Innovation is often described as the creation of something new or a new way of doing something. Recognizing its potential benefits to operational performance and customer experience, most enterprises today say they want innovation, but they almost universally create conditions that impede it. Competing objectives such as cost control or service stability often take priority, creating a reluctance to listen sympathetically to the ideas brought forward by external partners who are looking for ways to enhance collaboration and value.
The new year promises new things, and to boost innovation and steal a march on the competition, enterprises should resolve to collaborate with providers and follow these Top 5 pointers:
- Provide a mechanism. Try something radical. Set up an “Innovation Fund” into which you deposit $X million a year. Invite providers to bid for funding that will allow them to help you accomplish your goals, whether it be encouraging income growth, increasing automation or improving productivity. Use a bid template so providers can include details of the effort and the financial commitment required to successfully deliver the innovation. Then hold a monthly or quarterly Innovation Forum with the provider and business stakeholders to approve or reject bids. Setting aside real money that is clearly earmarked for innovation signals to providers that their ideas will be genuinely considered.
- Share the corporate vision. Nurturing innovation requires granting providers access to business stakeholders and visibility into how you see your business evolving. The collaboration model of the future may be in the form of joint solution design, investment in or partnership with fintech or newtech firms, or even utility/white label joint ventures. In return for this new level of intimacy, let providers know you expect them to be proactive in bringing forward innovative ideas.
- Change the mentality. Resist the temptation to treat providers as simply “IT or back-office vendors” and foster a spirit of true partnership in which all parties are working together to achieve shared goals. Take this example: a large Australian bank is considering creating a “steering panel” made up of senior business and IT leaders plus account executives from the ten largest external providers. To encourage the panel to collaboratively achieve business objectives, the bank has agreed to pay a bonus to the panel members – including provider account executives – if those objectives are met.
- Focus on tailored solutions. Embrace providers that demonstrate deep domain knowledge and understanding. Your customers demand nothing less, so why should you? Many of the most exciting applications of emerging technologies such as the blockchain and the internet of things (IoT) are specific to particular industries, so don’t accept a one-size-fits-all approach.
- Keep your eye on business outcomes. Where possible, map your services to the customer journey and create services that are end-to-end across typical functions. A horizontal view of services will help you select the right partner for providing seamless customer onboarding and business process as a service, while reducing the number of handoffs. Many providers are used to selling according to their service lines (data center, end-user computing ADM, etc.), so help them think in a new way about how they can use business-focused KPIs that are based on outcomes.
It’s easy to talk about innovation – it’s much more difficult to make it happen. In a world changing at a faster pace than at any time in history, sabotaging it may be a dangerous habit to establish. Contact ISG to discuss how our FutureSource™ provider acquisition process can help start you out right in your relationships, and our Coactive Governance philosophy can nurture innovation and make it part of your expected outcomes from providers.
About the author
Owen Wheatley
What he does at ISG
To say Owen Wheatley comes prepared to work through your operational concerns and transformational needs is an understatement. As ISG’s Lead Partner of Banking and Financial Services, he treats his 25+ years of experience in this ever-evolving, customer-centric field as a replete lexicon of applicable knowledge, relevant learnings and potentially executable solutions. In doing so, he makes the ethereal and theoretical, actual and obtainable.
Past achievements for clients
Knowledge-sharing is second nature to Owen. He provides his clients with market insights and meaningful thought leadership and helps them understand what similar (or different) organizations in comparable situations have done regarding transformational change. Many of Owen’s clients have sought his expertise to strengthen their customer engagement on the digital front, enhance the employee experience to improve the customer one and navigate new ecosystems—like integrating emerging partnerships—endemic to the industry. He makes sure that untangling this complexity and harnessing your new relationships always lead to your number one goal: driving better results for your banking or financial institution. In fact, Owen:
- Led a consulting team to design a commercially groundbreaking and elaborate deal for one of the largest hedge funds in the world to reimagine its middle and back-office operations, lessen the bureaucratic demand on the front office and serve institutional clients better. The measures of success for this co-designed and collaborative project included defined stages of excellence and experience metrics, delivered in a commercial model which positions all parties for success.
- Managed a large team of advisors to provide market insight and an "outside-in" perspective to multiple major North American banks looking to transform their operations, including indirect auto lending, core banking, cheque processing and the entire cash ecosystem.
- Led a team of experts in helping to transform the HR technology and operations of a major European bank, including designing the right strategy, creating the roadmap and business case, selecting the right partners for a new ecosystem and ensuring expedited and effective implementation.
