It’s not that hard to train to someone to be risk-averse; even monkeys can be trained not to chase after rewards and benefits, Mick Simonelli, principal at Simonelli Innovation, said yesterday during a presentation at Celent’s Innovation and Insight Day in New York.
Simonelli, the former head of innovation at USAA, told the story of a famous experiment in the 70’s. Researchers put several monkeys in a cage with a bunch of bananas, and as each monkey went for the bananas, the researchers would spray all of the monkeys in the cage with cold water until the monkeys learned not to reach for the bananas. Eventually a new monkey was introduced to the cage, and when that monkey tried to get the bananas, instead of the researchers spraying the monkeys, all the other monkeys that had been sprayed previously beat him up. As the experiment proceeded, all of the monkeys that had been sprayed with cold water were replaced with new ones, and as each new monkey went for the bananas, the group would gang up on the new one and stop it from getting the bananas without needing to be sprayed.
So being the new monkey in the cage kind of sounds like being the new kid at school. But more importantly the experiment demonstrated the way that groupthink and fear of punishment can suffocate individuals’ desire to achieve something.
“I see that there’s some element of that in our organizations today that is risk-averse and discourages going for the banana,” Simonelli observed.
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If employees believe that their ideas will not be cultivated, or if they believe that they will be punished if their idea fails, then their organization simply won’t be able to innovate. Too often that is the case in large organizations, Simonelli explained, where people are invested in the ways that things have been done and are afraid of the risk inherent in changing or modernizing.
Most large organizations in financial services do have some kind of innovation function in their organizations. For some that could mean having regular brainstorming sessions or an annual or semi-annual innovation day, Simoenlli shared. Organizations with a more mature innovation function usually have an innovation lab with dedicated resources, staff and executives, he added.
But the ideal for a large organization to be truly innovative, Simonelli argued, is to be what he called “systemically innovative.”
“You need to have a system where ideas form throughout the organizations are encouraged, developed and funded… You don’t need a dedicated innovation group then. It is everybody’s function to innovate,” he explained.
Simonelli added that in thinking about what financial services companies are “systemically innovative,” he couldn’t come up with a single one.
But he also laid out an assessment for financial services companies to understand where they are on the maturity curve in becoming systemically innovative.
- Innovation Strategy. The first part of understanding where your organization is on the innovation maturity curve is understanding your strategy for innovation, Simonelli said. There also needs to be a definition of innovation that is accepted throughout the organization. If your organization doesn’t have that definition and strategy, this is a good place to start on encouraging innovation.
- Resources. Do you have staff that are dedicated to innovation? What kind of resources and budget are earmarked to support innovation?
- Process. “In innovation, process can be a bad word,” Simonelli noted. “Processes are associated with squelching innovation, which people say needs to be a free-flowing thing. But we are big organizations and we have to have processes.” So large organizations need to map out their internal processes and find which ones are or aren’t supporting innovation.
- Know What Works. Simonlli prescribed the following exercise: “Look at an idea you launched that was successful and learn from it. Trace its process through authorization, development and testing. This will give you new insight into your organization. On the other side, look at an idea that failed, did someone else launch it before you? Why weren’t you first to market? Where did the idea die?”
- Competitive Environment. Understand what innovation is happening in your market, Simonelli advised. “If you’re going to be a fast follower you need to know what’s emerging in the market.”
- Culture. Companies need to assess their culture and see whether or not it is encouraging, dismissive or outright hostile to new ideas. “If I took a seed and threw it on this table, it would just die,” Simonelli told the audience from his speaker podium. “Culture is the environment in which your innovation, your seeds, will grow.”
Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio