I was taking an online course at Section4 Strategy Sprint. After I have learned the strategies that define the most valuable firms globally, I am using the framework to evaluate real-world companies and identify strategic opportunities. The company I choose to analyze is Thought Machine, which is the company that I work for and am familiar with.
Overview of Thought Machine
Thought Machine is a product company. It has built the core banking product, transforming the banking industry and empowering banks to offer innovative services to their customers.
Thought Machine Growth
We raised $200M in our recent Series C funding round with industry-leading VCs and leading global banks, including Nyca Partners, Molten Ventures, JPMorgan and Standard Chartered, bringing our total funding to $350M at a £1bn+ valuation.
Thought Machine Clients
We work with several Tier 1 to Challengers, such as Atom Bank, curve, Lloyds banking group, Monese, SEB, standard chartered, transfer go, Arvest, ING and JPMorgan Chase.
Thought Machine Products
Vault is ledger on cloud-native platforms (including Amazon Web Services, Google Cloud Platform, Microsoft Azure) with no legacy technology. Through Smart Contracts, Vault can be configured to run any type of retail bank product with flexibility, such as current accounts, savings, loans, credit cards, and mortgages.
T-Algorithm Strategies Evaluation
The framework I use for analysis is T-Algorithm. It is the set of strategies that define trillion-dollar firms, such as Apple, Google, Facebook and Amazon. It drives both explosive growth and substantial margin. Influential business leaders deploy strategies that matter to customers and progress key business priorities.
Traditional Tier 1 banks need to adapt to change quickly to meet their customers’ needs. It’s a high business priority for Thought Machine’s clients to change from legacy systems to a highly automated, efficient, and cloud-native technology stack.
Rundle means a bundle of goods and/or services that justifies recurring revenue. Banks care about most to reduce complexity. They are stuck with a legacy mainframe monolithic complex systems, which inhabit them for innovation. Banks could subscribe to Thought Machine ledger with a growing number of bank accounts as a solution. It generates recurring revenue as they pay by usage.
2. Appealing to Human Instinct
Today’s most successful business appeals to a core human instant, typically one tasked with an element of survival, such as the brain, heart, gut or genitals. In my opinion, our solution is mainly appealing to banks’ human brain, because they want practicality & low cost. Therefore, Thought Machine is attracting new banks by its product advantages on stability, security, resilience, and cost-benefit.
3. Benjamin Button
Products or services that leverage network effects to age in reverse. It gets more, rather than less valuable to users over time. In other words, it’s the network effect. One of the pain points of traditional banks with legacy systems is that it is tough to extract their data. On our platform, the Thought Machine product offers flexibility to integrate with other systems, e.g. Salesforce and Tableau, to address the issue.
4. Visionary Storytelling
It is the ability to articulate and demonstrate progress against a bold vision to shareholders and stakeholders. One frustration that traditional banks got is their lack of deep culture for engineering excellence. On the other side, Thought Machine was founded by an ex-Googler with a culture of engineering excellence. The story helps to raise capital.
5. Vertical Integration
A firm can control the end-to-end customer experience by owning as much value chain as possible. Banks care most about cost, convenience and speed. They want to offer new financial products as soon as possible and shorten the time to market. At the same time, Thought Machine has value chain control by leveraging partners to integrate our product.
It means a firm that serves as an incredible springboard for a career. Banks care most about quality. Traditional tier 1 banks are risk-averse and not agile. They can’t afford a system failure as it would cost them a bit of loss in public image and huge fines from regulators. Meanwhile, our company culture at Thought machine encourages continuous learning high-quality work with enormous amounts of fun.
T-Algorithm Strategy: Visionary Storytelling
Based on the above evaluation, the strategy with the most significant potential at my firm is visionary storytelling. The initiative that I propose is to convey a simple, appealing and believable vision to change the banking industry.
The future of banking
1: Increase social media presence of our company CEO (Low effort, high impact)
Like Elon Musk, who is portrayed as the innovator, our CEO, Paul Taylor, story as an ex-Googler could also increase his online presence on Twitter. We need an iconic hero who is so influential that he can distort the legacy banking system with cloud-native technology, shown in newspapers and magazines. Use Mox by Standard Chartered challenging bank as a success story to create short videos to drive brand awareness on Instagram and Tiktok.
2: Create interaction with technology communities (Medium effort, high impact)
Open source some of our technology. Attract more developers to use. It is difficult for non-technical people to appreciate our tech stack with Kubernetes and Kafka. Create a meetup group with free beer and pizza to engage the technology community. Brown bag sharing and webinars are good examples. Create a weekly newsletter to communicate more directly with developers on change in the banking industry. Not every software engineer is aware of the banking industry.
3: Create a deeper connection with the banks (High effort, high impact)
Building a good reputation within the banks could help to raise more funding. JP Morgan is one of our biggest clients, which could lead to tremendous growth. Connect with the bank’s customers and invest in our technology. Lloyd banking has many clients who have no idea where the technology is behind the scene. Hire top talents in the banking industry and partner with the top consulting firms, such as Accenture, Deloitte and BCG consultants, to help promote us.
Priorities of the three initiatives and recommendations
The 3 immediate next steps Thought Machine should take to deliver on the revolutionary potential of the cloud core banking technology are:
1: Tweet more frequently using CEO Twitter account with a bold vision statement.
2: Open source part of the technology and build a tech meetup group.
3: Ask our banking client to share the success stories using our product.
look forward to receiving feedback that cements my learnings and improves the recommendations. Don’t hesitate to get in touch with me on Linkedin: https://linkedin.com/in/victorleungtw