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Start-ups can shake off conventional shackles

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The cultures within corporates and new businesses can make it tough for them to collaborate but there are those who think it’s well worth the effort

Innovation is one of the toughest challenges leasing companies face. The fleet market in the UK is mature so coming up with a genuinely new product is not easy – even car salary sacrifice is not entirely new.

Innovation also requires time, money and energy. Developing an app, which needs to work with a leasing company’s existing systems, for example, could take a year, dependent on the complexity. 

In some cases, there may be no income generated from the ‘innovation’. It may simply be an enhancement to an existing product or service. 

So why bother?

For Ian Hughes, commercial director at Zenith, a company which is often classed as innovative by its customers, innovation isn’t simply a nice-to-do, it’s a must-do; it’s essential in order to build long-term, sustainable relationships with its customers.

“We want to be seen to be adding value all the time to our customers because it’s a highly competitive marketplace and we don’t ever want to be complacent,” he says. 

“It’s not innovation for innovation’s sake, we’re looking to meet a customer need, typically.”

During quarterly review meetings, Zenith takes the opportunity to ask customers what they would like next. Sometimes it will work in collaboration with a customer on an idea that it knows will prove useful to others. 

“A customer came to us wanting to do more around risk management but it wasn’t just about a driving licence check, it was going much deeper into the behaviours of drivers and pulling a whole variety of risk components together into an overall risk assessment of a driver and a driving population,” Hughes says. 

“We’ve been working with them on this piece of innovation to work it through, make it into something that we’re then going to start being able to talk to our customers about in the future.”

As well as working collaboratively with customers, leasing companies should consider partnering with those outside the industry in order to innovate. 

BMW Financial Services, for example, teamed up with innovation specialists L Marks last year on a 10-week programme to help it find start-up companies to work with on new and improved services.

Jonny Combe, general manager, product and channel development at BMW Financial Services, says that the business wanted to take a different approach to innovation rather than making “gradual, incremental improvements” to products, as had been the traditional approach.

The advantage of working with start-ups, says Combe, is they “inherently see things differently to corporates”.

“Generally speaking, start-ups tend not to be constrained by current ways of thinking. They often challenge the status quo and are wired to constantly find creative solutions to difficult problems,” he says. 

“By virtue of being a start-up there are some things that are much easier to do; you’re more nimble, can change direction quicker and make decisions instantly. All of those things are much more difficult for a large corporate.”

But the differences can make it tricky for corporates and start-ups to work together. 

“The corporate will typically struggle with the lack of structure and mature processes within a start-up, conversely a start-up will no doubt be frustrated at the speed at which the corporates makes decisions,” Combe says. “If both parties play to their strengths the results can be very powerful, but it’s not as simple as it might look from the outside.”

The programme, called Innovation Lab, concluded with a ‘demo day’ where finalists pitched to BMW Financial Services to secure long-term commercial relationships. Deals have been struck with Cazana.com (heralded as ‘Zoopla for cars’), Divido (an app offering 0% finance options for drivers hit by unexpected repair costs following vehicle servicing), and Wrisk (an insurance app which brings together motor, travel and home cover).

 BMW Financial Services is also continuing commercial discussions with Warwick Analytics (a predictive analytics platform that allows businesses to utilise Big Data) and Drover (a car rental and ridesharing platform described as ‘the Airbnb for cars’).

Combe says he has learned that a lot can be achieved in 10 weeks and that is possible to bring innovation to a highly regulated environment like finance. 

While the chosen start-ups are predominantly retail finance, a programme like the Innovation Lab could work for fleet finance. 

However, Combe believes the whole business needs to be “ready to embrace it”.

 “For it to work, it needs genuine buy in from the top and that needs to mean more than just the CEO turning up at the beginning and end of the programme,” he says. “As well as commitment from those at the head of the organisation, there needs to be a culture of willingness to engage with new ways of working, new ideas, many of which may challenge some of the existing conventions.”

Following the success of last year’s Innovation Lab, BMW Financial Services plans to run another innovation programme this year, which Combe promises will be “even bigger and better”. 

ALD International is also planning to work with start-ups in order to innovate.

Last month it launched the Start-up Challenge, inviting start-ups to use digital technology to improve the parking experience for drivers in congested areas. The challenge is open to start-ups in all of the 41 countries that the ALD Automotive Group operates in and the winning solution will have the opportunity to sign a partnership contract with ALD Automotive. 

“The idea behind the initiative is to harness the creative spirit of young start-ups and to weave their approach into the fabric of our own business,” says Derek Barker, IT director at ALD Automotive.

Barker is in charge of ALD’s new Development Centre, which opened in Bristol last year to accelerate the development of new digital applications and products.

The centre is backed by significant financial investment from ALD International and has a 100-strong team of developers. 

Taking key learnings from the internet start-ups of the Silicon Valley, the Development Centre aims to create an environment that “fuels creativity and innovation”, according to Barker. 

The developers are free to research and explore the latest technological trends within the finance and mobility sector to help create new applications for customers. 

The Development Centre is also responsible for progressing ALD’s telematics system, ProFleet. The latest system upgrade is about to be completed and will be rolled out across 18 countries over the next 12 months. 

Zenith also takes an in-house approach to digital products, creating its own fleet management software (Pulse), and a driver contact management platform, called Accelerate, which allows it to track communication with drivers. 

Zenith also looks at technology being used outside the leasing sector.

Hughes believes the way that companies like Amazon, DPD and Royal Mail now manage customers expectations about the delivery of an item could be applicable to company car drivers taking delivery of a new car. 

“If we were to use the Amazon model that would be a fantastic enhancement to the customer experience,” he says. “That’s the kind of thing we’re looking at and wondering how we start giving that type of experience because we’re all being trained that that is what ‘normal’ looks like these days.” 

He adds: “We’re always very ambitious about the art of the possible and because we’ve got that in our DNA, we’re never short of great ideas.”

New ideas are discussed by Zenith’s innovation committee, which is made up of the senior team and representatives from across the business.

“It’s very collaborative because we want all voices, it’s not just who shouts loudest because we want to innovate across the whole proposition and a great idea in accident management still has the same value as a great idea in in-life operations or in finance, for example,” Hughes says.

Zenith’s marketing team has a part to play in assessing market trends and where technology is going.

“Ultimately they need to take it to market and make it into the product that it needs to be to add to the overall proposition,” Hughes says. 

Deciding which ideas should get priority is dependent on whether they fit with Zenith’s strategy of where it wants to be in three to five years’ time and whether they add value to the customers. 

This approach, along with a “proper brief” and carefully scoping out the project, means it is rare for Zenith to drop an idea mid-way through the development process. 

Sometimes, fleet suppliers will approach Zenith with a new product or service. 

“We’re quite keen on evaluating that stuff because it’s more straightforward to dovetail into someone else’s innovation if it matches our strategic direction because they’ve put all the hard yards into it and we don’t need to do it all ourselves,” Hughes says. 

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