As the rate of change increases, large established companies must be able to innovate at pace and scale, to keep one step ahead of start-ups and large technology companies that are moving into new sectors and markets.
Banks are a great example since they face challenges not only from new banking entrants but also from technology platforms such as WeChat. And so, it was interesting to discuss innovation with Andrew Bester, who has managed large-scale transformation at the Co-operative Bank and Lloyds Banking Group.
Andrew joined technology entrepreneur and academic Vivek Wadhwa and I on the latest episode of the Incremental to Exponential podcast, in which we explore how big companies can innovate to survive and grow. Vivek and I are the authors of the new book “From Incremental to Exponential - how large companies can see the future and rethink innovation”.
As was underlined during our discussion with Andrew, creating the right culture is the most important factor in enabling your company to innovate. In fact, he declared that when he’s looking at driving innovation as part of a transformation project: “I always start with culture.” If that’s the case, the next logical question is: What should a leader do to create a culture of innovation? Some key answers emerged in our discussion.
Focus on the customer
You need to create an “axis”, as Andrew puts it, around which your innovation efforts can revolve, and the customer is perhaps the most powerful choice for this. Customers' expectations are climbing exponentially in this digital age, which can generate the energy for change as well as the organising principle for your innovation. When the team understands that the customer comes first, many barriers to change begin to break down and decision-making becomes solutions-orientated and forward-thinking.
You’re only as good as your last customer interaction. Due to the reach and pace of social media, customers have enormous power and expect action in under an hour. Benchmarks can no longer be backward facing; they have to capture the experience of customers as they interact with your brand in real-time.
Be clear about your purpose and values
This clarity can help to mobilise the team and ensure that everyone is pulling in the same direction. Understanding your business’s key attributes can help you to focus on what makes your business and people unique, building your advantage over the competition.
As Andrew points out, purpose can be your lighthouse when the waves of change start to get larger and more frequent: “If you're not clear what you really do, what the strengths of your company are, you have no basis to be able to process the pace of change as it happens.”
And on the flip side, losing your values as you change and making poor ethical choices can introduce massive risks during innovation – the Financial Conduct Authority handed out a record £319m in fines in 2019, more than six times the amount levied in 2018 . As Vivek says: “If you make the wrong choices, you're jeopardising your future, because you will never survive ethical lapses.” And so, it's very important that you are seeking to do the right thing and giving customers the best advice. Our customers and our employees will watch how we all behave as businesses in this period of COVID-19 and hold us accountable.
You need digital capabilities and skills
to support your culture of innovation and enable implementation. For example, at Capita when COVID-19 hit, we were able to move 20,000 people to working from home within two to three weeks. But that was only possible because we had already moved our infrastructure to the Cloud.
It will be digital capabilities that will drive most of the changes in customer experience. And, of course, you need data and analytics to inform your decision-making as you innovate.
Successful innovators experiment and learn quickly and accept failure as part of the learning process. In fact, Andrew felt speed was the very definition of digital innovation: “We saw that, in response to COVID-19, where the pace at which we were needing to implement, whether it's mortgage holidays, credit card payment holidays – that was digital at its best.”
Create a structure that supports innovation
If it’s early days for your organisation on your innovation journey, you might need to create a digital centre of excellence, as Andrew did by appointing a chief digital officer to pull together disparate digital banking initiatives at the Co-operative Bank. The digital team becomes a change agent for the whole company and works differently to other teams. Conversely, there’ll come a time when you want to break down any silos between your new digital capacity and the legacy operation. After 18 months, Andrew integrated his legacy IT and digital teams. As he explains: “You need to create the centre of excellence around the digital skills, the digital capability, and then what you need to do over time is pull the rest of the company along towards that future.”
Lead from the front
Finally, the role of leadership is key in driving this culture of innovation. You need to create an environment in which creativity and curiosity can flourish by encouraging diverse voices and allowing difficult and new questions to be asked. Most importantly, you need to set the innovation agenda. If leaders aren't clear where they're going with a company, they’re not going to make any progress.
I’ll give Andrew the final word: “What I learned was just be yourself; be really clear on what you're trying to do, anchor yourself on some universal principles about what the objectives are, and why you're driving those objectives.”