Banking innovation’s death predicted early

Chris Skinner, much respected banking commentator and author suggests that banks have dropped the word “innovation” from their mantra. He says the focus on being innovative in banks was “a focal point during the 2000 and now its all over”.

Supporting this point, he says that the number of times banks use the word in their annual reports has dropped and that all the Heads of Innovation jobs in banks have gone.

I have to beg to differ, because as one of those “gone” Heads of Innovation, I find myself talking more than ever to big innovation programmes in banks. Last time I looked, all the big innovation programmes at the top banks around the place were still very much going on strong.

Perhaps Chris isn’t talking to the right people. I’ve never seen so much interest in the work I’m doing (even though I’m now in the public sector) from banks, and the book I wrote on banking innovation seems to be doing quite a brisk trade.

The point of the argument that Chris makes, really, is he thinks that big high profile innovation teams are fading away, to be replaced with some kind of “innovation culture”, which works away behind the scenes to create outcomes which are invisible in overall tapestry of what banks are doing. He goes on to say that:

“the lesson learnt for most banks is that innovation is not a function or a label, but a culture so it is gratifying to see innovation has been remove from the mantra of the banks”

Personally, I think he’s missed the point. All the examples he quotes of an innovation culture working in banks are actually examples of innovative new things that have been adopted as part of business-as-usual in the past. That’s not a sign of an innovative culture, rather it shows that in the past these banks have created some new way of doing business which is now part of ongoing operations.

The question I would be asking is this: how did those successes get generated, and how did they get so well adopted that they are now part of business as usual? If the answer is the individual heroics of a few key people, then what you have is random innovation, not an innovation culture.

You see, innovation cultures don’t work unless you put the systems in place to support them. Everyone talks about companies which are supposed to be inherently innovative and fails to recognise that what makes them so is not the goodwill of their employees who engage in individual heroics. They are all companies which have systems, structures and active goals that support an innovation agenda. They are organisations that have decided that innovation itself is a business process.

Naturally, there is usually some kind of team that is responsible for running that business process.

I don’t disagree for a moment that the high profile, bet-the-bank innovation team has gone underground to a degree. That doesn’t mean these teams aren’t around any more and innovation magically happens by itself, regardless of any cultural imperative set by leadership.

I’d say, though, it is a sign that innovation teams are getting recognised as part of a business as usual process, so are naturally getting less visible as they become less different.

Comments

[Chris Skinner]

Hmmmmmmmm ... don't think I missed any point James as the core point is that innovation only works if the leadership makes it work.

That means the CEO has to be committed to supporting, nurturing, enabling and leading a culture of innovation.

It's not a function.

Right now, there aren't that many leaders who are committed to such a culture as many are challenged by cost containment and regulatory compliance.

The examples I use are not just tired old banks who had one bright idea, but banks that are led by leaders who believe innovation is important.

[James Gardner]

Perhaps I misunderstand, but I thought your point was that innovation culture is more important than an innovation function. I accept your view that you believe an innovation culture happens as soon as the CEO decides it.

My practical experience suggests otherwise. CEOs may say that want innovation, and may personally believe it, but that doesn't actually result in much newness happening all by itself.

Sometimes you get random people doing random things that have random positive benefits. Nothing wrong with that, as long as you're happy to leave the creation of the next thing that makes you different to random chance.

I'm always surprised that people suggest an "innovation culture" should exist and then fail to define what that means. Most of the time in my experience what they mean is that "everyone's job is innovation" and therefore you will get innovation as a matter of course.

Reality is that innovation *should* be institutionalised. Since when did determining what to do next stop being something that's business as usual anyway? My point is it doesn't happen predictably unless it is someone's full time day job.

By all means don't call the function "innovation" if you feel the word is too loaded.

[Chris Skinner]

I think you do misunderstand James ... my point is that you cannot create an innovation culture without belief. It's the same as Marketing and Customer Service and Technology-led businesses.

All of these 'functions' become 'cost centres' that are then 'allocated' to the profit centres.

It's baloney.

Creating a 'function' means you pay for a label or badge that's meant to do something around that theme ... just so you look like you're doing it.

Truly marketing-led, service-led, technology-led and innovation-oriented businesses - banks or otherwise - create a leadership who passionately inspire the organisation to be oriented that way.

That's far more than some little silo-based functional dross.

[James Gardner]

Yes, maybe so, but "inspiration" does not equal "execution". Someone has to do the work. Who do you propose would do the marketing work if not the marketing team? Why not the same for the innovation team?

Anyway, its clearly false that all innovators are "cost centres" that get allocated to the "profit centres". Decently done innovation is a series of investments that turn into profit centres of their own.

[Neil Robinson]

James, aren't perhaps misusing the word "innovation" for what is really just a slow, natural evolution?

Maybe you can show us something that the UK mainstream banks have done in the last 18 months to change the game. Suddenly and irrevocably. I'll give you some time for that one...

[Chris Skinner]

The work follows leadership.

You must have leadership first, and only create the process and team once the leadership is truly committed.

Otherwise, any innovation function, team or process is worthless.

[Colin Henderson]

Interesting debate. Semantics aside I see little example of innovation amongst banks at the moment and especially since 2008. When we look carefully at what banks are doing, largely it is the outcome of credit card disclosure regulation, or similar government driven change. No innovation going on.

[James Gardner]

Well I suppose this brings us back to the thorny issue of just what defines innovation. If you define it as "stuff that wouldn't have happened through business as usual", then innovation is happening everywhere. Colin, I agree there's no big, game changing plays coming from banks at present, and hasn't been for a while. But no innovation at all anywhere? Surely that implies all the bankers have gone to sleep and/or are too stupid to understand the way the world is changing?