Disruption

Businesses are usually not disrupted by a ‘big bang’.  They are disrupted when innovators snap together existing pieces of technology and process in an innovative way.  

Disruption comes when innovators think, “That makes no sense.  This is a better way.”  Note that the innovator doesn’t think “There’s got to be a better way.”  They think, “This is a better way,. and here’s how I can do it.” Mavericks usually see it coming, but many business leaders don’t see it until it’s upon them.

Gordon Moore of Intel introduced an observation that became known as “Moore’s Law”: the capability of a microprocessor will double every 18 months, given a constant cost. Mortgage lending costs just keep escalating, and are not delivering more value for the higher cost.

This is just crazy. There’s no other way to describe it. I’ll make a bold prediction: in the next three years, the cost of originating a mortgage loan will fall by more than half. If one can’t find a way to keep pace with that prediction, I suggest you won’t be originating mortgage loans.

Which brings us to disruptive technologies.

Geoff Colvin presented a talk entitled “Leading Ahead of Disruption.”. My take-away from the talk was that one should use technology to do low value-added things that humans could do, (such as processing loan documents,) and focus humans on high-value things that technology can’t do, (such as building a personal connection to a customer).

Afterwards, I had a discussion with Geoff. He said, “Most businesses and products can be disrupted by technology. To find areas that are difficult to disrupt, ask yourself, ‘What are humans most driven to do?’ It’s to build relationships. To have empathy. To engage in creative problem solving as a group. To collaborate.” This is why Relationship and Empathy function as a Strategic lever.

Let’s review what technology can disrupt in the lending process. Could a lender originate and close a first mortgage loan in one day, for under $1,000? As I said earlier, my thesis is that your business model works until it doesn’t. Businesses are usually not disrupted by a ‘big bang.’. They are disrupted when innovators snap together existing pieces of technology and process in an innovative way.

Disruption comes when innovators think, “That makes no sense. This is a better way.” Note that the innovator doesn’t think “There’s got to be a better way.” They think, “This is a better way,. and here’s how I can do it.” Mavericks usually see it coming, but many business leaders don’t see it until it’s upon them.