Innovating against conventional wisdom
Here's what I mean. Far too often "everyone" agrees that a specific market or space is just "ripe" for innovation, while other segments, markets or industries are just too limited, and no one in their right mind should innovate there. Too often experts tell us things that they know are true and direct our attention to "facts" not quite in evidence, leading a lot of lemmings to innovate in a particular market, while other markets or segments, crying out for innovation, are ignored. Let's use a specific example. We recently completed a project for a large retail bank. The conventional wisdom is that all Millennials and Gen Y and Gen Z will never use or frequent a retail bank. They are too wired in, too mobile and too dependent on the internet to ever darken the door of a branch bank. Or so we were assured by experts. So this leads to a lot of "innovation" in mobile apps targeting younger customers and the constant breast beating of retail bankers stuck with old, unattractive retail branches. So no one is innovating in branches, except trying to figure out how to turn them into coffee shops or community centers. All the smart money in the retail and commercial banking sector is in payments and money movement, not in retail banking. After all, nobody goes there anymore.
But what if the prognosticators and experts are wrong? What if we should be innovating in the very place they suggest we ignore? After all, as an innovator you have a number of choices as to where to innovate, but very limited resources. Should you innovate in the same markets and segments that all the cognoscenti suggest you should, and simply follow the crowd, or should you carefully consider all the data and seek markets, segments and customers where your innovation will matter? Should you zig when others zag, even in an innovation setting? Is it better to be the fifth or sixth firm to "innovate" is a specific space where everyone is innovating, or to carve out unrecognized opportunities that you can own?
Well, the recent punchline to the issue of whether or not younger consumers will use branches is new research that demonstrates young customers use branches about the same amount as older customers. It's not that younger customers reject branches. Younger customers (and the rest of us) now have different interactions and expectations about interacting with banks, and many different channels. There are simply some interactions where all of us, regardless of age or experience, prefer the face to face interaction. And, since many banks are ignoring the branch experience as an innovation opportunity, perhaps some bank out there will realize that branch banking isn't going away, but is simply changing, and will realize that no one else is really innovating in this space, while all of the competitors are seeking to drive all banking to a hand-held device. While "everyone" is talking about the death of the retail bank, some firm is going to understand the overlooked opportunity and be the only one innovating in that space - literally hitting them where they ain't.
Sometimes what is counterintuitive is also true. I'm guilty of nodding along as experts told us the branch banking system would die on the vine, that no younger customer would be caught dead in one. Again we've neglected to think through the entire customer experience to realize that not everything can be automated, minimized, placed on a handheld device. The sooner the branch banking system realizes that (and overcomes some other issues like opening hours) the greater potential for relevancy.
So the question becomes, how much of the conventional wisdom should you accept when it comes to where you place your innovation bets? What happens if every player in an industry accepts the same models or wisdom (I'm looking at you now, Wall Street, and the whole CDO packaging fiasco). Can you afford to be the fifth or sixth company to innovate in the same space, or does it make sense to differentiate where and why you innovate? I'm often reminded of the Woody Allen movie Sleeper, in which Allen's character wakes up in the future after a long coma, to find everyone eating fatty foods and smoking cigars constantly. When he rejects the lifestyle, they tell him that people in his generation had it all wrong. Steaks and cigars were never life threatening. Will we wake up from our comfortable sleep to find out that all the conventional wisdom was wrong? I suspect it won't take us long to discover the error of conventional wisdom and innovation bets. Less time than Allen's character, but with greater complications.
If you've read this far, thanks for sticking with me. There are two interwoven points I wanted to make, and have probably done so relatively poorly. The first is that innovation goals should be driven by your specific insights, not on what the cognoscenti decides. Far too often the conventional wisdom is wrong, and leads us to investments that don't pay off or were simply wrong. It's often easier to follow the herd, when experts and analysts are telling you that younger generations won't go to branch banks, who is to say they are wrong?
The second point is that every innovator has only a limited number of bets to make in any given time period. Too many factors in running the day to day business will restrict the number of innovation activities that you can undertake. So, the question becomes, should you innovate in exactly the same place everyone else is innovating, or should you innovate in markets or segments that have needs that others are ignoring or overlooking? In the payments space, can you compete with Apple, Facebook, Google, Paypal and a host of others, or could you rather partner with these firms in these opportunities and innovate in the branch setting, which most banks are ignoring? Of course I've used a banking example, but the same phenomenon plays out in every industry.