‘Failing fast’ has increasingly become a clarion call for its proponents to rally their organisations into action and embrace the risk that something might not work enabling them to quickly adjust and experiment until finding the right solution. The intention and value of ‘failing fast’ is clear in certain situations such as agile software development, or in changing cultural attitudes in bureaucratic organisations so that permission is granted to experiment.
However, within financial services care needs to be taken that ‘failing fast’ doesn’t become a mantra to embark upon initiatives in the name of disruption with little regard to the risk to the organisation and accountability for the consequences of failure.
When it comes to the development of investment and wealth management products the possibility of ‘failure’ is something that shouldn’t be aspired to or be seen as a badge of honour. The investment and wealth management industry is littered with unprofitable investment products and under-utilised platform features. Sub-scale products result in significant cost to organisations as they wait in vain for the product to gain market traction, and then indefinitely manage ongoing legacy issues such as regulatory, tax, distribution-partner or client service requirements.
Despite the ever-increasing importance of technology in this Fin-Tech fuelled world, developing an investment product to offer to retail or wholesale investors is not the same as developing a standalone piece of software or an app. Trustees, Responsible Entities and management in general have a different set of risks, regulations and customer obligations in which to adhere to. The requirements are more onerous, and the implications of a failed product can last for a long time for both the product manufacturer and the customer. The cost of just ‘getting it out there and seeing if it takes off’ is just too great.
With the right approach to product development the positive intentions of failing fast (innovation, adaptability, speed to market) can still be achieved while mitigating the risk to the business and protecting the client. Five key elements that enable rapid and adaptive product development in the asset and wealth management industry are:
- ‘Quick and dirty’ feasibility analysis. Many inputs into a product development business case are by their nature difficult to accurately predict, however, without some estimate of market potential you are flying blind. Undertaking quick-fire analysis with sales and finance teams enables an organisation to quickly size the opportunity while avoiding ‘analysis paralysis’;
- Collaborative strike teams. Cross-functional, collaborative teams with key experts from sales, marketing, operations, IT, finance etc. can quickly identify issues and roadblocks and come up with alternative solutions. Importantly all members of the team must have a common sense of purpose and belief in the initiative being developed, and must be supported by strong project management discipline. Include your best people to create a crack team;
- External insights. Involving clients/advisers/gatekeepers in the product development process provides opportunity for prototyping and adapting the product offer in response to market feedback (customer centred design does this well) thereby decreasing the risk of failure;
- Strong, on-demand product governance. Product governance groups which are well informed and empowered to make quick kill decisions create an efficient product development process rather than simply giving birth to the next sacred cow. These groups of senior business representatives must be able to meet as required, rather than at a pre-determined time slowing the product development timeline further;
- Take the ‘fast lane’. For initiatives where the risk is identified as low, or the business imperative is the highest, the existence of a fast-tracked process with streamlined analysis and governance can markedly increase speed to market. The rationale for the fast-tracked approach needs to be widely understood and supported by increased prioritisation and resource allocation.
Product development by its nature is a risky undertaking and is too important to court failure. However, when done well, investment and wealth management product development can still be adaptive, nimble and fast, while being mindful of the need to minimise the risk of failure.
How Shoreline can help?
Shoreline’s Product Advisory Services practice specialises in all aspects of asset and wealth management product lifecycle. We have deep expertise in the development and implementation of product development frameworks and well as extensive experience in the delivery of major product initiatives.