Innovation. It’s all around us. It’s not isolated to Silicon Valley or New York, although they are among the top tech hubs in the United States.
But what does Innovation really mean and why is it vital to financial institutions?
Our working definition of innovation is simply implementing new ideas that create value, that is, the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Sounds simple enough. Then why is it so hard? In a nutshell, because innovative thinking, like critical thinking, does not come naturally to most people. I’ll dig into this notion in more detail in a future post.
For now, let’s get to the vitality part. Dictionary.com defines vitality as the power giving continuance of life. Now let’s add some context. We’re in the midst of an era of digital disruption, and we all know that we need to innovate to keep up with the demands of our customers. Innovation will keep us not only alive in the market, but hopefully ahead of our competitors so that we can gain market share.
But there’s more to this story.
I came across an interesting study the other day and the results made me look at innovation in a bigger, more holistic way. Part of the reason for this was based on a few of the key findings, including:
Employees and their bosses have different views on innovation
It’s not surprising that senior executives and entry-level employees had different views, but what really stood out was that while 44% of senior executives recognized that the ability to fail is a necessary ingredient for innovation, only 25 percent of entry-level employees said their organizations were tolerant of failure..
The gap was even larger (25%) regarding the perception of how well their companies were “adapting to address the rapid pace of disruption currently impacting businesses”; with 98 percent of senior executives agreeing, compared to only 73 percent of entry-level employees.
Innovation is now a key factor in the escalating war for talent
The Ernst & Young LLP (EY) survey found that a majority of all respondents (69%) would leave their current position for a similar role at an organization that is recognized as a leader in innovation, signaling that a company’s brand recognition around innovation is key to attracting and retaining high-caliber talent in today’s competitive job market.
That’s a staggering figure for employers desperate to hold on to good people as they navigate a period of transformative change.
“These findings tell us that companies must be more proactive in engaging all of their people in the innovation conversation. However, the work doesn’t end there. In addition to communication, organizations need systems where new concepts can be analyzed and tested – and ultimately implemented – so that today’s ideas can become tomorrow’s competitive advantage in the market. This includes an acknowledgement that failure is a significant ingredient in the process.”
- Michael J. Inserra, EY Americas Deputy Managing Partner
Based on these findings, it’s safe to say that innovation not only drives business to us, but it also drives talent to us and helps us retain it as well. Thus, the vitality of innovation.
How can you leverage innovation to bring vitality to your business?
If you agree with our definition that innovation is about adding value, then you need an empirical approach to value creation. As my partner, JP Nicols described in an earlier blog post, “One that lets us try new things and break new ground, but doesn’t let us get mired in the unproductive muck. Something that allows us to test new ideas and cut our losses quickly with those that things that are not panning out, and double down quickly on those that look promising.”
In our experience, not too many organizations suffer from a lack of ideas. We often see roadmaps, project lists, and feature backlogs that number in the dozens or more. Rather, they tend to lack a scalable, repeatable process of turning those ideas into results quickly. We have also found that an important part of that process is aligning the organization around a shared vision and goals up front to minimize the kind of gaps cited in the EY survey. Gaps that are far too common, but not unexpected with an ad-hoc approach to innovation.
Our FIRE™ process includes foundational frameworks for enabling leadership teams to resolve critical questions and give much needed guidance and direction to the teams closest to the customers who are often responsible for executing innovation within the organization.
FIRE™ stands for Fast, Iterative, Responsive Experiments.
· Fast - because we want to shorten the gap between idea and results
· Iterative - because we want a process of continuous improvement
· Responsive - because data, not internal opinions, should drive our iteration
· Experiments - because we want the process structured to maximize learning
We think of FIRE™ as an “innovation operating system” for teams. Once you install it in your organization, you can use it to create value quickly from everything from small incremental feature improvements to more disruptive or transformative approaches to new products, new markets, and new business models.
Contact us if you’d like to hear more about how FIRE™ can help you create value quickly in your own organization and help you leverage innovation as a source of vitality in your business.