Equipment Finance’s ‘Moneyball’ Moment: Remaining Innovative is the Anti-Disruption

by Sean Scampton Monitor 101 2021

Innovation is one of the hottest topics in equipment finance and how well industry participants adopt forward-thinking strategies will determine the future of the space. Sean Scampton of Leasepath explains how technology infrastructure and company culture are two areas most primed for innovation (and disruption) in equipment finance.

Sean Scampton,
Director of Sales and Marketing,
Leasepath

From an operations standpoint, disruption evokes an air of anxiety and panic. What we’ve all experienced the last year and a half has made critical infrastructure break down as society and the equipment finance industry has coped with a rapidly changing world. Cyber-attacks, sweeping governmental changes and even acts of God all seem more ever-present, leaving the foundation under us feeling as unstable as ever.

But change has always been constant and ever present. Before 2020, we regularly anticipated being disrupted. Why else would we have contingency plans and redundant backups if not to maintain the status quo? And while the status quo is certainly more predictable, supporting it at all costs motivates us to ignore opportunities to evolve as disruptive events occur.

“Any product or service goes through stages of disruption,” Deborah Reuben, an innovation influencer to the equipment finance industry and the founder of TomorrowZone, says. “The first is digitization, the second is deception. We’re firmly in the deception phase as an industry because it’s deceptive to think you can do the same thing forever.”

You could say that one person’s “disruption” is another’s “chance to innovate.” But in exploring the dichotomy between disruption and innovation, you’ll find that using disruptive events as opportunities to innovate can produce numerous benefits.

If we accept the concept that change is constant, what does it look like to lean into the chaos and foster innovation? What does it mean to consider disruption something that organizations choose willingly and/or that serves as a rallying cry for operational transformation? Companies that embrace change and seek opportunities for innovation are the ones that weather whatever is thrown their way.

Adapt or Die 

In the real-life story depicted in the book and movie “Moneyball,” Oakland A’s general manager Billy Beane found himself in one of these moments of disruption when he had to adapt after losing three high-profile players to competing teams. In the film, Peter Brand (who is essentially a stand-in character for one of Beane’s real-world advisors, Paul DePodesta) explains to Beane that clearing the payroll presented an opportunity; instead of overspending for stars, the A’s could reallocate resources and obtain skills the club needed at a lower cost while zeroing in on the exact tools needed to produce more runs and, therefore, more wins.

“Adapt or die,” Beane famously spouts in the film. It is a rallying cry from a real-life innovator who ignored how other organizations approached problems. Instead, he looked inward, broke down the requirements to the numeric, reevaluated the processes and proceeded to wildly change both his team and baseball for the better. But the A’s have not rested on those laurels. Since the 2002 MLB season, which is the year the film version of “Moneyball” tracks, many other organizations have adopted Oakland’s ideas and numerous other new ideas about player evaluation have been born. By intentionally continuing that cycle of disruption to innovation to transformation, the A’s have consistently adapted in creative ways to achieve success. Including the 2002 season, the A’s have nine playoff appearances and have had a winning record 11 times in the last 19 years (and they look well on their way to adding to those totals this season).

Like the A’s, equipment finance companies must make the daily choices to lean into the chaos and seek innovative solutions. For most, this transformation will require investment and intentional engagement in two major areas: technology infrastructure and corporate culture.

Grounded in Disruption

Believe it or not, the equipment finance industry is historically grounded in reacting to disruption. The original lease contracts were written on clay tablets, allowing Sumerians to acquire the ships, land and livestock needed for economic growth when such options didn’t exist. A few innovators saw an opportunity to profit and essentially created an industry that allowed lessors to profit from their assets indirectly. From those auspicious beginnings, the modern equipment finance business model has developed a cozy relationship with the conservative banking sector. This has allowed banks to dictate the pace of innovation for the entire industry, which has led to a level of comfort with the status quo.

“There is risk in not evolving,” Jim Zelinskie, a longtime equipment finance executive and the leader of Bryn Mawr Equipment Leasing, says. “For the longest time, there was a lack of need for disruption or changes in the process; the industry was successful at what we were doing. In some sense, a level of malaise has fallen over the industry, as we have become stuck in the bank culture and found security in existing technology.”

Bryn Mawr Equipment Leasing recently moved much of its technology infrastructure to a true cloud in order to streamline processes, but its reward wasn’t fully realized until its needed to abruptly shift from purely on-premise operations to a work-from-home setup.

“The technology enabled us to pivot in an unexpected way,” Zelinskie says. “It forced us to recognize that business can be conducted remotely with efficiency and success.”

Certainly, nobody predicted the COVID-19 pandemic to come, but by placing more time and financial resources toward becoming more agile and dynamic, Zelinskie also prepared his business for the world-shaking disruption to come.

Today, technologies and solutions are more accessible than ever, and taking the modern approach with the cloud has allowed more operational flexibility than was initially required. Choosing to implement that technology was in and of itself a disruptive event, but the digital transformation process Bryn Mawr Equipment Leasing underwent prepared not only the infrastructure but the people that drive business as well.

“In embracing modern technology, there was a shift in our culture,” Zelinskie says. The team was not only ready in terms of their tools, they were mentally and organizationally ready for a major disruption event to hit. It took vision and intentionality to seek what’s best over what is easy.

Consumer technology trends have helped reshape how customers demand to engage with companies, forcing those companies to adopt new solutions; the pandemic has only served to accelerate that pace of adoption. Consider that video conferencing apps are now standard fare when just 18 months ago, teams were still wrapping their heads around e-signatures. Change is happening too fast to be complacent, something the Bryn Mawr Equipment Leasing team learned well. Companies that are intentional about exploring and investing in modern, intelligent user experiences and architecture are substantially more capable of remaining agile.

Culture of Innovation

Like technology, creating a culture of innovation is not a one-time activity; it requires ongoing investment and nurturing. The process begins with making diversity of thought an integral part of your culture. That means actively bringing new perspectives into your boardrooms. By accessing a variety of voices and perspectives, you can create more avenues for evolution with more creative solutions.

Change starts at the top and must be driven from within. In terms of creating a culture of innovation, this means leadership must be the champion of change and must lean into the disruption that change will create. They must be open to investigating ideas that could challenge the status quo. And they must take brave steps to start conversations internally that may go in unexpected directions.

Banks and finance companies that have adopted a “if it ain’t broke, don’t fix it” mindset will find themselves unable to keep up with the pace of digitization in equipment finance. Instead of falling back on such a mindset, they must empower and encourage employees to look for new ideas where “nothing appears broken.” Whether its regular meetings dedicated to hearing and sharing new ideas, workshops for exploring new technologies or even simple encouragement when staff take an interest in improving an element of the business, if employees feel ownership of the change, the chance that it makes an impact will increase dramatically.

Getting the most out of these exercises requires us to be more intentional about our hiring practices and about how we connect with our teams. Simply adding new people isn’t the challenge. Instead, it is in specifically adjusting what qualifications and intangibles we’re seeking. As a personal example, Leasepath’s team is in the midst of adding to our ranks. Experience in demonstrating needed skills is great, but we’re specifically asking ourselves, just as Beane asked himself, what specific skills do we need to add to our team and can we acquire them from unexpected places? Each team is different, but a room full of people with similar life experiences will lead to similar outcomes.

Embracing this maxim over the last decade, Zelinskie has intentionally recruited, mentored and promoted millennials and members of Gen Y for several years. In doing so, he has built a pool of talent that is more “tech-savvy” to help him see beyond his own horizons. That team has given the organization fresh eyes at every level of the business, seeing risks and challenges that were previously obscured. This has given Bryn Mawr Equipment Leasing insight into how technology could be applied and perspective on organizational risks while also accelerating its ability to gain buy-in. This has produced a more skilled and capable team, which came in handy when the company needed to dramatically shift to a work-from-home setting within hours.

Finding What’s ‘Broke’

“When it comes to digital adoption, we are four to 10 years ahead of where we thought we’d be,” Reuben says. “Change is happening too fast to rest on our laurels. We must be paying attention to disruptive forces of change, or we risk being disrupted.”

Paying attention emphatically does not mean burying one’s head in the sand and expecting circumstances to adjust to your needs. Adopting a posture of innovation will allow us to develop an organizational stamina that can withstand wild paradigm shifts as well as minor disruptions.

Like the A’s, companies that are intentional about leaning into that disruption can fashion for themselves a “future-proof” foundation and they’ll be rewarded with opportunities only available to companies with that competitive advantage as paradigms continue to shift.

Sean Scampton is the director of sales and marketing for Leasepath, the cloud-first CRM and LOS platform that is bringing the intelligent workplace to equipment finance. Scampton was recently named one of the Monitor’s NextGen Leaders of equipment finance. He speaks and writes regularly on the topics of digital transformation, technology adoption, change management and sales leadership.

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