I often write and speak about the “Business Prevention Department” that lurks inside banks. Devoted to sniffing out and stamping out anything that looks “risky”, the Business Prevention Department is staffed with members committed to “protecting” their banks from those scary people who want to try unproven ideas.
As banks worldwide hurriedly launch accelerator programs, venture capital funds and internal innovation initiatives aimed at finding the next hot FinTech idea and separating themselves from the competition; here are five surefire tips from the Business Prevention Department to make sure those efforts fail.
1. Give Your Innovation Initiative No Power or Funding
One of the easiest and most common ways to make sure your innovation initiative goes absolutely nowhere is to staff it with junior-level people and make sure they can’t spend any real money. Senior people have real jobs devoted to protecting real products and revenue streams, and they can’t afford to be distracted by such folly.
Let the kids have some fun by meeting in the boardroom and playing around with the video-conferencing equipment, and have them present a PowerPoint to the board about every other quarter. Then you can teach them what it’s like in the real world when you grill them about all the ways their ideas won’t work and explain to them why you would never let them actually launch anything that could siphon business from any of your existing products.
2. Staff It Only with Senior Executives
But what if one of your Senior Executive Vice President Vice Chairmen Chief Business Line Officers read a book or attended a conference somewhere about innovation and wants to get in on the fun? Then you should put ALL of your Senior Executive Vice President Vice Chairmen Chief Business Line Officers on the “innovation committee”.
The best part of this strategy is that you don’t have to do any additional work at all. You just label the last 20 minutes of your Executive Committee meeting “Innovation Committee Report” and talk about all of the things you normally talk about. Did you add a new fee to your checking account disclosures because you were behind in your fee income goal? YOU JUST INNOVATED! It’s just that easy.
One warning about this strategy though; under no circumstances should you involve anybody with a rank below Brigadier Admiral. They don’t really understand executive priorities, and they will unnecessarily bog things down with irrelevant distractions like “customer pain points” and “I was at this really cool Next Bank conference, and I heard…”
3. Turn It Into a High-Tech Suggestion Box
Some innovation consultants will try to tell you that your innovation initiative should include diverse perspectives from all over your organization. Some will even claim such nonsense as “those closest to the customers should be empowered to come up with unique approaches”. I know you know better, but some of these hucksters are pretty tricky, and your CEO might fall for it. They might even sell your bank some fancy software to help connect your people and help them develop and communicate their ideas.
Don’t worry, there’s an easy solution to this.
Remember when you read that book on Excellence back in the 80’s and you decided to put a suggestion box in the employee cafeteria? What happened?
The first couple of months people eagerly dropped slips of paper into the slot, and then you and the rest of the leadership team painstakingly listed, categorized, and evaluated the ideas. Then you formed task-forces and subgroups to analyze, prioritize, re-evaluate, and stack rank the ideas, and then reported out the results in quarterly town hall style meetings.
They learned their lesson soon enough and stopped giving you suggestions then, and you can do it again now. You don’t even have to report back at all.
The deafening silence ought to do it.
4. Expect Immediate Results
If someone is insisting on innovating, at least make sure that it pays off financially. No later than next quarter. Preferably this month.
Apply your usual ROI, ROE, ROA and Efficiency Ratio measures against every idea, no matter how early stage it may be. If it can’t be NPV-positive against a decent hurdle rate by the end of the year, kill it. Those creative types don’t really understand the real world of business, so it’s up to you to make sure they learn that this isn’t kindergarten art class.
5. Lock Your Innovation Team In Their Own Silo
Let’s say an Innovation Watch has been issued for your area—this means that conditions are favorable for innovation, even though no actual innovation may be present. Maybe there has even been an official Innovation Warning; that means that innovation is imminent, or possibly even has been sighted touching down in the area.
You can isolate yourself and the rest of your bank from the damaging winds of change by locking the innovation team securely in their own silo. A windowless basement conference room is ideal, but even if your local innovation system has gathered enough strength to have it’s own brick-walled loft with jeans and T-shirt clad women and bearded men in hoodies, you can still ride out the storm.
What makes innovation dangerous is contact with people in your company who are open to trying new things, able and willing to fund early-stage experiments and open to exposing early prototypes to actual customers. With careful firewalling, stonewalling and sandbagging, you can rest assured that you will have once again protected your shareholders and customers from the untold risks of the unproven.
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