Disruption Playbook: Innovation
Accelerate innovation with strategic insights from 30+ of the most influential industry leaders DISRUPTION PLAYBOOK: INNOVATION
Continuous innovation is According to research from McKinsey, companies that prioritized innovation in past crises emerged stronger postcrisis, outperforming the market average essential for long-term success. by more than 30%. BCG reports a similar trend – companies doubling down on innovation during downturns are more successful over the long term.
And with COVID-19 rapidly The message is clear: success in the post-pandemic world begins with a strong focus on innovation today. changing demand, consumer But successful innovation isn’t easy. Even before the pandemic, a survey by behavior, and the way we do BCG revealed that although 80% of innovation executives reported innovation as a top-three strategic priority, only 30% felt their organizations business, the need for an were good at it. To make it work, you need to develop the right culture, effective innovation strategy is balance a variety of moving parts, and dodge a host of potential pitfalls. stronger than ever. To help you do just that, we’ve created this playbook. Inside, you’ll find insights from some of the brightest minds and most successful innovation leaders in business today. So wherever you are in your innovation efforts, you’ll be better able to recognize promising opportunities, quickly select the Radek Zaleski best, and successfully transform them into new sources of revenue. Partner, Fintech Lead Good luck! DISRUPTION PLAYBOOK: INNOVATION
Warwick Hill Rohit Kumar Barbara Fuchs Investor and Corporate Advisor Director, Products and Innovation Head Business Model Innovation at at Supercapital Partners at Mastercard Ivoclar Vivadent
Kristian Hart-Hansen Akshay Chopra Barbara Liebich-Steiner CEO and founder of LEO Head of Innovation & Product CDO and Head of Digital Strategy Innovation Lab Design, CEMEA at Visa & Solutions at UNIQA Insurance Group
Jan Schütz Laura Barrabia Gil Esther Seidl-Nussbaumer Senior Innovation Manager Head of Exploration at Roche Head of Corporate Innovation at at finstreet SIGVARIS GROUP DISRUPTION PLAYBOOK: INNOVATION
Jonathan Denais Mercedes Pantoja Johannes Busse Managing Director of Open CNP – Head of Technology & Architecture Independent Banking & Payment Head of Investments at CNP at LATAM Airlines Expert Assurances
Rita Waite Jan Enno Einfeld Barbara Walensa Head of Payments BD & Innovation CEO at Finiata PhD, IT strategy practitioner at Millennium
Anneli Bartholdy Ismail Shomala Veronika Bridgman Strategic Partner at Nordea, Digital Product Executive at gomoney Innovation & Design Strategy Innovation & Product Ownership Director at Sprint Kingdom Commercial and Business Banking DISRUPTION PLAYBOOK: INNOVATION
Konrad Jarociński Steve Suarez Moritz Spangenberg Innovation Lab Manager at Global Head of Innovation, Finance Client Partner - Fintech at Netguru Netguru & Risk at HSBC
Erhan Bilici Nataly Nieves Reyes Mats Lundquist Capital Planning and Stress Testing Innovation Specialist at Deutsche CEO at Telenor Connexion Officer at UBS Bank Innovation Lab
Peter Collingridge Sebastian Grimm Maarten Boelens EMEA Head, D10x at Citi Ventures Head of Innovation Lab Innovation Manager at Rabobank at ZF Friedrichshafen AG DISRUPTION PLAYBOOK: INNOVATION
Ron Ashraf Robin Buschmann Scrum Master at Allianz SE Head of Ecosystems at Commerzbank DISRUPTION PLAYBOOK: INNOVATION
Startups and Corporate Design Breaking Innovation Thinking down Silos
Digital Failure and Innovation Validation and Transformation Prototyping DISRUPTION PLAYBOOK: INNOVATION
It’s difficult for innovation to reach its full potential by relying on internal Partner with resources alone. As a startup, you may be nimble and able to quickly spot and exploit opportunities in the market, but you may be restricted startups to get by budget constraints, access to customers, and a lack of facilities. ahead If you’re an enterprise, on the other hand, you may have large budgets and considerable resources at your disposal, but you’re often limited by your existing infrastructure. Risk aversion, bureaucratic processes, legacy systems, culture, and lack of creativity can all stifle innovation and prevent companies from keeping up with the pace of change required by the market.
The answer for many is to seek out mutually beneficial relationships and opt for collaboration over competition.
In this section, we look at the importance of external innovation opportunities and how to get the most out of them. DISRUPTION PLAYBOOK: INNOVATION
Why companies should consider an outside-in approach
I think every large enterprise should ask themselves whether they’ve got the internal mechanisms within the organization to drive innovation or whether they should collaborate with externals.
Looking at the companies that have successfully adopted change, they have a real program where they not only disrupt themselves, but they start to look at how they do business and see whether they can adopt an outside-in approach. And I think the outside-in approach gives them a far greater understanding of what's happening in the ecosystem, what's happening around them, and what's happening in the competitive space of their products.
Warwick Hill Investor and Corporate Advisor at Supercapital Partners DISRUPTION PLAYBOOK: INNOVATION
Get insights into what lies ahead
A corporate venture fund is one of the solutions that enterprises should think of. Not only does it allow you to scan the market to observe new trends, but it also opens up way more chances to retain a stake in the market.
We believe it’s useful to have more eggs in the basket, so our venture arm is investing in companies that operate in similar areas that we do. As a stakeholder in these companies, we’re able to learn from them and better anticipate the challenges that are awaiting our projects further down the road.
Kristian Hart-Hansen CEO and founder of LEO Innovation Lab DISRUPTION PLAYBOOK: INNOVATION
Make it more than just a financial relationship
The goal of our external innovation program is primarily learning from working with them [startups]. This means involving a lot of different stakeholders internally, so it's not just a financial relationship, and enabling them to spread good practices to the internal projects afterward.
It's also a way for us as an organization to test emerging new trends that we think could have a lot of potential. This could be anything from new kinds of insurance products to blockchain.
Jonathan Denais Managing Director of Open CNP – Head of Investments at CNP Assurances DISRUPTION PLAYBOOK: INNOVATION
Staying relevant in fintech
In the fintech industry, the current influx of public startups proves that it doesn’t take decades to climb to the top of the ladder.
In fact, the ten most valuable fintech companies in the world are mostly between six and 10 years old, but none of them have gone public yet.
However, with all of the innovation happening in fintech right now, that could change in an instant, creating even more competition for enterprises.
Moritz Spangenberg Client Partner - Fintech at Netguru DISRUPTION PLAYBOOK: INNOVATION
Partnering with startups as a tactical decision
Partnering with startups is becoming more dominant in strategic as well as tactical decision-making processes. The cost of collaboration with cloud, API and other technological innovation has decreased significantly. Today the question is not if one can copy a good idea, it is all about who is delivering the best product or service, and who is able to easily integrate the solution into others’ value chains.
Banks can fulfill customer needs, avoid churn, and build ecosystems around their core offering because they own the customer interface. On the other hand, this strategy emphasizes the importance of brand, trust, and reach as three of banks’ core competitive advantages.
In terms of efficient innovation management, it might also be less costly trying new features with a partner than building them. A key requirement for a well- functioning partnering strategy is an efficient on- and off-boarding process. The levers to look at are a modular architecture, harmonized pricing and branding policies, and of course aligned sales incentives.
Robin Buschmann Director, Digital Transformation at Commerzbank DISRUPTION PLAYBOOK: INNOVATION
Incubate ideas In theory, innovation should produce products and services that are tightly aligned with customers’ unmet needs. But efforts are often hampered by the fast with design biases and behaviors of the people involved in creating them. Design thinking counters this with a human-centered but structured approach. thinking If you’re not familiar with design thinking, team members approach challenges by immersing themselves in the customer experience rather than focusing on products or services. They gather data and produce insights and then use these insights to brainstorm solutions. Team members must examine and challenge their assumptions before creating prototypes to test their proposed solutions with customers. Insights are then fed back into the process, and the solution is refined.
When done well, design thinking can increase the success rate of innovation projects and result in a real competitive advantage for your organization.
In this section, we look at how you can incorporate it into your own initiatives. DISRUPTION PLAYBOOK: INNOVATION
8 questions to ask in the exploration phase
I'm responsible for exploration, the first part of the innovation funnel.
The idea of exploration is to do design thinking. We go in with disciplinary teams and first try to understand what knowledge we have inside the organization. Then we go out and talk to our customers and try to answer a few questions:
Is it a problem we want to solve? Is it desirable? Do our customers need a solution? Is it viable? Can we make money out of it? Are customers willing to pay? Is it feasible? Is the technology out there, or do we need to wait 20 years to make that happen?
Based on that, we decide whether we want to pass the project into a design phase, to really deep dive and design a solution, or whether we just stop and explore another one.
Laura Barrabia Gil Head of Exploration at Roche DISRUPTION PLAYBOOK: INNOVATION
Make the most of internal talent
We have internal hackathons where we ask employees to come together and have a two-day session in a room. We ask them to think about a business problem and then provide a solution in two days' time with a prototype or POC.
Also, we have an idea box where we ask our employees to submit any new ideas internally so we can bring them to life.
Think about how you can bring in the right people – that diversity, different mindsets – and also how you can bring people, processes, and technology together.
Rohit Kumar Director, Products and Innovation at Mastercard DISRUPTION PLAYBOOK: INNOVATION
Don’t lose sight of the overall goal
What I see very often is people get so excited by the tools and exercises you can do that they lose track of what they’re actually trying to achieve. You're not just trying to achieve a checklist of exercises that you've gone through, you're trying to say that I'm going to start with a mission and end with an output in the most efficient, yet risk free way from an outcome perspective.
We use our own proprietary way. It's four blocks – discover, design, develop, and deploy. Discover is really honing in on a problem statement. The most critical thing here is understanding user voice, […] going deep into the market and speaking to people, […] that's when you really have a sense of pain points, unmet needs, and aspirations.
Akshay Chopra VP, Head of Innovation & Product Design, CEMEA at Visa DISRUPTION PLAYBOOK: INNOVATION
Continuous innovation depends on nine key factors
Companies need to have a clear vision of their influential role in the industry and to discover their competitive differentiation to get the best business advantage. A specific culture is needed to create market disruption, visionary products, and excellence in customer experience.
Flexibility, collaboration, creativity, data analytics, design thinking, experimentation, agility, a good understanding of customer behavior, and expectations and knowledge of new technologies are key factors in achieving continuous innovation. The top management has to be enthusiastic about this mindset and promote this culture.
Mercedes Pantoja Head of Technology & Architecture at LATAM Airlines DISRUPTION PLAYBOOK: INNOVATION
Innovation can’t happen in a vacuum. To create real value and Break down silos exceptional customer experiences, you need horizontal collaboration across boundaries – functional, departmental, and geographical. But for success many organizations, particularly large enterprises, naturally prioritize vertical relationships, making silos a common issue.
The problem with silos is that communication may be ineffective and knowledge and data sharing become limited. As a result, resources are wasted, business functions become fragmented, and innovation flounders.
Although silos are difficult to overcome, it’s not impossible. In this section, we look at how you can break down silos to encourage a unified organization and create an environment where innovation can flourish. DISRUPTION PLAYBOOK: INNOVATION
The importance of culture
As the organization becomes bigger, it becomes very difficult to manage the silos being formed – even if they are close to the agile methodology, they have their own agile mindset, which is separate from other parts of the organization or other business units.
So it's a need for every organization to have the right culture in place.
Rohit Kumar Products and Innovation at Mastercard DISRUPTION PLAYBOOK: INNOVATION
Create shared success with a minimum viable product
One thing that really helps is to focus on minimum viable products because this can create a shared success story for all departments involved.
Once you have a successful minimum viable product, you can keep on growing the baby.
But you need to focus on communication and be aware of what your silos are able to digest.
Barbara Fuchs Head Business Model Innovation at Ivoclar Vivadent DISRUPTION PLAYBOOK: INNOVATION
Focus on the individual
In my opinion, corporate silos and culture are major hurdles for successful innovation.
There are many ways to respond to it.
One factor can be distilled: people and the individual. Individuals shape the culture of an organization. Innovation is fostered by consciousness, an entrepreneurial mindset, and trust.
Esther Seidl-Nussbaumer Head of Corporate Innovation at SIGVARIS GROUP DISRUPTION PLAYBOOK: INNOVATION
The benefit of a flat management structure
It’s important to encourage experimentation, and to keep the disruptive mindset alive without letting people fall into routine, process, and silos.
At LEO Innovation Lab, we have maintained a flat management structure and fluid team boundaries to encourage cross-pollination of ideas and a short distance to power.
Kristian Hart-Hansen CEO and founder of LEO Innovation Lab DISRUPTION PLAYBOOK: INNOVATION
Use the power of urgency to create cohesion
You need a sense of urgency to overcome silos.
If you look at, for example, a war room or a task force, everybody cross-functional is on board. They have one goal – to survive.
Urgency also makes people rethink how they work today and how they might work better tomorrow.
It's not easy. It needs a lot of C-level support, and it needs a cultural discussion mindset where you go into it, talk it out openly, and it must be transparent what you're doing.
Barbara Liebich-Steiner CDO and Head of Digital Strategy & Solutions at UNIQA Insurance Group DISRUPTION PLAYBOOK: INNOVATION
Digital technologies are fundamentally changing how industries create Digital and deliver value, and banking is no exception. Disruptive fintech startups have shaken up markets once dominated by large institutions, transformation customer expectations are soaring, and COVID-19 has increased the in banking pressure. While incumbents have responded with digital offerings of their own, there’s still a long way to go. Legacy systems, corporate culture, and compliance fears are among the obstacles hampering banks’ digital transformation efforts. But if financial institutions are to remain competitive into the future, digital transformation must be achieved.
In this section, we look at strategies for successful digital transformation in the financial services sector. Although the focus is on banking, many of the insights could be applied to any industry. DISRUPTION PLAYBOOK: INNOVATION
One of the biggest mistakes companies make
Digital transformation doesn't stop at "digital". Organizations must invest in people and build frameworks that enable empowered decision-making. Individuals need the flexibility to build the right teams. […]
One of the biggest mistakes that can be made during digital transformation efforts is believing that digital transformation is a one- time thing. Companies lose focus because they become invested in trying to “modernize” rather than build a modern business.
While you can modernize your technology, building a modern technology-driven business is different. The distinction is important.
Rita Waite Head of Payments BD & Innovation at Millennium DISRUPTION PLAYBOOK: INNOVATION
The rise of mutually beneficial partnerships
Users expect a smooth digital experience from their financial services providers. Traditional banks face a challenge in meeting these expectations as the creation of digital solutions is not their core expertise.
Fintechs, however, can nowadays fulfill high standards of compliance to enter the corporate banking world. Therefore, we are just about to witness a time of cooperation instead of competition in the banking and fintech space.
Matching traditional banking assets such as trust and clients with the digital solutions of fintechs will radically accelerate the innovation process.
Jan Enno Einfeld CEO at Finiata DISRUPTION PLAYBOOK: INNOVATION
Embrace collaboration over competition
The biggest blocker [of innovation in the banking industry] is seeing other banks as competition and not partners, especially within the same geographies.
Our real competition is coming from elsewhere, so let’s stop pretending that we can protect ourselves by trying to out- invest each other by funding startups and instead jointly develop or venture on new initiatives.
Anneli Bartholdy
Strategic Partner at Nordea, Digital Innovation & Product Ownership Commercial and Business Banking
At the time of publication, Anneli is no longer with the company. DISRUPTION PLAYBOOK: INNOVATION
How fintechs create fertile ground for innovation
In financial services, you constantly need to navigate between customer needs, technology, and regulation. To innovate and meet customer needs in new and convenient ways, partnering up with fintechs is crucial.
Fintechs focus on customer needs based on technology offerings, usually less restricted by legacy systems and regulation. That creates fertile ground for innovation.
Johannes Busse Independent Banking & Payment Expert DISRUPTION PLAYBOOK: INNOVATION
Two pitfalls to avoid
There are two possible failures that undermine companies' innovation efforts and deplete their budgets:
1. Experimenting with fancy technology, just because it’s fancy, only to eventually discover there is no demand for it.
2. Innovating in an area without an identified business value because, seemingly, everyone else is doing it."
Konrad Jarociński Innovation Lab Manager at Netguru DISRUPTION PLAYBOOK: INNOVATION
Four key steps for digital transformation
The risk management of the future requires technological improvements as well as a corresponding redesign of operational practices, structures, and controls. […]
Eliminating information silos, centralizing data collection and management, unifying platforms among all departments and lines of business, and automating inefficient processes are some of the key steps for digital transformation
Erhan Bilici Capital Planning and Stress Testing Officer at UBS DISRUPTION PLAYBOOK: INNOVATION
There is no one-size-fits-all process
The main challenge to digital transformation in banking is the lack of a defined scope or area of immediate impact.
The inefficient process of trying to apply digital transformation in a one-size-fits-all manner leads to suboptimal decision-making in the areas of project prioritization, personnel training or re-skilling, and platform and tooling choices.
Ismail Shomala Product Executive at gomoney DISRUPTION PLAYBOOK: INNOVATION
Align tech investments with business goals
Most “digital transformations” have failed. Out of $1.3 trillion spent on digital transformation in 2018, $900 billion went to waste. A large amount is spent on outside consultants and new technology that does not support the business strategy. “Digital transformation is not about technology,” but about company culture, a continuous journey towards digital excellence, and a radical management paradigm shift. This kind of cultural change will require a movement within the company.
Management should align tech investments with business goals — they should also lean more on insider knowledge than outside consultants. However, management has not been able to bring about these changes, making digital transformation unsuccessful. The reason is that there are so many incompetent men in the business. Therefore, individuals in boardrooms need to think more critically about what seems like a leadership trait versus what is an actual leadership trait.
Ron Ashraf Scrum Master at Allianz SE DISRUPTION PLAYBOOK: INNOVATION
Arianna Huffington once famously said, “failure is not the opposite of Failure and success; it’s part of success.” And although she wasn’t specifically talking about running an effective innovation program, she might as well have innovation been.
Innovation is an iterative process of experimenting, learning, adapting, and trying again. Its uncontrollable nature means that the chance of failure is high – some of the world’s most innovative companies, such as Amazon, Microsoft, and Google, fail regularly. But rather than being discouraged or punished, failure is celebrated and viewed as an opportunity to learn.
In this section, we look at the essential role of failure in innovation and how you can embrace it. DISRUPTION PLAYBOOK: INNOVATION
Without failure, there is no innovation
When managing risk, you want to eliminate failure.
When innovating, you actually want to promote failure – you want to learn fast and learn from your failures. If you're not failing enough, you're not being innovative.
Steve Suarez Global Head of Innovation, Finance & Risk at HSBC DISRUPTION PLAYBOOK: INNOVATION
What matters is learning from your failures
In reality, for everyone that works in innovation, failure is just part of your day job. At Deutsche Bank, we start small before we scale, so if phase one fails, we may change the strategy or the way we do things before the next level.
As long as you learn something from those failures, it’s something really well-embraced, accepted, and normal within an innovation function.
Nataly Nieves Reyes Innovation Specialist at Deutsche Bank Innovation Lab DISRUPTION PLAYBOOK: INNOVATION
Don’t get hung up on business or organizational improvements
Innovation is not about business or organizational improvements. It is not about doing old things in new ways. An innovation’s result is always unknown.
The goal and real value of innovation is verified knowledge coming from successful or failed projects based on market tests and experiments. From this, we can fastly find out whether the way we take will lead us and our business to the new quality.
Barbara Walensa PhD, IT strategy practitioner DISRUPTION PLAYBOOK: INNOVATION
How failure can be a good thing
[One of the biggest pitfalls of using prototypes] is assuming that because you've built a prototype, you have to stick with it.
You've built it, and now it has to be real. But if you built it and it failed, that's a good thing.
Veronika Bridgman Innovation & Design Strategy Director at Sprint Kingdom DISRUPTION PLAYBOOK: INNOVATION
When undergoing transformational change, don’t punish failure
The goal of innovation is not to customize existing topics, but to try to reinvent the process, a product, or even the business.
So you need to create the right work environment that allows people to be creative. You need to have an environment that empowers trial and error, and not in a personal mistake way, but in a “Yeah! Let's try this” mentality.
Jan Schütz Senior Innovation Manager at finstreet DISRUPTION PLAYBOOK: INNOVATION
Create an environment that empowers trial and error
Set bold aspirations for transformation, and make sure you understand why you need to transform.
Create alignment on the initiatives that will move the needle and fund them properly.
Avoid punishing failure since it is very easy to become risk-averse in an organization when making transformational change.
Mats Lundquist CEO at Telenor Connexion DISRUPTION PLAYBOOK: INNOVATION
One of the easiest ways to increase the odds of your innovation Validation and initiatives ultimately being successful is to validate your ideas and make data-driven decisions based on real customer insights. prototyping Using prototypes is a simple but highly effective way to do this quickly and, if necessary, with minimal resources.
Prototypes can be used throughout the innovation process – from testing initial assumptions with low-fidelity prototypes in the problem formulation phase to gathering user feedback with physical models in the design phase.
In this section, we look at how you can get the most out of prototyping. DISRUPTION PLAYBOOK: INNOVATION
The importance of incorporating data into your sprints
Data is sacrosanct, especially audience data. You need to have it.
You need to have your customers, potential users, or potential audience as part of your sprints, and you need to find a way to get it – it doesn't matter if you have any budget or no budget.
Veronika Bridgman Innovation & Design Strategy Director at Sprint Kingdom DISRUPTION PLAYBOOK: INNOVATION
Ninety percent of ideas end up in the trash bin
We're always trying to find opportunities for disruptive growth for Citi and our clients.
And the validation part of that is really important to what we do, to the point where we might kill 90% of ideas because they don't reach the client validation that we need.
Peter Collingridge EMEA Head, D10x at Citi Ventures DISRUPTION PLAYBOOK: INNOVATION
Using prototypes to speed up the development process
The normal development process in the automotive industry is long – it takes years to bring a new product into the market.
Our goal is to find new ideas and insights quickly, and with a timeframe of three to six months, the only way to evaluate if an idea is valid and will work in the market is by prototyping.
Sebastian Grimm Head of Innovation Lab at ZF Friedrichshafen AG DISRUPTION PLAYBOOK: INNOVATION
Learn quickly and distribute that knowledge
We very much have the philosophy in the experiments we run that the outcome cannot be predicted.
So we run experiments and validate the things we believe.
And ultimately, we believe that winning is about having the fastest cycle times and getting the learnings out of your experiments, and then being able to distribute this learning throughout the organization.
Maarten Boelens Innovation Manager at Rabobank DISRUPTION PLAYBOOK: INNOVATION
Let’s talk about innovation
Successful innovation isn’t easy – but you don’t have to figure it out alone.
Whether you just need a steer in the right direction or a complete overhaul of your innovation program, we can help accelerate your business down the path to success.
Drop me a line at:
Radek Zaleski Partner, Fintech Lead