Author: Marc Butterfield, SVP, Innovation & Disruption
Any business owner or executive knows that innovation efforts are important when it comes to keeping pace with market change. However, it isn’t always understood just how critical innovation is to both current and future competitiveness.
Research shows a strong correlation between innovation performance and financial results, with top innovation performers commanding a growing lead over those companies who have yet to harness a solid innovation strategy.
Fortunately, when it comes to taking a market-leading approach to innovation, there are 5 rules organizations can live by.
Take a Top-Down Approach
Amazon employees recently revealed some of the tactics the company takes to foster a superior culture of innovation. The number one factor was empowerment. Every employee is encouraged to think big and contribute innovative ideas.
While Amazon’s enterprise-wide approach can take a lot of the credit for the company’s success, none of it would have been possible without the top-down buy in from CEO and founder Jeff Bezos. He understands that big products come from big ideas and that innovation requires effort.
“If you double the number of experiments you do per year, you’re going to double your inventiveness,” says Bezos.
However, as a business leader, Bezos also understands the risks involved with innovation and the fact that results often come years down the line. He chooses to support innovation efforts anyway.
It’s this top down support for innovation successes and failures that have propelled the retailer into multiple markets and revenue streams.
Establish Clear Expectations
When it comes to innovation, it’s far easier for companies to spend their time in innovation theater than it is to push the envelope into innovation practice.
Most organizations begin as a simple startup, willing to take risks and invest in innovative ideas, because that’s what it takes to outperform the established competition. Over time, the grand ideals of innovation can take a backseat to the bigger demands of profitability, seriously hampering an organization’s prospects for remaining competitive.
This is particularly true for publicly traded companies that must report on earnings to shareholders. It is easier to trot out several promising ideas for demonstration than it is to push the envelope beyond the theater and bring ideas into development or support initiatives that may even fail.
The trick to managing this environment is to sell the importance of innovation and to set clear expectations regarding the organization’s ability to remain competitive and prosperous without an innovative culture that supports future growth.
Be Willing to Forego Immediate ROI
Failure is part of the innovation process, and unless business leaders unleash the reins on innovation teams and invest in some ideas that may go nowhere, they are destined to remain at the bottom of the pack, unable to evolve with changing market winds.
On the other hand, business teams need to be able to demonstrate the potential value of an idea to stakeholders. That value, however, isn’t always going to charge the bottom line. Value from innovation often comes from what is learned and the insights gained that put the company on the path of a game-changing idea.
As long as innovation efforts are pursuing potential products and services that meet customer needs, leadership should be willing to forego immediate ROI and accept that some roads may lead to other values.
Choose Your Partners Wisely
In banking, the customer surge toward online and mobile banking provided a long-term opportunity to flex the innovation muscle. The problem is, bankers are not technology experts, making it hard to compete with new startups charging the gate with brand-new innovative ideas.
The answer was to partner. Fintech alliances provided an avenue for banks to gain cutting-edge technology solutions and for startups to get their ideas in front of customers. The problem for many financial institutions was that the partnerships weren’t always equal. Too often, the Fintech came onto the scene without doing any banking due diligence, expecting the financial institution to do all of the heavy lifting as to regulatory compliance and other industry-specific considerations.
At the end of the day, if your potential partner isn’t on the same page with your business or lacks critical industry knowledge, it’s a good idea to look at another provider. While both businesses will bring their strengths, neither should be required to take on the bulk of the project alone.
Acknowledge that It’s a Journey
In truth, there is no real roadmap for innovation. Success requires the business to be open to the process and make changes when necessary. If something isn’t panning out, don’t be afraid to take what you’ve learned and pull the plug. Likewise, if a new idea emerges, don’t be afraid to follow in pursuit.
In the words of Jeff Bezos, “In some cases, things are inevitable. The hard part is that you don’t know how long it might take, but you know it will happen if you’re patient enough.”
Remember, the most successful innovation efforts will take you on a journey, and it’s the learnings along the way that lead to the most game-changing ideas.
About the Author
Marc Butterfield is responsible for leading the Bank’s Innovation & Disruption team and the Bank’s digital transformation initiatives. He is accountable for accelerating innovation throughout the enterprise, identifying disruptive business model threats to financial services, establishment & creation of new business models and fintech engagement. He also leads change management and strategic thought leadership to drive process and cultural evolution necessary for effective innovation practices.
In his tenure at FNBO, Marc has served in leadership positions in Digital Banking, Marketing, Consumer Lending, Credit Risk and Product Development. Marc began his career at FNBO in 2001, joining First National from Nexterna, a wireless technology company owned by Union Pacific Railroad.
Marc completed his Bachelor’s degree in Business Administration with a Marketing specialization from the University of Nebraska at Omaha.