Disruption in the financial services industry is on the rise. For example, 88% of leaders in the industry agree that fintechs are growing faster than traditional firms and increasingly challenging their business. Client behaviors are fundamentally changing as well. As one industry leader put it, “we’ve seen more change in the past two years than the previous 20 combined.”
But innovation remains challenging at legacy financial services firms. The fast-follower strategies of the past no longer generate sufficient growth, and financial providers now seek to go on offense with investments in innovation. To achieve this objective, firms seek to build a more disciplined process for product development and new venturing. But the real barrier to innovation in financial services is organizational mindsets. A recent survey of industry leaders revealed that only 34% have an appetite to innovate their company’s business model beyond existing boundaries.
Building a true “culture of innovation” can be a complex undertaking, starting with defining what a “culture of innovation” means for your organization in the first place, which is no small task. As a result, this short piece won’t discuss how to build an all-encompassing culture of innovation (although be assured that Gartner experts can help you take that on).
But, if your objective is simply to empower yourself and your team to more readily identify innovative new ideas, products, or capabilities, some straightforward techniques can help. Gartner has observed how the best leaders enable their teams to cast aside existing assumptions and identify new ways to grow the business. Here are a few simple exercises and techniques to spark more innovation in your business:
- Conduct a “No-Capital-Constraints” Exercise – imagine there were no budgetary limits and you could spend as much as you want. Ask your team what growth opportunities they would pursue under these conditions. This exercise may generate some crazy ideas, but also some amazing ones that never would have come to light when limited by capital constraints. You can also generate novel growth ideas by focusing on the opposite extreme, identifying ideas to pursue if zero additional spend were allowed.
- Impose a “Why Not Us” Burden on Naysayers – when debating new growth opportunities, impose a burden of proof on those who would kill an idea. If someone seeks to shoot down a new opportunity, ask them to argue “why not us.” Make them bring evidence and data to show why your firm cannot succeed with the opportunity. New ideas are often killed too quickly by conservatism and risk aversion. Asking naysayers to argue “why not us” forces a more objective strategic dialogue.
- Run a “Pre-Mortem” Scenario Planning Session – imagine 5 years from now that your firm is bankrupt. Work backward to understand how it happened, focusing specifically on uncontrollable external forces. Also do the opposite: imagine 5 years from now your firm is wildly successful. Again work backward to understand how it happened, focusing once again on external factors. Assessing extreme futures will challenge your team’s assumptions and surface previously unrecognized threats and opportunities.
- Conduct Project Eulogies – for investments that failed, facilitate a funeral service where you remember the project and celebrate the learning that emerged. Innovation can be stifled when people fear failure. Eulogies are a fun way to help associates remember that even failed projects create incredible value if the firm captures and applies lessons learned to future initiatives.
- Publicly Recognize Great Failed Ideas – in the same vein as the previous idea, periodically conduct ceremonies to celebrate innovation investments that failed. One firm that Gartner works with bestows an annual “Best Failed Idea” award to a project that, although ultimately unsuccessful, deepens the firm’s understanding of customers, technologies, or competitive dynamics. Many innovations fail. Celebrating productive failure can help associates embrace the risk inherent in innovation.
For more ideas to drive innovation across your business, check out our Innovation Management Primer for 2022. For more insight on trends driving the need for innovation, click here to learn about four industry trends concerning financial services leaders. Additionally, contact your Client Success Partner to register for our upcoming Gartner Discussion Group in April on Creating a Culture of Innovation to vet your ideas and get advice from fellow financial services leaders on this critical topic.
The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.
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