Singularity University in Jhb: Silicon Valley meets Africa

Something extraordinary is happening in South Africa this week. Barclays Africa’s Stephen van Coller has brought the founders and faculty ofĀ Singularity University to the country. I’ve been among those whose thinking has been changed by exposure to some of the best minds in Silicon Valley – the heartbeat of technological innovation. Here’s what motivtated Van Coller to bring Salim Ismail, Peter Diamandis and their colleagues to Johannesburg. – Alec Hogg

Stephen, listening to what faculty have had to say and reading books written by the co-founders, Singularity University introduces a different way of thinking to South Africans. The linear way we as Ā beings are hardwired into needs to change to understand a business world of exponential growth…..

Absolutely. What was interesting for me was that these new technologies that are coming out are actually, enabling you to address problems from a completely different angle. If you stick with the way youā€™ve been educated and trained; each year, you try to make your business just a little bit better.

Weā€™re hardwired that way, though. I remember someone once saying, ā€œWe have Stone Age bodies in a Space Age worldā€.

Thatā€™s right but where we are in business is many people are now able to use these technologies to disrupt. If you think about Airbnb, who would have thought the second-biggest hotel chain in the world doesnā€™t own a bed? If you look at Uber, the largest taxi company in the world ā€“ doesnā€™t own a taxi. Theyā€™ve done that in a very short space of time, so business models are compressing. Business strategies and the way you execute on things have changed and if you donā€™t adopt that, you donā€™t future proof your business because someone else will come and do something that comes from left field, which you havenā€™t thought about. The way you want to run your strategy is now disrupted so unless you do it for yourself, someone else will do it for you.

Youā€™re in banking. For many people, banks are almost the epitome of the old age. Are you trying to change Barclays?

Absolutely. There are two things. 1. Our view is that weā€™re really borrowing the future from our children. Itā€™s the old stewardship view. Weā€™ve been around for 350/325 years and we want to be around for another 325 years. If you donā€™t adopt the new technologies, youā€™re going to disappear. 2. We also believe that where weā€™ve been given licenses and where weā€™re systemic in the markets, we actually have a broader obligation to that society in terms of generating growth. Itā€™s not purely altruistic because weā€™re also interested in having GDP growth faster, because then we rise with the tide in terms of a business.

I guess that understanding it lets you lend more smartly than you would, understanding all these changes. Steve, we hear of Uber and then guys say, ā€œWell, the taxis will carry onā€. You hear of Waze, which is showing you how to get to places quicker. All these new technologies that are coming in are being used by people, but itā€™s almost as though the business world is saying, ā€œItā€™s not going to happen hereā€.

I disagree totally. Just see how Uber has changed behaviours in this country, how many people now go out, have a drink, and use Uber whereas before, getting a taxi was quite difficult. Unless you had a special person or a number who followed you around, you didnā€™t just get a taxi.

The taxi driver who would have gotten a loan from you in the past ā€“ are you now saying, ā€œMaybe not. Maybe weā€™ll give it to an Uber driverā€?

Not necessarily, but thereā€™s a completely new industry there. If you look at the way Uber works, Uber now does special training for its drivers. They know exactly how much a car can make and do. The money comes through Uber. Uber then pays us back and the balance goes to the driver, so you can already see that theyā€™ve changed the risk profile of each of those drivers. My risk is now a big Uber company paying me back, because thatā€™s where the money goes. That model itself has just made drivers more financeable.

What Iā€™m getting at here is that we are seeing so many of these exponential changes. Are you adapting the way you do business with customers? A bank is there to look after peopleā€™s money and to lend money to people. Are you shifting that yet?

Weā€™ve started two things, Alec. One is to actually, start working with our clients on solutions. Iā€™d take my infrastructure and say to them, ā€œWhat are your big problems? How can I use my infrastructure to solve it together?ā€Ā  Thatā€™s just a synergy thing.Ā  1 + 1 = 3. Whereas before, we would design a product and just push it. Those days are gone. Itā€™s not an easy change because the way we do business is ingrained over years and years, but weā€™re pushing that very hard. Secondly, you start looking at your own problems in a very different way.Ā  Iā€™ll give you a quick example.Ā  Our FX systems are 20 years old. For the last five years, Iā€™ve changed them, tried to make them a bit better, smoothed them out a bit, and refurbished them. However, when you realise that ā€˜I need to give FX to everyone because eventually itā€™s going to be on your mobile phone with your bank account’ suddenly, I need do it for not 20,000 clients but for 20-million. I suddenly realise I have to close the system down and put in a new one. Youā€™re suddenly accelerating some of the change in your business because you can just see, if you really go where the marketā€™s going, you use what you currently have, and your thinking is different ā€“ bang, letā€™s close that one down and build a new one.

It seems as though youā€™re trying to bring in Silicon Valley thinking (state-of-the art thinking). Singularity ā€“ talking to the guys there ā€“ tell me their campus is right next to Google. There canā€™t be too many more forward-looking companies, than Google.

What I really liked about it was when you read the book ā€˜Exponential organisationsā€™, itā€™s about a different way of thinking. If you look at these business models that are working now, itā€™s about the scalability so that your marginal costs of that additional client/additional sale tends to zero. Thatā€™s the ultimate barrier to entry. If you can build something once and scale it a million times, you can get the scalability. Just think about that effect on clients when the marginal cost of the extra transaction is zero. You can suddenly provide an entirely different service to them at a very different cost.

How do you get the guys in the bank to buy this? We can sit here now and pontificate indefinitely, but someone gets up in the morning, goes to works, and has to think differently. How do you get that in?

There are two things. What weā€™ve tried to do is (1) put the clientsā€™ needs first. Instead of building a strategy around it, we think these products need to happen. We actually go and sit with our largest clients and say, ā€œWhat do you need from usā€ and then that determines our strategy.

You teach them. Letā€™s just say you have a client who doesnā€™t get exponentiality, as most human beings donā€™t.

They donā€™t even need to get exponentiality. Iā€™ll give you an example. Weā€™ve had a client for years in the public sector and we do three things with them. We went and had a two-day session with them. We came back with 84 things that they would like us to do for them. Thatā€™s rather interesting and we never thought about them because we thought we knew what they wanted, as opposed to them telling us, ā€œIf you can do these things for us that will be awesomeā€. We can because we have the infrastructure. Weā€™re just not scaling it. Thatā€™s the first thing. The second thing is to get people to experiment. Especially in banking, we live in a hierarchical world and so it takes a lot of time to get to the top to get an approval.

If you can flatten that and say to this person, ā€œIf you bring a good idea, Iā€™ll give you R10,000 rand to bring the first prototype backā€. If we then like it, Iā€™ll give you R100,000. Then Iā€™ll give you R1m and Iā€™ll give you R10m, depending on how big it is. Instead of creating these big projects that then go through a three-month approval process, costs a lot of money, and takes two years to build, you actually get a lot of ideas and you kill a lot of it early because theyā€™ realise itā€™s not doable or it needs to change. You get more ideas and you get people really thinking and then you get all your staff giving you 100 percent, instead of limiting them to a job description and getting 40 percent.

Well, Stephen van Coller might well have been referring back to one of the original constituents of Absa. It was a bank, called Trust Bank which said, ā€œBanking will never be the same againā€. Well, itā€™s come a long way from there and certainly, listening to him now, the changes are coming thick and fast.

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