Innovation through Thick and Thin
History teaches us that institutions who invest in innovation in times of crisis are best placed to bounce back and stronger long-term. As we have learned and are continuing to learn about the COVID-19 crisis – that we simply cannot take for granted the way things were. In fact, we may need to consider new ways, new methods, new business models, new processes, new revenue streams, new thinking, new doing – to reframe business in this new paradigm.
There may be a tension between the widely acknowledged need for innovation and the need to tighten belts in tough times however growth and a mindset that acknowledges that ‘we’re not in Kansas anymore’ will enable us to hit greater hights than ever before despite the disruption which has come our way.
We wanted to take the opportunity to explain the importance of thinking long term when it comes to innovation, and how labs can help you place innovation at the heart of your business.
Stating the obvious
Innovation is highly prized and sought after among management teams everywhere. It must, however, be Innovation with a capital ‘I’ rather than “innovation” shrouded between quotation marks I.e., not really innovation at all.
In financial services (and elsewhere), new technologies and processes are sometimes seen to be as akin to a silver bullet, promising to solve every business issue in one fell swoop. While not quite true, if we consider the opposite of innovation, stagnation to be something that no business would ever want then it stands to reason that this thing called ‘innovation’ is something we should all be doing.
One reason for this is the cyclical nature of business. In good times, when everyone’s focused on growth, innovation gets the attention and investment it deserves. But when the chips are down and firms retreat into survival mode, innovation initiatives invariably suffer and are deprioritised in favour of other, more urgent objectives. Managers seek greater visibility before committing resources to innovation. In other words, they’re focused on steadying the ship, conserving cash and cutting risk. How can one focus on something on the horizon when this quarter’s needs are more pressing?
This is a logical enough assessment of the situation that managers face. It is one which is easy to understand. Yet it misses the big picture and sacrifices long-term growth and stability for (potential) short-term gains.
Thinking long term
Just as a buyer never got “fired for buying IBM”, you can probably surmise that a CFO never got fired for reigning in spending. But knee-jerk reactions during periods of market stress are never good. But neither is reverting to type. Standing still may well appear to be the ‘safe pair of hands’ option but it could do more damage in the long-term than you realise. Rather than simply cutting innovation budgets, managers should instead take a step back and survey the new landscape. New opportunities can emerge from chaos, no matter how dire things might seem, and growth comes from carefully and skilfully adapting to underlying conditions, not lurching from one grandiose vision to the next.
In order to really benefit from the application of new ideas, processes and technology, financial services organisations must see beyond short-term volatility and invest over the long run. While doing nothing or reigning in spending might make sense now, viewing innovation as an investment and embracing failure as a necessary part of progress helps us to re-evaluate the notion of risk and reward, unlocking significant value for stakeholders. Like all good things in life, realising the benefits of innovation takes time.
But that does not mean that pockets of value cannot be unearthed early on.
A key reason why innovation initiatives often get shelved in times of trouble is that they are expensive and suboptimal in their orientation.
Innovation is seen as an expensive nice-to-have, rather than a cost-effective need-to-have. And adoption rates for innovation initiatives can be quite poor. If initiatives are not delivering in the here and now, they don’t endure long enough to bear fruit.
That’s where Data Innovation Labs come in. They provide a “safe context” for experimentation, with proven value gains directed at data and AI experimentation, tied to concrete business use cases. It’s not a case of throwing spaghetti against a wall – labs are built to be embedded and scaled in real-world contexts.
A proven process
Data Innovation Labs are a wonderful cohesion of data, technology and people that work together to rapidly discover and deliver innovative data solutions. They enable firms to get going with innovation, speeding the process up whilst carving out resources (both human and financial) to do things properly.
Mudano’s 5 step process has been honed through practical experience to help firms break down business opportunities into hypotheses we can test, validate and scale into successful solutions:
- Value – Our Business Value Workshops help you to think big by starting small. Our process guides you through identifying opportunities, breaking them down into manageable experiments and prioritising the most valuable ones.
- Discovery – Prepare for experiments by profiling and understanding the data you have available. A secure lab environment and processes break down barriers to enable rapid data sourcing.
- Experiments – Following an agile process, we test your hypotheses in a series of two-week sprints, with business demonstrations each week. In just three to four sprints you will develop a rapid prototype ready to test with real customers.
- Proving – Test your prototype in the real world with a sample of actual customers. This is where you prove whether the prototype delivers the value you expect it to.
- Scale – Once value has been proven, the lab supports your efforts to scale up the solution.
By creating a Data Innovation Lab, you can rapidly apply data science techniques to identify and realise tangible business value from your data. We bring together the skills your team needs with a rapid and repeatable process to create a flexible blueprint for innovation in your business. And whether you’re a group-level Chief Data Officer or a local business leader, we can help you configure and rapidly deploy a lab to suit your needs and deliver a measurable step-change in value. The lab process is proven to work to quickly unlock so-called ‘nuggets of value’ for financial services organisations – Banking, Insurance, Wealth Management and more – early and often to allow innovation to be a driver of value for organisations.
A spirit of experimentation can help you meet your innovation goals. One thing is for sure, you’ll never find new paths if you don’t go looking for them.