Three lessons learned when navigating new territory
Skander Malcolm, Managing Director and CEO | 7 July 2021
Over my career I have had the privilege (!) to witness some of the biggest disruptions to economies and companies. I started in London in 1990 when interest rates were 14.88% and unemployment in the UK was a little over 7%. I saw the dotcom boom of 1999 – 2001 when the Nasdaq Composite Index climbed from 1500 to around 5000 and then plummeted back to its starting position all in 2 years. I had a front row seat during the Financial crisis of 2008, working for GE Capital. In each case companies and their strategies were upended. And now here we are, in 2021 in the midst of the global COVID-19 pandemic. So, what can I share about those experiences and why does it matter?
Firstly, in each case, great Corporate strategy tends to emerge or disappear during these times. Leadership either understands its business, its clients, and the drivers, so when a crisis hits it can adapt and even accelerate. But often it finds out its beliefs were misplaced, or flat out wrong. At that point, leadership can either have the humility to accept this and start fresh, making new scenarios and choices, or it can get stuck defending its flawed choices. In our case, whilst the external environment was not something we could or did predict, we had a good grasp on what mattered to our clients. We had a firm conviction to build the world’s leading value-added cross border payments company so that meant we could remain meaningful for clients, and create a more valuable company for shareholders and staff. The key in our case was that we embraced the idea that we had to have a great digital platform (and we were lagging in that regard), but the source of real value would be our ability to help clients beyond their digital needs, for example through human interaction, or currency risk management.
Secondly, crises tend to create opportunities for companies to ‘create a step change’ in value through M&A. We routinely scan the market for opportunities and had seen a number of attractive ideas. But an investment in TreasurUp, a spin out by Netherlands-based Rabobank made particular sense – and that’s because it is a brilliant example of adding value to clients through both digital and human means. Digital in that it is a beautifully simple piece of software for CFO’s and Treasurers to implement their hedging policies. Human because it was designed by a smart, passionate team from Rabobank that had grown up in foreign exchange, and served many mid-sized Corporate clients, so deeply understood their pain points, and used this to deliver a better client experience. for a fair price. For OFX, our Corporate and Online Seller segments now contribute more than 50% of annual revenue, a deliberate strategic choice, so providing currency risk management toolkits to our clients is a logical way to provide them with more value, and we were working on it. Therefore the €4.15m (A$6.1m) investment by OFX into TreasurUp, aligns completely with our strategy, and it allows us to provide that value quicker than if we had built it ourselves.
Thirdly, crises have allowed us to reimagine how we work. Pre-pandemic we’d have been on a plane, flying a cross-functional team over to Europe to meet in person, but as global lockdowns prevailed. business was all conducted over Zoom. One of our internal values at OFX is “Always Keep Learning” and whilst we evaluated this deal on its commercial and customer strength, it certainly delivered a deep personal learning; that the generosity, passion, transparency and goodwill of teams can be achieved through remote, digital communication.
So, the great crises can be devastating if the strategy is unclear, or leadership fails to accept the lessons provided by the crisis. But they can also create a step change in momentum for teams and companies if we embrace the opportunities they provide.