Four Steps to Innovation
One theme that appears consistently on agendas at banking industry conferences is the need for innovation to drive revenue and profitability growth. Yet, most of the pioneers in financial services have been non-bank companies as banks hunkered down into survival mode after the 2008-2009 financial crisis.
Now that the industry has stabilized, innovation is needed more than ever as banks face a revenue crunch and customers gravitate to electronic delivery mechanisms. But how can banks nurture innovation in their traditionally conservative cultures? By building it from the ground up. While any one company’s strategy for building an innovative organization must align with its unique situation, there are a few universal concepts for building a more innovative corporate culture that are worth noting:
Think broadly about where innovation can happen. Steve Jobs said, “Design isn’t about how something looks. Design is about how something works. And great design can motivate people to do things.” Innovation doesn’t have to be about products. It can be about work flow changes and processes – the way you open accounts, solve customer problems, handle errors you’ve made, pay for performance or communicate with customers. This is good news for bankers since many bank processes are ripe for innovative improvements.
Imagine if opening an account at your bank was actually a good experience, one people widely perceived as such. Maybe it would motivate people to switch to you and refer you to others. This is exactly what happened at Commerce Bank in New Jersey. The “fun” factor, longer branch hours, and coin counters were innovative in retail banking at the time and contributed to tremendous growth at Commerce Bank before it was acquired by TD Bank in 2007.
Make innovative thinking part of everyone’s job. Harvey Wade, a manager who helped drive innovation at Allianz Financial, explained in a recent interview the need to engage staff in innovation discussions. Wade recommended taking innovation to staff in ways that fit within their existing duties so it doesn’t seem as something additional they need to do. The idea is to use existing meetings and communications forums but add innovation and idea generation to the agenda. This could work well in banks where too many meetings are already on everyone’s schedules. However, meeting leaders must be tasked with fostering the sharing of ideas and keeping criticism of those ideas off the table. And these leaders need defined issues on which to work and processes for vetting ideas and teeing them up within the organization.
BBVA is taking this one step further. Early this year, the bank announced it is adopting Google Apps for Business, a Web-based suite of collaboration and communication products, in an effort to better enable employees to collaborate and innovate. The bank believes this will foster new ways of working because employees will have access to all the information they need along with advanced collaboration tools.
Remember that innovation blooms with strange bedfellows. It is important to go beyond existing forums and working relationships to spur innovation. In their book Innovation to the Core, Peter Skarzynksi and Rowan Gibson advise companies to create cultures that support innovation by, in part, deliberately creating “new conversations” because many times innovation comes from combining ideas – old ones and new ones – in creative new ways. You have to promote engagement among staff members who have different perspectives and experiences – and who don’t interact often with one another. When was the last time individuals from finance, marketing, third-party vendors or outside advisors and frontline staff engaged with one another to consider opportunities to do new and interesting things for customers? Very few banks have set aside time for these kinds of discussions, but without them innovation isn’t likely.
In a recent article on bankinnovation.net, we learned that BNY Mellon hosts “innovation jams” within its wholesale bank unit. The unit seeks solutions to specific challenges online, encourages all employees to provide ideas to solve these challenges and typically gets about 10% of its workforce participating in each “jam,” which usually lasts one to three days. The key to the success of these online innovation efforts is to give the employees a concrete issue or challenge to solve. Employees can build upon each other’s ideas in these types of social forums, providing opportunities for fast collaboration across the organization.
Light a fire under it. It helps for staff members to feel pressure to generate ideas. Providing for a limited amount of time contests at irregular intervals, high visibility of the ideas, and rewards for innovative ideas helps to spark innovation. Without a sense of urgency, people fall back into familiar patterns and become too complacent about the innovation challenge. You might consider an annual innovation award that recognizes the most successful innovation introduced by the business in the last year (in addition to the service excellence and brand champion awards that you should also present each year). Winners participate in the judging of new innovation ideas. In addition to improving the business, people might also have some fun.
In such a highly regulated industry as banking, not all innovative ideas will be practical or implementable. But we are faced today with innovations coming from outside our industry that threaten the traditional bank business model. Much of what we discuss as innovation in financial services today is product- or delivery-oriented and led by technology companies. For now, banks continue to have the customer’s primary financial relationships. However, the marketplace for financial services is changing, and the pace of change is accelerating. It’s time to create an environment that fosters greater innovation.