The larger an organization, the harder it is to change. Processes, systems, and talent all bring with them a certain degree of legacy, which needs to be challenged for innovation to take root and thrive. So how do large organizations stay innovative? How do they match the agility of smaller start-ups and keep pace in fast-changing markets?
I have seen this challenge within Oracle and across Financial Services, where large global organizations struggle to stay innovative, held back by their complex systems and processes. Leadership in these organizations needs to foster new ideas that challenge the norm, without discarding the structure that allows them to operate and compete at scale. In my experience, companies that succeed commit to the following:
- Creating a Culture of Curiosity
They create the environment and celebrate (even demand) new ideas, both successful and unsuccessful. It becomes an intrinsic part of the business and is re-enforced by the leadership in all areas like communications, recruitment, and rewards. These companies cherish curiosity and new thinking.
I believe the best litmus test for this is the number of questions people ask and the number of people asking. Larger organizations should not only support that natural inquisitiveness but also give their people a voice and a forum to discuss their ideas.
As an example, one of Oracle’s internal communities actively looks for commercial uses of Blockchain. That community is constantly reaching out to the whole company (in every industry), gathering insights on customer and market trends, testing potential products, and even hosting regular strategy and roadmap meetings. This “virtuous cycle” of feedback is incredibly useful for all the contributors and the Blockchain team: our innovation efforts become more productive, more relevant, and more successful because of the dialogue.
- A Relentless focus on Value Creation
In large Financial Institutions, it can take over 12 months for an idea to get into production! Unlike for small start-ups, the cost, time, and effort for an idea to receive sign-off, clear budget approval, and pass compliance checks mean that for an innovation to succeed, there must be absolute clarity about the value it can create.
In general, value is calculated along three vectors – increased revenue, reduced costs, and better risk management. In addition, given the customer-centric digital world we live in, I would add a fourth element around the customer (internal or external); value is about making things more accessible or better for your customers. Every time I see large companies successfully innovating, it is when they put the customer first.
When the business case is clear, it helps new ideas navigate the lengthy innovation cycle, but there is a final step when you are really focused on value, and that is Benefit Realization. Value focused companies always check if the business case is still valid and, once in production, measure if the expected benefits were achieved. This allows them to learn from their successes and failures, ensuring high-value ideas are not discarded and improving their innovation success rate.
- Breaking Silos and embracing the Open Economy.
Innovation has many sources, and a commitment to being open to ideas from anywhere is invaluable. Some of the best ideas come from the most unexpected places, both inside and outside the organization. In Financial Services, as the industry focusses on better customer experience, banks must go beyond traditional services and think holistically about what their customers need and expect. They have to embrace the Open Economy.
Already, nearly 84% of banking executives are building strategic ecosystems and looking at partnerships with Fintechs and other complementary companies. Banking is fundamentally changing, and partnerships are the only way to address the ever-increasing customer demands and keep pace with the rate of disruption in the industry. A good example is Goldman Sachs and MasterCard collaborating with Apple on the new Apple credit card.
Another major roadblock to innovation in larger organizations is the number of stakeholders and silos involved. Large organizations need to be prepared to grant innovators space and license to break from their silos and assemble. At Oracle, I’ve discovered that the most successful innovations often come from dedicated, cross-functional teams made up of people who share a similar interest, like the Blockchain group I mentioned before.
One such team, focusing on Open Banking and Open APIs, brought together several FinTechs and created an accelerator for them around our APIs – something only their mix of software developer, marketing, and financial services skills could accomplish. This would be impossible, however, if we didn’t give these small teams the autonomy to both develop new business models and test them out in the market. Including working with other businesses (like FinTechs) that we might not normally think of collaborating with.
- Continuous Innovation – always be innovating
75% of senior leaders surveyed by the Financier Worldwide conceded that they are not strongly focused on breakthrough or radical innovation. However, this is not the key – the breakthrough, radical innovations are very rare and hard to implement, the trick is to have a Kaizen like approach to innovation – constantly look for opportunities to improve. If you expand this beyond your traditional industry, you can have the Uber effect.
When an inquisitive team from Uber brought together digital payments, public transportation, and GPS in a well-designed user-friendly app (none of which were revolutionary), they created a disruption that brought tremendous value to the customers. The result? A global company that brings in $30 million / day in revenue.
Oracle’s internal transformation to cloud is another good example. We are relentlessly focused on the value of the transformation, and the impact it has on the customer, and the program is always open to new ideas from internal and external sources. This allows us to improve continuously. In fact, our Cloud platform has ended up incorporating numerous features from a range of disciplines, each of which targets a specific customer need in some way – giving it more critical mass and increasing the value and benefits we are delivering.
What tips do you have for making innovation work in large global organizations?
Talk to Conor Colleary
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