LAS VEGAS–Credit unions that strive only to be logical and follow the “rules” will remain stuck behind innovators, according to Frans Johansson.
Johansson, CEO of The Medici Group and author of “The Medici Effect” and “The Click Moment,” told attendees of the California and Nevada Credit Union Leagues’ recent convention here he believes innovation comes from diversity. From his experience growing up in Sweden with a Cherokee/African-American mother and a Swedish father, he developed a theory on intersections, which combine ideas from different areas for innovation.
“Why does innovation matter? The world is changing very quickly,” he said. “If things changed slowly, innovation would not matter. But technology and culture change every day. The average lifespan of companies on the S&P 500 has shrunk from 25 to 35 years to 10 to 15 years.”
Credit unions want to differentiate yet cannot, he posited, because they do not allow for randomness and serendipity. Johansson pointed to numerous examples in the business world where success came out of the blue, including YouTube, which started as a dating site and eventually was sold to Google for $1.65 billion, or the fact one programmer’s debugging program helped fix Microsoft Windows, which became the most successful operating system of all time based on one conversation at a party.
“Why should we rely on logic?” he asked. “Richard Branson went from Virgin Records to Virgin Airlines without running an airline. Reed Hastings rented videos at a video store, found it an awful experience, so he founded Netflix.”
Nokia was the No. 1 brand in the cell phone space five years ago. Johansson said its dominance was unchallenged until the rules changed, Apple and Google surpassed it, and now there are questions if Nokia can survive.
The i-Opener
According to Johansson, Apple’s iPhone was dismissed by CNET and other critics when it made its debut, but now serves as a prime example of how success can come from an unexpected source–in this case a computer company making a mobile phone.
“Randomness and serendipity is what makes companies stand apart, and that includes getting new members, or creating new products and services,” he said. “The process cannot be entirely logical, otherwise it is something others would have already figured out.”
Johansson said a good habit would be to pick up five magazines completely unrelated to financial services, then try to make connections with what the credit union does.
Are strategy and analysis completely useless? No, he said, adding the purpose of strategy is not to figure out the right answer.
“The purpose of strategy is to enable us to act. We need to feel we know what we are doing while introducing serendipity and randomness into our actions. The instinct is to do what every other company is doing. But then by design the company becomes like every other company.”
