This month , three thought leaders— Navi Radjou, Luke Williams, and Alan Mulally—will share distinct insights on innovation when they address the America’s Credit Union Conference/ World Credit Union Conference in Denver.
Credit Union Magazine interviewed these leaders to examine what drives innovation and how credit unions can turn innovation principles into practice.
Powering the entrepreneurial economy
The idea of frugal innovation oft en focuses on saving money. But organizations also must be frugal with their time so they can be agile, says Navi Radjou, co-author of “Frugal Innovation: How to Do More With Less.”
The association of frugality with agility is very strong, according to Radjou. Born in India, Radjou often frames frugal innovation around the Hindi word jugaad, which means an innovative fix or an ingenious, improvised solution.
Large companies’ layers of bureaucracy, which are costly, reduce frugality. That obstacle doesn’t impede small organizations, which lack hierarchy.
“Agility means you save time, and time is your most valuable resource,” Radjou says. “That’s why we think being frugal is not only about saving money, it’s saving on time.”
Large organizations understand they must be nimble, but their structure prevents them from helping the microentrepreneur, Radjou says: “The heart is in the right place, but the body isn’t responsive.”
Credit unions’ modest size is great for two reasons, he notes: “One, they can operate with more agility. But more important, they can better empathize with microentrepreneurs.”
Local and community-based lending means you’re likely to run into customers at the grocery store or coffee shop, for example. Because you can’t run away, the relationship has a certain empathy, more accountability, trust, and familiarity.
“One of the interesting ideas is the notion of proximity,” he says. “The closer you are to the customer, the more you’ll keep costs down.”
Conversely, the more distance between a business and the customer, the less trust exists. This leads to higher interest rates, for example, as a way to “de-risk” the tenuous relationship.
“The smaller you are, the closer you can get to the next generation of innovators and job creators—the job makers, not the job takers,” Radjou says.
The new generation of entrepreneurs won’t have MBAs and a lot of venture capital. They’re frugal innovators who use less capital initially to support their ideas, with the notion of serving the community and having social impact.
“They have a social heart but they may not have a business mind,” he says. “Instead of just lending them money, they could use money management services, too.”
The credit union can become a hybrid organization that provides capital, advice, and knowledge to support the growth of these modern entrepreneurs, who are more interested in production than consumption.
“I think this might actually be the golden age for credit unions because you have to finance frugal economics,” he says. Venture capitalists aren’t likely to work with grassroots entrepreneurs, Radjou says, “and neither will traditional banks.”
Credit unions have two interesting roles. One is to fund the community structure—the kind of locations and spaces where people can actually build products. And credit unions could also support the sharing platforms with financing via microloans.
Radjou suggests filling a complex need by connecting the customer with a partner network: “When I present this idea to big banks, they look at me like, ‘Are you kidding? We will never share customers!’”
Credit unions already do this kind of work with credit union service organizations and peer-to-peer support.
“If customers have a complex need, you don’t have to put it all together yourself,” he says. “You can provide a piece of that puzzle and link the member with other credit unions that might have complementary capabilities….people love you because they feel you understand their wants or needs in a more comprehensive way.”
Innovation as a skill
Luke Williams fights against “innovation fatigue”— the phenomenon where business leaders start rolling their eyes whenever they hear the word innovation.
For many, innovation is just a marketing term or superficial buzzword, he says. But innovation is incredibly important to future organizational success.
Through his 2011 book “Disrupt” and speaking engagements, Williams attempts to codify innovation and make it practical for businesses to innovate on a day-to-day basis.
“Innovation is a skill that anyone can learn, regardless of their background,” Williams says.
Williams grew up in Melbourne, Australia, before moving to the U.S. to work for Frog, one of the world’s most influential innovation companies. In addition to serving as a fellow at Frog, Williams is the executive director at the NYU Stern School of Business.
“The feeling that disruptive ideas are high-risk is erroneous,” Williams says.
Businesses that innovate correctly risk time, not resources. By the time you have thought through a disruptive idea and brought it to a point where it’s ready to implement, the benefits should be crystal clear, according to Williams.
Real-world innovation must be done while the existing business keeps moving. Williams likens the process to working under the hood of a car with the engine on.
“At the same time you’re keeping that engine running, you need to find a way to change the fan belt,” he says.
Williams recommends managing a portfolio of unconventional strategy options that balance out the standard portfolio of incremental strategy options—the pipeline of improvements you’re already planning.
Leaders should conduct small experiments with these unconventional options to gauge whether they’re scalable.
Williams says he hopes to change how credit union leaders think about innovation by:
1. Building awareness. Every industry faces an accelerating pace of change. And change in one industry affects other unrelated industries. Think about the effect of smartphones on everything from entertainment to taxi services.
2. Adjusting attitudes. The “spot and change” approach to innovation—where companies try to remain agile to adapt to new trends—is a step in the right direction, Williams says, but it’s a “dangerous approach.”
That approach only addresses the most obvious symptoms of change. Instead, you have to fundamentally rethink the most cherished assumptions of your business. “Your attitude must be one of leading disruptive change,” Williams says.
3. Offering an approach. Ask the right questions about your business, the consumer, and the competition. Leaders must learn how to innovate using all the ingredients available to them.
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