Saturday, October 13, 2012

The Art of Bank Innovation According to Guy Kawasaki

One of this year's keynote speakers at BAI's Retail Delivery Conference was Apple evangelist and innovation guru, Guy Kawasaki who is also the founder and CEO of Garage Technology Ventures. During his very engaging and at times irreverent presentation, Guy broke down the art of innovation into 10 easy -- and not so easy -- steps. He explained to the room full of bankers and industry service providers that while these steps should be followed, even he has not been able to always follow his own advice in his career.

1. Make Meaning - Great innovation occurs when a person/company decides to make the world a better place. Great companies are able to make meaning, and as a natural outgrowth, also make money. One of Guy's examples was Apple's development of innovative products that made the world more productive and creative. It was interesting for me to realize that most of the banks recognized in the Finacle/BAI Global Banking Innovation Awards this year developed products that actually improved the financial well being of their customers.

2. Make a Mantra - Not to be confused with a mission statement (usually developed by a committee facilitated by a person hired by leaders who can't lead), a mantra should be short, easy to remember and aspirational. Guy's example for Wendy's was "heathy fast food" while his recommended Nike mantra was "authentic, athletic performance". I wonder how many banks have a mantra that every employee can recite? My experience indicates that a clear mantra and clarity of purpose go hand in hand, and that this focus can lead to success and meaningful innovation.

3. Jump to the Next Curve - Great innovation does not occur when you simply try to improve what is already there, but when a firm looks beyond what is in place. According to Guy, most organizations start on a curve, stay on the curve and die on the curve. They do not move to next level. He suggested that banks should not view themselves in context of what we do today, but with an understanding of what consumers will want tomorrow. It took no fewer than a 5 minute walk for bankers to go from Guy's ballroom presentation to the Expo area which was filled with services and products that could assist in jumping to the next curve.

4. Roll the DICE - Are we creating something that is Deep, Intelligent, Complete and Elegant? According to Guy, these are the qualities of innovative products and services that jump the curve. While most products from Apple, Nike and other firms have these qualities, do bankers try to meet this criteria as part of their innovation process? Recent web site redevelopment from some of the largest banks indicates that they are rolling the dice.

5. Don't Worry, Be Crappy - Great revolutionaries don't wait for perfection. For instance, the first Apple computer was definitely innovative on many fronts . . . but it didn't have software or even color. Guy stated, "If companies wait for every element to be in place before a product or service is introduced, innovation won't happen." He added, "Perfection is the enemy of revenue." As I travel, I also see this challenge when banks try to decide which firm to partner with for new products and services. Sometimes, it is better to simply get the product introduced, and then use customer input to perfect the service.

6. Let 100 Flowers Blossom - Interestingly when innovation occurs, people you did not intend to be your customers will buy your product, and they may use your service in ways you did not intend. The key is to understand how these 'unintended customers' use your product . . . and take the money. While Guy presented the example of Skin So Soft (a moisturizer that became more well know as a bug repellent), my example is the PNC Virtual Wallet, which was initially intended as a Gen Y product, but where the appeal expanded beyond the expected demographics. 

7. Don't Be Afraid to Polarize People - Great products have people that love and hate the product. The worst scenario is that you have customers (or co-workers) that don't care about your innovation. If people don't understand your revolution in 10 minutes, they will never understand the reasons to buy your new innovation. Guy recommended that bankers should not intentionally polarize people, but added that great products always will piss some people off. In the banking world, it is better to be on the leading edge than to follow, especially as innovation is occurring so quickly. The challenge is to not wait for consensus.

8. Churn Baby, Churn - Guy stated that the biggest challenge is to shift from being evolutionary (small steps) to being revolutionary (big steps), where innovation is a continuous process of change as opposed to an end of it's own. Again, I will use the PNC Virtual Wallet as an example, where the developers of the product did not stop with a very innovative way to manage money online, but continued to add innovations such as mobile access, tablet access, new apps and integrated tools, etc. I also saw amazingly innovative improvements made by mFoundry this week on the Expo floor with their Fin.X mobile banking platform, allowing for additional delivery of revenue generating services in a cloud-based solution.

9.  Be Unique and Valuable -  It is imperative to build a niche for your product, where uniqueness drives value. Guy illustrated that development of a valuable service that is not unique brings price competition where recovering development costs is difficult. If we create a unique product without value, it is 'just plain stupid'. We will overwhelm systems and not add revenue if we build a service that is neither unique or valuable ( example). Therefore, the key is to innovate with an eye on developing a service that is unique with value (the top right corner). Interestingly, I think the biggest takeaway from this past week at the Retail Delivery Conference compared to previous years was the constant focus on building value and revenues. In the past, there were presentations that seemed to focus on innovation for innovation sake.

10. Perfect Your Pitch - While Guy admitted to not completely following his own advice here, he stressed the importance of following the '10, 20, 30 rule' where innovators should use 10 slides, presented in 20 minutes (even if you have an hour) using a 30 point font. He also suggested that an innovator customize their introduction and know their audience. I can guarantee that almost everyone in the audience (including myself) breaks this rule too often.

Finally, Kawasaki offered up a 'bonus' recommendation . . .

11. Don't Let The Bozos Grind You Down - He predicted that with every great idea, there will be those that believe the idea shouldn't be done, can't be done or it isn't necessary. Some of these Bozos where pocket protectors and are easily identified and some wear expensive suits and drive nice cars and have a large internal following. The latter group is more dangerous since they usually have more power. The key is to stay the course. Unfortunately, this challenge is prevalent in banking and is easy to simply accept. Are there innovations or even simple developments at your bank that are killed before they see the light of day because you have always 'done it that way'? 

I am hoping that the bankers and vendors in the audience took away as much as I did, and make it a mission upon return to work to try to follow as many of the ten steps as possible. I was pleased that I think my company does pretty well in most of the categories, but there is always room for improvement. I also sat in the session thinking about which banks do the best in several of the categories. Is your bank one of them? I would love to hear from both bankers and suppliers.


  1. Great article Jim

    Cheers from Germany


  2. Hi Jim - thanks for a great article.