The Finnovate Show
The Finnovate Show

Episode · 1 year ago

Gerry Purcell: Getting Innovation Done

ABOUT THIS EPISODE

Change needs structure. Host, Gerry Purcell outlines the four important steps for any innovation initiative. In a unique twist on our usual podcast format, Gerry weaves together insights from seven leading financial services experts. Hear their advice and learn how to put your innovation agenda in place, change hearts and minds and get things done.

...as a leader of your company, you must stay up to date with your strategies and execution or risk obsolescence. Welcome to the fin of a show. Financial services Innovators Bringing You the future Today and now Here's your host, Jerry Purcell. It's the fin of eight show brought to you by Innovation 3 60 groups. I'm Jerry Purcell. Get ready to think about your biggest challenges and capitalize on your biggest opportunities. After this, executives depend on external consultants to fill knowledge and experience gaps or to have an experienced mine audit their thinking. The Innovation 3 60 group brings together a wide range of proven thought leadership from around the globe, and cost effectively makes it available to you. Get the insights, advice and systems you need to succeed. Learn more at www dot innovation 3 60 dot com. We have a little different episode for you today. A virtual panel focused on the four critical steps that ensure that innovation works over many years, working with executives from all over the world, helping them to address the challenges they face. I've heard things like I'm really struggling to get my agenda in place, and how do I truly change the hearts and minds to get things done. Good questions for sure. As one of my earlier bosses used to say, If these challenges were easy to overcome, everyone would be successful. But they're not, and everyone isn't. That's what set my partners and I on a quest to find out what it is about organizations who are successful versus others who are not. We spent more than a decade researching working with clients and academics to uncover the foundations of success, measuring leaders and laggards to develop some unique perspectives on innovation. In past podcasts, I've had conversations with executives from all over the financial services world on the subject of innovation. I've spoken to bankers, insurers, credit unions, fintech, trade associations and governments alike about their views and their learnings as innovators. It's important to note that our discussions have not been about specific commercial solutions or tools, but the challenges of change and crisis. What you'll find in this episode is a compilation of some of their thoughts and learnings on how they made a tangible impact on their respective organizations. I will split this discussion to four steps which will form the underpinning of today's podcast, and I hope you enjoy it. Change needs structure, and there are four important steps for any innovation initiative. Step one. Having a clear strategy that is aligned with capability. Step to setting the stage for success. Step three. Ensuring clear accountability but giving the organization room to grow and step for watching your clients and making a point of asking them if they are satisfied in learning from our efforts, you can then go back to make powerful offers to your stakeholders and start the process again. It's true that the highest performing organizations follow this rigor better than anyone else. So let's talk more about the four steps and what experienced leaders have to say. Step one. Have a clear strategy that is aligned with their capability. Each of us understands that we need to have a direction for organization. It needs to be clear, and it needs to reflect what is unique about us. What we offer and specific somewhere we are going. Importantly, it makes a big difference where and how we focus our resources and how we innovate to ensure the long term success of our organization. Ask yourself a key question. Does my strategy, aligned with the capabilities that my...

...organization possesses. Recent research from PWC and booze and coal underline that organizations whose strategies are aligned with their innovation capabilities generate significantly higher results than those that are not. In fact, results are 22% higher than industry peers, as measured by EBITDA. We call this alignment coherence, and it's far more impactful than the absolute amount of money than any organization invests in innovation. In my conversation with Deal Oswald of Concentric Bank, he put it this way. First principles or understand your strategy. Make sure you know what you want to achieve. Make sure you know the customer you're trying to serve. Make sure you know the value you're trying to deliver, and then they'll go design for it and build for it and execute on it using analytics and data. So it's probably logical to start with strategy and move to execution, making sure aligned with your cultures and values, but also what you're trying to do in front of customer. At this point, it's important to focus on questions like Who is my customer? What will I offer them? Does my organization possess the capability to offer this service or product. How do I propose to do that? Do I have all the requirements in place? Is this something that my clients actually want? I found my recent conversation with Karen Moynahan of Boss Insights, a tech fin innovator of particular interest. We have a choice to make, and I think the reality in 2030 will be much affected by the decision that we're going to make in the next 1 to 2 years. Are we going to keep our financial services community closed? In which case regarding our products, or are we going to open it if we have it opened where we're inviting the latest in technology, but in an appropriate risk adjusted way where we get really the best of both worlds strong financial services ecosystem. But really, with the latest in innovation, we're going to see an ecosystem that has a much more varied product set. So right now we have one style of foreign exchange, but that doesn't make any kind of sense. Has anyone tried to send a wire lately? Does any like three hours in the bank because my online banking system can't allow for a seven digit postal code, which is what is required by the U. K. It's you know, we think we're in the modern era, but we actually aren't and and the scary thought is that there are geography. There are countries that have realized this, and they are farther ahead. The silver lining is is that they've shown a roadmap that we can then fast follow. So if we decide that we're going to have an open ecosystem where we are all collaborating together, we will see a very product base that is very customized to the individual business to the individual consumer. If not, we're going to see that there's going to be a split in the marketplace where there are some banks that are offering banking as a service or core as a service, and there are others that are opting for the traditional model, and that's what I would predict. Now let's move on to the next step, Step two, which involves setting a stage for success. Stop and think for a minute how many of you have gotten to this point and then started to implement your strategy. The pressure of today's world demands that speed is of the essence. So we routinely jump from discussion to action. This is a major trap that many fall into, and this approach will fail. Why we're following the meeting. We haven't taken any key considerations into account. We don't actually know what we're setting out to do. We don't know how much time it will take. We don't know who we need to engage in the effort, whether they are available to participate in what they need to do and what needs to be. So in order to do it.

We don't know if the required ecosystem will be as engaged as we need them to be in order to meet our objectives. Consequently, we find ourselves designing the plane while we're in the air, addressing culture and other challenges on the fly. Results are sub power and do not meet the needs of our clients because we haven't even spoken to them but assume that we know best. Rick Lenny of Manulife Bank offered the following words of wisdom in our earlier dialogue. Well, I would say start with the customer has too many times. We see products and services designed that aren't successful because the customer was not involved in the process. From day one, there wasn't human centric design. There wasn't a natural flow to the application or that sort of thing and the other. As I said, You know what's your core business? And if it's not software, um, you know, you have to decide whether it does make sense for you to build a house or to, uh, to go outside now it does create supply chain management issues, So you have to be prepared that if you're going to do a lot of outsourcing, you have to be good at managing all of your suppliers and how they all weave together. But the advantage of the traditional large players is gone. You know what constantly surprises me? How manual left bank and can produce such digitally leading products and services for a fraction of what it traditionally costs a large player to do. And that's by sourcing, whether it's locally or internationally, people that can meet your needs. Another common misstep in Step two involves the lack of discussion of the needs of the team who will be executing the initiative. What are their needs? How will your organization's culture respond cultural? Each strategy if we let it. As we all know, in effect, the completion of Step two demands dialogue and agreement on how we proceed together, including a promise to satisfy specific client needs but also to address the needs of those who will execute the plan. That is the resources, time, tools and other things they require. This entire step is often skipped or incomplete. A fulsome dialogue that leads to an agreement and commitments to deliver will represent the difference between a successful project and a long and challenging one. In our recent conversation, Peter Rutledge or C. D. C. Offered the following perspectives on the cultural transformation it started off. As you know, what kind of talent do we need to bring into the organization and how do we develop it over time? But very quickly we recast it as kind of a bold shift in our culture, and we we sort of call it internally, moving from C. D. I c. One point at a C. D. C. Two point. Oh, and we started that, and this is the core of I think all our other innovation activities. We started with a simple premise that an organisation's culture eats strategy for lunch. Therefore, the board and the CEO should focus on it passionately and that an organization is ultimately a community where the constituents ought to define the culture and then leaderships Job is to live it's cultural values, or what we call our promises and commitments and represent them and take accountability for it. And so we had a small team of colleagues from all parts of the organization define our cultural values, define our promises and commitments. And then not only is it my responsibility to live it, it's my leadership team responsibility to live those and build those into how we we run the corporation. And so we're in the process right now, building those into our performance measurement and management framework. And we're saying to people, it's not enough just to perform well. You have to be aligned to our values. In fact, we want you...

...aligned to our values before you're aligned to our performance. Standards will be much more likely to move on from a colleague if there not compliant with our cultural promises and values, even if their performance is good, and if we have someone who's really compliant with their cultural values. We'll take the time to coach their performance up if it's deficient. And so it's that getting that kind of cohesion is crucial to innovation. Peters comments are well taken. Managers play a critical role in the effectiveness of organizations, but often employees are the only ones who are held accountable for failure. In my experience, much of any failure represents poor oversight and management in step to the core premise of what a manager is and does is critical. Organizational theory tells us that managers are accountable for the outputs of others and for sustaining a team capable of producing those outputs. That means that they assigned the work, provide the necessary training and resources to do that work and hold their subordinates and themselves to account for their performance. All too often, the dialogue and coordination necessary to accomplish our goals is incomplete at best. This is a core driver of the failure of innovation and change, driven by the lack of a clear and shared commitment or promise to impeccably execute an agreed plan. The world is moving fast. It's difficult to keep up. Your executive team routinely needs new ideas to keep them ahead of the competition. Imagine having a plan in place in 30 days to focus your innovation efforts, improve customer experience, accelerate your move to digitization or increased speed to market. Our guide to accelerating your innovation agenda provides you with insights and time saving resources. To plan your path forward, Contact Jerry to book a quick call or for your complimentary copy at www dot linkedin dot com. Backslash in backslash Jerry Purcell G E r r Y P U R c e l l or email jerry at jerry dot Purcell at innovation 3 60 group dot com. As we move to step three, how do we ensure clear accountability but give the organization room to grow? We need to think about which specific tasks are required to execute, to fulfill on our promise and to engage those who need to help us to accomplish these tasks. And, more importantly, how will we and our client know that we have successfully completed these tasks? My discussion with the Neil Sand Mall of RDX addressed how innovation actually happens a bit to summarize what I said. But really innovation doesn't just happen, Okay? It takes a sustained commitment. Concerted effort. I will definitely stress that failure is not a negative. Experimentation is a key to moving forward and perhaps even looking down the road and saying, If this appears to be a dead end, let's cut it short now And let's learn from that and maybe perhaps take another path for sure, having partners to help guide the process to help create efficiency identify issues is very important as well. But I think really experimenting and and taking this partnership approach to developing solutions. Innovation is hard and often fails in financial services in particular, that can sometimes be a hard thing to accept. Our job, of course, is to protect the assets of our clients and to do things that reduce risks for our organization, its assets and the assets of our clients. Errors and negative outcomes are highly discouraged and sometimes...

...career limiting. So squaring a cultural adverse nous with the perceived risk of innovation is a challenge for many organizations. Of course, at the same time, the status quo is seen as riskless or is it? What do we do? Michel LeBlanc of First Canadian title offered his view on how to address these challenges that I think are instructional on this issue. I think the first thing is to establish trust and you know, not only trusted me, but you trusting the people that report to you are working with you. I think the other significant thing is is that I think there's an opportunity for people to show vulnerability to be human, and I think that goes a long ways and actually allowing you to relate to people and and at all levels in the company again. You know, I I have a view that, you know, everybody is important in this company. It's not, You know, I've probably at least important because I don't I do the least, but, you know, But there's a lot of people do a lot of work in this organization and that that contribution they make is significant to the overall success of the company. And I think people just need to recognize that and not think that they know all the answers and they come in with a degree or whatever and they can change the world because it doesn't quite work that way. I think you can change the world, but you need to bring people along with you. We can't force them. It's at this point that we need to reflect uncertainty and uncertainty. Innovation is risky, and that is driven by the level of uncertainty that innovation entails. So indulge me for a moment while I introduced to concepts s curves and horizons which I think will add some color to this conversation. The concept of s curves is well known. S curves represent the hunting ground for successful innovation which is defined by extending, nurturing or finding new s curves. S workers fall into three Horizons horizon one which represents innovation that extends or improves an existing business horizon, to which reflects innovation that reshapes or nurtures the next business and finally, horizon three. That reflects the efforts to find new and different businesses and future options. As we move from Horizon 1 to 2 to three, the level of uncertainty increases. Clearly, we can't be as sure that efforts in Horizon three that is reinventing our business will be as successful as Horizon one could be. Nor are the benefits as tangible immediately, they're in a number of apparent risks. At the same time, it's a certainty that any organization that does not invest time and energy outside of Horizon One will fail over the long run. The past Fortune 500 lists are littered with organizations that have suffered this fate. The challenge for any organization is how much time and energy to invest across the three horizons and how to capture the value from these efforts. Deal Oswald of Concentric Bank made an interesting point in our conversation. Innovation is a frame of mind, like it's the way you think about a problem. True innovation, for me at least, starts with when you look at your constraints and you actually need to think about how you're going to solve that problem. So unconventional thinking out of the box thinking, thinking beyond the current problem to the future problem is probably a way to think about innovation. We are fairly nimble organization, and we approach a problem proportionate to our size. We always have to work through partners to do most of what we do, And so we have now got a an emerging partnership playbook about how we work with partners to innovate and grow our organization while serving our customers. With the completion of any initiative, we moved to step four Many of us complete our innovation initiatives that Step three declaring success and moving on to the next one...

...without an important fourth step. High performing organizations taking additional step and put themselves in their clients shoes, asking themselves the following questions. Yes, does my customer, except my view that I have been successful in meeting their needs? Have I delivered in all my promises? Has my customer declared his or her satisfaction to me? Are there further actions to ensure completion or opportunities to pursue with this customer? This extra step leads to dialogue with clients by addressing any shortfalls and facilitating new dialogue, stronger relationships, higher performance and ongoing powerful offers. Mhm. Ryan Steiner The Insurance Bureau of Canada, talked about offers as follows. I've seen companies when they have these really unique good ideas that will really improve the experience for their customers and really kind of set like a new market within the market. You know, look at the insurance laws and be like, uh, the laws don't allow it, we can't do it. And, you know, I think there is a need to change that mindset, and I see it changing already, and you know, The reason is I'm finding that the governments and the regulators also want to improve the customer experience, and they're willing to entertain ideas. They're willing to entertain ideas to change laws or regulations if it will benefit the customers. So you know, my advice for companies is, you know, if you have an idea for a new product or a new way of pricing or or underwriting, and the laws are getting in the way, well, you know, don't let that stop. You build a strong case. But why? A change would be good for the customer as we bring this podcast too close. I wanted to revisit the two questions that clients ask me most often. How do I get my agenda in place? And how do I truly change hearts and minds to get things done as I outlined, Change needs structure. And there are four important steps. Step one ensures you drive your agenda with a coherent strategy that reflects your organization's capabilities. Step two sets the stage for success by understanding and addressing the needs of both clients and internal resources. Step three focuses on impeccable execution accountability and approaches innovation as a portfolio in Step four, we make a point of asking clients if they are satisfied and looking for ways to exceed those expectations with powerful suggestions about how we can help. A collaborative learning organization that makes powerful offers and executes them impeccably will exceed the expectations of clients and staff, reinforce creative and collaborative energies and capture their hearts and minds. Karen Moynahan of Boss Insights were counted the following story about engaging with her clients, aligning with their needs and being able to pivot to collaborate more effectively. Well, we had a bit of a catalyst moment, didn't we, in this past year if you were? And I know this because I was doing the painstaking work of approaching banks, credit unions and private lenders before 2020 and we'd say to them the way that your lending to businesses, whether it's a small and medium business or commercial business, is very much outdated because you're approaching them for the information you need every time you need it, and then you're getting them to take information from a cloud based system where it really could be automatically decisioned into something that turns into a PdF, which is just an electronic piece of paper and they would say one of two things to us. The first would be we've already digitized. Well, we know that 2020 was a huge year of actual digitization. So when things hit the fan, there's you've either been able to operate in a digital environment or you're not, there's not. You can't just say you've digitized. But the other thing that they would say is it's just not a top three. Priority 2020 has made it that we have has made it so that we...

...don't have another choice. We had to slow the curve right. That was what we decided in general, as a population worldwide. So that meant stopping a lot of economic activity and the only way to operate within a fully digital environment. So this year, when we go to financial institutions and we say you're operating in a in an outdated way, you have incredible regulatory knowledge. You have an incredible product base, but the way that you're reaching your customers is outdated. When you compare it to their expectations, led by big tech, they say that's true. Now tell me, why should we by you and not build you, so the conversation has completely changed. This wraps up our episode, and, as always, I look forward to hearing thoughts from you, our listeners, about today's show Thank you to kneel Oswaldo in Central Bank, Karen Moynahan of Boss Insights, Rick Lenny of Manulife Bank, Peter Rutledge of C. D. I. C. A Neil San Wall of RDX, Michel LeBlanc of FCT and Ryan Stein of IBC. I've enjoyed our conversations and your thoughts on innovating in the financial services world for our listeners. Please keep the conversation going. If you like the show, tell your friends and please take a minute to radar show or to comment on length in Go to Innovation 3 60 dot com or your favorite podcast site to hear more from today's guests and to listen to other podcast, Stay safe and see you next week. You've been listening to the fine of eight Show with Jerry Purcell. If you like the show, share it on your network and subscribe on iTunes or wherever. You listen to podcasts, and you can go to www dot innovation 3 60 dot com To listen to more shows, download the transcription from today's show or to contact today's guest. This is the Innovate Show Financial Services innovators, Bringing you the future today.

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