Embrace change, take risks, and disrupt yourself

Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.

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Looking to 2022 and Beyond: New Rules for a New World

Over the past 20 months, we have experienced personal and business transformation that has impacted every aspect of our lives. With change happening faster than ever, we are about to experience a radical new future that we have yet to fully understand.

In financial services, successful firms will be those that can leverage data, algorithms, and human talent to both sidestep industry boundaries and creatively meet customer expanding expectations.

I am excited to have Mike Walsh on the Banking Transformed show for the second time. As a futurist, speaker & author of 'The Algorithmic Leader,' Mike is going to share his thoughts on how leaders must prepare for a future that is still being defined.

Jim Marous:
Hello, and welcome to Banking Transformed. I'm your host, Jim Marous, founder and CEO of the Digital Banking Report and co-publisher of The Financial Brand. Over the past 20 months, we've experienced personal and business transformation that has impacted every aspect of our lives. With change happening faster than ever before, we are about to experience a radical new future that is yet to be defined. In financial services, you're going to have to leverage data, analytics, and the human aspect and talent needed to transform forward, breaking new boundaries, and meeting consumers, expanding expectations. I am so excited to have Mike Walsh on the Banking Transform show today. As a futurist speaker and author of The Algorithmic Leader book, Mike is going to share his thoughts on how leaders must prepare for a future that is yet to be defined.

Jim Marous:
Hey, welcome to the show, Mike. First off, I want to welcome you back to the Banking Transformed podcast, while it seems like just yesterday that we discussed your book, the Algorithmic Leader. The world has definitely changed exponentially over the last two years. And as we discussed in the pre-discussion, probably never thought we'd be in this place today, given what we were at two years ago. So, you recently wrote that the sum of recent transformation innovation, not only exceeds what we see in the past, but that the combination of these changes pretty much lays the foundation for a new world run by new rules. Can you discuss a little bit about what your perception is of what these new rules are?

Mike Walsh:
Yeah. I think really to contextualize that, the way we've been talking about digital transformation and even digital disruption, for the last 5 to 10 years, in truth, is really been more about digital incrementalism. We talked about applying robotic process automation, cost-saving efficiencies. We're looking at ways to cut time, improve productivity, and maybe even cut jobs. And with the pandemic, really all those plans for digital transformation, suddenly didn't look that innovative anymore. There were just a plan for digital delivery. It was really just a business case for survival. And I think that's been the biggest shock in the last 18 months; is that everything that we thought was going to be the future in 2030, ended up just being how we get through the next 12 months.

Mike Walsh:
And I think that's had two important consequences. One, the good news is that it's accelerated everything, and suddenly, what we used to have to convince people was a burning platform, everyone now accepts straight out of the box. But the other consequence, which is maybe more difficult to accept, is that that means we now need to reset our expectations about what innovation really looks like, because, no one's impressed with you having a mobile app anymore or having a digital channel, or having some level of automation, or accepting digital signatures, because, let's face it, if you hadn't figured out how to do that in the most recent period, you're probably no longer in business.

Jim Marous:
It's interesting because when you look at banking, a lot of organizations, especially when COVID hit, really spent a lot of time trying to make it so people could actually do basic transactions on a digital device. But as you said, it's completely changed the world because of what's happened around us. We're being inundated with new ways of organizations engaging and building experiences, but when you're looking at the digital delivery, it really is not enough. What is possible today that wasn't possible, lets say, pre-COVID, and what's going to be possible tomorrow with regard to digital delivery?

Mike Walsh:
Well, before COVID, there was still a lot of parts of, let's say, the business ecosystem that had not been digitized, whether it was parts of processes or paperwork or forms. And so, what's happened during the last 18 months is that pretty much everything has now been digitalized, has been added to the Cloud or to the network, and so now it's out there and it exists as data that can be interpreted and it can be analyzed. The other bigger thing that's changed, that has nothing to do with COVID, is just the pace of learning and acceleration around artificial intelligence, around algorithmic design, around the price of computation, access to Cloud services. So, this has continued to improve exponentially.

Mike Walsh:
Now when you put those two things together, so now you've got a much more digitalized ecosystem and you've got a lot more computational power available at cheap prices. Now we can start with a clean sheet of paper and we can say, "Okay, rather than just trying to digitalize our existing business, what if we start with a clean sheet of paper? What really is a bank? What are people really trying to achieve here? How do we rethink presenting risk and reward to the consumer? If we stop trying to sell them a product or service, what are they really trying to achieve at different life stages? And can we engage them in a much more hyper-individualized, hyper-personalized way at scale?"

Jim Marous:
Well, it's interesting because every consumer, once COVID hit, started understanding the dynamics of what's possible with digital, from Netflix being able to determine what you watch next, to Zoom-

Mike Walsh:
Well, they got spoiled, right?

Jim Marous:
Yeah.

Mike Walsh:
Because all the other aspects of their life, other than their financial services provider, was giving them amazing experiences personalized with data.

Jim Marous:
Well, and as you talked about the application of data and AI and everything else, from when you order groceries to them understanding some of the dynamics of how you wanted them to be, much like Amazon understands the pace at which you buy things, we've really gone from moving transactions to creating experiences, and even going further into trying to build engagement. How important is that going to be for every organization, not just the banking organizations, to do more than just the basics, to make it so that it's actually what you want to pick up at the beginning of the day, is actually pick up and engage proactively with your organizations you work with?

Mike Walsh:
Honestly, if you really break it down, the best kind of engagement is when you actually don't pay attention to the engagement. It's almost counterintuitive. I think we're at this interesting moment where we can actually start to ask ourselves what characterizes a true AI-powered organization. It isn't the technology stack, it isn't how many servers they've got in the Cloud, it isn't how much data that they're managing. What defines an AI-powered organization is the quality of experiences it can deliver for its customers and its stakeholders. I mean, if you look at companies like, and we're talking about this before Spotify, Uber, Netflix, what they have in common is that they've done an amazing job shifting the customer's focus from the underlying transaction to actually the experience.

Mike Walsh:
And the best example of this is just the fact people can't recall the transaction. I mean, what did you pay for your last Uber ride? I mean, you have no idea. What do you spend on average in Netflix if you take your monthly subscription cost and divide it by the number of movie or TV shows, or the number of songs you listen to on Spotify. I mean, it sounds like a crazy question, but five or ten years ago, I bet if I asked you how much you spent on CDs this month, you'd know. And that's what's really happened; is we've started to move into this realm of algorithmic experiences, where companies are leveraging artificial intelligence and data to really create these feeds of hyper engagement. The transaction's not important. And that's a great place to be from a value perspective.

Jim Marous:
Well, it's interesting too because it's all about making our lives easier. I'm on a holiday right now, and we've been going to different restaurants, but we're going to a place that we've been before. So, how do we figure out what we liked and what we didn't like? And we're going to OpenTable to say, "Geez, what did we visit last time and what we put down as our ratings?" And maybe, at one instance, I forgot how to spell the restaurant that we went to, but we were able to access it through OpenTable. Now that's just a little example, but as you said, with Uber, when I tried to find out, "Geez, where was I even two months ago?" I followed my Uber receipts to go, "Oh, that's right. I was in Boston that week." So, when you look at data and AI and analytics in general, they have the ability to make better decisions, better products, create better experiences. What's the difference between being data-driven and data-led? You referenced that in a couple of your presentations you've done recently, as well as in your writing.

Mike Walsh:
I think the real difference is that being data-led allows you to essentially take that creative further step and really launch new opportunities. I mean, to your example of OpenTable and restaurants, I mean, that's very useful. They know you as a customer, they can make better suggestions, but let's be honest, we've had that since the late '90s when Amazon first started recommending books. But what's happening now, which is even more interesting, is, if you look at Uber Eats, Uber Eats, in the last couple of years, has launched thousands of restaurants themselves. Now, I don't mean they've gone down and they've got a lease and they've done an expensive fit out. What Uber Eats does is that they look at the data about what people are searching for.

Mike Walsh:
So, let's say, in Austin, people suddenly start searching for Thai fusion Tex-Mex. God knows why you would. Sounds disgusting, but maybe there's a critical mass of people that want that kind of food. So, what Uber will do is they'll literally go and start a virtual restaurant. They'll launch it in a ghost kitchen, which is a giant warehouse full of food preparation that is not tied to a physical location, and they'll launch this restaurant and they'll see if there's demand. If it works, they'll expand the resourcing. So, you're at this point now where data is this two-way relationship, not only can you use it to personalize what you offer to the customer, you can actually use it now to generate entirely new products and services as well.

Jim Marous:
The whole product and service area is really untapped, certainly financial services. We're still looking at organizations, that pretty much when they're using data and AI, they're using more from security and risk perspective, they're using it for an efficiency perspective, as opposed to really, even though we talk about a lot, trying to make the customers' experience better. So, when you're talking about building digital engagement and using tactile interactions on your mobile device, how do you see the way we interact and engage with organizations, in the future, changing with regard to maybe voice and other dynamics, where we can actually... Some of this is going to be proactive, as you brought up here, that you'll have the ability to have them actually meet you. Again, I'm on vacation and realizing that where I am has been a major dynamic as to how different of my applications have talked to me. Everywhere from ticketing for events and things like this, that they're now saying, "Okay, you're here. Here's some things you may be interested in," but these are all proactive. But beyond that, how do you see voice in AI moving forward?

Mike Walsh:
I mean, we're in a new realm now, and this is the realm of not digital design or interface design, but truly experienced design. And unfortunately, we're going to go through a teething period where we're going to get a little over-enthusiastic about the toys at our disposal. And for me, the kind of analogy here is, I'm sure you remember, it was in the early days of desktop publishing, when suddenly, people got their first Mac and they discovered there were fonts. And people just went nuts. They produced these documents that had thousands of different fonts on them, and it was a graphic designer's nightmare. They say a little knowledge is a dangerous thing.

Mike Walsh:
And I think this is going to happen as we start to have these new realms. Everyone's excited about the metaverse now as if it was just invented. And so they're saying, "Okay, well, we're going to have banks and digital services and virtual reality, and you'll go into your branch." You know what, probably not, because, once again, with any new format, you've got to say, rather than trying to create a moving escalator, a moving staircase, or a horseless carriage, we've got to think about how these new formats and mediums lend themselves to the design of new experiences. And in the early days of the web, we were designing retail, e-commerce things that we actually were pushing a physical cart through an isometric kind of environment because we were trying to recreate the aisle.

Mike Walsh:
And then we realized, actually, it's too dimensional. There's a smarter way of doing this. So, as we started to have voice and we have augmented reality, and we have some of these new technologies, for me, the guiding principle is not how many toys can we use simultaneously, but how do we make this as natural as possible? How do we make the technology disappear? Amazon Alexa has been an incredibly successful technology because my 80-year-old mother can use it, because, she just talks to it and it understands her. And so, rather than human-like, it's human-level. It's not trying to pretend to be human, but it understands the analog parts of us well enough to create a seamless experience.

Jim Marous:
Well, it's interesting because you've mentioned it here that we have to avoid trying to tether the future with the past. You have to completely rethink it. As you said earlier, starting from a blank sheet of paper is so much more important, because, you look at banking, I don't want to build a brand new account opening experience that makes all the processes faster. I want to avoid the processes. I often reference the opening of an Apple Card, and where the Apple Card, the first screen was, "Here's what we know about you." And you simply validate that that's all right. The second one was, "Tell me what the last four digit government ID." That's to know your customer. The third one was, "Tell me how much income you make." That's another validation point. And the fourth one was, "Here's the rules and reg," which we all just scroll through. And that was it. And you're going, it's four steps, all pre-thought for you. I didn't have to input anything. It was all there.

Mike Walsh:
I mean, look at video games. I mean, you think about it, a 13 to 15-year-old is probably the most demanding and savvy consumer of digital experiences on the planet today. You don't try and get them to read a manual. If you've got a game experience, you actually teach them a little bit as they go, and the interface unfolds as it needs to. And that's because they've learned the hard way that if you don't design games in that way, people don't play them and you don't survive. We need that same rigor in designing experiences for everything, because, let's face it, that generation's growing up. They've grown up listening to Spotify, to playing TikTok, to playing Call of Duty or Halo, and they're going to want that same intuition built into when they open up their first... I'm not going to even say account. ...When they begin their relationship with some sort of financial institution.

Jim Marous:
Well, yeah. I have a nextdoor neighbor that one day said, "Can you pay me through Square Cash? Do you know what Square Cash is?" And I said, "Well, yeah. I'm in the industry. I know what that is." He goes, "Can you pay me that way?" And I said, "Sure." And then the best question always is, "Why?" And even though you think you know why, and he goes, "Well, when you pay me with cash or a check, I've got to go to the bank. And I don't want to go to the bank." And you realize that that's not just one generation. As we're thinking about it now, this was certainly way pre-COVID. Now you're thinking of post-COVID. There's a whole lot broader definition of what audience doesn't want to go into to the branch. It ranges from the youngest to the oldest.

Jim Marous:
When you look at the biggest challenges in banking, I'm going to shift a little bit here to the future of work. One of the challenges in banking and every industry is, is digital technology going to replace me? Right now, we're at a really interesting dynamic in the employment world, where the ability to get employees is really tight, but when you look at it, there's not an employee out there that doesn't worry about, "Am I going to be replaced by a robot?" And in some cases, these people work against you with your digital transformation efforts because they say, "If I help you too much, I'm basically building an outplacement for myself." When you look at this, how do you envision the future when you're talking about future, work, and employees engagement with digital technologies without being replaced?

Mike Walsh:
You're right. It's a weird time to be talking about this subject because actually, the dominant meme is anti-work. The great resignation, people not wanting jobs. And I think part of this is because it's been incredible stimulus. Everyone took that stimulus and bought Dogecoin and Shiba and some other crazy cryptos, and so everyone feels rich right now, so they don't feel like they want to drive Ubers or stack shelves at Amazon or work crappy jobs, which is fair enough, but the unfortunate side of it is it's actually accelerating automation. So, I speak to my clients who work in every industry, from nursing to hospitality, to entertainment, to food service, no one can find people to work. This means that they're doubling down on automation, artificial intelligence, machine learning. So, because they can't fill these jobs, they're actually speeding up their plans to eliminate these jobs.

Mike Walsh:
So, that's going to be a problem because, at some point, people are going to realize they're going to actually going to need to work again. And I think when that happens, it's not necessarily a bad thing, but we need to start to define what a human's good at and what a machine's good at. And it's not a one-stop definition; it's going to change week to week. In a way, part of being a effective human leader or otherwise, in this new environment, is your ability to constantly reinvent yourself. And in fact, probably the key part of a new skill of someone you want to look for in the future, is someone's ability to destroy their own job, to take a matter approach to look back and go, "Okay, is there a smarter way of doing this? Should I be doing this work?" And I don't mean, should you delegate this work, but "Can I find a way to automate this task?" And as though it sounds counterintuitive to self-sabotage your own career, that's actually is probably the most useful thing that humans can do in the 21st century.

Jim Marous:
Well, it's important because... You talk about transformation. We're both in a business that was very human based. We spoke on tour, we're doing all these things, but we had to reinvent ourselves almost overnight. And I know you went through a lot of iterations on what's the role of this studio, what's the role of doing a pre... Do I simply replicate what I did on stage in a studio environment, or how's the difference? We even see what we present being different. But when you are looking at the employees and the future of work and where you're going to work, actually, it all starts at the top. The CEO of Lemonade insurance once said in one of our interviews on Banking Transform, that the biggest hurdle to digital transformation is legacy leadership. You talk about this a lot. You talk about the importance of understanding the power of data and AI and things like this, but how different is leadership in the digital era, and what skills are required from top management to be able to enable these organizations to move to the next level of what they need to do?

Mike Walsh:
There's a great scene in Ted Lasso, which is one of my favorite TV shows, where he's... I don't know if you watch the show, but he's playing darts. And he was talking about... He's always been underestimated most of his life. People, they fail to ask the right questions. And he gives a quote from Walt Whitman, which is, "Be curious, not judgemental." Because if you're judgmental, you are close-minded, you don't see new opportunities, you don't adapt new ways of working, you don't take in more data, whereas if you're curious, you're open to adapt, you're open to change and you might ask something like, "Does someone like Ted actually play darts every Saturday?" In which case he's a total dart shark. And to me, it's a wonderful lesson because I think probably, the single most valuable characteristic in leaders in this new world we're in, isn't your ability to program or code or understand technology, it's really about being open-minded and being adaptable, and critically, being probabilistic.

Mike Walsh:
And what I mean by that is that, rather than try to be right all the time, in a world where you have lots of data, it's actually more useful to, in a sense, try to be less wrong with time. This is something that professional gamblers know really well, because, as you get more information and more data, you can basically update your information and then you can handle uncertainty and ambiguity. So, a lot of the time, as leaders, we're really frightened of being wrong. We want to get all the information and we want to be a hundred percent certain before we take a risk. But in this new environment where things are changing constantly, where we're being asked to pivot, to reinvent businesses, to change overnight, sometimes you have to be prepared to act on 60, 70% certainty.

Mike Walsh:
But that's okay because sometimes by taking action in this environment, we can gather more information which can increase our certainty level, and if not, we can reverse course. And Amazon, they talk about this as the difference between one-way and two-way doors. A two-way door is one where you can easily reverse the decision, in which case, you should act on much lower levels of certainty. A one-way door is a little bit more frightening, maybe it's like strapping a bunch of people to a rocket and sending them to space. You don't want to make a mistake. So you want to be up to a 95% certainty. But honestly, very few decisions are one-way doors.

Jim Marous:
Yeah. And it's interesting, in banking or in any industry right now, the financials of most of these companies are performing quite well. When you're meeting with companies that you're guiding, how do you encourage them to change when, number one, change sucks? Nobody likes change. Doesn't matter how futuristic you are, change still takes effort. And how do you encourage change when everything feels like it's working?

Mike Walsh:
Yeah. Success is often the biggest obstacle to change. I mean, because, not only do you have an inner fear to rock the boat when things are going well, it seems insane to do so. And so we always have to find a burning platform. COVID was a burning platform for most of us, because, even if we'd been very successful, suddenly we were forced to reinvent our engagement channels, the way we did things, where we worked, our workplaces. If COVID had not happened, honestly, the whole digital transformation initiative would be 10 years behind. We would've been talking about these things in 2027, so that made a big difference.

Mike Walsh:
Now we've got to find a new one. And for me, the next burning platform is generational change. And I think once again, this has been accelerated because you've had a whole generation who didn't go to school for 6 or 12 months, they've immersed themselves even deeper into the digital world, they did everything remote, including schooling, their parents are probably home with them. So, all of this, I think has accelerated the behavioral change of that whole generation that really started to grow up during this most recent period.

Jim Marous:
So, it appears that disruption of all types is a new normal for business, and that companies must respond with rapid innovation and rapid new thinking. We found in a research, that the correlation between organizations' ability to transform and their ability to innovate, really has financial ramifications. Have you seen organizations that succeeded in innovation, data analytics, will be more financially successful?

Mike Walsh:
It's one of those things that sounds so obvious that no one would even commission a study on it, that if you don't pay attention to data, you're certainly not going to be successful. But I think there's a deeper issue here, which is, what is the right way to leverage data and analytics to drive innovation outcomes? Because one thing that I see a lot is that people invest a lot of money in technology. They partner with a software vendor who promises them a big increase in collaboration and productivity if everyone's got dashboards and business intelligence graphs, and suddenly, everyone's going to be looking at real-time data and making better decisions. We spend so much time and intention on building a data infrastructure. We don't do the difficult thing, which is try to understand how to build a data culture.

Mike Walsh:
And that's actually quite difficult because it's not something you can copy and paste. You can't take Amazon's data culture and apply it to a completely different type of organization. I mean, there are family resemblances and there are themes that come across, but this is actually a journey that everyone needs to figure out for themselves. Actually, at some level, we're going to hit a point where most of these technologies are commoditized. Everyone's going to have some sort of Cloud-based data analytics platform, everyone's going to have access to Cloud-based AI algorithms and prediction engines. What's going to differentiate a good company from a great one, to a industry-shaking transformative organization, won't be the amount of money they spend on tech, it'll be their internal cultural operating system that they've figured out.

Mike Walsh:
And I'm amazed at how naive we are still about this. We used to talk about Zappos being the ultimate example of great company culture. Okay. Yeah. They were really nice to people when they called up, and did amazing things for service, but when you actually looked under the hood, it was a little loopy in there. And we all know the tragedy that overcome its founder as well. So actually, what a great culture is, is not just about the fun people have at the office or the cookie Zoom hours that people do on virtual. It's actually about the complex system of interactions that governs how people make decisions, how they interact, how they communicate, how they collaborate, and especially, how effectively they can do that in a hybrid environment where some people are at work, some people are in the office. So, this is all still up for grabs. I think during the pandemic, we learnt the hard way, how important it was, but I think many of us haven't solved this problem yet.

Jim Marous:
You talk about the amount of changes going on and the need, as we both agree, to use data, analytics, and AI. Are you finding that most organizations are outsourcing or partnering for that, rather than trying to build it all internally? Because we see in the banking industry that organizations sometimes hold back on decisioning because their data is not right. When a lot of organizations now can work with, what I call, dirty data and apply their solution, but are you finding that not only the engagement of partners, but the importance of speed of getting there is more important than ever.

Mike Walsh:
There's a couple of issues, I think, contained in what you said, which is very true, Jim. The first is that there is a lot of outsourcing going on, and honestly, it's dangerous. I can understand if you are a small organization and you basically don't have the resources to build up your own data science team, but I'm seeing this in very large multinational global organizations. The world's top 50 organizations, some of these players are outsourcing large parts of their data and AI capabilities. Partly is because they want to be seen to be doing something quickly, that they're frightened of taking on the risk of trying to deploy this themselves. But the danger is that none of it's in-house, none of that internal knowledge is being developed.

Mike Walsh:
They've still got their people working in very traditional ways, making decisions in very traditional ways. There's now just another seat on the table, which is sort of the voice of the data sphere, but it's not really deeply embedded into the way they frame opportunities and see the world. And that's a great advantage of a company like Amazon, has done. And people have pushed hard against it. People often find that environment difficult to work in. It's because they've not only built a data infrastructure, they've really built a data culture. And it's hard. It can be a confronting place to work in, where you're always having to argue in the face of cold, hard data. And data isn't objective. Data is subject to biases, how it was collected, how it's used, how it's interpreted. People can be very manipulative with data. So, it's not an easy environment to work in, but it's a necessary one.

Jim Marous:
Well, it's also important that we start to deploy the data. Especially in the financial services industry, we keep on using data analytics, and it stays within a department, it doesn't get deployed across the organization. And we've been talking quite a bit, lately, around the fact that you've got to deploy the results of your analysis to all employees, so they can make better decisions, build better products, serve customers better.

Mike Walsh:
I go one step further. Arguably, even humans shouldn't be looking at the data. It should be deployed automatically into decision-making systems. I mean, this is where the Chinese have been really extraordinary, and I know you've spent some time there. When you look at Ping An Insurance and the whole ecosystem there, they take data from different lines of business and use it to price risk in other parts of the businesses, things that will get the regulators hot under the collar in the west, but it is a slippery slope, but that is the point of the data; if you can't use data to radically reshape your operating model, if you're just creating pretty graphs for people to show to other people to justify their decisions, you are really just scratching the surface of what's possible. The whole point of collecting more data and using more algorithms is that you can create new types of businesses and go after new types of opportunity. We still look at risk in a very-

Jim Marous:
And reach new audiences. We saw this in China where-

Mike Walsh:
Completely new audiences. Yeah, absolutely. In ways that wouldn't have been cost-effective before. I mean, Goldman Sachs is doing incredible stuff with this right now. I mean, they launched Marcus. Who would've thought that 150-year-old Wall Street bank would launch a digital-only consumer bank, really that started off doing credit consolidation? Who would've thought that these people would be customers of Goldman Sachs? But it's interesting. I interviewed the former consumer chairman there, Harit Talwar. And I did this piece for the Harvard Business Review, and I said to him, "What was the secret of your tech stack? How did you create a technology business inside Goldman?"

Mike Walsh:
And he said, "Mike, please, first of all, do not call us a technology company. We're not a technology business. We're a consumer solutions business." He said, "The secret to our success is actually largely due to our organizational structure. We did a big agile organization. Everyone's part of pods, which are these teams that are focused on consumer problems. So you could be a lawyer or a marketer, but you're still part of a pod that's focused on someone onboarding a new customer or someone changing their password." So, that relentless focus on constantly innovating around the customer experience, that is what data is for.

Jim Marous:
It's interesting because it all comes back to data analytics and experience, and it seems simplistic, but really when you're taking a legacy organization, it really takes, as you said, a cultural change. And you've written recently, and I've talked recently about the whole concept of building a challenger bank culture, a challenger culture, trying to change the way you do things. And you likened it to; you got to be careful because you don't want to get into a situation that you're having your midlife corporate crisis, where basically, you're trying to be the teenager when you're really the 50-year-old or older in my case. But how do you build this? How do you rebuild an organization? How do you rethink an organization that has some great foundational aspects to it for the future?

Mike Walsh:
I think you really have to do two things. You've got to, number one, see the world through the eyes of your customer. You have to follow the customer wherever they are, no matter whatever weird places that takes you. And you have to look at it through different customers as well. So, your existing customers, your legacy customers, and your new customers, which, let's face it, are your kids or your grandkids. So, that's the first thing. And the second thing is you got to work backward from the future. So, you might have this vision of people using augmented reality and voice systems, and you might have this incredible vision of 15 years out and it's all cryptocurrency-based and blockchain, but you've got to work backwards from that and say, "Okay, in order for that to exist in 15, 10 years time, what things need to be in place five years time? What needs to then be in place in two years time?"

Mike Walsh:
So, you've got to work back on the foundational infrastructure, the critical markets, the support and buy-in from regulators, from your key customer segments. This is how you build a plan and a bridge to tomorrow. It's not just creating vision statement or expensively produced videos about a vision of the future. You've got to be quite pragmatic about what has to be put in place foundationally for these things to happen. Apple's been ingenious at this and drives us nuts sometimes because you sort of know that Apple knows exactly what iPhone 20 should looks like, but they're not just drip-feeding technologies to us, they sort of know that you need a certain critical mass and a maturity around customers' understanding and their use models before you can hit them with something else. So, for example, we know that Apple's probably going to bring out some kind of augmented reality eyewear next year. It's going to be-

Jim Marous:
I just wrote about that this week. Yeah.

Mike Walsh:
Yeah. And you know what, it's going to be okay, just like the first Apple Watch was okay, the first Apple TV was okay. The fanboys are going to buy it, they're going to love it. Everyone else is going to go, "Don't quite get it." But what they don't realize is that you've been psychologically prepared for the metaverse for years. You've been wearing devices that are measuring your vitals, you are using augmented reality and LIDAR on your iPhone and iPad, you've been catching Pokemon, you've been collecting content, increasingly high levels of resolution. So you are actually being trained to do stuff, in a sense, like we were talking before, like a video game, which gives you just what you need to know when you need to know it. So, this has been a long run up to something which is going to be huge, but people brought out these technologies 10 years ago and we weren't ready for them, and so they didn't go anywhere.

Jim Marous:
Well, nobody wanted to wear big goggles, but you look at that... You bring up the watch. If you'd looked at me eight years ago and said, "You're going to wear a watch again," I go, "Why? I have a phone? Is it that difficult to look at a phone to see what time it is?" And then they made the functionality of that watch better and better. I use it every day and often every day, simply for tracking fitness and for doing other things using my voice. We look at the future and we realize that the engagement, the experience, again, it's a foundation upon which everything else is built. So, I'm going to do a little bit of a pivot here and get into the whole concept that really got elevated during the pandemic, which the whole issue of sustainability, including the environment, social equity and equality. How important is that going to be as far as how we frame experiences and engagement and use that in AI in the future?

Mike Walsh:
I'm not sure that they're so linked to the question of engagement and experiences as much. They're linked to really a kind of a broad shift to, I would say, a value based economy. So especially for the next generation, there is this sense that corporations are not outside of the broader social debate on what is the right thing to do for the environment, for society, for questions of equality. And it's challenging because it's political, and it shouldn't be political, actually. That's the weird thing. These should be universal. And I don't mean that in a political way. What I'm saying is that if you look at it in some societies, you've got very strong cities and strong councils who handle taking out the trash and managing that at a community level, that you're having the right housing and you don't have ugly development and you have enough trees.

Mike Walsh:
They're not political considerations. It's just a shared resource that we're managing. So, that kind of thinking now needs to be scaled up to corporations that are bigger than countries, and I think it's a positive thing. And I think that if organizations and companies aren't proactive on that, they're going to face activist shareholders and activist private equity, which is already starting, and they're going after traditional energy companies in this way. So, it's going to be a big part of the future of not just regulation, customer activism, but also the way we think about investments and ETFs and things like that as well.

Jim Marous:
So, finally we realize that... You take on the role of futurists, but everything got thrown out the window two years ago. I'm in Phoenix, Arizona. When the last time I was here was on March 12th, 2020. That for me will be a day in my life that lives in infamy, because, the day the sports world shut down, I came out here to see baseball in Phoenix and going to see spring training I had done for 20 years previously. We arrived here, they had a little bit of a rainy day, and they said, "We're not sure if we're going to play." And then within two hours, the NCAA championship shut down, the baseball season shut down, everything changed instantly. So, as you look to next year, Mike, what do you see is happening that will maybe surprise us or maybe just be a transformation of where we are today?

Mike Walsh:
I wish you asked me this question in four weeks because, honestly, I think it's very hard to call because of the increasing number of variants. There is a high probability that next year will be harder than this year. And it's harder because we've had a bit of taste of freedom. People don't want to go back under control, under regulations. They're sick of working from home, they want to be out, they want to be interacting. Human beings are social creatures. They want to be shopping, going to the movies, they want to do stuff and they want to travel. And at the same time, all of these things are incredibly difficult right now. So, what I hope is that I think we're going to face a really big challenge, which is, in the workplace, how do you get hybrid work to function effectively.

Mike Walsh:
Hybrid is much harder than in the office or all at home, because, the difficult thing is not the technology. We can all use Zoom now, we discovered, we've learned not to use cat filters inappropriately, but what we haven't learnt is how to build a distributed organization with delegated authority that allows people to make decisions effectively without all physically being in the same place together. I see people in offices on Zoom, trying to create level playing field. I see people, in the conference rooms, calling in people remotely, and then as soon as the calls are finished, the actual decisions get talked about in the room. Som this is a disaster and we're going to have to really figure out that next year. And if we can solve that, honestly, the future of work will be a much more interesting place.

Jim Marous:
It's interesting, I've been talking recently to people, the biases of a hybrid workforce, because, you think about those people that can't come into a workplace right now because it's hard to get daycare, it's hard to get other things. And invariably, there's going to be a bias because you have a situation that most of the people that need to, have to work at home, are going to be females and minorities. And how do you level the playing field for those people that have to work remotely, without having to bias against those people that don't come in and interact in what we call the normal way. There's some interesting dynamics. The future worker, as you look at it, is the foundation upon which everything else is going to be built and how fast it can move forward. So Mike, really appreciate the time you spent with me today and with our audience. How do people find out more about what you're thinking, what you're doing, and what you're saying in the marketplace?

Mike Walsh:
Yeah. Listen, it'd be great to connect with your audience. They can follow me, it's at @mikewalsh on Twitter, Instagram or LinkedIn. And of course, you can check out my book, The Algorithmic Leader, on Amazon or Audible. And I've got a YouTube channel as well, which is actually just youtube.com/michaelwalsh.

Jim Marous:
I'd recommend to everybody. This is something I do regularly, because, if you want your mind to move forward, Mike continues to do that. And he also brings it to a foundational aspect that makes it so it's not only understandable, but it's achievable. And I think that's the most important thing that Mike has to deal with, I have to deal with recently, which is, people talk a good game, but they don't move forward many times because there's pain to that and change sucks. And I recommend that everybody follow Mike and follows his YouTube channels, read his book because it really gives you a foundational aspect as to what you need to do to go forward. Thanks again, Mike. Appreciate your time.

Mike Walsh:
Thanks Jim. It's been a pleasure. Good to see you again.

Jim Marous:
Thanks for listening to Banking Transformed. If you enjoyed today's podcast, please make sure you followed on your favorite podcast app. Also, if you have a chance, give us some rating as to how you enjoyed our show because it's real important when we try to find new guests and we try to move the podcast forward. This has been a production of Everett Green podcast. A special thank you to our producer, Leah Longbrake, our audio engineer, Sean Rule-Hoffman, and video producer Will Pritts. I'm your host, Jim Marous. Until next time, remember as Mike Walsh said as he quoted Walt Whitman, "Be curious, not judgemental.

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