Turning Market Disruption Into Innovation Opportunity

Jim Marous:
Hello, and welcome to Banking Transformed. I'm your host, Jim Marous, owner and CEO of The Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous:
McKinsey found that 90% of executives believe that COVID crisis will fundamentally change the way they do business over the next five years. Unfortunately, only 21% feel confident they are prepared to capture this new growth opportunity. At a time when technology solutions are abundant, an innovation culture is required more than ever in banking. This is because status quo is not an option in a marketplace that is changing faster than ever before, with competitors of all sizes creating solutions to scale. We are fortunate to have Amy Radin, founder and principle of Pragmatic Innovation Partners and author of the award-winning book The Changer Maker's Playbook: How to Seek, Seed and Scale Innovation to Any Company.

Jim Marous:
Welcome to the show, Amy. I'm so happy to have you on the show today, not only because of your extensive history in financial services but because your perspective on innovation is so well tested in the trenches, during your tenure at Citi, E*TRADE, AXA and elsewhere. Your book, The Change Maker's Playbook: How to Seek, Seed and Scale Innovation in Any Company, is really the users guide for any person or organization involved in the innovation process. Can you share a bit about your background and how you came about writing this book?

Amy Radin:
You know, I think what happened with me, and it was probably influenced by the fact that I grew up in a family business, my dad owned a corner drugstore in Brooklyn. When you're in a family business, food on the table and your wellbeing is very much a function of do you understand your customers needs and are you anticipating them, and really giving them a reason to come to you when they have a lot of other choices. I'm sure, although I hated working in the store, that it was a big positive influence on me.

Amy Radin:
But, throughout my corporate career I was just always the kind of person who was attracted to what's new, what's next, what's coming. So even though it was many years before I actually had the word innovation or digital in my title, I always worked on the front end of what was happening. When I decided to leave the corporate world and start a new career, I saw that, even though at that point we were over a decade into the digital era, that people were still struggling with the same challenges, over and over again. I said, "You know, I have this operator perspective of working in a very large, very complex, very results driven and financially oriented financial institution with Citi Group, and was surrounded by people doing that kind of work, and led teams of people doing that kind of work." I said, "I really want to share not just my expertise, but the expertise of other people who've taken on this challenge and bring the lessons learned to help those innovation operators."

Amy Radin:
The only other thing I'll add is, God knows the world doesn't need another book on innovation. So I said, "What's going to be different about my book?" And, what I saw pretty quickly is that, among the top titles on innovation, they're all coming primarily from academicians and consultants. I said, "What's different about me is that I was actually in the hot seat, and I had to look my CFO in the eye and deliver results." That's a different perspective. That's really how I came to do it.

Jim Marous:
Well, it's interesting because your book, you say that it's a playbook. That was interesting because from going through your book, it was interesting that it really isn't theory, it's really practice. It's pragmatic, it's very implementable. But, your book was published in 2018 and to say the least, a lot has happened since then. Did the foundation of your book, to seek, seed and scale innovation, stand the test of time during the disruptive period of the pandemic?

Amy Radin:
Yeah, absolutely. That's a great question.

Amy Radin:
Coincidentally, the book won a really nice award in 2020, a best book award from an organization called Book Excellence. At that point, my publisher said, "Well, why don't we do a paperback?" I asked that same question, "With everything happening, is it still relevant?" I actually read the book again and I was like, "You know, except for the fact that some of the people ... " because the book included stories and case examples from about 50 other people who I interviewed and did research with. Except for the fact that some people were now in new roles, some of their titles had changed, the advice was not only still relevant, but it was intensely more relevant because the need to build the right capabilities, the right culture, the right teams, the right methodologies to get from an idea to something at scale that has value to customer, and has commercial value, has only intensified.

Jim Marous:
Right. Yeah. And again, your playbook was really how to do it, really as I said earlier, into the trenches. As you said, that doesn't change, that's still very important.

Amy Radin:
It doesn't change. And in fact, when I wrote the book I had this vision. I guess being a pretty practical person, I had this vision of the book, it would be on the shelf or in the Kindle and it would be dog-eared, and my readers would be folding down the pages or sticking in the Post-Its for they'd run into a problem and they say, "Well, let me go back and see what Amy would do." I meet readers today and that's exactly what they're doing, so it's very, very gratifying.

Amy Radin:
But yeah, the needs only intensified.

Jim Marous:
So in financial services, many organizations are reassessing the perspective on innovation. Unfortunately, our research that we did for The Digital Banking Report found that while financial service executives understood the importance of innovation, few know where to start or how to structure innovation in their organization. Where should a bank or credit union start?

Amy Radin:
I think a lot of times what stops people is they ask that question, they don't know where to start. When you look at the whole issue, it seems so overwhelming. You think about companies like Apple, or Google, or Netflix and you go, "Oh my God, how am I going to do that? I'm sitting in a bank, where the standards, and the understanding and the culture is so different."

Amy Radin:
It's funny, just last week I was speaking with the COO of a pretty major North American bank, and they have an ambition to innovate their customer experience. Which obviously, for banking, is one of the most fertile grounds and one of the most important grounds for innovation. This is a really smart guy whose doing a great job running his business and really cares about his employees, and his customers and his brand, checking a lot of the right boxes. One answer is you've just got to start, like the Nike slogan "just do it."

Amy Radin:
But at a practical level, let's assume that one of your top opportunities is the customer experience. Start by picking out what are some of the most important aspects of the customer experience for you. So say, the account opening process, or the first 60 days of owning the product. Map out the customer journey, bring together a small, cross-functional group of people who really understand what's happening with the customers, do a journey map. Then say, "Okay, within that journey, what are the critical moments of truth? And, what are the biggest pain points that we think people are experiencing today?" Of course, you can validate all this with your internal data. If you're doing customer service tracking and stuff, you have data to back this up. And then, you do a map of okay, what's the go-to journey? How do I want it to be? And, you look at your gaps.

Amy Radin:
Those are great starting points for innovation. How am I going to innovate the moments of truth in the customer experience, to really delight my customers, so that I can differentiate my brand in a way that makes me a preferred financial institution. You can see there's discipline and method to how to do it. Very much as we were talking before, I draw from my background as a direct marketer. I have a real process orientation. It's that you can apply some real process and discipline to do this, it just may not be the methods and process that you apply to running something steady-state.

Jim Marous:
Well, it's interesting. We interviewed Dom Venturo, who is now in charge of digital transformation at US Bank, but he also was in charge of innovation in the past. It's interesting because he said, "Too often, financial institutions see innovation as adding something." And he says, "Now more than ever, we're speed and simplicity." And you talked about new account opening process, where it's so important. Sometimes innovation is actually doing that journey mapping you mentioned and removing parts, removing the process so that you can have an experience like opening an Apple Card or opening an account at Shine.

Jim Marous:
In the past, many financial institutions built innovation labs that looked good to the investor public, but many times did not move the needle in regard to transformative improvements. Innovation labs, are they productive or simply are they usually innovation theater in your perspective?

Amy Radin:
I'm skeptical about some of the labs that I've seen. I've definitely seen situations, sadly, where the CEO and the executive team want to put up a lab because the board is asking, "Where's the focus on innovation"? So they say, "We're going to go spend a couple $100 million, we're going to pitch a tent in Silicon Valley and put up a lab. And, we're going to keep it really far away from the business because we don't want them to ruin it."

Amy Radin:
I think it's like anything that you're investing in in your business. Financial institution people are really good at doing business cases and figuring out, "What am I going to do with my money to grow my business?" You have to say, "What's the problem I'm really trying to solve, and what's the best way to solve it?"

Amy Radin:
One of the things, frankly, that we struggled with a little bit at Citi but my team had a firm opinion on it was yeah, surely there's a lot of bureaucracy, and rules and risk management in a big existing successful business that may not be terribly helpful to innovation. In fact, some of the stuff could innovation unintentionally. However, there's also incredibly valuable institutional knowledge and you've got highly talented employees who see the future and want to be part of it. Ultimately, as you come upon and validate innovations that you want to scale, you need that mothership, you need that organization to achieve rapid scale. Unless you plan to build a whole separate brand, and that's something completely different. But ultimately, to scale quickly, I'd say most financial institutions, you're going to want to come back to the fold.

Amy Radin:
So maintaining that balance of having a team that are able to operate in a way that's appropriate for innovation, it takes sponsorship from an executive who can figure out what are the times to break the rules, because the rules of innovation are different, versus saying, "We're going to put these people on the other side of the country or in whole different place," and deliberately divorce them from the organization. I think it's a real loss. And also, it's unbelievably demoralizing to the people who you've got in your organization. It's not for everybody, but the people who see the future and have a career runway get it, and they want to see these efforts succeed. They may not know what to do, they may feel personally at risk, but those are all issues that can be addressed.

Jim Marous:
You know, it's interesting. As with any component of digital banking transformation, the key to success is really leadership, as you mentioned, that fully supports the process, and a culture that reinforces the process at all levels, throughout the organization.

Jim Marous:
From your perspective, and you've worked for banks and worked with banks for years, how can this be achieved by leaders and employees who have never before seen innovation as part of their job? How do they reconstruct their mindset to support innovation culture, and even build innovation culture, if they've never seen what it feels and works like?

Amy Radin:
Yeah. Well as I said a couple of minutes ago, you need that top executive sponsor. We were very fortunate, my team particularly at Citi, that we had an incredibly tremendous sponsor in the CEO, the person who was CEO at the time in the credit card business, who really saw the need to carve out the breathing room and the resources to really focus on innovation as a specific priority of the business. I think if you don't have that at the very top of the house, it can be very difficult.

Amy Radin:
However, that's a requirement but that is not going to guarantee success because you still need to build credibility with the teams around you. I think one of the ways to do it is you've got to find ways to collaborate with the people, with your colleagues and peers in the business, and help them see their success in what you're trying to do. One way to do that is you try to attack business problems where innovation can be the answer and the business problems are on the priority list of those executives.

Amy Radin:
It also takes a lot of communications, it takes some education and frankly, it's not for everyone. My team, we would look around the organization and say, "Who are the people who are really excited about this, and up for the challenge and want to be part of this?" Invite them, all day long, to our brainstorm sessions, include them, they were the people who posted for internal transfers into my organization and things like that. Then there are people who are, "Okay, I'm open-minded but you've got to show me the way." Then there are people that say, "I don't believe, we don't need to do this. We could just do more of what we're doing." You know what? You're not going to win everybody over, that's the nature of change.

Amy Radin:
So just work with the people who are completely, "Wow, we want to go there. How fast can you up us," and the people who are open-minded, and just don't even come with the agenda that you're going to convince everybody. I think that's really frustrating and it's not the best use of your energy.

Jim Marous:
Now, is that the biggest mistake organizations make when trying to implement change, is trying to force it? Or, are there other mistakes that organizations make in trying to truly require the embracing of change?

Amy Radin:
If everybody agrees, you're probably not innovating hard enough. It's like if the things that you're experimenting with are always succeeding, if you never have failure in any of your tests, then you're probably not pushing the envelope as hard as you need to.

Jim Marous:
As we look at change, and speed of change has obviously become a big issue since the pandemic, that financial institutions now realize, we have done research that shows that organizations rank themselves actually lower than they did before the pandemic on innovation culture and being able to implement leadership. What's interesting is one of the ways that organizations have done this has been partnering with solution providers or even fintech competitors to create innovative solutions.

Jim Marous:
How important is speed and simplicity in the process, and the ability to open your mind to partnering with outsiders?

Amy Radin:
I think it's really useful. One of the things that I think has helped me in my career, and I think it's a trait of changemakers and people who enjoy this work, is being curious, and externally and market focused.

Amy Radin:
When you're in a financial institution, you've got a pretty full plate, you've got a lot to do. It's very easy to just be absorbed, heads down, on what you have to deliver today, and tomorrow and next week. Anything you can do to increase your focus on what's going on outside is very helpful, and that's where external relationships, external partners, bringing in technology companies is incredibly important. But, that culture of curiosity where you're looking outside and looking beyond the obvious suspects.

Amy Radin:
One of the things that we used to do, we really liked, I was really encouraged by one of my innovation mentors to look outside my sector for ideas. Because if you're always looking in your own sector, you run the risk of just being a follower and a copycat. People move around from company to company, so it becomes incestuous and very group-think oriented, so you diminish the chance of being innovative.

Amy Radin:
We were very interested, for a while, in what we could learn for example from the weight loss industry. Why is that? Because people, unfortunately, manage their health sometimes similarly to how they manage their money. You have aspirations, you know you should save for retirement, you know you shouldn't run a big balance at your credit card bill, you know you should lose 10 pounds. But, what happens? We got really good learnings from looking how do people manage their health, and what does that suggest about innovations in how we can help people with their financial needs?

Amy Radin:
It's just anything you can do to increase your external view is a really, really important source of ideas.

Jim Marous:
I probably should have started with this question, now that I think about it. But, when we define innovation, we look at innovation, as humans in this organization, we sometimes think it's something new, and exciting and way out there. Does innovation even have to be something that's brand new and disruptive? Or, can an innovation simply be an improvement on a current solution or an introduction of a solution that may already be in the marketplace but not for my institution?

Amy Radin:
I saw data years ago, one of the innovation consultancies that we worked with presented us with data showing that over 90% of innovations are incremental. This is data from the last decade and the market value of disruptive innovation may be greater. But, if you're in a financial institution, there is an incredible amount of innovation you can do, going back to the customer experience, around making it more delightful and easier, and by the way also probably more cost effective, for your customers to do business with you that can scale rapidly, that can impact your bottom line. And frankly, can help build credibility to start to do some of the more out there stuff.

Amy Radin:
The other thing is you don't know, from the starting point, if something's going to be disruptive or incremental. I wouldn't recommend to work and saying, "Okay, today I'm going to start on a disruptive innovation," you have no idea. You have to say, "Today, I'm going to start working on solving a customer problem that I have reason to believe is significant to a large number of customers. That, if I'm able to solve this problem in a way that's differentiated in their eyes, I can impact certain drivers of the business model." It will attract more customers, it will deepen the relationships with my customers.

Amy Radin:
You know what? As you iterate, and continue to build, and grow and expand upon what you learned, it could become disruptive. But, you can't label things from the get-go. It's just not productive.

Jim Marous:
So your background is pretty much the same as mine, with a long tenure in direct marketing. From your perspective, how does data analytics and modern technologies play into the innovation process overall?

Amy Radin:
For me, and as we were saying before, having grown up, chapter one of my career was I spent 14 years at American Express as a direct marketer. So first of all, world class company that, even before customer experience was a thing, a very, very customer focused company. Where everybody, across all functions, felt accountability for their impact on how customers were treated because we knew that that was what gave us premium pricing advantage and all kinds of benefits in the market. I saw the connection between ... What does a direct marketer do? They work with large amounts of data and technology people, to deliver personalized products, and services and experience, [inaudible 00:21:17] messaging, to the audiences that they want to serve. When companies started calling, 20 years ago, about all of these Dotcoms that were starting I was like, "Wow, I have really transferable skills."

Amy Radin:
I was very fortunate the have the opportunity to go to Citi to lead the digital transformation in the very early days, where it was really almost a white slate. The direct marketing skills translated very readily and I still think they do. It's got that discipline, and process orientation and structure. But also, what's really great about it is that experimentation is engineered into the business model. That's so core to having an innovator's mindset and an innovation process, is that you're constantly trying things, you're experimenting, you're testing and learning. You see tests that don't work as learning opportunities not as failures, things that keep helping you move forward to the right answer.

Amy Radin:
It was a great ... Who knew, at the time. I went to work for Amex because it was just a fabulous brand, to do marketing in financial services. But it was a fantastic foundation for the latter parts of my career.

Jim Marous:
Let's take a short break here and we'll recognize the sponsors of the podcast.

Jim Marous:
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Jim Marous:
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Jim Marous:
Welcome back. I'm joined today by Amy Radin, founder and principle of Pragmatic Innovation Partners and author of the award-winning book The Change Maker's Playbook: How to Seek, Seed and Scale Innovation in Any Company. We've been discussing the importance of innovation in post-crisis mode.

Jim Marous:
So Amy, your book talks about changemakers, those who dream big and are also committed to the execution of ideas. Besides this broad definition, what differentiates a changemaker in your perspective?

Amy Radin:
Yeah. Well, there are a couple of things. Things that really come top to mind, as we already talked about, definitely curiosity. You are the kind of person who asks the next question like, "Why is it like that?" As opposed to, "Oh, that's wrong." So you see possibilities, you solve problems by collaborating.

Amy Radin:
This myth of the changemaker or the innovator as a lone wolf I think is really just that, a myth. People hold Steve Jobs out there as a lone wolf, but Steve Jobs surrounded himself with some pretty incredible people that were essential to making Apple become the world's most valuable and most admired brand. You see those possibilities and you want to execute to create the future, and you're not held back by fear. I think fear is one of the biggest derailers of innovation.

Jim Marous:
Oh, yeah.

Amy Radin:
Don't get me wrong, I have plenty of anxiety about some of the things that we've tried over the years with the teams that I've been part of, but you're able to keep that anxiety in check. And, you surround yourself with great people. So again, this spirit of collaboration and understanding that it really takes a village to make this stuff happen.

Amy Radin:
I think at the end of the day, you want to make a difference.

Jim Marous:
You know, it's interesting. You talk about those people that can view things and not be fearful. It's interesting, because it's something that you can grow into, security, and confidence and things like this. As many of us found out, sometimes you're thrown into a fearful situation and come out alive, and you say, "Oh okay, I can handle this. I was probably afraid of something that wasn't as big of a deal as I thought it would be."

Jim Marous:
Overall, what is the biggest opportunity you see in the financial services industry, coming out of the pandemic?

Amy Radin:
I think that, for financial services now, clearly around customer experience. If there's one thing that everybody's talking about and that we've seen happen through COVID is people have embraced technology and a set of digital behaviors to do things they never would have done before. In healthcare, telemedicine visits are up 600% since 2019. I'm sure you know people in your life, and I definitely know people in mine, who would never have had a doctor's visit on telemedicine. And I think in financial services, people are in general integrating digital into their lives much more than anybody imagined would be possible in such a short span of time. So I think that's the area where financial institutions need to focus.

Amy Radin:
I think as you look at the generational transitions, as people we call digital natives, they're starting to own the economy. Having a digital-first, digital centered ability for people to bank, particularly on mobile devices, but that integrate with other channels and it's the old world relationship, is going to become table stakes to have productive customer relationships across all the products and services that banks offer.

Amy Radin:
That, at the same time, creates the biggest threat, because innovation isn't the kind of thing that can operate with an on-off switch. Companies try. "This year we don't have the money, so we're not going to do it." Off. "Okay, now we really have to do it." On. The problem is you need to be in the game, you need to be building momentum all the time, and testing and learning all the time. You can't jump in and out, you have to constantly be in the game. I think that's the risk for leadership teams that don't see that, they will be caught flat-footed, and because change is happening more and more rapidly, it'll risk being left behind.

Jim Marous:
So finally, is being an innovation leader a function of asset size or ability to invest a large sum of money in technology, analytics, human resources and R&D, or can any size organization differentiate through innovation?

Amy Radin:
That's a great question. I have to tell you, I left the corporate world seven years ago and I started to engage with early stage startups, and it was because I wanted to be on the frontline. I said I wanted a front row seat to what's next. One of the good things about being at a leading financial services brand is everybody wants to do business with you, so it's pretty easy to stay connected. Once you're on your own, it's a little different.

Amy Radin:
So I started to engage with early stage startups and the thing that really blew me away, almost from the get-go, is how much they get done with so little. In a big company, you want to do a customer insight project, oh you need a couple $100,000. A founder at a startup? They call six people who they find on social media and interview them. You know what? It's good enough. I think resources do not need to be an obstacle at the very earliest stages, when you're trying to just figure out, "Am I onto something that has merit?" That takes grit and a little creativity, maybe permission or maybe forgiveness from your management if you cross a little bit of a line. But, I don't think you need a ton of resources.

Amy Radin:
If we have time for a quick story, I'll tell you one of the stories I tell in my book is about a medical device entrepreneur who wanted to create ... You can imagine the standards for medical device approval are incredible in this country. He built his first prototype, which was this inflatable device to cushion people falling. Falling in the United States is a multi-billion dollar cost to the medical establishment. His first prototype was built off inner tubes of tires from cars in a junkyard that he took to his trailer and had stitched up for a couple of bucks. That initial prototype was enough of a proof of concept to get enough early stage angel seed money to get to a real prototype, that eventually got him an agreement to conduct a legitimate experiment with a leading hospital.

Amy Radin:
I always think about my friend Drew and the junkyard and I go, "You know, your size is not an excuse." You've got to look for a way and be really creative.

Jim Marous:
Yeah. A great way to end the broadcast because everybody I ask, I ask can small organizations do whatever we're talking about because I think a lot of times, organizations think, "Jeez, we talked about these great ideas and we can't do it." And, you can. The reality is, success can be scaled and still, the dynamics of serving the community is still key for the smaller organizations and that's, in and of itself, a way to get community involvement behind your innovation.

Jim Marous:
So Amy, thank you so much for being on the show today. It's great to have you, great to have you talk about your book. How do people get your book?

Amy Radin:
Well, you can go to any of the online etailers, clearly Amazon, Barnes and Noble, everybody else. You can also visit my website, [email protected], or email me. But, amyradin.com if you want to sign up for my newsletter. But definitely, you can buy the book through any of the online etailers. If any of your audience are interested in a bulk purchase for their team, you should just contact me directly because I can arrange that at a favorable price.

Jim Marous:
Great. Thanks for being on the show today, Amy.

Amy Radin:
Thank you so much for having me, Jim. It was really fun to talk to you.

Jim Marous:
Thanks.

Jim Marous:
Thanks for listening to Banking Transformed, rated as a Top Five banking podcast. I genuinely appreciate the support you've provided since we've started this endeavor. If you enjoy what we're doing, please be sure to follow Banking Transformed on your favorite podcast app. In addition, take 30, 45 seconds to show some love in the form of a review, it means the world to me. Finally, be sure to catch my recent articles on The Financial Brand and check out the research we're doing on digital banking transformation, the future of work in banking, retail banking innovation and the changing dynamics of financial marketing for The Digital Banking Report.

Jim Marous:
This has been a production of Evergreen Podcasts. A special thank you to our producer, Leah Longbrake, audio engineer, Shawn Rule-Hoffman and video producer, Will Pritts. I'm your host, Jim Marous. Until next time, make every day a learning experience.