The Innovator’s Purpose: What’s Missing When We Try to Change Financial Services

Study after study shows that there’s no direct correlation between profitability and expenditure on innovation. Simply increasing expenditures on R&D neither boosts nor damages profitability. We know this intuitively: If it were easy to increase profits simply by spending money on R&D, everyone would do it. It’s not lack of money or good ideas that makes it difficult to achieve profitable innovation. In fact, good ideas in the workplace are often discouraged or never acted on. You could fill a library with strategies on how to counter this effect: Change the design of your organization, build diverse teams, recruit different people, set stretch goals, improve communication among executives – all this and more in hopes of influencing how profitable your innovation will be. There are vast resources available, but how do you use them effectively? And when should you apply them? For generations, executives have struggled with these questions. Often Overlooked: Purpose Purpose appeals to our sense of what is right and what is worthwhile. In the credit union movement, it is what motivates an individual or the organization beyond the drive to make a living and feed their families. Leaders of the most successful companies identify a purpose that fits the aspirations of their colleagues and drives the business forward. A deeply-satisfying purpose taps into established moral ideas. Many tech companies find their purpose in the desire to discover something new and exciting. Google, IBM and Intel are grouped under this over-arching purpose. Some companies are driven by the pursuit of excellence: Apple comes to mind, or Toyota with its Kaizen mindset, continuously improving all functions and involving all employees from the CEO to the assembly line workers. A third successful purpose is heroism – the drive to win and succeed above all others. Any sports team fits the bill, as do Amazon and the original Ford Motor Company. Last but not least is altruism, the desire to help others. Purposeful efforts lead to enhanced organizational effectiveness. The reason is straightforward. The greater complexity of today’s global marketplace demands a higher degree of interdependence than independence, more attention to cooperation than competition, and greater loyalty to the organization than to the individual. Such changes require altruistic thinking on the part of both the individual and the organization to succeed and to innovate for the future. When shared among colleagues, purpose encourages innovation by supporting both the generation and the implementation of ideas. The ideas may be big (changing the face of each branch) or very small (minor efficiencies in member interaction). Implementation will typically take an idea all the way to a practical application, often passing through several stages (concept development, blue printing, prototyping refinement, or engineering development). In the following series, we will describe ways in which purpose can help the process of innovation. There are four factors that lead to successful idea generation and implementation. These include sensitivity to the market, dissatisfaction with the status quo, a focus on shared goals (which leads to discipline in a team of innovators) and the trust and continuity that facilitate the free flow of ideas. Purpose strengthens all these factors and makes them more impactful. In the next post, we will discuss sensitivity and how a strong sense of purpose help innovators tune in to their environment.