What leasing companies can learn from the IT industry
I’ve been following some interesting discussions around two fundamental questions: ‘Why does leasing exist?’ and ‘What is the future of leasing?’. One of the most interesting discussions took place at the Leaseurope CEO council, where industry leaders exchanged ideas related to innovation and attracting talent. Some of the world’s leading IT companies were used as benchmarks in terms of attracting the top talent and therefore being able to remain innovative. Although the leasing industry clearly has quite different characteristics to the IT industry, I believe there are several lessons to be learned from the most successful IT companies. There is no reason why a similar level of success couldn’t be achieved within our industry.
When we talk about IT companies we often focus on a handful of world leaders in different sectors of an increasingly broad industry. Companies like Apple, Google, Amazon and Facebook represent a small fraction of the companies in the field of IT, and hence my first conclusion is that instead of talking about best practices across the entire industry, the most interesting lessons can be learned from a small number of pioneering companies. In a similar fashion, I also believe that within the leasing industry we could see increasing polarisation, where the pioneering companies find new and innovative ways of attracting the top talent and developing new value-adding services, while others remain stuck with the old ways of doing business. So rather than trying to copy best practices from one industry to another, I believe in benchmarking and learning from each other at a company level.
So what makes the leading IT companies so special? Although there are as many answers to this question as there are successful companies, there are a couple of simple observations that can be made. Firstly, all these companies have managed to properly answer the question, ‘Why do we exist?’. I don’t think they are that interested in why the IT industry as a whole exists but, just like Apple, they have built successful businesses in collaboration with their employees, partners and end customers based on the meaning of their own operations.
Collaboration leads me to my second observation: none of these companies would have achieved success alone – the value-added services they offer are always based on specialisation enabled by ecosystems. The different players within the different ecosystems may have very different roles and reasons for existing, but they can all be very successful with different approaches – as long as they stay true to their core business and beliefs. We are currently witnessing a very interesting battle of the ecosystems, where Apple, Google and Microsoft are all vying to win out as the leading platform for the mobile era after the dominance of Windows since the 80s. Nobody knows yet who’s going to win, but my prediction is that instead of technological superiority, the winning strategy will be based on effective management of the entire ecosystem.
My third observation is related to time horizons: the most successful businesses have been built for the long term. Instead of chasing quick wins and cutting expenses in the short term, the most successful businesses have continued to invest in new innovations – and they have never stopped dreaming. A great example of such long-term thinking is the letter sent to shareholders by Amazon’s CEO Jeff Bezos in 1997 when they went public, where he explicitly stated, “It’s all about the long term.”
So how do these three simple observations apply to the leasing industry? My humble opinion is that each and every industry player should first define why they exist. After that we could begin to view the leasing industry as a great ecosystem or platform with many different types of players, who together can provide amazing new services and added value for end customers, vendors, consumers – and society as a whole. These value-adding services can be related to more sustainable ways of using fixed assets, improved ways of distributing capital to the real economy, further development of global e-commerce, or something completely different. However, these goals can only be achieved if businesses are willing and able to take a long-term view and have the guts to continue investing in it. We’re already seeing new entrants to the industry taking advantage of the great opportunities to be found in asset finance and related services. These new entrants have already figured out why they exist, how to create winning ecosystems and how to run a business for the long term – and we have seen in the IT industry how a new entrant with this knowledge and commitment can quickly become a globally successful business. In order to stay ahead of the pack and maintain competitive advantage and customer loyalty, it is vital that the leasing industry’s current leading lights continue to innovate and invest in long-term business models. The lessons are already there for us all to see.