Innovation + Tribe = Innotribe! The Perfect DJ Mix


This is a guest post by Peter Vander Auwera, one of the co-founders, with me, of Innotribe. The post was first published on the Management Innovation eXchange  as a submission for M-Prize. I reproduce it here as I think it’s a great summary of what Innotribe is all about.

Giving the floor to Peter-

SUMMARY

Launched in 2009, Innotribe www.innotribe.com is SWIFT’s initiative to enable collaborative innovation in financial services. Innotribe fosters creative thinking in financial services, through debating the options (at Innotribe events) and supporting the creation of innovative new solutions (through the Incubator, Startup Challenge and Proof of Concepts).

CONTEXT

SWIFT www.swift.com is a member-owned cooperative that provides the communications platform, products and services to connect more than 10,000 banking organisations, securities institutions and corporate customers in 212 countries and territories. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.

TRIGGERS

The initial triggers for having a specific innovation focus and creating a dedicated tem was driven by both product and culture requirements.

Product: A good example of a product requirement was the need for a product for low volume customers. Typically, existing products targeted the top and medium segment of our customers, but we did not really have a product for low volume customers. A black-belt team was formed and delivered a brand new product in one-year time. The team not only revamped the product functionality, but also revised fundamentally the buying experience, on-boarding, pricing model, and business UI experience.

Culture: Given the nature of its business, SWIFT has a strong company culture of “Failure-Is-Not-An-Option” (FNAO). Although this culture was inspired on the Apollo 13 mission, where the NASA team would do “whatever it takes” to get the three astronauts back from space, and learning from mistakes, over the years the FNAO mantra was at times misinterpreted as a culture of no-risk taking, not coming up with ideas challenging the status quo, not daring to step forward. We wanted to create a culture where “failing smart” was accepted. To that end, we created a number of tools and techniques to enable collaborative innovation. One example is our own “sandbox”. The concept is introduced on Kosta Peric’s Forbes blog here. Kosta is SWIFT’s Head of Innovation, and has documented the history and activities of Innotribe in a recently published book “The Castle and the Sandbox” available here.

The sandbox is an “incubator” – a protected place where people with ideas can “play”, or to try out their ideas, without impacting the castle. The “castle” is the metaphor for the mothership, the core of the company. The incubator is the place where you can try, experiment, fail, try again, fail again, and eventually learn and succeed.

We also offer tools to the SWIFT employees like Idea Challenges, Brown Bags, Hackatons, and internal TEDx-like events to encourage team members to learn from the edges, to step forward and to reward initiative.

KEY INNOVATIONS & TIMELINE

Innovation team started in 2007 when the new CEO came on board

  • Prototyping was introduced when one of the innovators challenged an executive on a proposed new product line. The executive agreed in funding 2 competing prototype teams, one for his own idea and one for the idea of the innovator. Each team had to pitch their idea and prototype head to head in front of the full executive team. To the surprise of many, the prototype of the innovator won.
  • Initially, the innovation team was seen as a fast product development shop where the end deliverables were software products. Black-Belt teams were formed per product, and end-to-end delivery cycles were reduced from 3-5 year to 1 year.
  • End 2008, based on an in-depth internal customer review, the scope of the team was re-defined as an unit within the company for enabling collaborative innovation
  • The Innotribe brand was launched in 2009 during SWIFT’s flagship event “Sibos” in Hong-Kong.
  • Initial focus of the revamped Innotribe was on idea generation and creating serendipities

By end 2010, we had in place:

  • An innovation framework based on open innovation;
  • A portfolio of tools and techniques for internal (SWIFT as a company and ecosystem) and external (the financial industry at large) innovation. Most of these tools and techniques were used to create the initial tribe and ideation for the open innovation pipeline;
  • A group of internal ambassadors, called “megaphones”;
  • A successful event and facilitation practice
  • In 2011, the Incubator and the worldwide start-up challenge were added to the mix and we further scaled and perfected our existing tools and techniques. The incubation phase was particularly important as for the first time we had a multi-million dollar fund for investing in promising innovations.
  • By end 2011, our Innotribe “brand” was considered the most important brand SWIFT launched in the last 30 years.
  • In 2012, we explored the Acceleration phase to progress the most promising incubation ideas through different forms of co-investment.
  • In 2013, we will continue and further increase our innovation efforts, with a greater focus on the core activities of the company for internal innovation, and exploring novel funding models for our external innovation.
  • In 2013, we will also experiment with “Innovation Journeys”, a model for enabling business units to win though co-ideation, co-creation, co-delivering. We also plan to complement our existing toolset with scenario planning and story-telling.
CHALLENGES & SOLUTIONS

Here are some of the key implementation challenges that had to be overcome:

CEO as sponsor is instrumental:

  • When a new CEO came on board in 2007, he made it crystal clear that innovation was one of his big bets.
  • A CEO can make or break the innovation agenda, and set the direction and ambition for disruptive innovation or not.
  • A CEO “protects” the innovators from anti-bodies who try to fight change.
  • A CEO can “force” certain innovation projects to go ahead.
  • A CEO can open the door for skip-level meetings to have a direct contact with what’s happening in the field

Executive alignment. Having the CEO as sponsor is one thing, having the whole Executive Team (and the subsequent hierarchies) aligned is another thing.

  • In 2008, the company engaged in a company wide “Lean” efficiency exercise. Part of the methodology includes an internal customer satisfaction survey: it became clear that the executive team was not aligned on the mission of the innovation team. Expectations ranged from a pure R&D shop to a facilitating unit.
  • The Lean methodology facilitated clarity on the direction of the innovation team: it was collectively agreed that the mission was to enable collaborative innovation.
  • Any company wide program with executive attention is a great opportunity for getting executive alignment on innovation.

The concept of “enablers”.

  • The incubation projects are funded by the Incubation Fund, a 100% SWIFT Fund.
  • To help us deciding where we put our funds, a group of “enablers” was created. This is a group of senior leaders from our industry ànd from outside our industry. They have been selected for their authority and influence as persons, not necessarily because of the organization they represent.
  • The role of the “enablers” is to “enable” incubation projects. This is NOT a killing committee or gating process to say “no”. It’s a group of wise people saying “yes” to projects and bringing enabling assets to the table such as contacts, experiences, trend validation, etc

Megaphones iterations.

  • Very early on we started with the idea of “Megaphones”, some sort of internal innovation ambassadors in different departments of the company.
  • In the initial version, megaphones were “volunteered”, their mandate was unclear and their management was not motivated or incentivized.
  • In version 3.0 we got it more or less “right”: we have a novel and very transparent megaphones recruitment campaign, megaphones now have a clear mandate, spend 15% of their time on innovation related activities, and this is part of their objectives, and signed-off at the begin of the year by their managers.

The importance of communication.

  • If there is one big recommendation it is “communicate like hell”. If “they” don’t know what you do, they can’t support it, they can’t leverage it, and they can’t sponsor it.
  • Although we were doing a lot of the right things, not many people in the company really knew what we were doing. When we were dumping at the end of the year the list of our activities, many people were surprised of all the things that went on.
  • For external communication we struggled for finding the appropriate bandwidth from our own communications department. The good intentions were there, not the bandwidth. In the end we mutually agreed with our communications department to hire our own external communications agency. For internal communication, we gave one person in the team that responsibility, and we leverage as much existing communication channels like our corporate intranet, Yammer and Chatter.

Being creative with funding.

  • When coming up with new ideas, we heard several times an enthusiastic “yes, you should do that, but you have to stay in your existing budget”. So we explored alternative ways of funding such as sponsorship. 
  • A good example here is our Start-Up Challenge that has become fully self-sustainable through sponsoring. This Start-Up Challenge is probably one of the most visible initiatives now of Innotribe. In 2012 more than 600 start-up companies were screened during 3 regional competitions (one for the Americas, one for EMEA and one for APAC), and the two winners get away with a 50K$ cash price. The basic objective of this initiative is to bridge the gap between the start-up community and the heads of innovation of the financial industry. Success story: Mastercard acquired the winner of the 2011 edition in 2012 for 40M $.

Financial: own P/L

  • Our best motivation is when third parties pro-actively approach the Innotribe team and ask whether they can buy our services.
  • In 2012, we had our first innovation consulting and facilitation contracts.
  • Some of the challenges we had were related to accounting of these new revenue and cost streams. In a bigger corporation, it is not so self-evident to create a different P/L and decide what revenues and costs have to be allocated to that new P/L. To be continued…

Legal/Governance: by-laws of the company

  • SWIFT is a non-profit co-operative. Certain innovation ideas that are for profit and/or for the benefit of only a subset of the community would require a change in the by-laws of the company.
  • The governance of the company is based on a long tradition of customer consultation and consensus making. For example, our 10,000+ members are represented through 160+ National Member Groups. Consultation takes time, and sometime we want to move faster. We have learned to live with some of these constraints, to choose our battles, and remain passionate, perseverant and patient.
BENEFITS & METRICS

The benefits of Innotribe can be clustered in to three “Impact” vectors: brand, revenue, and people

  • Brand
    • The Innotribe-brand has a strong positive effect on the overall SWIFT-brand. During our 2011 Innotribe at Sibos event in Toronto, our CEO referred to the Innotribe brand as the “strongest brand SWIFT has produced in the last 30 years”
      • The Innotribe-brand is omni-present at internal and external SWIFT events
      • Our design and facilitation techniques create an immersive learning experience
      • Our curation expertise brings the finest speakers, igniters and subject matter experts to our staff and to our community
      • Customers declare it is “their” Innotribe
      • All our activities are appreciated for their freshness, deep design philosophy, and accessibility.
      • The brand reflects innovation, collaboration, youth, dynamism, and novelty.
    • The Innotribe brand is now strong enough to attract dedicated sponsoring, and initial explorations with an own P&L. We are humble enough in knowing that our brand is and will get a substantial part of its value from the connection with the “mothership” SWIFT.
  • Revenue
    • From very early on in the Innotribe history, we are getting challenged on the tangibility of our deliverables, how much they contribute to the company strategy and how much they contribute to the revenue objectives.
    • It is not always easy to find a fine balance between seeing innovation as a means for supporting short-term sales objectives, and innovation as a means to re-define the agenda.
    • A great success story is one of the incubation projects “MyStandards”. As one of the first true incubation ”sandbox” projects, a dedicated team with its own scrum master delivered a new product in one year time, with first paying customers and revenue contribution 3 months after production launch.
  • People
    • Our internal innovation activities touched more than 50% of the company during face-to-face meetings, workshops, events, and facilitation assignments.
    • More than 10% of the staff participated in our innovation challenges
    • Several ideas from the challenge have been implemented
    • But we feel we have to communicate better, at all levels: senior management, middle management, and the workforce at large.

Metrics used

  • Most of our metrics are quantitative and in essence about influence: we measure people reached, number of events, number of facilitations, number of ideas, velocity of ideas from ideation phase to incubation phase, etc
  • We regularly perform NPS (Net Promoter Scorecard) surveys. Participants to our events are very satisfied; non-participants (those who never attended) are skeptical and give us lower scores. Another reason why communication is so important
  • We are not (yet) measured on revenue contribution, but we start feeling the heat in the general crisis-climate of the financial industry, with a tendency to proving short team bottom-line results.

We have also seen some unintended side-effects

  • Tribe behavior. Our events are really special: we architect serendipities and immersive learning experiences. We create connections at people/human level. Our customers love it. We see tribe behavior – like fans for life, groupies – and return customers, who come back only for the Innotribe vibe and connections.
  • We did not plan for it, but in 2012 we are seeing the first customers – both from inside and outside our industry – soliciting us for paid facilitation, consultation and event services.
  • We are also very much in demand by our internal departments. This creates capacity challenges. The biggest challenge is to remain focused and dare to say no. We also have decided to do certain internal/external engagements only against a fee and covered T&E.
LESSONS

Here are some of the most important lessons that other organizations should learn from our Innotribe experience.

Communicate like hell: it’s extremely important to communicate what you do.

  • Hire a PR agency fully dedicated to your external communication. Design with them a communications plan, plan press events, plan regular press interviews, invite press to your events. Use social media tools like Blogs, Twitter, Facebook, Yammer, Chatter, etc
  • It may sound obvious, but have a website explaining what you do, what your methods and tools are, what your deliverables are: this should be the landing page for press and other communication contacts.
  • Appoint at least one person responsible for internal communication. Communicate everything: success stories and lessons learned. Celebrate experimentation, celebrate success. Have small ceremonies for winners of internal challenges. Organise brownbags, hackatons, special staff events

Think in terms of an “Innovation Portfolio”

  • We recommend you start thinking in terms of an “innovation portfolio”, highlighting how many projects and/or how many budget you will allocate to different areas of innovation: innovation in the core, adjacencies, new functionalities, new territories aka disruptive innovation. 
  • Make sure you have some quick wins in core and adjacencies; it will help you getting credibility for doing more disruptive stuff later.
  • Keep fighting for disruptive, don’t get complacent or discouraged, it is your mission to challenge the status quo relentlessly.

Accept craziness, stealth work, but capitalize on what works

  • Innovators do things differently: withhold some ideas that initially sound crazy or impossible.
  • Stealth work. Sometimes you have to walk on thin ice and do actions behind the scenes that are not fully in line with the script or standard procedures. This does not need to be done in secrecy: you can do stealth work in full transparency with your Head of Innovation and your CEO.

Passion, Perseverance, Patience

  • Innovation is challenging the status quo. Many people in your organization don’t like change. They will challenge you. They will fight you. Just accept this as part of the job. Don’t get too frustrated too much by it. And if it gets too much, get yourself a trusted friend with whom you can share your frustration, and get on with it.
  • Your passion is infectious and viral. Talk to as many as possible people in your organization and keep the conversation going. When they see the passion in your eyes and your irresistible enthusiasm, they will follow.
  • Don’t “force” innovation but do “coach” and enable innovation. The metaphor is that of a parent learning a child to bicycle: at a certain moment, you have to release, let the child experiment and fail until it can bike on its own. 
  • Be patient. Sometimes you have to live with the constraints of your organization, and accept it will take time to get where you want to be
  • Innovation is human business

Stay fresh, fun and accessible

  • Almost forgotten, but have fun ;-) Whatever you do, it must have certain lightness, freshness in it.
  • Design surprises/disruptions in the flow of your brainstorms, events, and facilitations. Make people experiment with their hands and build physical things, metaphors: they will love it and smile.
  • We design our events on purpose with some “un-polishedness”: we have learned that if what you do is too polished, too finished, you create distance and you don’t leave much room for input and creativity.
CREDITS

This post/submission is only possible because we have a fantastic team building Innotribe into what it is today. Petervan – the submitter of this story – is just one of the team members. Kosta Peric, Head of Innovation SWIFT, heads the team. Key team members are: Mela Atanassova, Martine Deweirdt, Muriel Dewingaerden, Greet Michiels, Karen Declerck, Matteo Rizzi, Nektarios Liolios, Dominik Debuyser.

We would not be where we are without the support of Lazaro Campos (the CEO who put the innovation team in place in 2007) and his successor Gottfried Leibbrandt who has been a sponsor since day one.

We also would like to extend credits to “the tribe”. We feel honored and humbled they consider us as “their” Innotribe.

TAGS
Innovation, Open Innovation, Tribe, Events, Start-Up Challenge, Incubator, Facilitation, Architects of Serendipity
HELPFUL MATERIALS

More information about Innotribe can be found in following resources:

The Three Best Job Titles Of 2012 (And A Wish For 2013)


For me, 2012 was an intense year of encounters and meeting of the minds. As I was replaying it in my mind, I remembered three unusual job titles, and three special persons behind those job titles.

These persons and their titles also represent what I wish to be hot topics for 2013 - possibilities, innovation and the “internet of things”.

The first best job title of 2012 is “Princess of Possibility”, and it is proudly worn by Min Xuan Lee (twitter: @minxuan, LinkedIn), co-founder of PlayMoolah.

PlayMoolah was the winner of the Innotribe Startup Challenge 2012, and I had the pleasure of giving Min and Audrey  Tan (the other co-founder of PlayMoolah) the $50,000 prize at Innotribe@Sibos Osaka in November 2012. More about PlayMoolah in my earlier post on this blog.

Audrey (left) and Min (right) with PlayMoolah kids

Min has chosen the “Princess of Possibility” job title, and I find it goes perfectly with her – she is all smiles, outgoing and very kind. At the same time, she (and Audrey) relentlessly pursue a very ambitious and noble goal related to kids (educating them to master money and finance). And she manages to pull some magic (which really is all about perseverance and passion) to make this small startup grow.

The second best  job title of 2012  is “Chief Happiness Officer”, and is a title that has been acquired after considerable effort by Laurence Vanhée (twitter:@happy_laurence, LinkedIn). Surely by now you must be thinking Laurence works in some startup in the Silicon Valley to claim a title like that. Well, not really. Laurence works as the head of human resources at the Belgian Ministry of Social Security. One of her basic beliefs (to which I subscribe 100%) is that people should be happy at work. Here is her TEDx talk explaining some of the ways she uses to make this happen in a governmental organisation.  Don’t do the mistake of considering this as wishful thinking. Laurence is a woman on a mission, and she has many success to demonstrate that, yes, being happy at work is possible and necessary.

The Innotribe team has recently run an “Ignite” event at SWIFT – a kind of a TED event for the SWIFT employees, where we have brought some of the best 2012 Innotribe speakers (in fact we call them “Igniters”) to inspire our people. Laurence was with us and here is my sketch of her talk.

Happy Laurence’s Happy@Work talk

I really love the way Laurence says it – “Don’t Complain, Innovate!”. It’s a mantra that helps me at many occasions.

The third best job title of 2012 goes to Erik Kruse, “Networked Society Evangelist” at Ericsson. I got in touch with Erik (LinkedIn) when organising a SWIFT Business Forum is Oslo earlier in October 2012, and he simply … evangelised … me. I’m a technologist at heart, and he talks about pervasive technology, hyper-connectivity, and the “internet of things” (the internet where billions of humans but also hundreds of billions of things – computers, cars, fridges, micro-drones – will be connected and interacting). I’ve heard similar speeches before, and they tend to be threatening (at least to me). The big difference with Erik is that he explains this simply, in a non agressive manner. He is very humble and he talks in a kind of  “around an open fire” manner. I also like the way he uses the life of his son to illustrate many of his concepts. Here is his TEDx talk for you to enjoy.

I also invited Erik at the Ignite event at SWIFT, and here is my sketch of his talk.

Erik Kruse’s The Internet Of Things

Erik Kruse uses the expression “Digital Transfomation” which I vibrate in sync with, see here for my thoughts about the digital transformation of finance.

2012 is drawing to a close, and as I said I had the privilege of meeting and interacting with incredibly creative and innovative people. I’ve highlighted three of them in this post, as they have what I thought to be inspiring job titles, but if you read this blog you will find out about many others.

On to 2013 - I think the above three job titles are the perfect representation of my wishes -

- Possibilities. We need to be open, to scan and understand the tremendous change we’re going through, driven by technology.

- Don’t complain, innovate. For the financial industry, this means: yes, we have more regulation, more rules, more costs. And yes, we have to do all of that with flat or reduced budgets. The only way ahead is innovation.

- The “internet of things” or hyper-connectivity. This drives tremendous changes in the social fabric, especially with the younger generation, soon to become our new employees and/or consumers. Focusing and understanding this new generation will be of paramount importance.

I want to use the opportunity to wish you an innovative, sparkling, exciting 2013.

A HAPPY 2013.

Kosta

Taking No Risk Is The Greatest Risk Of All


— update on 5 November 2012 —

PlayMoolah has won the grand finale of the Innotribe Startup Challenge at Innotribe@Sibos in Osaka! They were selected first among 10 startups that were pitching to a senior jury of bankers and venture capitalists.

Here are Audrey and Min with the $50,000 prize awarded by Innotribe.

Well deserved Min and Audrey, wish you luck.

— end update

— update on 1 October 2012 —

Min came back to me today with some great news, showing PlayMoolah’s progress since I wrote the original article back in June.

PlayMoolah has its first bank partnership, with OCBC.  The bank will sponsor PlayMoolah for their customers, and will provide digital and retail space in all 55 branches across Singapore.

Excellent news for Min and Audrey. I wish them a continued success and, most importantly, hitting their target to educate thousands of children in Singapore. And elsewhere!

Here is an extract of their press release:

Technology start-up, PlayMoolah, is today announcing that it is working financial institution, OCBC Bank. This tie-up will see young customers from OCBC Bank’s Mighty Savers programme gaining access to PlayMoolah’s fun online platform that educates 6-12 year olds on financial literacy matters. In order to provide financial empowerment to more young people, PlayMoolah is partnering with financial institutions around the world and OCBC Bank is the first financial institution to sign up. Through this partnership alone, PlayMoolah target to educate over 50,000 children in Singapore.

— end update —

Forbes is running a “startup month” and this week is about turning an idea into a real business.

Immediately I thought about the PlayMoolah startup and its co-founders Min Xuan Lee and Audrey Tan. Playmoolah was a winner in the Innotribe Startup Challenge in Singapore earlier this year. I was inspired with what they do – a tool to help parents educate their children about the value of money – and the energy and passion of Min, so I asked her to tell her story.

Giving the floor to Min -

It was an eye-opening experience to learn how different cultures use money. Coming from Singapore to California during the height of the financial crisis, we uncovered more and more horror stories over casual conversations about debt and over-leverage, fueled by relentless, uninformed optimism. It was evident how this generation was fast becoming the most indebted generation in modern history. This sparked one simple question – what is the root cause of financial illiteracy in our world today?

Our curiosity led us onto a path of inquiry, into the homes of American families, volunteering to teach in public schools, and speaking to anyone who had done work even remotely related to the field of financial literacy. Over one year, we spoke to hundreds of researchers, entrepreneurs, investors, teachers, and parents. The problem was clear – children lack financial education, school intervention had not proven effective, and only 32% of American parents talk to their children regularly about money.

Volunteering in schools and seeding questions about money

The solutions were staring in our face. First, the problem is not simply about literacy, but in following through with real action and cultivating good habits. It’s also about starting young and involving not just the child but their parents to encourage good role-modeling and healthy conversations about money. At the root of the problem, parents just don’t know where to begin. And if the problems start at home, they need to be solved at home. But why isn’t there a home-based solution to help children and parents work through money matters together?

On the other hand, children are exposed to an avalanche of mass media and games that encourage consumerism and peer comparisons of what they have, even in the virtual world. What are our kids exposed to?

While at Stanford University, we were influenced by the work of B.J. Fogg and his methods for designing persuasive technology –technology that influences behavioral change. We saw an opportunity to nip the problem in the bud and take what kids have come to love, to turn the incentives completely on their head and design good technology that inspires real-world behavioral action.

There is something powerful about an idea whose time has come. So many people rallied around the idea offering us so much encouragement and help, putting us in a position where taking no risk became the greatest risk of all. With gut indignation towards the problem, an agonizing discomfort of the status quo, and the collective wisdom of all that we met along the way, PlayMoolah (http://playmoolah.com) was born.

Kiara, age 9, sitting in to one of our brainstorm meetings

In the PlayMoolah headquarters, there is a little desk with little chairs for the kids, filled with sketch paper, color pencils and markers, lego bricks and all sort of toys for kids to join us in the design process. All our concepts go through prototyping and feedback from the kids before put into production.

Paper prototyping game concepts

We design and develop playtools that put kids in the driver seat of their own learning, empowering them with the curiosity, knowledge, skills and tools needed for financial capability. Separately, parents are provided with a dashboard where they can monitor and track their kids progress, get involved with their kids saving goals, or get ideas on family projects they can do at home. No other solution on the market today is tying important age-appropriate lessons about managing money to real life, real dollar and real impact.

PlayMoolah family time!

There is a famous saying in the valley – ask for money and you get advice, ask for advice and you get money. Through many of these unexpected conversations, we raised our seed round from a diverse group of angel investors across US and Singapore with an alignment in intention and a great humility towards something larger than ourselves. Our first investor wrote a tongue-in-cheek description on our cheque – “Pay to the Order of Play Moolah” for “Saving the world”, definitely one for the archives.

Getting investment to save the world!

We are approaching exciting times as we partner with more schools and financial institutions to offer PlayMoolah to a greater number of kids and parents around the world. As part of the International ChildFinance Movement headquartered in Amsterdam, we also hope to catalyze quality financial education and access to reach the goal of touching the lives of 10 Million children around the world.

Fan mail from one of our awesome moolahkids!

At the end of the day, we hope to inspire a next generation of young people to develop a healthy perspective of money, and to really rethink what money is. To see money as a wealth creation tool rather than an end in itself, money should serve our own dreams, personal growth and happiness. It’s about the enhancing the quality of our experiences, the strength of our relationships, our well-being and our health, and ultimately using money as fuel to create greater value in society. That is the true essence of startups that have served as a vehicle for wealth creation – because every single time we see our Playmoolah kids saving up for their goals, or giving their allowance to charity, we couldn’t imagine trading what we’re doing for anything else in the world.

Audrey Tan, Min Xuan Lee (co-founders) with Playmoolah kids

Open Source Software For Risk Analytics – A Valid Option


I love writing about startups, and as we are reaching the finals of theInnotribe Startup Challenge at Sibos in Osaka, I dedicate an entry on this blog to each of the winners of the regional challenges.

Each one has a story to tell. As story of overcoming business difficulties, funding issues, dealing with personal hardship. A story of how passion, patience and perseverance have won over many obstacles.

So, here’s the story of OpenGamma, a startup focusing on financial risk analytics and which believes, as I profoundly do, that the open source approach to software is the most progressive and efficient approach in our hyper-connected world. I already wrote about open sourcing in the financial domain as a bold innovative move (see the story of Allevo). It is also the story of three entrepreneurs who have spotted an opportunity while working in financial institutions, and decided to do something about it.

OpenGamma was one of the winners of the Belfast regional showcase of the Innotribe Startup Challenge. We will thus see them, along with 14 other startups,  in the upcoming finals at Innotribe@Sibos in Osaka (29 Oct- 1 Nov, 2012), which promises to be amazing (register here to participate to Innotribe@Sibos). I’ve met Kirk Wylie, CEO of OpenGamma, and asked him to contribute his story and the story of OpenGamma for this blog.

Giving the floor to Kirk.

The idea of OpenGamma came from a need I noticed while working in the risk and front office technology for financial services firms.

My job was building generic infrastructures,  but infrastructure for which there wasn’t a viable commercial offering. With financial services firms looking for cost reductions in every part of their operations, it seemed absurd that most of their IT budget was spent on building and maintaining expensive in-house systems that didn’t hold any proprietary value to the company. Trading and risk analytics systems are plumbing; as long as it works you shouldn’t notice it

So why should every firm build their own from scratch? Why shouldn’t there be an open source solution out there available to all?

This thought triggedred an email to the other two co-founders, and the idea for OpenGamma was born. After the credit crunch, Jim Moores, Elaine McLeod and I set out to turn our vision of a single unified platform for analytics across financial services firms into reality. We were frustrated with the state of financial technology, and we wanted to change it.

“Is anyone going to buy this?”

In building our flagship product, the OpenGamma Platform, we’ve taken all the lessons that the combined team has learned working in hedge funds and investment banks, as well as pure tech firms outside financial services.

From the very beginning, we also dedicated a lot of time to grassroots market research. We met with people in technology, on the trading and risk desks, and in senior management, to talk about their experiences with analytics and risk technology. We wanted to build something that technologists would love to deploy, end users would love to use, and procurement departments would…well, accept.

When we got to the point where we had people willing to go on record saying “If you build what you say you’ll build, and you have the business model you say you will, we’d buy it”, we realised it was time to start building.

Defining open source

One of the most common questions we get is: “What do you mean by open source?” We use the term open source in its full sense: all code freely downloadable online, along with full documentation, user forums, bug tracking, and so on. There aren’t any catches here. To date, every component that we’re legally allowed to release under an Open Source license has been.

However, although our approach is radical in the industry, our goal was never just to build open source technology. We wanted to build the best platform for financial analytics and risk management possible. We’ve released it under an open source license because that’s what the market told us they want.

In the past, the industry has had three choices: buy a traditional, siloed trading system and spend years trying to get it to do what end users wanted; pay for an expensive, opaque external service; or build everything from scratch. With choices like that, it’s no wonder the preferred choice has been to build from scratch. Over and over. Within the same firm, across firms, developers keep building the same components because vendors haven’t given them what they need.

These traditional choices don’t work anymore.

Of course, open source software has often been championed as the low-cost option. While it’s by no means free, it allows firms to focus their IT effort on what’s specific to their trading strategies, which is perhaps only 10-15% of the overall technology stack. Allowing our clients to do this type of budget optimization has been one of our main goals in building OpenGamma.

When everyone knows what’s going on under the hood, users can feel confident in trusting the results that they get out of the system—and not just take a vendor’s word for it.

Investors with a shared vision

We knew what we wanted to build, but we also knew it was a massive undertaking. How would we actually finance it?

 

While I’m generally in favor of bootstrapped business models for most startups these days, we knew that we were building something far too large to be done in that fashion. The sheer scope of what we needed to present as a minimum viable product meant that we needed external capital to get started.

When I first moved to the UK in 2004, I’d met with Bruce Golden and Kevin Comolli of Accel Partners. In 2009, when we decided to launch, I knew they would be perfect partners in building OpenGamma. Accel believed in our vision, we raised a Series A round from them, and Bruce joined our board.

We’ve since raised two additional rounds: Series B, led by FirstMark Capital in 2010, and Series C in August 2012, led by ICAP plc. Without investors who share our vision of radical disruption in the quantitative finance market, there’s no way we would have been able to build a system as comprehensive as the OpenGamma Platform. 

We are now moving our first customers from evaluation into full production installations. This is perhaps our most important milestone to date: some of the largest, most sophisticated capital markets participants are using our technology to manage some of the most complex derivatives portfolios in the world. Having these companies as clients is the strongest possible indication that our software works.

As with any open source project, remaining independent, and truly open, is paramount to us. Customers greatly value the neutrality and transparency that open source players contribute to the industry. We need to continue being extra vigilant not to let them down.

People that matter – Bernard Lietaer


I’m starting a new series on my blog, featuring people I met that I think have something important, intelligent to say that may influence our short and long term future.

There are many people that qualify (which is good, as I’m going to run this thread for a long time!).

I’ll start the first of the series with Bernard Lietaer (www.lietaer.com and http://en.wikipedia.org/wiki/Bernard_Lietaer)

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Bernard was part of the “Future of Money” stream at the recently held Compass Summit (www.compass-summit.com). The stream was sponsored by Innotribe, and I had the pleasure of introducing Bernard to the crowd.

Let’s first flash back to the past.

Back in 2009, the Innotribe team started looking at the “long” aspect of finance, inspired by the long now foundation (www.longnow.org). We were interested at the “long finance” aspect, basically focusing on the resilience of the financial system. Resilience is a term dear to SWIFT, and we wanted to explore some long term implications about its meaning.

Rather immediately, when you start considering the long finance, the discussion comes about money, or, more appropriately, about value and how it is expressed. And this is where I inevitably meet Bernard.

I did invite Bernard to Innotribe@Sibos Amsterdam in 2010, where we started the Long Finance discussion, but unfortunately he could not make it (he is a busy person, I can tell you!). So we sort of drifted apart for a while.

Back to now. When considering the “Future of Money” subject we were planning for the Compass Summit, Bernard’s name immediately spring back to my mind, and I contacted him.

We finally met in person in California, right before the beginning of the Summit (this is strange, as Bernard lives in Waterloo in Belgium, about 5km from SWIFT headquarters…. But as I mentioned, he is somewhat of a migratory bird, difficult to catch).

Bernard is an interesting mix of academic (expert on currencies) and practitioner (central banker, fund manager, contributor to the Single European currency- the euro), associated to a great story teller, writer (he is the author of the “Future of money” book and numerous writings) and professor, as he explains things simply and in a way many people understand. And an innovator, and out of the box thinker- as he has designed the C3 (commercial credit Circuit), that is being used in Brazil and Urugay (Have a look at his TEDx talk for a summary of C3 – http://www.youtube.com/watch?v=nORI8r3JIyw)

In addition, I quickly discovered in California that he is, like me, an amateur of fine food!

You may be, as we say in french, “pour ou contre” (in favor or against) his theory. I know he has supporters and I know he has detractors. But what cannot be denied is his scientific (almost mathematical) approach, the strength he puts behind his proposal and his passion.

In a nutshell – he has something to propose to improve the financial crisis we are going through. He is out there proposing a different approach. And I believe this is something worth recognizing.

If you assume (as I do) that we’re going though a period of change equivalent to the printing press or the steam machine, then ask yourself the question – is the money we use today, designed and maintained over centuries, designed for an agricultural and industrial age, is that money going to take us where Internet and social media are taking us?

This is the subject and, shall I say, battle of Bernard.