Businesses of all sizes must commit to innovation to thrive
IT'S tempting to think of innovation as one of those things that is reserved for big companies, the giants of Silicon Valley or the billion-dollar brands who spend millions on R&D every year.
But that couldn't be further from the truth, according to the international expert on business transformation Magnus Penker, who joined us for a recent Danske Advantage event in our Catalyst Belfast fintech hub. He is an authority on innovation and he presented some of the lessons he has learned from his career.
His view is that successful innovation is less to do with how much you spend on it and more to do with approaching innovation in a structured manner.
Innovation is not just about product or technical innovation. It is about having the ability to predict what people will do.
I've come across many companies that are buying in strategic advice from consultants. But Magnus believes if you're relying on external consultants to drive innovation in your business, then you'll never be better than your competitors. They too have access to research if they pay for it.
It is an interesting view, but his hypothesis helps explain why some of the biggest innovations to the way we live have been created by start-ups.
Successful new companies are often started by innovators who have taken the gamble that people will want a certain product or service that doesn't exist yet, or which improves on something that could be done better.
Of course, we've seen people's behaviour changing rapidly in banking and as digital banking has taken hold we have had to innovate to compete with new challengers.
Magnus outlined the top five blockers to innovation, one of which was that having no higher purpose stifles innovation.
That will ring true for many people. His view is that if you only go to work for money and no other reason, it doesn't encourage innovation. Will employees go the extra mile to achieve your objective if it is just about making you money? Probably not.
That's a big challenge in an industry like finance, but something we have taken on board, and which has played into our desire to make a social impact – ultimately leading to the bank being named NI Responsible Company of the Year by Business in the Community earlier this year.
Lots of business leaders recognise the need to innovate, but too many focus on the wrong things, making incremental changes for short- term profit rather than committing to long- term innovation.
To be truly innovative means being prepared not to make a big return on investment on “version one” of that innovation. Magnus said Apple took a bet on disrupting the market instead of expecting a return on the first iPhone.
Radical innovators are more structured than companies who are committed to incremental innovation. They are good at decision making because they have to be. And that makes them more successful at achieving incremental innovation than those who are focused on what they did yesterday.
It's maybe not as simple as innovate or die. But innovation should be a priority for those who want to thrive and stay relevant.
:: Shaun McAnee is managing director of corporate & business banking at Danske Bank in Northern Ireland