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Bonding With Bankers

If the Knowledge Lab succeeds in defining and designing the next wave of commerce-enabling technology, it will in many ways be a move to NCR’s roots. After all, the corporation was founded in 1884 as one of the earliest cash-register manufacturers. Originally called the National Cash Register Company, NCR was for decades a leader in banking and consumer-transaction technology. But in the 1980s, NCR got big for its boots, spreading itself into a number of loosely associated businesses (there was even an NCR PC).

By the end of the 1980s, NCR had been overshadowed by younger organizations driving the personal computer revolution. Without the economies of scale that allowed upstarts such as Compaq and Dell to manufacture competitively, the company began suffering heavy losses-despite the growing importance of two core strengths: ATM and point-of-sale technology. By the mid-1990s, it was clear NCR needed to change. Moreover, the change needed to be highly visible, re-establishing NCR’s reputation for innovation in the fast-paced, increasingly aggressive banking and retail marketplace.

NCR’s strategy was to outsource the manufacturing of hardware such as ATMs, cash registers and barcode scanners and concentrate on the company’s ability to gather data about customer transactions. At the same time, corporate restructuring moved NCR’s Financial Solutions Group’s headquarters to London-it was then that the Knowledge Lab was born. “We needed a point of difference,” says Kicki Wallje-Lund, Financial Solutions Group vice president of business development and the NCR executive responsible for launching the Knowledge Lab. “Our competitors had state-of-the-art banking centers to show customers visiting their HQs. We wanted something different-to be recognized as a thought leader.’”

The proposed structure of the lab was intriguing: Although launched and housed by NCR, it would be co-funded by the Financial Solutions division’s customers-the banks. This would not only offset some investment costs (NCR spent 3.5 million, or about $5.5 million, in the first year), Wallje-Lund explains, but also help the company forge stronger relationships with its customers. Rather than simply paying money up front for an entitlement to research results or regular reports, banks were invited to become partners (in NCR-speak, “members”). Member banks could join an advisory board and have a say in the conception and utilization of Knowledge Lab concepts. Members were invited to contribute to the lab’s research by, for example, coordinating consumer trials.

Initially, there was skepticism within NCR as to whether customers would pay, Wallje-Lund says. But the lab secured a high-profile portfolio of commercial partners, including Barclays Bank, HSBC, Sun Trust and Wells Fargo. “The level of interest exceeded our initial targets,” she adds. The first year, 10 banks each contributed $25,000. This year, two dozen are contributing up to $50,000 apiece while NCR has upped its annual investment to 4 million to 5 million ($6.3 million to $7.9 million).

Indeed, the biggest challenge wasn’t finding sponsors but getting the right people to work in the lab, Wallje-Lund says. “We found ourselves in a catch-22 situation: We needed to change people’s perceptions about NCR if we were to convince them to come to us rather than, say, Microsoft. The trouble was, we couldn’t do this until we had the right people in situ.”

Luring Stephen Emmott away from Bell Labs was a key accomplishment, one that’s drawing kudos from Knowledge Lab members. “He’s a marvelous leader, and a visionary,” gushes Roger Alexander, managing director of the emerging markets group at Barclays Bank. Alexander is confident that NCR is giving Emmott and his lab enough latitude to operate productively.

It was exactly this promise of the “freedom to innovate” that drew Emmott to the Knowledge Lab. “All they said to me was You can do whatever you want,’” he explains. “Of course, there was a tacit assumption that this would be relevant to technology, but the key was they did not tie me specifically to e-commerce, or even banking technology.”

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