From Innovation Theatre To Real Innovation

I was listening to a great discussion about innovation (again) amongst a group of innovative bankers. As the conversation progressed, it made me reflect on a few things. In particular, how the conversation about innovation has changed over the past decade.

Just before the financial crisis hit, innovation was big on the banks’ agendas. In 2007, I remember a statistic that the mention of ‘innovation’ in the annual reports of the world’s top 100 banks had risen from an average 1.3 mentions in 2000 to 6.2 in 2006. Yep, innovation was big on the banks’ agendas but they weren’t really innovating at all.

Most innovation was in a laboratory, separated from the business. If the person running the lab got frustrated because the bank wouldn’t let them play in the big boys’ room, then they were told to leave. I think most Chief Innovation Officers I knew back then had an average lifespan of 18 months. And my comment would usually be that innovation was like some virus that had entered the organization and challenged it. Like any virus, the white blood cells soon gather to squeeze it out.

Then the global financial crisis hit, and most banks moved into survival mode. During this period, innovation was of no interest at all. Living was the focus.

During that period, a whole raft of new start-ups began to pop out of the woodwork and the FinTech world began to evolve. With most banks hated and unable to innovate, the innovation focus moved outside the banks and into the private equity and venture capital world. That was the springboard for so much of what we see today as innovation.

When the banks got through the worst of the crisis, they then noticed that everyone was trying to disrupt and destroy them. The reaction to that was first to scoff and laugh, then to sit and watch and finally to invest and focus.

It was therefore around five or six years ago that banks started their innovation theatre. Let’s run hackathons and innovation days, and invite these upstarts to come and show us what they’ve got. Let’s have some pitch battles and demo discussions and offer prizes. Let’s do some stage work to make it look like we’re hip and cool … when we’re really not.

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