Innovation is defined simply as a "new idea, device, or method". However, innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs.
As defined in Wikipedia.
It’s always difficult to foretell the future, especially the future in the capability, place and role of technology. Technology in itself continues to evolve with periodic quantum shifts, but it's the application of that capability that is the raw material
of innovation. Years ago the engineers at PARC removed the limitations on the capability of the available technology, which led to the creation of the bedrock of technologies that we see today.
In our world of finance, innovation has become a mantra, with some firms appointing Chief Innovation Officers (ironic initials, isn’t the Chief Information Officer supposed to be doing that?) to oversee their efforts. This is most evident in the growth of
FinTech, with pretty much any firm worth its salt having an incubation lab, or investments in start-ups. On one side they fear the arrival of disrupters and want to be on that train, on the other side they want to improve / find new ways to deliver innovative
services and offerings.
The innovation efforts have mainly been focused around outreach to the market, through ubiquitous technology capability and their willingness to interact with it. This is a target for innovation, particularly as the tech savvy generations enter the workforce.
Some financial firms have recognized that others will get things delivered, but also need the back-end services. So to provide this, firms put an API around themselves and become a factory earning cents on the transaction, while losing the valuable contact
point. This is not a long term strategy unless YOU become the mega-factory.
What we have yet to see is how innovation will affect a firms business internally, where there are known inefficiencies and hide-bound processes, often the low-hanging fruit that external innovators can completely avoid. Internal efforts to innovate
internally will be impeded by the following:
- in place inertia;
- complexity of the infrastructure;
- lack of acceptance of ideas that challenge the status quo;
- unwillingness to invest in things that may fail (even if often they do);
- the “compliance corset”;
- and endless cost control programs.
But long-term survival is dependent upon a creative rethinking of how things get done and effectively dis-intermediating themselves before someone else does. This idea should be the focus of the two CIO’s, along with a strategic investment vehicle.
So in the finance vertical it seems that fortune favors the bold, and most of the innovators are outside looking in and have little baggage. They will continue to create new avenues outside the organization, shaving away contact, with effective infrastructure.
Firms like Facebook have a better opportunity to succeed, especially with an innovation philosophy that recognizes “fast fail” as positive feedback.
Whether the industry can learn from this and apply it to oneself is the question.