THINK Week in Review: The “Innovation” Edition

Rapidly advancing technologies, evolving member expectations and a changing regulatory landscape are opening doors to disruptive innovation in financial services. From crypto-currencies to big data to peer-to-peer lending, fintech innovations have captured the attention and imagination of customers, investors and incumbents. What should credit unions focus on: disruptive or radical innovation?

What 40 years of research reveals about the difference between disruptive and radical innovation. “Disruptive and radical innovations are complex phenomena, but they are important to distinguish from one another. While Marc Andreesen expects many industries to be disrupted by software, with new firms overtaking incumbents, technology may at the same time enable the incumbents to radically transform their businesses, especially with new customer-centric business models embedded in product-service-ecosystems. Many examples highlight how radical innovation may help incumbents to insure against disruption. For instance, Daimler is using their Car2Go strategy to secure market positions against the Uber’s and Lyft’s that may become disruptive to their core business model. Daimler as of recent even announced a partnership with BMW to join forces and to build a joint mobility platform and eco-system.

For disruptive innovation, the key to organizational renewal may lie in the needs of the customers, whereas for radical innovation, it may lie within the capabilities of the incumbent firm itself. To mistake one for the other may in fact do more harm than good.” Oh, and one more HBR piece that will impact business in the US very soon: GDPR and the end of the Internet’s Grand Bargain.

THINK 18 speaker Jaron Lanier just spoke at TED and it became the most talked about speech of the conference: I can’t call these things social networks anymore – I call them behavior modification empires. “I don’t believe our species can survive unless we fix this,” he said. “We cannot have a society in which if two people wish to communicate, the only way that can happen is if it’s financed by a third person who wishes to manipulate them.”

AI and Machine Learning not being used to full potential in finance: “The challenge for banking organizations is that, while they realize the future is in the more ‘revolutionary’ functionalities of personalization and customer experience, they are still using these new technologies for ‘evolutionary; purposes related to fraud and security. The question is just how fast will AI and machine learning technology be implemented in the areas where the greatest benefit can be realized? Being a ‘fast follower’ is not a good option.” – Not sure I agree with Jim here. AI/ML are an emerging technology and some of the described opportunities are way early in their development and not ready yet to deploy.

How fake news drives corporates to redirect their security strategies. “Researchers estimate U.S. eCommerce companies lost $6.7 billion due to fraud in 2016, and a significant portion of that stems from chargeback fraud. According to LexisNexis Risk Solutions, chargeback fraud accounts for 28 percent of all fraud that occurs at an eCommerce company, tied for first place with “friendly fraud.”

Design for your strengths. “It is not easy to know your strengths, and it is even more difficult to put them to use and build on them. It may require you to look outside standard approaches to getting things done. But if you can step back, accept your weaknesses, recognize your specific strengths, solve the right problems, and design your own way of winning, you too might find your life has changed. This way of going through life is not for everyone, perhaps. But neither is the struggle many of us put ourselves through — the struggle against our own innate capabilities.”