How to ignite creativity and flair for innovation?
If you happen to be a tennis fan, then this is the most important part of the year for you… British summer, strawberries with cream, Pimm’s and Wimbledon. But, here’s a question I would like to ask: “Would you agree that in the past ten years of Wimbledon, our enjoyment has been greatly enhanced by the Hawk-Eye technology — that advanced ball tracking system they use?” When it was introduced, many saw it as a threat to breaking some core values in tennis, but nowadays almost everybody agrees that it has actually improved tennis by adding new levels of player strategy, by increasing our involvement and by settling on-court disputes.
This innovative technology uses 10 cameras on each court and determines the position of the ball by mathematical calculation. It tracks absolutely every single shot of the entire Wimbledon Championship! It produces an enormous amount of data broadcasters use to deliver analysis and insightful statistics to us, the audience. Equally important is the Hawk-Eye’s capability to display the visual replay only 5 to 10 seconds after a player challenges a line call.
Well, if Wimbledon — so resistant to change (Remember, the players are still required to wear only white!) — can embrace innovation so successfully, the same path is available to all of us!
There are three different models in which companies address innovation: in house, through various types of collaboration, and by outsourcing it. I will concentrate on the first two in this post since I consider them relevant to the financial services industry. I will leave the topic of outsourcing innovation for some other time — although there are some extremely interesting examples.
In-house innovation
Now, the company that has really impressed with their extremely bold move regarding in-house innovation is IBM. They have undertaken a large-scale transformation by bringing in Design Thinking. CEO Ginni Rometty’s strategy is to replace the company’s engineering and sales culture with the innovation mindset.
Two years ago, a large IBM Design Thinking Centre was set up in Austin, TX, where they teach literally hundreds of their employees per year how to apply Design Thinking principles in their everyday practice. At the moment, there are already ten of these Design Thinking Centres worldwide. I do not doubt that these efforts will drive IBM’s future growth.
Let me explain why I think this is of strategic importance! Design Thinking is a dynamic approach to problem finding and solving, focused on real end-user needs that yields the highest value to all stakeholders. By putting emphasis on understanding implicit end-user needs, it helps multidisciplinary teams generate pretty unique insights and big new ideas. It also utilises prototyping and iteration for rapid learning and improvement. Moreover, IBM scaled Design Thinking framework to even the most complex projects by combining it with agile development. That enables them to deliver rapid solutions to large-scale enterprise problems without losing sight of great user outcomes. As you can see, Design Thinking takes the meaning of ‘client centric’ to another level! Also, please spot the importance Design Thinking puts on multidisciplinary teams — this is how new ideas are generated: by connecting different fields and people of diverse backgrounds, by bouncing ideas of each other, building on top of existing ideas… rather than in a linear fashion: “problem-solution”.
Of course, it is very difficult to measure innovation, but the general opinion is that approximately 50% of innovation happens in-house. To me, that’s understandable! Any company’s employees know their business best; they understand both their clients and their own organisation. The question is how to ignite their creativity and flair for innovation?
Good news is that Design Thinking believes we are all creative beings, and gives us tools and methods for generating innovative outcomes. When adults are asked whether they think of themselves as creative, only half give a positive answer. But think about it for a second! Do you not come up with creative solutions to your life and work related problems, no matter how small they are, almost every day?
Design Thinking focuses on unlocking that potential within each of us by developing our creative confidence — the ability to approach problems as opportunities, try new things and learn through the process. And, this ability to take on problems even when they don’t have a clear answer is essential in the environment of high uncertainty we all live and work in nowadays.
My personal view is that we can all be great design thinkers! It is a simple method that can easily be learned. As a Design Thinking practitioner, I can say that it can be applied to any problem — be it designing a new product, new service, new business model or even hacking your life!
Have to tell you that IBM is not the only example of a cultural change of such a scale. GE is another one — they have combined Design Thinking with the Lean Startup methodology to transform themselves into “the world’s first digital industrial company”. (If interested, scroll to the second page and watch CEO’s Letter to Shareowners.)
Many other great companies like Google, Amazon and Apple have also been using Design Thinking to boost innovation internally. No matter what industry one is in, the companies with a culture focused on their customers’ needs and experience fair better. All new financial products and services can also be designed around users’ needs and experience. Why? Because, that is what shapes clients’ impression and wins them nowadays!
Collaboration
Hackathons are, in my opinion, the best possible example of collaboration and open innovation due to the impact they can have if organised well. Briefly, they should support a clear business target (for instance, a hackathon can be focused on a client journey and breakthrough client experience); they should be deeply cross-functional to foster cross-pollination of ideas (i.e. bring together people from across the business (not just IT and top management) and Fintechs; they should be focused on output (e.g. Fintechs are normally asked to produce an app or digital solution); and — I would also add, everybody involved should benefit!
In my previous post titled: “Andy Warhol, Open Innovation and FinTech”, I spoke quite a lot about both collaboration and open innovation, and outlined their benefits. (Please follow the link if you wish to check it.) For that reason, I will not repeat myself but will give the topic a different slant this time.
Many of you have actually never participated in a hackathon. Therefore, I would like to illustrate what normally goes on — so you can understand how happenings like this can help both sides to learn and evolve, and maybe take part in one yourself in the future.
Apart from the challenge, participating FinTechs are normally given an API Sandbox and a large amount of anonymised data to work with; and are asked to produce a minimum viable product (MVP) within a very short time (let’s say 24–36 hours). Sounds like an impossible task, doesn’t it!
Fintechs are super motivated people, full of energy, and the coding usually goes on well into the night. It is also important that the company’s experts are available to them throughout the event for questions and advice. Cannot stress enough that the success of the whole event depends on the quality of participating FinTechs and the support they are given during the hackathon.
At the end of the event, the Fintechs pitch their solutions to a panel of internal and external experts. The criteria include standards like: value created for clients, operational feasibility, technical execution, inventiveness and originality, as well as financial viability.
Generally, the winners are awarded cash prizes along with a few months of the bootcamp — which allows them to work in close collaboration with the company’s experts on refining their solutions.
I hope that by now you can clearly see all the benefits for both sides. The exposure we all get in the media is just a small part of it, although very valuable.
The FinTechs get the company’s experts’ attention and help throughout the event. That typically continues until the end of the bootcamp period for the winners. There is also a possibility of a deeper partnership/relationship with the company since it can, not just provide know-how, but also access to scale.
On the other hand, the solutions produced and presented by the Fintechs in such a short time definitely show the companies what is possible and doable regarding any company’s culture — it is like compressing months and months of innovation into a short weekend! Likewise, hackathons are worth the effort because the companies get access to external knowledge in a very cost efficient way.
Here is how I see it: There are so many new tools and technologies available to us like never before, and there is nothing stopping us from improving our performance, transforming our culture, collaborating internally and externally, creating better and cheaper financial products and services attuned to our digital age while, at the same time, improving our client experience. If we keep offering value to our clients by being resourceful and adaptable, I think we can control our future by creating it.
There are so many other options. Many companies organise internal hackathons with the same goal: to instill more innovation-driven culture and accelerate the process of digital transformation. Only a few days ago, I read about JPMorgan launching a residency program for Fintechs: “JPMorgan is revolutionizing the way Wall Street banks work with tech startups”. That means that JPMorgan will house the participating Fintechs in their offices to work on co-creating innovative solutions to certain challenges by leveraging big data, AI and blockchain technologies. By the way, all the challenges will be listed on JPMorgan’s website.
At the end I would like to quote Daniel Pinto, CEO of JPMorgan’s CIB: “The business of technology is no longer a back-office concern, but rather “totally integrated” into the firm’s businesses”.
