The Logical Reasons Innovation Doesn't Occur

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Are you innovative? Of course you are. The only thing that would be innovative anymore would be finding someone who doesn't believe they are an innovator, or any CU that doesn't plan to be an innovator in 2014.

And yet in planning session after planning session, meeting after meeting, the only innovation that typically takes place is the discussion of the need for innovation. According to one person, there's a logical reason innovation seldom occurs. Or, more precisely, it's logic that gets in the way.

Frans Johansson, CEO of the Medici Group and author of two books on innovation, The Click Moment and The Medici Effect, posits that the "number one impediment" to reaching innovation is: "We tend to rely on logic."

'A Fundamental Flaw'
"The logical outcome in using logic to differentiate yourself is that you end up in the same place as everyone else," said Johansson in remarks at BAI's recent Retail Delivery conference. "It is useful, but it has massive limitations when it comes to innovation. We believe that success follows having great expertise at what one does; it's a very logical idea. I think we get this idea from the world of sports. But there is a fundamental flaw. In sports, the rules of the game never change. Nokia was the Serena Williams of the mobile phone world. They knew the rules of mobile phones cold. That all changed with the iPhone and Android. Just because you understand the rules doesn't mean the rules can't change.

"You say, 'Yeah, but they just didn't understand the trends.' That implies that Nokia could have nailed the trends. We forget this now, but when the iPhone came out people were very circumspect of its success. Bloomberg said, 'Apple is unlikely to make much of an impact on this market.' The CEO of Palm said, 'Apple is not just going to walk in.' My point is not to make fun of these guys. My point is that they knew more about mobile phones than anyone on the planet. If they couldn't figure it out, who could? If a trend is so crystal clear that you know it 100%, then it provides you no competitive advantage."

So how can a CU ever hope to spark innovation? According to Johansson, the answer is fortunate accidents. "All breakthrough innovations occur this way; they are serendipitous moments that I call 'click moments."

But if it's all a happy accident, what is a CU to do? Are strategy, analysis and data completely useless? No, argues Johansson.

"Human beings need intent and purpose and rationale in our lives and for our actions," he said. "The thing is to understand a strategy in this context is not to figure out the right answer, because you're going to be wrong, as the world is changing far too quickly. The purpose of strategy is to convince yourself to act, to execute, to get something done. We need to feel that we know what we are doing while still introducing serendipity and the unexpected into our actions."

So how does your organization escape what he calls the "logic trap?" Through "intersectional thinking."

As his example Johansson uses the Medici family of Florence, Italy, who brought together lots of creative people from separate disciplines and countries and helped to ignite the Renaissance. For a credit union to turn its own staff into painters and sculptors and scientists, Johansson said two facts must be kept in mind: 1) All new ideas are really combinations of existing ideas, but not all idea combinations are created equally, and 2) People who change the world try far more ideas. The companies and individuals with the most breakthroughs are the ones that tried the most things.

Another key: "Staff for diversity."

"Who do you turn to when you're trying to pursue a challenge or opportunity or solve a problem? Is it the same group of people? Is it the logical choice? You must reach out to diverse people. You can have lots of people with different backgrounds, but if you're not connecting you're not setting yourself up to innovate. Enhance your ability to incorporate different perspectives. This is a critical ability for leaders over the next decades. Homogeneous teams initially outperform diverse teams initially. But once a diverse team is able to work together they outperform homogeneous teams. Rethink risk management around innovation. You must open yourself up to the risk that something might fail."

The Other Blue Sea
One other note from the BAI meeting in Denver. All the keynote addresses, including Johansson's, took place inside the marvelous, semicircular Bellco Theatre. But I'll bet 99% of the audience, most of whom were bankers, had no idea the 5,000-seat facility is sponsored by a credit union. That's because Bellco's branding doesn't use the words "credit union." Indeed, its tagline is "Banking for Everyone."

Incidentally, while standing at the top and near the back of the darkened theater, I was able to look across the sea of audience-members and see at least half had a blue screen from some device glowing in front of them. How ironic that so many of these presentations are about the challenges of getting attention from consumers. Or something like that. I'm not sure; I was checking Twitter.

Frank J. Diekmann can be reached at

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