“Do you think Innovation will be part of everyone’s job?”
I was asked this question recently when discussing how to enable business SMEs to drive innovation. And it made me stop and consider the role of innovation teams in incumbents and its evolution.
If we look at the FinTech and startup world, there is not one team called “Innovation”. Instead, everyone has to innovate, to think outside the box and to make sure they are being efficient, effective and providing the best customer experience. That is mostly due to their size and higher risk appetite.
Incumbents, on the other hand, will typically have innovation teams segregated from business teams. The business teams’ role, in a nutshell, is to perform BAU activities and support the customer, while innovation teams aim to improve processes and customer experiences.
So, how did we end up here?
Started with an elite team and closed innovation
In the early days, innovation teams in incumbents were seen as the elite by the rest of the organisation. Only a small group of individuals were part of the elite, and their central role was to test and experiment with new technologies and processes.
Most of the experiments were done behind closed doors and once they were rolled out would not be fully embraced because of lack of engagement with business SMEs and understanding of the existing processes.
Moved to innovation labs culture
In the following years, innovation labs and accelerators boomed. The lab concept was to get a team to focus on a specific problem, instead of pure experimentation as before.
The team would still be seen as elite but would be composed of a mix of individuals from the business and innovation team. In order to mirror the creative environment tested by startups, the team would work in colourful offices with ping-pong tables.
Although there was considerable initial excitement, the labs did not result in overall success. Once projects finished, integration with the wider team was shown to be difficult, with business SMEs (not involved in the lab) not always fully embracing the innovation.
Arrived at open innovation to all
The lack of business buy-in and sponsorship was one of the critical issues related to the failure of the first two phases. With those learnings in mind, we have now arrived at the current stage.
Experiments are transparent and open for anyone to collaborate. Innovation teams spend a considerable amount of time promoting new technologies and benefits as well as training and empowering all business SMEs to innovate.
The current phase is more aligned with innovation taking place at FinTechs and startups in which everyone is empowered to test their ideas. However, the current phase also has its pitfalls.
One of them being business SMEs still see innovation as a side desk activity with ownership and responsibility still laying on the innovation teams. Progress is slow and incremental, not transformative.
Where do we go from here?
Going back to the initial question: Do we think innovation teams will become extinct and business SMEs will be responsible for innovating alongside their day to day job?
It is hard to predict what the future will bring.
The reality is that business SMEs role is changing from a backward focus into a forward-looking one. As new technologies become available, training and innovation KPIs will be part of their performance review.
Now, incumbents’ risk appetite will continue to be constrained by heavy regulation and a recovering economy from the recent (still ongoing) crisis. As such, for strategic and transformative changes a dedicated team of innovation, with senior sponsorship and business engagement, may still be required.
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organisations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated.
Rita Martins drives Innovation and FinTech Partnerships for Finance and Risk, at HSBC. See her personal blog here.