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Why does innovation favor the bold?

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.

 

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Comments: (2)

João Bohner
João Bohner - Independent Consultant - Carapicuiba 12 August, 2016, 14:33Be the first to give this comment the thumbs up 0 likes

My opinion is that "The challenge drives the innovation".


In the seventies and early 80's, we 'had to' to innovate everyday to survive.


Just a sample:


To develop a money market input program, we had 32k memory for the program AND the data on the terminal.


Imagine finding a valid date, equivalent of today's date + 180 days, where the number of the program statement, counted memory!


We innovated by developing ONE statementent which transformed a date in a seven digit number and another statement that transformed back a seven digit number in a date.


We solved the problem with just 3 statements:


One to transform the date in the number;
other to add the number of days to the number;
and the third to transform back that number to a date!

Perhaps this is why the old 'core system' still dominate the backoffices ...

P.S. The language was Business Basic and if somebody is curious I can show the two statements.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 12 August, 2016, 19:24Be the first to give this comment the thumbs up 0 likes

There's one more reason why innovation favors the bold: Opportunities for innovation lie more often than not in exploiting “regulatory gaps”, as I'd highlighted in my latest blog post Fintechs Need Marketers And Lobbyists, Not Lawyers.