5 Tips On Using #Innovation To Grow Your Business Heading Into 2017

Anthony J James [AJ] Innovation, Digital TransformationGlobal Head of Digital & Innovation, Growth Strategist, Global CMO, LinkedIn Agency Publisher of the Year - Asia Pacific
We are in an environment  of - uncertainty of new technology disruptions,- supercharged connectivity, financial and geopolitical turbulence, - supplier consolidations and - a dramatic increase of data breaches 
Business leaders need to consider how to invigorate a possible stagnant (or worse dying) organisation to reach full potential, and set the RIGHT goals and strategies for growth in 2017.
Innovation is key 

I am passionate about digital transformation and innovation, and I believe...

"...organisations and agencies that consistently explore  culture and innovation, as a part of their business strategy, will realise significant returns"

Innovation is about seeing the dots and connecting them. It’s about deeply understanding the client’s business problems and together developing solutions that solve the problems to generate growth.....However, the  fundamentals need to be put in place. 

From my experience, there are 5 key elements that contribute to transforming a stagnant organisation or agency into a dynamic, thriving, and evolving place to work. 

#1. Experiment, Fail, Learn, Repeat


If there is one quality that deeply impacts innovation and digital transformation projects within all businesses, it is the ability to learn! Many lack this quality in spades, chasing or waiting for the next brief from the client and diligently and carefully responding point-by-point. Innovation simply CANNOT exist in an environment that is not receptive to idea sharing and open discussion – ensuring natural ideation takes place. This learning goes hand-in-hand with a willingness to fully embrace collaboration 

Businesses that have become stagnant may have fallen victim to a resistance to change, sit within a siloed structure, and may have forgotten it’s ok to make mistakes – as long as you learn from them, and be willing to share this learning across the firm – then innovation can flourish. 

* Note: the mug was 'borrowed' and is available from @StartupVitamins

#2. The Attitude Adjustment


Any attempt by management to create change must come through a culture that presents an open, honest, and collaborative work environment and that encourages sharing and the exploration of new ideas and concepts.

Cultures can be incredibly hard to shift, but a culture can also change from dormant to energetic and innovative overnight, literally. Being fearless has driven some of the most creative innovations in our time.

Planet Innovation has spent enormous effort recruiting entrepreneurial thinkers. "We look specifically for people with deep technical expertise coupled with broad commercial acumen. Once on board we mentor our staff to seek diverse experience, share their challenges and champion their ideas" said Stuart Elliott, CEO at Planet Innovation. This key ingredient to an innovative culture, "people" saw Planet Innovation being named Australia’s Most Innovative Company for the second time in three years by Fairfax’s BRW, Australia’s premier business publisher.

#3. Trust Culture


For any kind of innovation to exist, staff must feel as if they are part of a culture in which it is safe to share their ideas and where they are valued for their perspective. We all have different approaches, needs and personalities – trust comes when your teams feel that their needs are being met and their voices heard. Once trust is established, the ability to experiment and communicate, move across boundaries, and create a highly dynamic environment will be imminent. 

#4. Celebrations


In order for any business to experience innovation, there must be a fundamental importance placed on employee recognition – to reward and recognise those that have put in the effort. This does not always need to be money and bonuses. The new employee of today wants their “15 minutes of fame”, and simply recognising them in front of their peers at the next staff meeting might do it. Wins should be celebrated, the added benefit is that it generates healthy competition to encourage others, and it also generates greater knowledge and awareness in the broader team. 


#5. Experiment, Experiment, Experiment


Experimentation and failure are key contributors to innovation

Any organisation that is looking to innovate, especially as it focuses on the year ahead, will need to give their staff the freedom to try new things and shoot for the stars. “No” needs to leave the vocabulary now! The most successful people are those who are not afraid to fail and find excitement in learning, growing and developing as a result.

These are just the first five simple steps to invigorate growth for your business through innovation. However, it is important to remember that there is no magic formula for innovation. Businesses and agencies should always experiment, fail, learn and repeat, with a view to identifying what will work best to achieve business goals and objectives. Doing it the way it’s always been done, not collaborating, telling them how and what to do is a sure receipt for failure. 

It is important to remember that there is no magic formula for innovation

Let me know what other core values need to be embedded in your business to have a more innovative culture!

Anthony J James [AJ] Innovation, Digital 

Boiling the frog

Value Creation in the 21st Century from Curt Carlson 

http://www.practiceofinnovation.com/value-creation-in-the-21st-century/#more-1110

FEATURED

Boiled Frogs

The world is entering a turbulent and demanding economic period. Over the past few decades job growth and prosperity have dramatically slowed in America and many other developed countries, including Japan and the European Union. In America GDP growth has declined from 4% in the nineteen nineties to under 2% per year. Larry Summers has referred to this as the “new normal.”This growth rate will not produce the jobs and prosperity needed. If not addressed, this decline will cause major disruptions across society. Going forward America and the world must significantly improve its innovative performance while educating the world’s most productive workforce.

Today’s innovation economy has four distinguishing properties.  Many technologies improve at rapid exponential rates, global competition is intense and increasing, there are unprecedented opportunities for major new innovations, and emerging global markets are huge. Confronting these challenges is daunting. Most companies and countries are failing to adapt to these powerful dynamics.

America’s competition will increase dramatically over the next few decades. In China two million people move from the countryside to the city each month. Going forward America is competing against four new cities the size of NYC every year. 

The pace of innovation is accelerating. As exponential improvements in information, communications, and artificial intelligence technologies advance they create new tools and capabilities. The positive feedback from these developments makes the world increasingly transparent and competitive, further accelerating the pace of innovation.

Companies are finding it more difficult to survive. In 1930 large companies on the S&P 500 list had lifetimes of roughly 70 years before dying or being bought. Now their lifetimes are well under 20 years. For the first time in U.S. history 200,000 more companies are failing each year than being born. Even in Silicon Valley most venture capitalists lose money. University “tech transfer” programs are mainly unsuccessful absent a major drug license, like NYU’s Remicade. Almost all measures of innovative output show poor results. Our innovative performance is like the poor product quality before Total Quality Management (TQM).

Going forward America will not have the most RD&I professionals or the most resources. China has more honors students than America has students, and Asia already spends 50% more on RD&I than the U.S.  For America to win its share of jobs and prosperity it must leverage its core strengths and work smarter. 

The need for greatly improved innovative performance is being amplified by automation. Autonomous cars, trucks, and buses will eliminate up to three million jobs. Over the next decades years various forms of automation may eliminate half of today’s jobs. Robotics, 3-D printing, bio-engineering, plus many other exponential technologies, along with new business models like Uber, will reshape almost every industry. 

Given today’s poor results, many government RD&I agencies are rethinking their initiatives and policies. Too often the impact of their current initiatives is inadequate. In Finland, the lack of RD&I success resulted in a 23% cut in Tekes’ 2016 funding, their equivalent of NSF. In America I-ARPA and ARPA-E were modeled after DARPA, which is generally considered to be the world’s most successful innovation agency. Japan’s ImPACT program for creating major commercial innovations was also modeled after DARPA. Singapore’s CREATE initiatives are joint RD&I centers between their universities and others, such as MIT, Cambridge University, and ETH Zurich. NSF created the I-Corps program to teach students and others the basics of value creation. DARPA also uses “grand challenge” competitions to create new innovations at the speed of the innovation economy. 

Increasingly universities are responding to these challenges. They understand that students need innovative skills to thrive in a world where rapid, constant value creation is a necessary life skill. For example, Finland created Aalto University, an “innovation university” with a comprehensive projects-based curriculum. At Stanford University, the highly desirable d.school and Bio-X experiential programs are now emulated internationally. WPI pioneered a highly-influential projects-based curriculum in 1970 called the WPI Plan. It includes team projects performed around the world, including in India and China. Olin College has more recently pioneered one of the most far reaching projects-based curricula, with no discipline-specific departments and no tenured professors. 

Today only a few professionals and enterprises have the innovative skills and value-creation processes to identify and systematically develop major new opportunities. The few that do, such as Apple, Google, P&G, GE, SRI International, and IDEO, are all leaders in their fields. Recently improved value-creation processes are being developed, such as Agile and Lean. For creating major new innovations the value-creation practices described in the 5 Disciplines of Innovation and the Innovation-for-Impact methods described here are required. 

In addition, companies are increasingly using other models, such as the X-Prize and Google-X “grand challenges” to drive innovation. On-line competitions from Kaggle and many others are producing impressive outcomes. These programs are showing that large systemic improvements can be made.

What today’s successful company, government RD&I, venture capitalist, and university programs all have in common is the strict adherence to proven value-creation best practices. The key ingredients are:
1) a focus on important opportunities,
2) complementary teams composed of the best practitioners,
3) a “playbook” for value creation, and
4) intense, continuous team ideation.

If the opportunities are not important then they are rapidly overwhelmed by global competition. Only the best, most committed teams win in a hyper-competitive world. The playbook assures that everyone on the team has a shared understanding of the concepts and processes required for innovative success. Intense, continuous team ideation is required because exponentially fast learning is required to stay ahead of the rapid, exponential improvements in technology and the competition.

The value-creation best practices summarized above are just the start. In the coming decades America will be in a profoundly more competitive and challenging world. Even better best practices must be invented and used (see The Transparent Company). Ad hoc innovative approaches guarantee failure. Only the rigorous application of value-creation best practices can lead to systematic world-changing R&D and high-value innovations. 

As previously with TQM, the comprehensive use of value-creation best practices produces transformational results. Improvement in innovative impact of ten or more times is typical. As importantly, developing a U.S. workforce where engineering graduates understand and apply these skills will allow America to continue to lead in the creation of new, high-value, global innovations.

In a future post I will describe the process that GM went through at the NUMMI manufacturing plant to learn and apply the Toyota Manufacturing System, Toyota’s version of TQM. GM took 15 years to take the lessons of NUMMI seriously and then it took another 10 years to implement them. 

Many of those lessons are the same as today’s organizations are experiencing trying to adapt to the demands of the global innovation economy and the use of value-creation best practices. But today companies don’t have 25 years to adapt and they are not likely to be bailed out by the U.S. government with a $50 billion dollar loan. If they are not going to be another boiled frog, they better jump fast.

Innovation is deeply counter cultural and a mindset shift is necessary

Innovation is deeply counter cultural and being entrepreneurial is a mindset - the question is ..... can an entrepreneurial mindset  and a bureaucratic mindset work together?

I think both are needed to create an innovative culture that works.... See Steve Denning's figure 3 below

If you turn figure 1 upside down and the small boxes become customers .... And the big box is the leader supporting the team vs "ordering the team" and in each box, you have figure 4. .... Maybe you have the workings of a successful ecosystem.

It's not easy trying to innovate while keeping order in an ecosystem ....

- However it is key to empower the innovators and the crazy ones to be different and challenge the status quo.

- It is key to encourage collaboration to challenge the order and find new ways of working 

- it is all about creating an entrepreneurial mindset

Idea

- create groups of people meeting regularly, collaborating and being facilitated by a top coach .... Outside their normal job .... with a view to get to know like and trust one another .... So they can feel comfortable in expressing their views and thoughts - without the fear of being ridiculed.

(Look at the power of this i4j group!)

If you understand the problem.... The solutions start flowing. 

Steve a Denning writes

"It often feels like we’re trying to get a dog to stand on its hind legs," as Gary Hamel said back in 2012. "You can do that, but you can’t get a dog to do that for long. It’s a DNA level problem. A dog has the DNA of a quadruped. Once you turn your back on the critter, and you put away the treats, the dog is back on all four legs. Any innovation effort must start by acknowledging that innovation itself is deeply counter-cultural: we’re never going to build a truly innovative company without a gene-replacement therapy. Without that you’re going fail. You’re going to try something and then be disheartened when you discover that three months or six months later, the dog is still peeing on lamp-posts rather than doing the tango." 

http://www.forbes.com/sites/stevedenning/2012/12/04/gary-hamel-on-innovating-innovation/

There is no getting away from it: innovation is a mindset problem. 

The track record of trying to ease people into a mindset shift by way of a process alone (and getting to the question of mindsets later) is not a happy one. 

Mindset are nested in systems: individuals, organizations, communities, societies, language groups etc. So one may be looking at change at many levels depending on the level one is focused on. This just underlines what a big, long-term challenge it is.

 If people find the prospect of fundamental mindset shift too daunting, then maybe they shouldn't begin? Maybe they should wait until the pain gets so great that they have no choice?

Geoffrey West’s work at the Santa Fe Institute suggest that mature corporations have a very difficult time changing their mindsets: https://www.edge.org/conversation/geoffrey_west-why-cities-keep-growing-corporations-and-people-always-die-and-life-gets 

Cities, on the other hand, tend to survive indefinitely. Perhaps the difference between Singapore and a corporation can be understood through this complexity lens…

If managers have an entrepreneurial mindset, it hardly matters what process they use: the mindset makes it come out right (although it does help if it is a good process (playbook)). But if they don’t have an entrepreneurial mindset, hardly any benefits ensue, no matter what the process. The bureaucratic mindset instinctively implements the process wrong. 

Changing a mindset is hard work and doesn’t happen overnight.  In many cases, it takes months or years. In some cases, it doesn’t happen at all: the bureaucratic mindset, based on years of MBA training, experience and groupthink, simply cannot be changed. The only solution is death or retirement.

The most frequent impediment to change we encountered is the thinking: “I don’t have to change. It’s my staff who have to change. So let’s put them through the process - the playbook and everything will be hunky-dory.”  Never works.  

Even if the process changes the mindsets of some of the people taking the training, it results in an organization at war with itself. You have to change mindsets throughout the whole organization. Otherwise the bureaucratic mindset at the top will prevail. 

​Bottom line: entrepreneurship is mindset.​

Steve Denning
Forbes blog: http://blogs.forbes.com/stevedenning/ 

Innovation Definitions - Can We Agree on the Basics?

"Our most important innovation is the way we work." Observations by Curt Carlson http://www.practiceofinnovation.com.

Curt  Carlsons definitions of a number of basic innovation terms.  Below are some of the most important.  

Value creation is the process of discovering and creating new knowledge to address an unmet customer, market, or societal need. Engineering R&D and the incubation of new commercial ventures are examples of value-creation.

Innovation is the delivery of a new product, organization, or method that has value to a segment of society.  All significant innovations create surprising new knowledge.  For example, the publication of CRISPR created a paradigm shift in the field of biology; the smart phone fundamentally changed how the world views human communication.  Specific innovations last only as long as they are sustained by making a profit or by other means, such as through voluntary contributions. Most innovations eventually go away or are integrated into new innovations.

Entrepreneurship describes the skills and personal characteristics of those who organize and bring to life new products, businesses, or enterprises. Entrepreneurs exhibit considerable initiative and often take substantial risks.

A Value Proposition describes those core items to be addressed in all productive initiatives, from basic research through to commercialization. The four minimum items are: 1) the societal Need to be addressed, 2) the Approach for the need’s solution and sustainability model, 3) the Benefits per costs resulting from this solution (i.e., the value), and 4) how this value compares to the Competition and alternatives. This is called an NABC value proposition.

Value-Creation Forums are recurring team meetings to accelerate value creation.  They employ best experiential learning and creating principles. Team members present short NABC value propositions, which provides the framework for meaningful discussion. They then receive constructive feedback from teammates — what is incomplete or unconvincing and what is defensible and persuasive? This feedback helps define the research agenda between meetings.  Rapid learning is achieved by observing the different presentation’s failings and achievements, and by the friendly competition to excel that the forums engender among the participants.

A Value-Creation Playbook describes the concepts and collaboration processes needed for performing effective team science and successful value creation. For example, in a multi-disciplinary team, each field has its own unique language and concepts. The playbook provides a common language and conceptual framework for efficient, collaborative RD&I. Several examples of concepts included in the playbook are given above.

NSW initiative to increase Jobs

Last week the Baird Government announced a raft of new measures to help deliver on the NSW Government’s election commitment to create 150,000 new jobs by March 2019.

‘Jobs for NSW’ is a private-sector led, Government backed initiative that aims to ‘tap the insights and knowledge of leading private sector minds to help drive government policy to grow the economy and create jobs.’ 

New funding initiatives for small to medium businesses in NSW include:

1. Minimum Viable Product (MVP) Grants
2. Building Partnerships (BP) Grants
3. Accelerating Growth Loans
4. Gazelle Loan Guarantees
5. Regional Solutions Grants

A program of indirect assistance for Exporters is also under development as part of the initiative.

The following outlines what we know about each of the funding options, how to apply and what to expect.

1.    Minimum Viable Product (MVP)

An expanded MVP grants program is aimed at start-ups yet to generate revenue to assist them in engaging with a potential business customer, or channel to market and to create innovative solutions that address compelling industry needs or market gaps.

Eligible start-ups can receive grants of up to 50% of approved project costs (to a maximum grant of $25,000).

The solution must:

• use an enabling technology, which is a new technology; or
• create a new use for an existing technology that enables new products, services or more efficient processes.

Start-ups must have an ABN registered in NSW, and be either a resident of a co-working space, incubator or accelerator, or a more established start-up business able to provide recent financial statements to Jobs for NSW.

While grants are available across all industry sectors, the start-up must be primarily focused on the development of technology, own the relevant intellectual property or the rights to commercialise the technology and have a relationship with a potential customer who can give feedback or a potential distributor willing to on-sell the technology.

Applications are now open. Businesses can complete a Preliminary Assessment Form online available here, and a Jobs for NSW Advisor will be in contact within 10 business days. Subject to a preliminary assessment, the Advisor will then invite Applicants who meet the criteria to proceed with a full application for an MVP grant.

2.    Building Partnerships (BP) Grants

Replacing the previous Collaborative Solutions grants program, BP grants are aimed at helping start-ups and early-stage businesses already generating revenue to complete pilot projects in partnership with key customers and other entities (i.e. to accelerate market adoption of the business’ products or services).  The program can also assist with funding for new marketing partnerships here in Australia (or overseas) to develop innovative new-to-market solutions. Solutions must use an enabling technology to address a compelling industry need or market gap.

Eligible businesses can receive up to 35% of approved project costs up to a maximum grant of of $100,000. 

Similar to MVP grants, applicants for BP grants must have an ABN registered in NSW, and be either a resident of a co-working space, incubator or accelerator, or a more mature business able to provide recent financial statements to Jobs for NSW.  The business must also be primarily focused on the development of technology (in any sector), own the relevant intellectual property or the rights to commercialise the technology and have a relationship with a potential customer who can give feedback or a potential distributor willing to on-sell the technology.  

Critically, the BP grant application requires a 3 member consortia comprised of a lead organisation (the Applicant), a pilot organisation (usually a customer), and a third partner organisation (a more flexible role that can vary from another customer, a research organisation, a marketer/distributor, a manufacturer, or even a professional services firm in some limited circumstances).  

Applications are open now and the first step is to complete the Preliminary Assessment Form here.  As for MVP grants, a Jobs for NSW Advisor will contact the Applicant within 10 business days to make a preliminary assessment and recommend whether a full BP grant application should proceed.

3.    Accelerating Growth Loans

In the six years to 2014, just six per cent of NSW’s companies – the fast growing small-to-medium enterprises (SMEs) – created over one million new jobs in NSW.  These entities, known as ‘Gazelles’, are a key target for the Jobs for NSW initiative.

For smaller gazelle entities with turnover of between $500,000 and $3 million, a $3.5 million pilot program will offer concessional loans of between $100,000 and $300,000 for a term of between 6 and 36 months.

At least 50% of the loan funds must be used to hire additional staff in NSW, with the remainder available for other expenses to fund business growth. Repayment of the loans will include both principal and interest, with specific terms confirmed on a case by case basis.

In addition to demonstrating they have been unable to secure affordable finance from commercial lenders, applicants must also:

• employ at least 5 people
• demonstrate an average 20% growth rate over the last three years and plan to continue this rate of growth with the support of the loan
• be a non-tax exempt company registered for GST or undertake to become incorporated if successful in accessing the loan.

Applications are expected to open mid-September.  Please get in touch with your BSI consultant today if you meet the criteria and are interested in seeking a loan under this program.

4.    Gazelle Loan Guarantees

For larger ‘Gazelles’ with strong cash flow and turnover between $3 million and $150 million, Jobs for NSW will partner with both the applicant and select financial institutions to enable them to extend loans in circumstances where the company would not otherwise qualify for credit on a reasonable stand-alone basis. 

The measure provides loan guarantees of up to $5m (depending on the proposal) for up to 50% of the amount lent by selected financial institutions. The guarantees will typically have a term of 2 to 4 years and a concessional interest rate relative to the market.

While the emphasis is on job creation, funding may be used to scale operations through working capital, payroll, commercialised R&D, expansion of production capacity and exports. If located within NSW, the establishment of national and international headquarters may also be supported under this measure.

Repayment arrangements will be negotiated taking into account the proposed transaction, the financial stability of the gazelle and the purpose of the loan/guarantee

Applications are opening soon, but please speak with your BSI consultant today if you would like to explore a loan guarantee for your business.

5.    Regional Solutions Grant

The NSW Government has committed 30% of the total $190 million Jobs for NSW for investment under the Regional Jobs Now portfolio. 

In addition to regional businesses being able to access all elements of the Jobs for NSW program, a new Regional Solutions Grant is also under development for start-ups and SMEs in regional and rural NSW.

Specific details of this program are limited at this stage, however preliminary information available on the Jobs for NSW website (www.jobsfornsw.com.au) suggests a focus on both SMEs and start-up accelerator and incubator businesses that commit to creating 10 or more jobs, or a lesser number where a significant regional impact can be demonstrated.  Applicants must also:

• have an ABN number, with a registered office/principal place of business located in Australia
• be operating for a profit
• have been operating for a minimum 1 year
• be solvent and not be under criminal investigation
• not have a history of bankruptcy or adverse findings against them (including company directors)
• demonstrate they are up-to-date with payroll tax, superannuation contributions and other ATO requirements
• be prepared to declare all existing loans, debts and securities.

The program is expected to open in mid-October 2016.

Assistance for Exporters

A final element of Jobs for NSW is a program of indirect assistance for exporters in the form of networking, mentoring and export promotion events.  While references on the Jobs for NSW website, specific details of how this assistance will be provided to NSW exporters still under development.

BSI Innovation

Jobs for NSW represents a suite of positive initiatives for growing NSW businesses that complement other Federal government incentives and grants.  For more information on any of the Jobs for NSW measures, or how best to access various government funding products, call a BSI Innovation consultant on (02) 9126 9100, or visit www.jobsfornsw.com.au.

Also, watch out for an upcoming Jobs for NSW event to be held in our Sydney offices.

Why Banks Won't Be Left Out of Fintech 2.0

By TANAYA MACHEEL

"A robot solution that applies machine learning will never call outside the allowed time periods, it'll never curse at you, it'll always used approved language," said David Sica, partner at venture capital firm Nyca Partners, about his favorite type of fintech solutions.

The second wave of the fintech boom is here, says David Sica, a principal at venture capital firm Nyca Partners. First came the startups with their ideas, now banks are leveraging those ideas and delivering to customers.

Nyca was formed in 2014 as a fund for fintech startups that aims to bridge the different experiences on Wall Street versus Silicon Valley and provide entrepreneurs expertise on the inner workings of the financial system. Sica, who began his career at Merrill Lynch and moved on to Visa, was the first employee of the firm founded by Hans Morris, an ex-Citigroup investment banker and former Visa president.

Today Nyca Partners is the third-most-active venture capital firm globally in fintech, by the number of investments, according to a recent study by KPMG/CB Insights.

In an interview with American Banker, Sica talked about the future of fintech, how disruptive the burgeoning industry will really be to banks and differences between venture capital in Silicon Valley and Wall Street. The following is an edited transcript of that conversation.

How and why did you get to Nyca?

DAVID SICA: I started my career at Merrill Lynch, I worked in CMBS origination. It was a very active area and overnight in 2008 the credit market turned and we were no longer lending. I ended up getting a job internally at Merrill Lynch in the institutional sales group covering Russia, the Middle East and Africa. At the same time I met Hans Morris, who was on the roadshow for Visa's IPO and he invited me to come out to San Francisco to work with him.

It was a really exciting time to be in payments. You had all the regulation around the Durbin amendment, the various class-action lawsuits and all the new innovation that popped up at the same time. There were all these new business models popping up like Uber and Airbnb — these two- and three-sided marketplaces that can be unique payments solutions. The 'wow factor' with a lot of these companies was a seamless payments experience. After spending a good deal of time on the acceptance side of the business I decided I wanted to get more involved in the new businesses. That's where Hans and I teamed up again, and I was the first employee at Nyca.

What the future of payments?

The next big payment company will enable tech commerce that's not happening today. One of the areas I like is small-dollar cross-border payments. If you're Coca-Cola or General Motors, you have a lot of options. You can go to a bank and transfer money around the world. But if you want to do business internationally with small vendors, and send out many small payments to settle in local currencies, there aren't many good options. If there was better infrastructure in place you could see a real growth in crowdsourcing activities and hiring talent from around the world.

What's your favorite subset of the fintech industry?

Right now my favorite thing is digital advice. Machines are never out of compliance. Think of debt collection, people calling at midnight and threatening if you don't pay your bills — that sort of thing. A robot solution that applies machine learning will never call outside the allowed time periods, it'll never curse at you, it'll always used approved language. That's important. Whether it's investing money or recommending a whole life insurance policy or collecting on debts you haven't paid — being in compliance is a big thing and that will be a key motivator for banks. It's cheaper, more accurate, better than humans and compliant.

What's something all your portfolio companies have in common?

An A-plus management team. That becomes more important the earlier you go. It's a long path to build a fintech company. The thing we always ask ourselves about a founder is, would you work for this person? Because chances are the rest of the people they meet will feel the same way. We look for entrepreneurs that want to work — that want to work with regulators, that want to work with banks, that are open to collaborating with the existing financial system versus trying to kill it. That's a key thing.

You haven't exited any investments, but how do you determine when to get out of an investment? Is there a one-size-fits all exit strategy?

We're going to have a few big brands that come out of fintech. They're super well capitalized, they're spending a lot of money on building the brand, so people know what they are. They want to build the modern platform to provide financial services. Going into an investment it's important to determine which bucket a company falls into. Is it going to be a business-to-business enterprise software play that can get distribution through banks or is it shooting to become a huge brand? That also connects to the exit strategy. If you're investing in the first bucket you could potentially sell the company to a financial institution, a provider of technology to financial institutions or work with a private equity firm to do a secondary transaction. By investing in companies in the second bucket you're betting this is going to be a very big company with a potential IPO down the line.

To what extent will fintech really "disrupt" banking? Where do you see banks and fintechs in a few years based on the current innovation boom?