The quintessential consideration for innovation is the customer. The customer sits alone as the most important aspect of innovation. The customer is why we innovate and who we innovate for. Because of that, they need to be included in every step and every process as if they are the owner, because they are the owner. The days of a handful of organizational leaders sitting in a building and deciding what products to offer are gone. The customer is the essential element of everything innovation—they are the raison de’etre, the reason for being innovative. When that central truth is realized and operationalized, new ideas succeed; and when they ignore this they fail.
Perfection and the fear of failure are frequently the enemies of innovation. New ideas and inventions need to test certain things in order to learn from them. In the innovation process there is frequently failure. It is a natural outcome of trying new ideas and business models. For the over 500 innovations I’ve launched, many of the best ones came from failing and reapplying the learnings in a different way. Because of this, a best practice I use is to conduct post mortems or after action reviews after a large new initiative or entrepreneurial endeavor, It’s a great way to review what the goal was, what went well, what didn’t go well, and how the idea or business should proceed. However, not all organizations are open to failure and to learning experiences from failure. One such example of a company that wasn’t ready to have learnings from after action reviews was a large US bank I was working with. For one of their initiatives, they wanted to explore the use of available housing data to grow their mortgage portfolio. So they had performed a number of pilots using publicly available mortgage data to make new offers on mortgages. After a three month period of five different tests, none of the five tests had enough revenue lift to warrant a full blown pilot.I conducted one of the first after action reviews for the bank. All of the key participants and leaders were present as I explained the ground rules. No blame, no rank and open exploration of the root causes of our success and failure, so we could identify ways to pivot and improve. However, during the review question “What went wrong?” we all witnessed that the senior VP of mortgage did not really want to explore the topic. She completely missed the learning value of the review and blustered loudly, “Learnings are fine but everyone in my organization is graded on their success and ability to grow revenue.” A few minutes later, when a junior leader spoke of never feeling they achieved the right preparatory timeframe for mortgage renewal during the test, the mortgage leader continued squelching frank discussion by demanding, “Who failed to achieve the correct offer lead times? We can’t allow that to occur? The after action review took a quiet, hesitant turn after the participants saw that failure was going to be punished and not learned from. The mortgage leader was more of the mindset of the unforgiving Japanese in World War II.
However, her auto loan senior VP peer present for the review, picked up some interesting information. During our failed tests, we learned some correlations about the behaviors of mortgage holders that we were able to use for great benefit to other parts of the organization. We learned that over 50% of our targeted home mortgage population also purchased a car within 6 months of purchasing a new home. And, of those who purchased a new car, about 60% of them financed their new car. This fact excited the auto loan department and they were able to spin off a successful test that capitalized on that information. In the new test for auto loans related to new house mortgages, they were able to gain a remarkable 10% lift of our test population. When the bank extrapolated those gains across their fairly large market, it resulted in new auto loans totaling a little more than $100 million, a remarkable bump. This would never have been realized without the failed mortgage initiative. After failure in one bank department, a lesson from that failure helped another department achieve success. Failure and learning can result in new success.
Apart from selecting the right ideas and focus areas, saying no is perhaps the most important aspect of innovating within a resource constrained environment. No on in corporate America has a crystal ball, and no one is infallible in their choices. But to use resources properly one has to say no to many, many ideas. We all know if the horror stories around good ideas being refused by well meaning (and short-sighted) leaders. There is the story of FedEx being rejected in business school, the story of the personal computer being disregarded as a fad, and a whole host of bad declinations of great ideas. So organizational innovators must learn to say no in a soft way that allows the very best ideas and most determined innovators to still excel.
The soft no allows that. When an organization says "no" to ideas, it should say them in a non-arrogant way that allows for the ideator to still succeed. As an example, while leading innovation at USAA we said not to many ideas. But I quickly learned that we weren't he harbinger of all things innovation and made many mistakes about predicting innovation value. So we created a soft no that told the ideators that although we weren't using organizational resources to pursue their idea, they were welcome to pursue sponsorship and development on their own. That we in the leadership made many mistakes and perhaps we were wrong about not pursuing their idea. For most people, this was enough to table their idea for ever. But for the super motivated, true believer, this allowed them an avenue to still pursue the idea. The result was a number of tangible innovations that eventually launched without the help of the innovation program. hey launched merely because we provided a soft no to the ideators that allowed them to still pursue their ideas.
the soft no is a great tool for resource constrained environments that allows an innovation program to focus, but still lets motivated internal entrepreneurs to pursue their ideas.
With so many financial services companies finally lifting their heads up and realizing mobile is the future, here are some must do;'s for their strategy:
-Have a clear, well-defined and agreed upon strategy and roadmap
-Customer focused development
-One app, not multiple
-Mobile first or omni-channel approach
-Do a couple of things right vs doing many things poorly
And lastly, don't expect miracles overnight, a mobile strategy is a long-term journey. But if you use innovative approaches and address the above major issues, you will be on your way to success.
The Majority of Innovation efforts are unsuccessful
Innovation has become the Holy Grail for executives in the 21st century. The advent of technological changes, such as the digital five forces (mobility and pervasive computing, big data and analytics, social media, cloud, and artificial intelligence and robotics), means that companies need to innovate continuously with agility and efficiency if they are to sustain themselves competitively. However, our numerous client interactions, as well as research from a broad array of sources, indicate that a majority of innovation efforts are unsuccessful. The challenge, more often, is not the generation of creative ideas but their conversion into meaningful innovations that stimulate growth in revenue and profitability. Primary reasons for failure include an inability to rapidly and iteratively experiment, by prototyping new solutions and determining business outcomes through simulation and testing of novel concepts.
Innovation is vital to growth
The emergence of digital technologies has made the current business environment one of the most dynamic in history. Companies seeking to expand their market share, enter new product or customer segments, or use emerging technologies to create more compelling customer experiences need to generate and launch innovative solutions faster than their competitors. These solutions may include differentiating services, breakthrough business models, or re-imagined business processes. To do this successfully they need to build the capability to continuously idea, experiment, and monetize their inventive solutions. Innovation, therefore, requires a systematic yet flexible process to handle its associated ambiguity and uncertainty.
For more information visit: http://www.tcs.com/consulting/related-insights/Pages/Rapid-iterative-experimentation-process.aspx
Virtually every aspect of financial services is facing a significant threat for disintermediation. The core question is what are the current market leaders doing about it. Are they investing enough resources and leadership emphasis to control their own fate in this hyper-innovative environment? In most cases that I've seen, the answer is NO. Large financial services companies need to devote more resources towards positive change before change positively overcomes them.
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In my experience, the very best innovations are those that take care of the customer’s needs first. When I led the innovation program at USAA, a large financial services firm, we earnestly put the customer needs first, although it wasn't easy. I witnessed how serving the customer first ensured new products that truly met their needs, and weren't in conflict with the revenue objectives in the organization.
It's as if there are two gods that want to be served: a revenue growth god and a customer benefit god. The revenue growth god is more powerful and demanding within the organizational culture. It is omnipresent and all powerful. It demands sacrifices and many innovations. Meanwhile, the customer benefit god is an unassuming and modest god, entering the picture only when the organization invites its viewpoint into the decision cycles.
But here is the catch. Although quiet and unassuming, the customer service god is actually the more powerful and independent of the two. It recognizes true customer services innovations and follows them for its own benefit. When a company or innovation doesn't support the customer benefit god and instead follows revenue goals, its followers (the customers) are able to quickly notice the lack of benefit for them and migrate elsewhere. However, when the customer service god is served then customers magically gravitate towards the new innovations. And because the customer service god is greater, the revenue god will always follow it. Whenever a successful idea serves the customer god, the revenue god gets jealous and pursues. Customer service and experience should always lead innovations when there is a choice.
Far too many financial services companies are trying to build innovations without giving any thought to how the innovations will grow. They wrongly assume that their ideas can be inserted into their normal project processes and survive. While this may work for the more mundane, evolutionary ideas that merely build on existing products and services, it usually fails miserably for the more revolutionary ideas.
Ideas that don’t fit the normal product development processes of a company, or that don’t appeal to ROI-based decision processes, require a protected place where they can grow and develop. Just as an egg is kept safe and warm within the nest until it can walk or fly on its own, so revolutionary innovations must be given a place to grow and learn before being subjected to the hard reality of an profit-focused organization. Too many companies expect their big ideas to fly right away, and that just doesn’t happen without incubation.
Modern innovation methods make management increasingly irrelevant and sometimes even obsolete. The old information model in organizations is for managers to gather the information, decide what is relevant, filter the information and then disseminate their key instructions. This was previously the case for new product and services development. But recent innovation methods have flipped the model with the most relevant information being shared and defined by the users first through some sort of crowd sourcing; then those same users determine what is relevant and define the results. With the old model, leaders controlled the information flow and were essential to its success. Under the new model, excessive management and control is stifling in the early stages of innovation and irrelevant once the users have decided the approach. What my TCS friend Courtney Wood calls "crowdvantage" is usurping traditional management roles in developing innovation.
Mick is a thought leader on innovation in financial services. He is the former lead innovation executive for USAA, a Fortune 500 Insurance and Banking company, where he built and led their program to best-in-class status. Prior to USAA he was a DoD innovation and transformation officer. Mick works collaboratively with leaders and is particularly focused on the practical application of innovation cultures and strategies.