by Jan Reinmueller July 31, 2019
In a world where change is the only constant, innovation is a tool that is essential to any organization that doesn’t want to be made obsolete in the next few years.
While the need for innovation is not unique to the banking sector, the need for banks to be innovative is more important now than ever as they are facing unprecedented levels of disruption.
With bigtech and heavily funded digital banks all eyeing a piece of their pie, it’s worthwhile to consider why despite investing large amounts of money, their innovation initiatives still fall flat.
This is often because many banks and large companies are obsessed with adopting practices that are in style and attempt to imitate strategies of other successful organizations without due consideration of how it would fit into their own unique situation.
It’s a tale as old as time with big companies telling themselves that they need to operate like start-ups, but what many leaders fail to realize is that many start-ups operate under circumstances that would prove challenging for a large organization to imitate.
And no — just because you’ve ditched your ties it doesn’t mean that you’ve suddenly embraced a culture of innovation, despite how many CEOs will jokingly tell you at their keynote speeches that this is evidence that they are now all about innovation.
In order to truly be innovative, companies must be able to formulate and create a clear strategy, design and innovation system and build an innovative culture.
At the core of it, organizations must not be afraid to fail, innovation is driven by a mindset of learning to fail fast, grow from failures and creating a truly unique and exceptional customer experience that drives impact and helps the company achieve its goals.
This is described succinctly by Amazon’s CEO, Jeff Bezos who said, “If you double the number of experiments you do per year you’re going to double your inventiveness.”
It is an area than many Singaporean CEOs are still struggling with, as evidenced by our recent 2019 Global CEO Outlook Singapore Edition. Despite their desire to empower their team to innovate, there’s disconnect between that and the culture of failing fast.
Good leaders know that failures are necessary for growth, but great leaders know that embracing failures doesn’t necessarily mean that it is acceptable to keep failing. Leaders need to help their team to navigate when conviction to push the project through is needed and when it’s time to pull the plug and spend their time on a different idea.
There are no hard and fast rules on how many attempts to keep going before moving on, but it is important to create a culture in which your leadership team is not penalised for taking such risks.
It’s tricky, but organisations also need to be able to balance the fine line of embracing failure and being intolerant towards incompetence. It is acceptable to for ambitious and risky ideas to fail but it is not acceptable for it to fail due to poor management, misplaced strategy or an ill-equipped workforce.
If those are the reasons for failure, it is something that your leaders need to be held accountable for.
Innovation is of course just not as simple as trial and error process, it is a process that needs to be managed. Organizations need to follow a disciplined approach to succeed in innovation.
Harvard Professor Gary Pisano describes in his recent book “Creative Construction: The DNA of Sustained Innovation” that the key here is to align innovation efforts with business strategies and have very clear specific objectives. More specifically, executives must ask themselves:
What value are you trying to create?
Decide what kind of value we want to create and stick to it. Few companies are customer-centric. They say they are, but mostly just in theory or in some daily user group survey. True customer-centric organizations should map the entire customer journey from end-to-end and make sure to check where the weak links are.
How the company will capture a share of the value that its innovation generates: Once a new product or service is released, consider what complementary products and services can be released to fence off competitors.
Defining the type of Innovation: Pisano divides innovation into four categories — routine innovation, disruptive innovation, radical innovation. Organizations need to identify which basket their initiative falls under and allocate resources accordingly.
KPMG Digital Village has been helping organizations chart their innovation journey for over 3 years now. Our human centered design approach together with agile delivery allows us to rapidly prototype innovative propositions and generate maximum results out of our clients’ investment, helping them outpace their competitors.
Head of Digital Village & Innovation