Written by External Source on September 7, 2023

Realistic view of innovation prevents rash investment

[Original Source: TechCentral]

While many companies take a big bang, glamorous approach to the design of new products and features, real innovation lies in simply revolutionising existing processes or better understanding the customer — especially in the financial sector where processes are still deeply inefficient.

Shareholder demand for innovation – often taking companies into high-risk, uncharted waters and even cannibalising existing business models – can do more harm than good. Sometimes real innovation is about exploring how to revolutionise existing processes or simply harnessing data to more fully understand the customer.

“First digital transformation, and now artificial intelligence, is causing seismic shifts in how we do business and sometimes results in the disruption of entire value chains. Companies are only just discovering how much data they have and the value of the insights it can deliver. Using new AI tools to deliver these insights can sometimes pave the way to create exciting new offerings and deliver a competitive advantage,” said co-founder of Global Kinetic and CEO of its open banking platform, FutureBank, Sergio Barbosa. Sometimes it’s the boring stuff that is often the most disruptive in an industry. Take payments, for instance

The problem, however, is that before any kind of innovation can begin, data needs to be unlocked from organisational silos. And while not as glamorous as designing new products, Barbosa says a well-crafted integration project which can connect siloed worlds in an efficient and observable way can deliver more for the company, especially over the longer term, than obsessing over new offerings.

By way of example, Barbosa explains that in a sector as fragmented and sometimes archaic as the payment world, a simple piece of integration can fundamentally disrupt the industry.

“In the short term, disruptive technology will displace many human jobs and grab the headlines. But sometimes it’s the boring stuff that is often the most disruptive in an industry. Take payments, for instance. The financial sector is still deeply inefficient and it’s often down in the plumbing where simple, seemingly unglamorous improvements can be earth-shattering in terms of their impact to fundamentally disrupt things,” Barbosa said.

Innovation: improving incrementally

Before embarking on any kind of innovation a company must first determine if it will be genuinely worthwhile.

“Companies need to ensure they are leveraging the data that is available. They should also spend time on validating the problem they intend solving for the customer. Innovation is one thing, but it must be useful if it is going to generate money. Leaders should also collect analytics and usage statistics as well as establish customer feedback loops to ensure they are achieving what they set out to do,” said chief operating officer at Global Kinetic Lorén Rose.

Once a company has satisfied a single use case they can grow from there. Rose says this will allow them to respond to customer feedback and minimise capital outlay. By doing small experiments and learning from each, firms can get to market faster and establish customer feedback and feasibility earlier on. She says this route will also keep the cost of learning lower.

“The ability to innovate and respond to changes in the market is tightly coupled with the quality of your product code base, the context created within the team around the customer, what they are wanting to achieve, and the ability to break down internal silos.

“If you have everyone working towards a single goal that has been designed to benefit your customers, you are more likely to succeed. Having more data on your customers than your competitor is also, of course, vital,” Rose said.

Companies that are afraid of taking small MVPs to market to see how they perform, or those which adopt a waterfall approach to their development are setting themselves up for failure. Rose says one company insisted on a big bang development approach and took four years to go to market. By the time they wanted to go live, their architecture was so outdated it was no longer fit for purpose.

Finally, when it comes to building skills that are best equipped to support agile innovation, Barbosa believes partnerships hold the key.

“The best way to build a new skill or competency is to partner with someone who has already had success in that space, particularly when looking to cross sector boundaries. Once you have an established market and product, then you can look to migrate your competency in-house. Today, the risk of sinking capital into building an in-house competency for an initiative that turns out to be financially unviable is far greater than the risk of not having all your operational IP inhouse.

“The route to ensure innovation that delivers meaningful value to your users and your business is to experiment, validate, establish feasibility and then build operational capability. Small, successive wins that move the needle will ensure you remain relevant and profitable,” he said.

Original Source: TechCentral https://techcentral.co.za/realistic-view-of-innovation-gloprom/231195/

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