In the first part of this series I introduced the story of Frederic Tudor, the American Ice-Block King; and discussed lessons learned from his then new product offering as it relates to blockchain technology.  Tudor was able to successfully corner the ice-block shipping market and eventually was shipping blocks of ice to as far away as Calcutta from his home in Boston.  

How was he able to achieve such success?

To put it simply, Frederic Tudor became obsessed with the problem, not the solution. In the digital age, so many of us fall in love with technology and struggle to understand why consumers aren’t adopting the incredible products we’ve introduced to the market (Yeah, I’m looking at you mobile wallets). We suffer from the dreaded “solution-looking-for-a-problem” syndrome.  

Tudor quickly realized he could corner the ice-block market in the Southern regions; that his base product wasn’t the issue.  It met consumers’ needs and the raw product was in abundance.  His focus, his master stroke that set him apart from his competition was in totally committing to solving the associated problems with shipping blocks of ice thousands of miles to tropical geographies.  Tudor realized through several failed attempts of ice shipments that the challenges he faced were threefold:

  1. Tudor needed to solve the problem of product shipment;
  2. Tudor needed to solve the problem of consumer product knowledge;
  3. Tudor needed to solve the problem of rapid product production.

All three of the challenges and the unique solutions Tudor implemented provide us with insights as to how companies can experiment, pivot, and innovate in our rapidly changing digital marketplaces.  I discussed how Tudor worked tirelessly to educate both consumers and merchants on the value of his product in the first part of this series.  I’ll discuss the necessity of partnerships in support of rapid product production in part 3 of this series.  For now, let’s focus on the first challenge: product shipment.

I discussed how Tudor worked tirelessly to educate both consumers and merchants on the value of his product in the first part of this series.

The Importance of Sawdust

Obviously one of the key problems facing Tudor in shipping large blocks of ice thousands of miles by sail-powered ships was loss of inventory. It’s estimated that only 1/10 of each block of ice survived the voyage from Tudor’s base in Boston to the southern ports. Conventional knowledge recommended insulating the ice blocks stored in the ship’s hull with hay; however, after several failed voyages Tudor began to experiment with other packing materials.  The genius of Tudor is evident by his adoption of a readily available and basically free insulating product: sawdust. New England was overflowing with wood mills and the sawdust produced was considered waste.  Sawdust became the not-for-long secret ingredient to Tudor’s success. Tudor’s ships began to appear in Savannah, Charleston, and other Southern ports with large blocks of New England ice ready for sale, all thanks to the insulating power of sawdust.

 The genius of Tudor is evident by his adoption of a readily available and basically free insulating product: sawdust.

Focus on the sawdust

The same concept is true today.  We ignore the routine, the boring, and tend to focus to often on what is the latest buzzword or industry trend.  We often overlook the non-sexy back office processes and invest our capital spend on consumer facing products emphasizing the UX.  Not that great user centric design isn’t important and that the banking industry in particular didn’t need a swift kick in the rear when it comes to digital customer interfaces.  But, in many cases, the pendulum swings too far and we’ve focused too often on putting the proverbial “lipstick on a pig”.  Legacy systems and legacy products (“batch” should technically be a four-letter-word) remain in place in a vast majority of financial services’ technical infrastructures.  

We often overlook the non-sexy back office processes and invest our capital spend on consumer facing products emphasizing the UX.

It takes quite a bit of career path courage to focus on the back office, to turn one’s eye on the legacy systems supporting our ever-creaking and ageing systems.  But it is so obviously needed.  Want to know where to start?  Look around at the shop floors like Tudor did and focus in on the sawdust, the routine processes and tech stack solutions that are in abundance and yet almost invisible to the naked eye due to their abundance.  

Want to know where blockchain solutions are most likely impactful in banking?  

Not in the big sexy consumer facing world.  Blockchain will not solve world hunger, cure cancer, or create massive new revenue product lines (yet) for your institution.  But the technology is well placed to streamline, to provide clear cut authenticity, transparency, and security to many of your back office processes.

How do you go about learning, experimenting, and implementing these solutions?  

By getting started, by focusing and executing small, controlled, and rapid experiments.  By not attempting to eat the elephant in one bite but by working with subject matter experts to drive forward this experimentation process one bite at a time. (Did I mention 11:FS has a simply kick ass team when it comes to blockchain and innovation?)  To be willing to get a little sweaty, a little dirty, a little bit covered in the sawdust of the production floor.  You’ll be amazed to find what solutions will quickly rise to the surface.

Did I mention 11:FS has a simply kick ass team when it comes to blockchain and innovation?

In part three of this series we will discuss how Tudor was able to adopt new technology and to work with partners to dominate the global ice-block market.  

Catch up with part one here.

Sam Maule is Managing Partner for the Americas. Connect with him on Twitter, LinkedIn or drop him an email.

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