerging competitors launch innovations in the market, open-minded managers will have a better chance to recognize whether they have the potential to serve their own customers. Dealing with the opportunities and threats that present themselves in uncharted territory will demand an emergent strategy. When leaders have found a way that works, they can then switch to a deliberate roadmap—one that will please more traditional stakeholders and shareholders.
The transition to the credit sector of the future will hardly be plain sailing, and we are still in the early stages of the journey. Leaders who can successfully guide companies in rapidly changing global environments are hard to find, but the opportunities are immense. When established banks and marketplace lenders have found a winning combination that works, they will revolutionize the way credit works, both in established and newly developing markets.
What the credit sector of the future looks like is unclear, but it will be safer, more convenient, and more profitable than our current system. For this to happen, platforms and banks should look farther ahead, and entrepreneurs and bankers should make efforts to build the hybrid financial sector of the future together. Instead of cannibalizing each other, competitors should put value creation for customers before their pursuit of market share. They should find ways to innovate collaboratively, without trying to impose their rules of the game on each other. What exactly banks and marketplace lenders can learn from each other is the topic of the next chapter.
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