Simon Terry

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Fintechs & Social Purpose

Fintech startups are experiencing rapid growth and increasingly playing a role as enabling new capability and innovation for traditional financial services players. I recently spoke with Macquarie about the need for fintechs to understand their social purpose. This article expands on those comments.

The Social Licence of Finance

All forms of finance depend on a social licence. There are strict regulatory regimes in place for banking, wealth management, superannuation and pensions, insurance and other forms of finance. Importantly these regimes are just one part of supporting a social licence and the support of wider stakeholders. In many cases the regulation exists to enable wider community support or has been created to rectify loss of community trust in the finance industry. The finance industry complains about the burden of regulation but much of this regulation has been created in crisis or because of the danger of a rapid loss of trust in the industry. As the old quote goes

“trust arrives on a tortoise and leaves on a horse”

When community support and trust falls, all forms of finance quickly experience business risk, operational and existential issues. We only need look at our recent experience of the Global Financial Crisis or the stories of the Australian Banking Royal Commission to understand the degree to which community frustration and real business issues can arise when financial services players do not live up to social expectations.

The social licence exist because finance fulfils social purposes. Finance is an enabler of other business, personal and social activity. The benefit of finance in enabling or reducing the risk of that activity is key. When the finance industry’s attention shifts to money alone, it is losing its social purpose and that social licence is in jeopardy.

The Social Licence for Fintechs

Fintechs are the newer players in the finance industry. In some sectors of the wide range of fintech innovation, like crowd funding and blockchain, regulatory regimes are only now being created to catch up with the change they have created. In other parts of the fintech landscape, like attacker banks or new intermediaries, the goals of fintechs are to actively disrupt the approaches and practices of existing finance industry players. With a large, global addressable market, the daily challenges of innovation and a goal of disruption, social licences to operate may not always be a startup’s first consideration.

However, all fintechs must remember that the social licence that applies to finance applies equally to them. The nature of the finance industry is such that even the most disruptive of fintechs will depend on the community’s trust and confidence in the sector. More importantly, most fintechs depend on collaboration and partnerships across an ecosystem of innovation that includes other fintech startups but also includes partnerships with large financial services players. Some of the greatest and quickest value fintechs can bring is helping large financial services players to reach new markets or transform themselves with new ways of working or interacting with stakeholders.

The Role of Social Purpose for Fintechs

A social licence exists because a business fulfils a social purpose. Every fintech should challenge itself to understand how its business enables a social benefit to others beyond the organisation. Like the finance industry as a whole, fintech exist enable others. Their ongoing social licence depends on being able to clearly express a social purpose. Clever rent seeking, speculation or technology is not enough to enable a fintech to survive, let alone succeed.

At LanternPay, we have a clear social purpose and it is at the heart of our claim and payment platform – we enable consumer choice and control in healthcare, aged care and disability. We believe that giving consumer’s choice and control will improve their experiences of healthcare, agedcare and disability and create platforms for the sustainability of those important industries. Our platform can help hardworking providers of care to focus on care provision and remove the administrative paperwork of multiple different payment processes for different schemes. We can deliver efficiency This purpose guides how we develop our platform, how we price our service and how we operate. This purpose has been key to winning the support of consumers, providers, government payers and a range of other partners as we grow. Importantly, our social purpose engages all our employees, many of whom have direct personal or family experience of the benefits of choice and control in care. Growing a new two-sided platform in a rapidly changing health, aged care and disability industries is not easy work, our social purpose is an important ongoing part of our growth.

Fintech startups are a critical part of the future evolution of the finance industry and realising new capabilities for society as a whole. Fintechs need to understand their social licence to operate and support it with a clear social purpose.

Interview on Fintech Startups and Social Purpose

I was interviewed recently by Macquarie Group on fintech innovation, LanternPay and the need for a fintech startups to have a social purpose. Fintech’s are maturing into key collaboration partners for players in the finance ecosystem. It is important that finch’s understand that finance is about more than money and play a social role.

Rethinking Management I: Revisiting Foundations


Defining Management as Control

Henri Fayol published his influential book on management, Administration Industrielle and Générale, over a century ago in 1916 based on his management experience that stretched back to 1860 when the workplace looked quite unlike ours. Despite the time that has elapsed, Fayol’s definition of management would be familiar to many today, because it is still used in management textbooks:

to manage is to forecast and to plan, to organise, to command, to co-ordinate and to control

We read this definition of management and it shrieks of hierarchical power. We see this model of management in light of our experience and the prevailing management ethos controlling power of those who run our organisations. In over a century, these verbs have become expressions of power and constraints on human behaviour. Forecasting and planning are the decision making processes that understand the environment and set the direction for the organisation and its people. Organise, command, co-ordinate and control are the exercises of power by a manager to set the structure of a team, to direct people, to manage delegations and activity between teams and to adjust to the performance of that team and business over time.

The combination of these focuses with the process-centric and efficiency oriented legacy of Frederick W Taylor’s Scientific Management leave many employees with little freedom to use initiative, to share their unique capabilities and to pursue intrinsic rewards. Since Fayol’s time, we have come to view management as an exercise in building the perfect system or machine to constrain human variation and to drive human performance extrinsically. In our quest to make widgets better, we have made people a widget.

The prevailing system of management and the beliefs and cultures required to sustain it are a major cause of employee dissatisfaction with work, waste and loss of human potential. Worse still a managerial system dependent on the decision making powers of a few remote partially informed managers is incapable of adapting to meet the needs of a globally connected marketplace.

Not Quite As It Seems

Intriguingly one of the reasons Fayol wrote his treatise of management was that unlike Taylor he believed that elements of these managerial roles were inherent in every job. He even includes a table in his book highlighting that frontline employees had at least 5% of their time on managerial tasks. (In comparison, he attributed no more than 60% of the time to senior management). Fayol saw education of all employees in the skills of management and better communication as a key way to improve performance and reduce dysfunction in organisations.

Fayol was an experienced practical manager setting out to describe a theory of management when there was none to guide management education. His management experience meant he was all too well acquainted with the limits and the abuses of power. A few select quotes from his book highlights these highly modern themes:

‘Management thus understood is neither an exclusive privilege not a particular responsibility of the head or senior members of the business; it is an activity spread, like all other activities between the head and members of the body corporate’

‘A good leader should possess and infuse into those around him courage to accept responsibility’

‘…Conventions cannot force everything, they need to be interpreted or the inadequacy supplemented.’

‘In dealing with a business matter or giving an order which requires explanation to complete it, usually it is simpler and quicker to do so verbally than in writing’

‘The best plans cannot anticipate all the unexpected occurrences which may arise, but it does include a place for these events and prepare the weapons which may be needed at the moment of being surprised’

‘The administrative gearing – ie every intermediate executive – can and must be a generator of power and of ideas’

‘The tendency to encroach on the part of control is fairly common in large scale affairs especially and may have the most serious consequences. To offset it, powers of control must be defined at the outset as precisely as possible with indications of limits not to be exceeded…’

As you can gather from the quotes above what Fayol meant by ‘to forecast and to plan, to organise, to command, to co-ordinate and to control’ is not quite as rooted in absolute hierarchical power as we may interpret from our modern experience. Undoubtedly, the book has many examples of hierarchies and at times reflects a 19th century worldview, but it also includes many situations that reflect the need for local initiative, employee trust, responsibility, adaptation and change. These situations even include an example of the need for employees in two silos to have direct conversation to resolve issues because going up and down the hierarchy is too difficult.

When we read Fayol, one thing we can easily forget is that he was writing in an era before modern communication and transportation technologies. Imperfect information, poor communication and autonomy of distant individuals was part of the every day management experience. These constraints were so much a part of his environment that Fayol hardly need refer to them and much of the work of management that he describes is addressing these constraints directly or by enabling employees. The only clues are that he only refers to a distinction solely between written instructions and face to face conversations. In an early twentieth century business there was only the telegram and the train. No way to coordinate the large amounts of information or activity necessary to control a business from the top in real time.

We have adapted to increased information and communication in many cases by increasing the scope of the power to control. In light of this increased flow of information and communication, Fayol’s definition of management takes on echoes of a totalitarian state. We have followed the lead of Frederick W Taylor and his suspicion of employee’s individual contributions to work, other than as sources of waste.

Another Path: Enabling Human Capability

Our organisations are not entities in their own right. They are vehicles of shared human achievement. Our definition of management has to reflect more than the power exercised within organisations. It should reflect the potential realised within organisations as people come together to create new ways to fulfil a shared purpose.

The changing nature of a connected global market means that we need to move beyond the initial frame we placed on management of controlling uncertainty and maximising performance from a given stock of human talent. Now the challenges of management are to develop creative and adaptive paths leveraging the collective talents of those in the organisation, their access to information and partners beyond the boundaries of the organisation. This exercise is inherently a challenge of building human capability – scalable learning at speed. This challenge is going to require new management mindsets and new practices.



To reinforce the mindset change required and to break the connection to the language of command and control, here’s a new working definition of management to explore in the next post. Like any good definition of management, it’s focus is on value creation. This time that focus is through capability development and not control.

to manage is to enable an organisation to better connect, to share, to solve and to innovate

We connect in global networks to realise individual and shared purposes. We share to understand, gain insight and to learn faster. We solve the daily challenges to better adapt our organisations to its work and the world. We innovate to continue to create new value for stakeholders by collectively working in new and better ways. Each of these activities can be expressed in the action of each individual employee in the organisation and in their collective collaborations.

Importantly this definition brings to the fore the collective nature of the work of management. We have tended to see management as a solo task of the manager or one concerned with the direction and performance of one employee at a time. The value of management is its facilitation of collective work, collective learning and collective value creation.

The job of management is to build the capabilities in their teams, their colleagues and their networks to connect, share, solve and innovate. Everything else is just accounting for value.


Ranting for Beginners

Our world offers many opportunities for a great rant. The magic of the internet and social media is that your rant can find its audience no matter what your topic or preferences. Look around great rants are everywhere. Sadly, rants don’t create change. Only working together with others matter.

Ranting can be extremely satisfying. There is an emotional reward in getting something off your chest. Ranting is working out loud on steroids. The key difference is there is much less rigour about choosing a relevant audience. Rants find their audience. Even if they disagree, people appreciate the emotion and eloquence of a well phrased rant.

Unfortunately, a rant is an exercise in extremism. A good rant highlights divisions and differences. It portrays a stark difference between the engaged voice of reason and the Other. Rants foster engagement at the edges. They don’t build the engagement of a civil society. They don’t drive change.

Rants don’t lead to change because they release tension. Our reaction to a rant if we agree is ‘Yes. Glad Somebody said it.’ Rich with emotional satiation we don’t feel the tension to act. The reaction to a rant of we disagree is a heightening of tensions, increasing alienation and loss of shared ground.

Ranting is fine as an emotional outlet. Just don’t expect it to create change. Swap your rant for a conversation and find a way to work with others instead.

Don’t Change People. Let Them Change.

If there’s one mistake I have made more than any other in my career, it is setting out on a project with a goal to change people. I can assure you that if you read through this blog you will find all sorts of language about how to get people to change, how to drive change and how to force change. Bad habits die hard.

Force is an ever present temptation for managers, leaders and change agents in the world of work. We have a desire to specify exactly how things should work. We feel our position is rational and justified. Why can’t others just do what we need?

Robots might but humans have their own calculations. They consider what we need in light of all the circumstances and their needs. You can’t change someone. They can only change themselves. We need to shift the agency of change from those advocating change to those who must do the work, because that is the only place change can happen.

Understanding this difference, turns challenges of the change into opportunities.

  • Do you really need senior leadership support? Are you just trying to get more power to for e change? Fighting for this support can be a bottleneck in organisational change. If they won’t change are they really that relevant to the work?
  • What are people trying to say when they resist change? Resistance is at least a form of engagement. It’s better than ignoring change entirely. What insights might improve your change if you understood the drivers of resistance?
  • What capabilities and systems might people need to change effectively ? A proper assessment of capabilities, systems and performance impacts of change is essential to make it easier for people to choose to change. Too much capability building is just an elegant form of communication, not actual enablement.
  • What might you learn if you share the purposes of the change and engage others? I’ve seen many changes taken well beyond the dreams of leaders when an engaged team takes responsibility for managing the change itself.
  • How might you need to change to help others? The most surprising learnings from a change program can be that you are the one who has to change.

In any change process there will be people who don’t want to come along. Some you will have to work around. Others will prefer to leave because they can’t or won’t change. These are far better choices than the false compliance of someone who has been forced to change. In a world of work that demand commitment, compliance is deadly.

Humans are participants in change, not widgets in a process. Allow others to shape the change they need. Help them to make it better. You may even end up being the one who changes most.


The problem with extremism is not the division it creates. There is always division in society. Vibrant civil societies are full of conflict and struggle. The great threat of extremism is that it can foster a growing detachment.

The problem of extreme positions and actions is that they foster detachment in those in the middle. Forced to choose sides people prefer to choose none. The intensity of the fight between extremes creates a ‘no mans land’ in which those forced to choose sides choose none. The lack of certainty caused by ardent opposition disconcerts those who fall in the middle. Unsure of their ground and unwilling to join the fight, the middle detaches and leaves the fight to the extremists.

A civil society requires the participation of everyone. We need all knowledge to combat fake news. We need all voices to be able to hear what’s best for society. We need diversity to be able to leverage the capabilities and talents of all. We need new and different ideas from those shouted by the packs of loyalists. We need all hands to make our society better together.

When we become detached, we leave the floor to the extremists. Amidst their number are the ideologues, the totalitarians and the tyrants. Each of these is happy to trade reality and society for greater power. By ceding the floor when the fight gets extreme,  we open the door to the ideologues and the totalitarians who would like to proscribe what thought and what action is acceptable. No civil society can survive the pretence and the cancer of social relationships that follows.

The remedy to detachment is engagement. Engagement is at the heart of the future of civil society. We must remind each other of the purpose and value of sharing a civil society. We must find our causes, our relationships, our voice and our actions. We needn’t unite in one cause. We can pursue the cacophony that reflects a vibrant civil society.  Far better to deal with complexity, compromise and confusion than to face the quiet certainty of absolutism detached from society. Detachment is the problem, not an answer.

Centres of Ignorance

How to Create a Centre of Ignorance

Take any expertise.

Announce it is a Centre of Excellence.

Withdraw it from its business context.

Manage it independently.

Hire externally based on qualifications in the expertise.

Create geographic, cultural and mindset distance between the expertise and business activity.

Set targets for the expertise unrelated to business goals.

Force expertise practitioners to engage with the business practitioners through intermediaries.

Restrict feedback on the performance of the expertise.

Restrict information flow about the performance of the business to the expertise practitioners.

Constrain the availability of the expertise to meet declining cost budgets.

Focus expertise resources on standardising the expertise into fixed methodology.

Treat anyone from outside the expertise as a barbarian.

Periodically upgrade the methodology to reflect new trends in the expertise.

Apply for awards from specialist associations of practitioners of the expertise.

Commence a communication program to the business on the value of the expertise.

You have created a Centre of Ignorance.

All you need to do now is buy an Ivory Tower.