[In a business environment with accelerating rates of change, the power to compete and win is shifting radically from corporations to ecosystems, from leveraging internal assets to accessing external networks, from a traditional operating focus on efficiency to dynamic open innovation. Welcome to the Collaboration Economy and the new source of competitive advantage for firms that want to thrive in our new business climate.
With many cross-industry projections saying that we will see more change and innovation in the next three to five years than we have seen in the past thirty years, firms need to be less insulated and become more synergistic. No one company and management team in isolation can practically keep up with the hyper-changing complexity of our modern business world.
Firms need to leverage their knowledge and experiences with others fighting the same fight or addressing similar challenges. Deeper connections need to be formed between firms that can lead to an ecosystem of resources built on mutual interests. These ecosystems tend to function as open platforms adding substantial new capabilities to all. It is now up to how firms can creatively connect with one another that determines how successful they can be. This puts a whole different spin and a new reality on what “networking” really means and how it is being strategically applied to meet today’s challenges.
Greg Satell – a transformation & change expert, top innovation blogger, and bestselling author of Mapping Innovation and Cascades: How to Create a Movement that Drives Transformational Change – has done extensive work in exploring and writing about this new business dynamic of platforms, networks, and ecosystems.
“In an age of disruption, the only viable strategy is to adapt….The objective is no longer to claw your way to the top of the heap, but to nudge your way to the center of the network…..Successful enterprises can no longer prosper merely by deploying assets efficiently, but must effectively manage and deepen connections… In a networked world, the best way to become a dominant player is to become an indispensable partner.”
To dig deeper into the mechanics and strategy of building your company into a platform and developing an ecosystem, we reached out to Institute Founding Member, Mark Spina, President and COO of FLX Networks – a financial services technology platform and membership community. FLX is actively building a “network of networks” through their new community platform which is designed to revolutionize the working relationship and experience that occurs between asset managers, financial advisors, and wealth management firms. We asked questions to better understand how platforms can help us access technology, talent, current insights, and strategic partners and how this can dramatically change the ways we can successfully compete in our rapidly changing industry environment.]
Horz: What were the strategic decisions behind building your business as a platform?
Spina: The financial services industry is facing a generational transition away from its traditional engagement model, which has been disruption-based and heavily dependent on this high-cost implementation model, grudgingly accepted by business managers. assets as well as their target audience of wealth management firms and advisors. A cross-current of macro events, including the pandemic, technological innovation and regulatory evolution, created the momentum for a more user-friendly engagement and experience to be introduced through a community platform.
Importantly, competitive pressures are shifting the supply industry from a myriad of specialized business solutions and vendors to seeking strategic partners who can consolidate and integrate the many resources now available. Simply put, specialization has delivered many amazing innovative solutions, but it has also led to increased costs (due to more tools and services), complex technology stacks, and an overwhelming number of vendor relationships. Asset managers and wealth managers are looking for scalable relationships that creatively meet their business needs, while reducing the number of partnerships and the time required to maintain them.
Horz: How does a platform structure allow you to address the challenges you see facing financial services companies?
Spina: FLX Networks’ purpose-built technology platform is designed to create a more cost-effective and sustainable distribution experience with less friction and inefficiency between asset managers, wealth management firms and financial advisors. Using our proprietary technology, we have built a community platform that provides access to a business services marketplace, an aggregate open-architecture asset manager content marketplace, an asset manager exchange, and a social network facilitating the sharing of relevant professional practices and experiences.
Each vertical in our permissions-based platform provides access to a combination of tools, people, technology, strategic relationships, and products to help create a more profitable, on-demand, and sustainable business model. Our approach simultaneously delivers the scale of the largest companies on the market today.
Horz: Now in your second year of development, what are you learning about the dynamics of building a platform?
Spina: Key learning is a kind of meta learning – sitting in the center of a network creates an advantageous position for building a platform. Challenges and trends are easier to see. I know you are a fan of Greg Satell, the transformation and change expert. He says it so well:We can no longer rely on the control and operation of assets, but we must now take into account new sources of energywho reside not at the top of hierarchies, but at the center of networks“.
While we clearly see the power of establishing a centered network between asset managers, wealth management firms and advisors, each participant in the network comes with their own considerations and priorities. The need to educate participants on the potential of this new network has been both a key learning and a driving force for our succession.
Horz: How do you then make the platform a functional community and what are the benefits?
Spina: When launched, FLX offered asset managers access to a marketplace offering modular and on-demand distribution solutions. As a member of FLX, Asset Managers received a community page that served as the central location for the Asset Manager to place marketing content, product training, and relevant company information. Asset managers could then browse the various marketplaces within the platform and rely on experienced sales teams, as well as sales leadership, sales infrastructure, technology tools, marketing, website development, etc. Interest in this unique approach was immediate, and the company completed its first capital increase.
COVID-19 has transformed the world and the economy as we know it. This pivotal moment led to a second key element of building the platform into a functioning community. FLX has recruited the clients of asset managers (i.e. wealth management firms and financial advisors) to become members of FLX as well. FLX identified both a bottom-up and top-down strategy designed to create a gravitational pull to a newly established community. It was during this time that FLX actively pursued the development of a community where asset managers, financial advisors and wealth management firms would feel compelled to visit and leverage tools, services and resources to easily access information, reduce noise and increase productivity.
Horz: What are your plan and criteria for developing your FLX Solutions Exchange on your platform?
Spina: The FLX Solutions Exchange has also proven to be an area with significant learnings to date and future-facing opportunities. In many ways, it’s a microcosm of starting and growing a business in an unconventional way. We plan to grow our FLX-branded solutions, strategic partnerships, and selectively expand the range of partners on the platform in the short to medium term.
Importantly and differently, as we move the company into year three, we see distribution or “shared customer engagement teams” as one of the solutions available. Based on our modular approach, shared client engagement teams are regularly paired with a set of solutions that best meet the needs of the asset manager. For companies that were historically focused on institutional, alternative, or international markets and are now entering the U.S. advisor and intermediary market, we consult with them regularly to first ensure product readiness and promote brand awareness, by leveraging the split services of our solutions capabilities and then adding staff.
From a strategic partnership perspective, we selectively engage in several areas. When you see and believe in the power of the network, these areas include AI, data, benefits, as well as access to industry associations and wealth management firms. While other companies have built well-developed networks to help the financial advisor engage with the consumer, we focus on the B2B “middle space” between asset managers, wealth management companies and advisers in the United States. The US market alone is a $50 trillion product market and it takes about $50 billion a year to make that market work from a sales, marketing, and data perspective. We also have international plans on the near horizon, eyeing markets with relatively large advisor markets, including Canada, the UK and Australia.
Horz: Do you have any other thoughts to share with finance professionals on how B2B digital platforms like yours can help them evolve their traditional way of doing business?
Spina: Yes. Think of almost every other buying and selling experience, both B2B and B2C. They have changed significantly over the past five to ten years, primarily toward on-demand tuning aided by subject matter experts at key decision-making or inflection points. We see these trends and catalyze the same experience for the wholesale distribution market.
So, certainly, we see and talk to leaders from such a variety of businesses, from cutting-edge boutiques to mainstream players, each with plans to grow their business. Conversations take place with asset managers, wealth management firms, large RIAs and advisory teams. In an oversimplified form, we see leaders who are beholden to the inherited style of things, and then those who are willing to adopt or, at a minimum, experiment with a new approach.
For example, most readers can very easily recall their experiences with wholesaling from different angles and perspectives. Although we have been saying this for a few years, even before Covid, it is now clear that there will be significant changes in the future. We will help by “innorupting” (innovating/disrupting) the status quo. One way is to create a Virtual wholesale market.
This first virtual wholesale marketplace, as we envision it, is where advisors from the general community or a white label wealth management community, tailored to their respective business, can access all content, insights, thought leadership and meaningful investment products from asset managers. information. Separately, asset management business teams can research advisors and identify their engagement preferences and needs. The detailed profiles provided by each member of the FLX community allow them to share their interests, work experience, product and service needs, and desired form of engagement (i.e. by phone, in person, by e-mail, etc.). the bThe benefit is to simplify, personalize and personalize the engagement experience.
Horz: Any recommendations on how financial firms can reinvigorate themselves in platforms and become part of a network?
Spina: Yes, although there are many options, a few concepts repeatedly prove to be competitive engines.
We’ve talked about creating a “synthetic scale” as a way to invigorate or better compete. Scale has been a driving goal for many in the area of assets and wealth. As a select group of companies achieved this goal and accumulated massive scale, it became harder for others to compete. By joining a community and leveraging the shared solutions and buying power of the community, companies or even business units can carve their way to growth.
We also encouraged companies to experiment. Although well-worn, the expression that “doing things the same way and expecting different results” is still an operational belief of many companies. Whether it’s a big experiment or a small one, we see significant value in trying new approaches. It can relate to an entire company. , a subset, product type, channel, geography, or combination thereof.The opportunity to experiment abounds.