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Making innovation pay

McKinsey assessed the IT strategies of ten leading global corporations to understand how they invest in innovation while running their core IT operations efficiently.

The consultancy found that they typically define their IT investments across three criteria - as low risk (“stay in the race” projects to improve basic services), medium risk (“win the race” efforts to raise the efficiency and cut the cost of current business activities), and high risk (“change the rules” innovations to enter new or transform existing markets).

Some companies devote a far greater proportion of their IT budgets to high-risk investments than others do. To avoid missing out on top-line growth opportunities, more should take that approach, suggests Mckinsey. An article exploring the idea in more depth can be found here: Divide and conquer: rethinking IT strategy.

Making innovation pay is set to be a key theme at Finextra's very own Innovation in Financial Services event in London next month. James Gardner, head of innovation at LloydsTSB - who has recently put the case for incremental innovation as a way to pay the bills - will be speaking at the event, alongside Pol Navarro, head of innovation at Banco Sabadell.

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Comments: (1)

A Finextra member
A Finextra member 25 October, 2007, 13:28Be the first to give this comment the thumbs up 0 likes

Hi

 Interesting report on innovation. I'm not sure if it applies to the Banking & Financial services sector though. There is a lot of talk on how IT can and should contribute to the firms innovation, however in the Banking & Financial services sector almost 65%-75% of the IT budget is still being consumed for 'keeping the lights on' type of activities ie supporting and maintaining existing systems ( according to research by various IT analyst firms).

 

Paul Penrose

Paul Penrose

Head of Research

Finextra

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