Why Innovation Gets Stuck… and How to Unstick it
FintechOS helps financial institutions move faster with their innovation. In this article we look at common causes of friction to innovation and how to get unstuck.
What happens when a technology project takes longer than planned, goes over budget, and doesn’t seem to deliver the value that was hoped for? Unfortunately, in real life, the answer is not that everyone enjoys a high-five because they “failed fast”.
The people involved will be disappointed: they feel less optimistic about applying technology in this particular area of the business. Some will grow more cynical about technology in general.
This reaction to setbacks is rational: naturally, we prefer to do more of things that are working, and less of things that aren’t. However, in areas which are both new and difficult to get right – which is everything about digitalizing established financial services businesses – it’s a big problem for the organization if technology and innovation are seen per se as risks to avoid.
Innovation efforts can get stuck in a vicious cycle where risk-aversion increasingly reduces the chance of success, and this lack of success in turn makes the organization even more cautious and pessimistic about innovation.
Let’s look at the symptoms that business leaders can identify, and consider how to break this vicious cycle and unstick innovation.
It’s hard to learn from failure if it’s not clear-cut
In business it’s great when you have the chance to A/B test an idea, measure the results, pick the winner, and move ahead with the next test. When people say “fail fast” they are usually imagining controlled tests where the success and failure evidence are clear-cut, and less successful alternatives can be discarded.
However, in substantial areas of change within organisations, it’s more like a boat that your team are sailing in together, and if something’s not right about it, or if a change didn’t work that well, it’s not an option just to abandon the whole thing. You need to keep going and fix things under your feet.
Thus, failure in technology projects is usually not clear-cut because often the only way to know how successful (or not) it was, is after you’ve put it into practice and are actually dependent on the new system in production. The failures tend not to be total but are more likely associated with cost and time overruns, unexpected bugs and maintenance issues, and long-running support needs for administrators and day-to-day users adapting to new systems. All of this means that an underwhelming result in a technology project probably doesn’t mean cutting your losses and throwing it away: it probably means the organization is stuck with owning the results and trying to mitigate and improve the system as you go along. This soaks up resources, and mature organisations are absolutely full of such situations.
Each complex and hard-to-maintain system is layered upon and entangled with another. “Technical debt” compounds and the organization finds itself spending an increasing amount of money and time just “keeping the lights on”.
This directly contends with innovation.
In mature and complex organisations, the share of technology budgets and team energies available for innovation is usually the small part that is left over after dealing with day-to-day maintenance. This figure might be zero if there are a lot of fires to fight.
Fire-fighters are not in a great position to innovate
That resource drain of technical debt and compounding complexity is the first part of the vicious cycle. The second knock-on effect is a shortage of resources to work on innovation, both in people’s time and energies, and in the skillsets needed to exploit the newest technologies and techniques.
Where the majority of “business as usual” for technology teams is occupied in maintenance of existing systems, often in a reactive risk-control or even fire-fighting mode, it’s hard for people to operate in the very different mode the organization really needs for innovation.
Business leaders can look at this situation and talk to technology teams to ask whether the “real” work of the business has come to be defined as essentially non-innovative. Are new techniques, tools, and thinking becoming risks to be avoided? Leaders need to consider how the most expert and experienced technical teams can be supported to get them back into a more innovative stance.
Legacy business model inertia
An attitude towards innovation that treats it as a risk to be minimized doesn’t just affect technology teams. Because of new tech initiatives often being associated with long-running, complex, and often only partially successful change management, the broader population of the business can also become resistant to innovation.
This is the third symptom that leaders need to look at when trying to unstick innovation across the enterprise: are operational, product, and commercial teams locked in “the way we’ve always done it”?
Traditional business operations tend to emphasize consistency and predictability. Even though everyone knows that modern businesses need to be able to change and self-reinvent, it’s incredibly hard in practice because anything radically new seems to put at risk the KPIs and standards on which the business runs. Yet, in business models like banking and insurance, which were built before the digital era, the way people and processes work are inevitably going to be radically different when translated into new digital forms. The more innovative a solution, the more it will seem like a “break” from familiar ways of operating, and in financial services, nobody wants things to break.
The way leaders can encourage stakeholders “at the coalface” to support change – and contribute their own expertise to innovation – is to agree safe zones where consistency and predictability are managed but not perfect. In some cases this may be “sandboxing” innovative experiments in a way that does not threaten the standards and reputation of the existing business.
In other cases, the best way to innovate is to reinvent from within the existing business area, using the unique knowledge and experience that exists there. But this latter approach means not insisting on also maintaining the status quo, otherwise resources will be spread too thinly to commit to succeeding with innovation, and the organization will snap back to old and proven methods before the new experiments have had a chance to work out.
Technical debt… technical experts who are stuck fire-fighting… operational experts across the business who are motivated by stability not change: these are the elements of the vicious cycle which leadership need to identify and unstick if the organization wants to innovate and thrive.
“Stuck” organisations suffer as they become more cautious and less ambitious with each attempt to “do digital”. In contrast, successful and innovative organisations fuel themselves constantly via the positive reinforcement of faster cycles of success.
Spinning up those smaller, faster feedback loops is the key to an intervention that can unstick innovation. Instead of technology initiatives only being done through slow, rigid, hyper-controlling, too-big-to-fail waterfall projects, organisations need to learn how to win or fail smaller and faster. The bigger, slower, and more complex initiatives are, the less clear what winning even means, and the less anyone has an ability to learn from failure.
To unstick innovation, leaders throughout the enterprise need to seek and grant autonomy and agility, to encourage tight feedback loops in innovation. Leaders should be looking for ways to speed up, identify small wins faster, and build on successes to fuel bigger and more transformative ambitions.
Clearly, a big part of unsticking innovation is about culture, people, leadership, and process. That part cannot be bought or installed like software or IT systems. But it will help your teams massively if they have the right tools in their hands that are built to drive more rapid experimentation, implementation, and iteration.
Innovate faster: talk to FintechOS
FintechOS provides a low-code tech environment to your teams that opens up collaboration across new lines – involving both technical and business roles – allowing them to build what they imagine at speed. By succeeding faster, your own teams become more expert and more empowered to evolve your financial products and services into more modern, higher quality, more livable experiences for your customers.
If you would like to explore how we can work on this together, please book a demo.