Updated: Oct 12
One of the things I hate most about the financial service industry is golf. There are far too many golf outings. Thankfully a broken wrist forced me into a permanent early retirement so I could quit embarrassing myself. I wasn’t a bad golfer, I was a horribly inconsistent golfer.
I could follow a 2 under par on a tough dog leg with a 6 putt after getting to the green in 3 strokes. When better golfers than I tried to assist and would ask if I had a hook or a slice, they were baffled that the answer was “yes.”
In golf, darts, bowling and horseshoes, I am relatively accurate but lack precision.
For those who need to brush up on the scientific method, accuracy is how close you are to the intended target. Precision is the consistency with which your shots land. It is possible to be precise without being accurate. If all your darts are in the same part of the dart board but not on the number you were aiming at, you are precise but not accurate. If you have 1 dart in the bullseye and one on either side, you are accurate but not precise.
Bankers love both accuracy and precision. We like when a loan performs as we expected (accuracy) and the entire portfolio is meeting expectations (precision). We like it when it comes time to report earnings, pay dividends, convert our core and manage fraud. We build our systems, processes and cultures around delivering what we expected, when we expected it. We’re able to do this because of our deep experience. The challenge lies when we do something where we don’t have as much experience.
When we do something new, it is like throwing that very first dart. We aren’t sure where it will land or if it will even hit the board. A few dozen darts later, we’re able to adjust our aim, bringing the darts closer to our intended target and learning to do so more and more consistently.
The same is true when we launch a new product, enter a new market or create a new business model. We aren’t sure what to expect and the further this new thing is from our area of existing experience, the greater the uncertainty. Taking on incremental steps from what we know can continue to extend our line up and to the right, but always extending the same line.
How Disruption Happens
Disruption happens when someone decides to redraw the line or jump to a new line entirely.
When Apple decided to redraw the computing game around tablets, it didn’t matter that Dell and Gateway were consolidating supply chains, building economies of scale and driving down costs. They were masters of extending the existing line until someone made that line irrelevant. Southwest and Jet Blue. Spotify, Pandora and iTunes. Airbnb. I hate to say it: Uber and Lyft. The list goes on and no industry is immune.
If our managers, shareholders, regulators or even just our personal psyches crave predictability to the extent that we are afraid to venture too far from what we already know, we risk extinction when disruption happens. Our tyrannical desire to deliver predictability is our greatest threat to succeeding in the long term.
Innovation is about exploration off of the line we know. Our existing products, business models, processes, systems, strategies and tactics are all about extending the existing line.They don't work as well when we are trying to bend the line, and they really don't work very well at all when we are trying to transcend the line completely.
Innovation is about bending and transcending our current line of growth, and we need a separate set of strategies and tactics that are built for those purposes.