In a recent post, our CEO Jason Henrichs said that ‘innovation’ should be renamed ‘growth initiatives’, and I want to expand on that idea. We’ve already made the change in our own lexicon because we’ve found that while leaders too often view innovation as optional and deferrable at best (and unnecessary or risky at worst), most understand the need for growth.
With economic headwinds threatening to make growth and profitability more difficult, it’s more important than ever for organizations to take an empirical approach to innovation. That must include a strong alignment of innovation efforts to strategic priorities, and repeatable processes and systems to ensure implementation and value realization.
“Innovation is Implementing New Ideas that Add Value”
In the boardroom and in the classrooms of graduate schools of banking, we align participants around a simple definition of innovation. It is simply implementing new ideas that add value.
What Innovation is NOT
Brainstorming
Most everyone gets the ‘new ideas’ part of the definition but coming up with them is the easy part. The hard part is implementing them and ensuring that they add value. That’s what separates the top performers from the rest of the pack.
We’ve all been a part of brainstorming sessions, scrawling lots of ideas on sticky notes and clustering them on the whiteboard. I love facilitating that part of the process, but far too often that excitement meets an anticlimactic end when nothing gets implemented. “That was a fun day, whatever happened to those ideas?”, the woeful coda from participants a few months later.
Technology
The unmistakable increase in importance of technology in all our lives and its impact on raising the bar on customers’ expectations make it easy to confuse the adoption (or worse, the mere pursuit) of technology with innovation. Not all technology is innovative, and not all innovation is technological. We still love the story about The Cooperative Bank cutting a mail slot into a branch door to receive customer deposits during the height of the pandemic lockdowns. A simple implementation of a 19th century idea that clearly added value.
Hoodies, Beanbags, and Foosball Tables
The stereotypical Silicon Valley-esque trappings of an “innovation lab” are fun ways to build a creative and collaborative environment. But there is a danger of this kind of environment becoming a cocoon, isolating its occupants from their colleagues who are more closely connected to the real-world problems and opportunities that drive the value.
Project Management
Effective implementation alone is insufficient to drive growth. It is possible (and desirable) to implement new ideas that add value in ways other than driving growth, but it’s important to understand the distinction.
Making incremental improvements to existing products and processes is a good thing, and continuous improvement can compound over time. The biggest challenge is that the market is moving faster than that. That’s why we refer to incremental innovation as merely “extending the line” of your current results.
That's why the tools and frameworks that we use in strategic planning and our corporate and executive programs are centered on strategic intent and are designed to help leaders evaluate the growth impact of multiple projects. Resources are always limited, and leaders must be mindful to not overweigh excellent execution of projects that don’t bend or extend the line.
Innovating for Growth
Leaders are now beginning to evaluate 2022 results and adjust 2023 budgets, and some of the more speculative initiatives may rightly be moved to the back burner. That should not mean cutting back on initiatives that can drive growth in the future, even if the ROI cannot be easily forecasted in the next few quarters. As Jason pointed out, it is impossible to accelerate growth by doing more of the same.
Innovation is Dead. Long Live Innovation.
________________________________________________ The corporate and executive growth programs from the Alloy Labs Institute are the industry leaders in helping financial institutions build and leverage their innovative capacity to create competitive advantage and drive growth. We have taught these principles in boardrooms and classrooms around the world, including at leading graduate schools of banking. Unleash exponential growth potential, build internal innovation capacity to "unbreak the bank", and quickly forge ideas into results. You can also learn and apply some of our industry-leading tools and frameworks and learn best practices from peers on operationalizing innovation in our open (co)Lab sessions. Both are open to non-Alloy Labs member financial institutions.