Advice practices need to make technological evolution a core strategy of their business in order to remain competitive, according to Netwealth.
The company’s 2018 AdviceTech Research report said businesses seeking to remain competitive are continuously “evaluating and evolving” their business model.
“The challenge for established businesses is legacy systems, people with set behaviours and established processes. For newer businesses, the challenge is a focus on juggling tasks, growing a client base and embedding reliable processes and a clear cultural direction,” the report said.
“Throw in digital disruption and technology progress due to AdviceTech, and before you know it a business could be heading in the wrong direction.”
The report said successful businesses “focus on technological advancements as part of their core strategy” while using the ‘Three Horizons’ strategy put forward by management consultancy McKinsey & Co.
“Three Horizons suggest a business should simultaneously focus on its core, emerging opportunities and the ‘weak signals’ of radical ideas the future brings,” the report said.
The first horizon, which should account for 70 per cent of a business’ technology projects, is to improve business and working models to maximise profit and cash flow, while horizon 2 (representing 20 per cent of the business’ projects) is to identify and implement “opportunities and technologies that already exist but have not been fully understood or explored”.
The third horizon listed in the report, making up the final 10 per cent of a business’ projects in this area, is focusing on technologies with a “weak signal” or unclear outcome.
“The focus is new markets that become new categories – even radical ideas that might change the market dynamics – that the business must have some readiness for and awareness of,” the report said.
“The business needs to probe and investigate over an extended period and signals may become clearer in the future through exploring, experimenting and building understanding. Working with (or taking an investment position in) a start-up with relevant technology and learning from their growth is a good strategy for advice practices.”
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