Never in my entire life have I had a genuinely original idea and I don’t expect to. Indisputable breakthrough thinking and/or truly revolutionary products are extremely rare. Most alleged new ideas, products, and services are, in fact, evolutions of previous concepts.
Isaac Newton famously acknowledged this when he said: “If I have seen a little further it is by standing on the shoulders of giants”. One of those giants was Galileo Galilei who, like his more contemporary scientific genius, Albert Einstein, shattered the foundations of our beliefs.
It is fairly easy to rearrange prevailing information and improve existing products and services. But how many of us can be creative to the point of changing the status quo and making others think and behave differently? The well of human ingenuity may be bottomless but, in my view, it produces few Eureka moments.
Businesses are always being admonished to innovate or perish. While I accept that innovation is an essential ingredient to business success, most innovation cannot be classified as ground-breaking discovery. Rather, it is the product of incremental change. McDonalds did not invent take away food but perfected the process for delivering fast food through franchisees.
Similarly, the car I drive today has far more gadgets and gizmos than the first car I drove 48 years ago, yet they are fundamentally the same. Both have four doors, four wheels, and most – 92%- still predominately run-on petrol or diesel.
Only Henry Ford can lay claim to inventing the first massed produced car – the Model T – which rolled off the assembly line in 1908. Today’s modern cars are not brand-new inventions but the result of continuous, small step improvements. (Interestingly Ford’s mass production car technology was the genesis of the modern-day production line and specialisation).
Even in my own industry of upbringing, financial services, I cannot think of any radical, game-changing products over recent years. Yet again, most innovation in banking and finance stems from process improvement and not breakthrough products. Innovation in financial services lies more in process and organisational change than in new product development. An example of this is the home loan.
Thirty years ago, it still took over a week for a bank to approve a home loan as the approval process was centralised in head office. Over time, banks decentralised decision-making and empowered area offices to approve loans and this cut the approval time to about two days. Today, thanks to even more streamlined approval processes, including embracing technology, and fierce competition in the home loan arenas, some credit providers approve loans within two hours.
So, what has changed over three decades is not the product per se but the efficiency of the processes used to deliver it. Innovation in financial services is driven by a culture of continuous improvement. Organisational culture, in turn, is established by the leader. Innovation, therefore, is a function of leadership which is why I always worked hard to create a culture of continuous improvement at whatever financial institution I was privileged to lead as CEO.
More and more in recent years, innovation is driven by fast paced advances in the uses of information technology (IT), including quantum accounting and the like. Artificial intelligence (AI) is increasingly leading the way in providing lighting quick answers to complex issues that consumers are experiencing with the goods and services that they use. If market participants do not keep up with innovation, then they will ultimately perish.
As business owners, we must keep up with the innovation pack to remain relevant and viable. One way to do this is to empower your team to constantly look for ways to innovate. Innovation is a continuous change management process and everyone has a role to play. Your staff, can I suggest, should be allowed to develop fresh solutions and offer new insights into how you can better serve your customers.
An example of rapid innovation which is changing whole sectors is Financial Services which is currently going through radical change. Cash is no longer king with many businesses no longer accepting cash. Financial institutions are quickly withdrawing cheque accounts and they will likely be completely defunct by the end of 2024.
Soon enough, branches of financial institutions will no longer exist as face-to-face transactions will no longer be necessary. When I began my banking career 47 years ago there was a branch of every major bank in virtually every suburb and town throughout Australia.
The alternate, of course, to cash and cheques, is electronic payments as well as other forms of exchange but these are also changing rapidly with the inclusion of Bitcoin and other cryptocurrencies as well as Non-Fungible Tokens as a means of exchange.
Collectable items have moved into the virtual world using trendy new technology called non-fungible tokens (NFTs). An NFT (also called a crypto collectable) is a one-of-a-kind asset which can be bought and sold like any piece of property even though it has no physical form of its own. Almost anything can be minted as an NFT including digital art, music videos, film clips, video games, luxury goods, and sports collectables such as football cards. I suggest you read up on NFT’s as soon as you can as well as Block Chain technology as both will increasingly continue to impact our lives.
In the building industry, where many readers of this opinion piece operate, there are also huge changes occurring due to technological advances. As one example, with the aid of research and development (R&D) tax breaks provided by the Federal Government, a robotic technology company has designed, developed, and built robots to address global needs. Most recently, they have developed the world’s first mobile robotic bricklaying machine and system, capable of safely working outdoors in uncontrolled environments with speed and accuracy.
In May 2015 their first robot had a bricklaying rate of 225 bricks per hour. Subsequently the company commenced development of a more advanced and larger robotic bricklaying vehicle designed to build structural walls faster, safer, more accurately, and with less wastage than traditional manual methods.
It can now lay over 1,000 standard bricks equivalent (“SBE”) per hour. It uses adhesives and/or bed mortar and can execute the automatic loading, cutting, routing, and placement of bricks to build a house. The robotic brick layer is truck mounted and self‐powered and its 30‐metre robotic arm allows completion of all brickwork from a single position. All of this requires no human involvement.
Just think about the implications for staff, costs, and completion times and with almost no defective work possible!
Moving back to the main topic of innovation, this leads me to my final observation about innovation. I have long believed that the greatest innovation is the ability to provide first-class service. I have never met a business leader who says that service is not important. Yet how many organisations truly deliver outstanding service? Promising to provide great service is easy on paper but actually delivering on that pledge day-after-day is incredibly difficult and comes down to the quality of the workforce.
For me the most important ingredients for sustained business success in 2022 and beyond is continued innovation combined with outstanding customer service.
You should aim to build your continuing business success on pragmatic evolution rather than illusory revolution. Reach for the stars but in doing so take small bite size steps rather than giant leaps.
I hope your business; in whatever industry you are in, embraces innovation and excellent in-service delivery so that you do not perish, but survive and prosper.
This opinion piece is provided by John (JT) Thomas, a 46-year veteran of the financial services industry and since 1987 a specialist in commercial mortgage funds. Considered by many to be the father of the modern commercial mortgage fund sector, JT helped establish and then managed – for 17 years – what became the largest and most successful commercial mortgage fund in Australia – The Howard Mortgage Trust – with assets exceeding $3 billion. Under JT’s stewardship, investors never lost one cent of their investments and indeed, investors always received competitive monthly returns. JT was also Chair of the $40 billion mortgage trust industry sector working group.
JT has been proudly involved with Princeton for eight years and sits on both the Princeton Credit Committee and the Princeton Compliance Committee as well as being an advisor to the Princeton Board.