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Dealing with change: the Amazon way
Here is an extract of what Bezos said in Nov 2012:
"I very frequently get the question: 'what's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'what's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two - because you can build a business strategy around the things that are stable in time….in our retail business, we know that customers want low prices and I know that's going to be true 10 years from now. They want fast delivery, they want vast selection. It's impossible to imagine a future 10 years from now where a customer comes up and says, 'Jeff I love Amazon, I just wish the prices were a little higher [or] I love Amazon, I just wish you'd deliver a little more slowly.' Impossible [to imagine that future]. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long-term, you can afford to put a lot of energy into it."
Base your strategy on things that WILL NOT change
In an environment where IFAs are often flummoxed with the rapidity of change around them - be it regulations or revenue models or competition, Bezos' advice shows us the way forward: don't focus on what might change, base your strategy on things that won't change.
Let's consider what might not change in the next 10 years in this business.
Product proliferation: As Nilesh Shah remarked recently in a Wealth Forum interview, our industry has 2100 products across two asset classes - debt and equity (Click here). In 10 years, do you expect this to come down to say 100-200? Do you expect it to be at least 2100? Or do you expect it to be double of where we are today? Its reasonable to assume that whether driven by competition or an urge to give wider choice to investors, our industry will continue to have thousands of products. Information proliferation: In the last 10 years, there has been an information explosion in all spheres, including on the subject of money and investments. It would be safe to assume that information will only increase and not decrease in the next 10 years. Need for advice: Product proliferation + information proliferation = heightened need for advice. We keep saying that consumers' attention span is reducing - if that is true, how many would want to sift through masses of information across thousands of products, to figure out what's the smartest investment for them to make? And how many would turn towards guidance/advice, to help them make sense of the whole thing? Need for guidance will continue to grow as rapidly as the combination of more products and more information makes choice more complicated for the investor.
A core proposition that will not change in the next 10,20 years
If therefore your proposition is all about decluttering it all, and making it simple for your investor to take an informed investment decision, your business will continue to be relevant 10, 20, 30 years from now. At the heart of this is the insight that investors do want to feel empowered that THEY have taken an informed decision - not that they have invested blindly, out of ignorance. Your job is not to be a person who says "Just blindly trust me", but one who says, "Let me help you make your decision". That proposition will continue to be relevant, irrespective of whatever else changes around you.
Now, focus on what WILL change around this core proposition
Now lets come to the second part of our lesson from Amazon on dealing with change. Having articulated your customer proposition that you are confident will always remain relevant, you now need to focus on what around it WILL change, and how you can lead that change.
Amazon started out as an e-tailer of books - physical books which would be ordered online and then shipped by Amazon. They basically eliminated book stores. Bezos understood the internet better than most. He understood one thing about books in this context - that books will always remain relevant, no matter how much of information explosion we see around us. The book reading habit is not dying soon - but he realised that the way we would chose to read books would undergo a big change. He foresaw the advent of e-books earlier than most. What Amazon did next was to actually propel that change rather than resist it. In 2007, Amazon launched Kindle e-book readers, which went on to redefine the publishing industry. Amazon worked tirelessly to gather more and more content from diverse sources, until a point where the Kindle e-book reader became an indispensable gadget for every book lover. You could now carry thousands of books in one single sleek tablet looking device, and get the same reading experience as you do with physical books. People didn't stop reading books in the internet obsessed world - they just switched the way they read books.
People will change the way they want to consume advice
People are not going to stop needing financial advice just because they have more information available. But they sure are going to want to change the way they consume this advice. That is where you need to think about change. People may want to consume your advice in a manner of their liking, at a time of their convenience, and this could change from time to time.
Here are a few thoughts for you to consider:
When you put out a market commentary note on a day of high volatility, when you expect clients to be worried, in addition to sending out a mail, why not prepare a 2 min video and a podcast and give them three options of getting your update: read / see / hear. When you schedule a meeting, always give an option of in-person and a Skype call When you want to give specific advice to a client on portfolio action, put in two radio buttons at the end of your communication which give an "Agree, go ahead" option and "No, don't do anything" option. By simply clicking on a button, your system should be able to get an appropriate instruction to execute your client's decision. Your client can see this piece of advice from you at a time and place of his convenience, and with a click of a button, can give you necessary instructions.
The bottom line
Investors will continue to want guidance. But the way they want to consume this guidance is changing dramatically. Stay focused on your core proposition of making it simple for investors to take informed investment decisions. And keep looking at how to enhance the way you deliver this advice and how they can react to it.
Content is prepared by Wealth Forum and should not be construed as an opinion of HDFC Mutual Fund.
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Wise Advice: Evolve
Amazon is truly an amazing company, and its founder Jeff Bezos is one of the finest visionaries in today's business world. He is a true pioneer of the e-commerce rage that is sweeping across the world. Starting from selling books online, Amazon has grown into the largest retailer of just about everything that consumers want, in most parts of the world. The Amazon story is well chronicled, Bezos has been interviewed umpteen times and continues to be a leading light for entrepreneurs across the world.