When you lack resources, but you have great ideas. How did Siemens Financial Services start its digitalization?

How is the need for innovation born at a large company? What is the similarity between corporations and start-ups? And is every organization prepared to face the challenges that arise when creating new services? I will try to answer these and other questions in this article, sharing my experience from implementing the SimplyLease online leasing service at Siemens Financial Services.

As Manager of the Innovation and Quality Department in Siemens Financial Services (SFS) in the years 2016–2017, I was responsible for establishing the business principles, then designing IT applications and changing internal processes for the new Siemens SimplyLease product. I then developed this service from 2017 to 2019, adapting it to market requirements. So as you can see, I experienced firsthand numerous situations that can happen to the person responsible for innovation at a large company, as well as witnessed a multitude of intriguing changes.

Creating a new sales channel and a new product required months of work involving, among others, market analysis, risk assessment, building IT tools and legal solutions. However, here I would like to focus primarily on the very process of generating ideas, searching for the best solutions and the know-how and resources needed to implement them. We must remember that a few years ago the leasing industry differed quite strongly from the banking sector in terms of technological advancement and, to say the least, it did not belong to the avant-garde of the financial sector.

The idea for a disruption

I don't want to repeat the circulating wisdom that the one who doesn't move forward in business automatically retreats, but there is something to it. Because even if for a few or more years small optimizations are enough in a given industry, at any time a player may appear on the market, who will change the definition of the service and offer customers a completely new quality. And this can change the balance of power immeasurably.

For the leasing industry, such a circumstance and challenge was the huge growth of the so-called flow of business and B2B sales in e-commerce, initially missed by the greatest players. Customers expected that leasing companies would finance the purchase of fixed assets of decreasing value — not for a few hundred thousand zlotys as in the past, but for a dozen or so, if not a few thousand zlotys (for a small ticket). And this could not be provided by any company through traditional sales channels in a cost-effective way.

When the innovation department was established in Siemens Finance, its vision was only just being formed. For the first few months, we were implementing the most urgent optimizations, which were supposed to improve the quality of services and increase performance, but all the time we were looking for an idea for real innovations. We read articles online, went to industry and new technology conferences, looked for ideas inside the company and talked to our business partners. Each of these threads brought new inspirations, from which the idea of online leasing finally emerged. And then, loans for companies that would be granted remotely and without signing paper documentation.

Based on my experience from that period, I could formulate some basic insights for corporate innovators:

• It is good to set a specific goal for innovators, e.g. to create a new high-margin service, but give them a lot of freedom of action, the possibility to specify the goal and time (for example a year) to develop new ideas;
• The more diverse the team that deals with innovations is, i.e. the more people with different work experiences there are, the better;
• From the beginning, the whole organisation should be prepared for change and be aware of the need to cooperate with the innovation unit, in order to eliminate internal barriers, because a change of thinking at a large company resembles severe flu;
• Innovation is a process that from the very beginning should assume experimentation and the possibility of making mistakes, which is what corporations often don't understand and want to have a finished product right away, instead of creating cheap prototypes; 
• Innovation should be considered when the company is doing well and when a specific budget can be allocated to it, which in digital services should, in my opinion, oscillate between PLN 0.5–1 million.

I must admit, that although not all of the above conditions are easy to meet in real life, the mere awareness of the need for new solutions in the management of a company is already a great deal. It’s the basis for further actions, observing the competition and looking for the best partners with whom to implement innovative ideas.

The innovation department in corporate as a startup

The head of the innovation department (or an employee who, as a lone ranger, tries to innovate in the company) is in a similar situation to the founder of a startup. Both of them create the idea for a new business, both of them have to obtain funding (which in the case of the innovation department means convincing the company's management of the new idea), find technological partners and create a working prototype. But most of all, they have to confront this (more or less advanced) prototype with customers' expectations and gain as much feedback on the service as possible from the very beginning. They must also take care of cost optimization and organise the implementation process. In the case of corporations, there is also a necessity of obtaining several approvals, moving around in a maze of internal regulations and securing the support from other departments.

Neither of them, the corporate innovator nor the startup founder, when starting to implement the plan has, in my opinion, full knowledge of all aspects of the project. Even if their expertise from a given industry is outstanding, the challenge might be the technological or legal aspects, know-how in project management or simply obtaining resources for its implementation. Even the best idea is not enough to achieve success.

As I’ve mentioned before, generating a new service is a complex process that requires abundant activity and creativity. Here you can apply special Design Thinking techniques or act "reasonably", by doing extensive market research and being inspired by things from outside your field and — in case of corporations — industry startups. Especially here you can see the positive impact of diversity in the innovation team, in terms of its individual members’ backgrounds. A wide network of contacts and extensive professional experience are extremely helpful in this aspect. It is similar in many startups and often their founders are people with various competencies that combine business with processes and technology.

From idea to implementation

A major challenge faced by Siemens Finance's innovation department was to find a company that could create the new service with our team. We weren't looking for a typical software house, because we also needed profound knowledge of project management and mutually inventing technologies that would be added to our service, in order to make it convenient and user-friendly for the end user, i.e. the entrepreneur. To tell the truth, finding such a partner wasn't easy at all, since at the time there weren't (and still aren't) many companies as such on the market. In addition, the contractor had to ensure an appropriate level of safety and quality of the service provided.

One of our business partners contacted us around that time with Startup Development House, who were active on the startup market, mainly in Norway, and already had experience in creating digital solutions for small "tickets". How little experience we had back then in designing new solutions can be proved by the fact that we were impressed even by the quick presentation of the system mock-up by the contractor, just a few days after passing on the functional requirements. The mock-up was then used for interviews with customers, which were organised for Siemens Finance by a research company.

Someone might ask, why Siemens Financial Services did not use its own IT department to create a new solution? The reasons were mundane. First of all, our colleagues did not specialise in some software languages, and secondly, our IT department, like such departments in most companies, was primarily concerned with maintaining and developing the main IT system. The SimplyLease application was an additional tool, designed to create a new sales channel. Therefore, it required additional resources to be created, implemented and later maintained.

Outsourcing in digitalization

In my opinion, involving an experienced external company in the process of creating and implementing innovations is the best decision a dedicated department, as well as the whole organisation can make. 

I would list here 3 main reasons:

• First of all, their well-thought-out and battle-tested processes provide increased efficiency and safety. The company's employees, in this case my team, still lacked experience and knowledge of the market of external service providers (such as online payment or qualified signature). Naturally, we were also more focused on internal tasks than on project activities. Yes, I mean reporting and creating presentations!
• If our partner has already delivered many projects in the past, they should know perfectly well how to manage resources in their company, so that they aren’t missing at key moments. I must admit, that it was us being encouraged by the PM from an outside company to test faster and provide feedback, not the other way around. Of course, sometimes we also pushed! This mutual motivation gives substantial results, provided the communication is efficient (we used the Slack tool for the first time).
• And perhaps the most important reason in the whole puzzle is limited resources. Everyone who has worked for a large organization knows how difficult it is to pull this off, how difficult it is to get new jobs for ventures that don't bring immediate results. Using an outsourcer, who at the same time acted as an advisor, led us in the project and provided software, contributed to the final success.

Wise textbooks also say that if you want to digitally transform your company, you should take a fresh look at your processes. But most people have natural difficulties in going back and looking at their business from a wider perspective. It's easier to cope with this task by looking from the outside and ask the strangest and seemingly naive questions that a corporate employee would be ashamed to ask but an external consultant would ask with a smile. These are questions like "why do we check this contract twice", "is the collected data necessary" or "do we need this attachment", very close to the Lean Management philosophy. When creating innovative services, it’s worth not repeating the same old mistakes!

No resources? Do not panic

Innovation is not the easiest thing in the world, because if it was, all companies would constantly be introducing new brilliant services to the market. But innovation is necessary and cannot only bring big profits, but also give a lot of satisfaction to their "mothers" and "fathers". Anyone who has implemented something new in a large company knows exactly what I’m talking about. And everyone would certainly like to have as much support as possible in their actions.

If your company is involved in the production of new information technologies and project development is a core of its activity, my insights probably don’t concern you. Such organisations have internal resources to design and implement further applications or other services. But innovation applies to almost all industries, including those seemingly distant from new technologies. Everyone would like to have better, more efficient processes, reduce costs and at the same time impress their customers. And for the latter group I have great news: The lack of resources and experience in projects is not the end of the world!

If you are interested in digitalization and you are looking for a tech-partner who can support you on your digital transformation journey, please do not hesitate to contact us:  hello@start-up.house