As I’ve been getting settled here at the bank in my new role, its been interesting to see the way that my colleagues – both in Group IT, and elsewhere in the group – have reacted to the advent of an innovation team. In general, everyone applauds the initiative on the one hand, while they are hesitant about the results we’ll be able to achieve on the other.
Why are they hesitant? Because they wonder how we will ever get the support of the business to fund any of our initiatives given that budgets are fixed in advance (often yearly), and that other business-as-usual projects always take precedence. Keeping the existing revenue is important, of course, but spending all your dollars doing that is a problem as well. I’ve often quoted the Accenture statistic that 70% of all budgets get spent on keeping the lights on.
That is an ongoing problem for the people that want to do new things in any organisation, and in talking with some of my peers in other banks, I’ve found they have the same dilemmas as well. Just how do you get money out of the business when they have none to give?
But, you know, I was having a conversation with a member of the innovation team here at the bank. He was expressing concern that the hard innovation metrics he’s been given to hit each quarter are going to be a stretch, if not impossible to achieve given the challenges of reaching into the business for money. And in responding, I just couldn’t help comparing the situation of an internal influencing team with that of vendors in general.
The business always seems to have money to give vendors (I know, having been one), and vendors often manage to get projects up, even though there is no formal line item in anyone’s budget at the start. The fact is, vendors are very good about winkling out money where none exists. They wouldn’t be in business if they weren’t.
What is it that vendors have that banks don’t? Salespeople. And what do these people do? Sell new ideas.
In our team here, we are about getting new ideas up. And difficult though it might be to accept (for an internal team), we have to sell these ideas – just as a vendor would – if we want to get any traction. I’ve challenged my team to find the dollars. If a vendor can do it, we most certainly can too.
I think (having looked at the literature and spoken to my colleagues) that many innovation teams in financial institutions fail for failing to understand that new ideas (yes, even great ideas) never go anywhere in a vacuum. They have to be nurtured and loved. You have to cost justify them, and market them, and invest in them.
And then, after you’ve invested yourself emotionally in getting support and traction, you have to be strong enough to kill the idea if you can’t make anything of it regardless.
Actually, we’re running the innovation process at Lloyds TSB as a numbers game. We’re planning to evaluate just over 1500 new things this year. That will lead us, we hope, to some 64 outline business cases, which we will distill to around 30 pilots. Of those, probably one in 4 will see the market and/or go live internally. Each individual in the team has to get to their "big bets" every quarter. Since they will be goaled on the change they create in the group, their skill in picking winners and getting them up will be the main thing that contributes to their success.
Looking at the numbers in one way, that’s a lot of things we’re going to toss out. On the other hand, though, we will, at the end, have some new things that might not have happened otherwise. That’s the key metric for our team really: what would not have happened if we hadn’t been here?
To guarantee that the answer is something other than nothing, the numbers game seems to be a good bet to me. Somewhere in all those numbers, we should find the nuggets which will let us shake the money out of the business.