For the majority of financial institutions, innovation is still hit or miss. We are all obsessed with it, we try to organize for it, find ways to execute it and deliver the benefits to members. Millions are spent compiling big data to figure what members want, possibly want or think they may want. Still, at best innovation often delivers only incremental results, and in 99.9 percent of cases completely misses the mark on the breakthrough innovations critical to long-term sustainable growth.
Clayton Christensen, Taddy Hall, Karen Dillon and David Duncan, co-authors of Competing Against Luck: The Story of Innovation and Customer Choice, have come to the conclusion that our long held belief that understanding the customer should get the highest priority has been wrong all along. In fact, members don’t buy products or services from a credit union: They hire a credit union to do a job. Innovating effectively is not about understanding customers – it’s about understanding the jobs your customers want done.
“The theory of disruptive innovation does not tell you where to look for new opportunities. It doesn’t predict or explain how, specifically, a company should innovate to undermine the established leaders or where to create new markets. It doesn’t tell you how to avoid the frustration of hit-and-miss innovation – leaving your fate to luck.”
The new theory discussed in this illuminating book is that when we buy a product, we essentially hire it to make progress and get a job done. If the product does the job well, we hire that same product again. If the product doesn’t perform, we start looking for a different solution. Your real job as a credit union is to understand what job your member is hiring you for, and then to do that job in a way that exceeds member expectations. Just think about Uber or Airbnb: “They were conceived, developed, and launched into a market with a clear understanding of how these products would help consumers make the progress they were struggling to achieve.”
Once you digest and understand the theory of serving customers as a job to be done, the point of innovation feels glaringly obvious. The opportunity for credit unions is that this thinking is rarely applied. Too often, companies turn inward.
“Even great companies can veer off course in nailing the job for their customers – and focus on nailing a job for themselves.”
How to avoid this pitfall? Create internal processes that adjust according to the needs of the job to be done, not what’s needed within your credit union. The need of the credit union should be secondary: The focus should always be on what matters to your member. No matter what.