Revv-olution: The nuts and bolts that power your innovation engine
“Our intuition about the future is linear. But the reality of information technology is exponential, and that makes a profound difference. If I take 30 steps linearly, I get to 30. If I take 30 steps exponentially, I get to a billion.”
—Ray Kurzweil, author, computer scientist, inventor and futurist
Without doubt, today’s exponential rate of technological change impacts every single industry. Consider this: 2017 marks the iPhone’s 10-year anniversary. Today, there are 2.6 billion smartphone subscriptions globally, and that number is expected to more than double to 6.1 billion smartphone users by 2020. Simply put, we stand at an exciting inflection point in our collective history as science fiction becomes reality.
What does this mean for you? Companies must reimagine experiences and act on ideas quickly and nimbly to keep pace with the speed of disruption—no matter the industry. Given the constraints of legacy systems, complex security, risk and compliance requirements, and siloed data stacks, financial institutions face particular difficulty not just to think differently (or as iPhone visionary Steve Jobs would say, “think different”) but also to act with requisite speed and agility.
Enter the need to build up innovation competency.
But what does innovation competency look like? Is it a lab? An innovation center? A “skunk works” team? A black ops crew? An agile group within a waterfall organization? Regardless of how you define that subset, the underlying mechanisms to grease the wheels of an enterprise innovation engine link to four key components (Figure A):
Figure A: Innovation Engine
The first two modules of the engine (Focus and Enable) tie to business, technology and process levers, and will be the focus for the remainder of this article. The other two link to company culture (an immensely important aspect of innovation competency that will be addressed in a subsequent article).
Focus your innovation efforts through deliberate curation of your pipeline initiatives, while taking a portfolio approach on your investments. Find the overlap between customer needs/value, business and strategy objectives, and technology trends—or what I like to call an innovation agenda. When you define your own innovation agenda, it puts parameters around where you’ll invest in any given year and signals to the organization your intent to focus on value-driven innovation rather than chase the latest shiny object. How could that play out? A simple equation can help you gain that focus (Figure B):
Figure B: Innovation Agenda Equation
Once you define different concepts and initiatives linked to your innovation agenda, you must act on them by enabling a set of test-and-learn capabilities. These fall into two major categories:
- Methodology as an enabling capability may seem antithetical to fostering innovation. But the right dose of process proves critical and assures that whatever you put through the innovation pipeline is a time-boxed, measurable experiment—one that provides you with learning at the end of its run. One way to do this is to approach your test and learn initiative as a circular learning loop instead of a linear project. This allows you to measure the outcome (not the output), learn from it and pivot appropriately to make the next investment decision. One caution: Make sure the learning loop isn’t so heavily weighted that it takes too long to glean the learnings. Take a lean approach to breaking down the work into bite-sized, manageable and ‘stoppable’ chunks: It is a critical success factor that will help you move your investment forward or fail it fast.
- Technology platform investment can go a long way toward powering your innovations. With the risk- and security-adverse nature of financial institutions, it makes sense to carve out a separate technology platform and resource set to focus purely on innovation experiments. This way, you can stick to test-and-learn without the common burdens that can bog down a production initiative. Again, be as lightweight and nimble as possible—only building out your minimum viable experiment—just what you need to make that next investment decision. The spectrum of test and learn options might include (Figure C):
Figure C: Test-and-Learn Spectrum of Options
Many innovation teams face the challenge of leaping from test-and-learn to production. Once you’ve deemed a concept a success, how do you go from a test-and-learn environment to production path with minimal friction? It’s a tough nut to crack. But there are ways to increase the likelihood of a more seamless graduation path:
- Bring in the right technology and subject matter experts in advance
- Leverage APIs and reusable services whenever available, and
- Introduce greater automation that addresses security, compliance, ADA and other constraints.
The nuts and bolts of building an attainable innovation competency requires you to 1) Focus with discipline about your investment—triangulating on tech trends that amplify customer and business value, as well as 2) Enable by establishing the right set of capabilities to accelerate test-and-learn activity through your innovation pipeline.
These first two aspects of the innovation engine can power what you take through the pipeline and how quickly you move through it, so that you can keep pace with the exponential change around you.
The innovation networks and culture you build to supplement your innovations are often neglected but equally important. Part two of this series will cover the softer side of building your innovation competency and serve as a reminder that there’s an art to the science. As a master of innovation, Steve Jobs (who was just as obsessed with the iPhone’s sleek style as its high-tech substance) would undoubtedly concur.
Want more Banking Strategies? Sign up for our free newsletter!
This article is Part 1 of a 2 Part series.
Miranda recently shared her insights as a guest of the BAI Banking Strategies podcast.
Miranda Hill is director of innovation and commerce strategy at ThoughtWorks, a global firm of 4,000-plus advisors, designers, product leaders and technologists in more than 41 offices across 14 countries. She can be reached at [email protected].