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How do you get a 200-year-old bank to think and act like a startup?

At Citigroup, a “Shark Tank”-like unit called D10X encourages Citi employees to think like entrepreneurs in the hopes of getting ideas for new products and services quickly to market. Citi has more than 200 employee “founders” working on 80 startup ideas across Citi’s business, and more than 1,200 employees have been involved in some element of D10X, which stands for “Discover 10 times.”

We caught up recently with Vanessa Colella, Citi’s chief innovation officer, who is also head of Citi Ventures and runs the D10X program. She explained how the program works and shared one approach to a problem with which many banks struggle — how to get a large bureaucracy to innovate quickly to compete with fintechs.

Is Citi’s D10X modeled after Google X, the lab where engineers are trying to invent the next Google and explore other futuristic (yet practical) ideas?

VANESSA COLELLA: While entrepreneurs often have fabulous ideas, employees in corporations like Citi also have fabulous ideas of how they can better serve their clients. Yet there’s no way to bring those ideas from the nascent spark of imagination all the way through testing and validation into market. D10X is a program we’ve instituted across Citi that enables employees to bring forward ideas, test them with clients and understand if they’re viable in the market and solve a client pain point.

What products have been launched through D10X?

In May we launched Citi Connect for Blockchain in collaboration with Nasdaq. It’s a blockchain platform that helps power Nasdaq’s secondary market, Linq. Then there’s Proxymity [a digital proxy voting system Citi piloted last week], which is an important milestone for us.

Is Proxymity an electronic version of the proxy ballot many of us get in the mail before each shareholder meeting? Have you figured out a way to put forward the issues and gather the votes in a simple, automated way?

Some Citi clients are challenged by the opacity of the proxy voting system. While for you or I as individual investors it’s a little confusing when you’re trying to figure out how to vote and make sure you get the ballot back on time, institutional investors have that problem multiplied thousands of times over. Proxymity brings transparency and real-time execution to that process, so you can go through the process of voting in a more seamless fashion and know your vote has been counted.

When employees come up with ideas, how do they bring them to your attention? And how do you solicit ideas?

D10X functions a lot like a venture capital firm. We run within Citi what we call “growth boards” — groups of executive leaders within our businesses — and they hold deal days. If you’ve ever watched “Shark Tank” or “Dragon’s Den” where people are pitching their ideas, our employees are given the same opportunity to come and pitch their ideas to senior management, and if the idea seems like something that could be interesting to pursue, it goes through the D10X process.

We’ve hired close to two dozen entrepreneurs-in-residence at Citi, people who have founded and fundraised for their own companies who then coach our employees through the process of creating a brand new business from scratch. Just like in a VC, employees will test their ideas, validate the markets, and if they get positive results, they’ll come back to the growth board and pitch again for additional funds. So we do the coaching and validation early, before we build something and pilot it in the marketplace. This has allowed us to test hundreds of ideas within Citi.

How do people validate their ideas?

We have found that validation has to be more than simply asking, would you like this or not? That could be a little like asking someone, do you go to the gym every day? Everyone aspires to go to the gym every day, but not everybody gets there. We often create working prototypes of a solution so clients can understand if this is something that would help them. And we don’t just ask them, would you use it, yes or no. We ask, what do you like about this? If the experience was designed in a different way, would this be better? It gives them a chance to give nuanced feedback.

You mentioned that you hired two dozen entrepreneurs. How did you get these people to work at a big bank?

I think the pull for entrepreneurs is that a company like Citi has global reach, and therefore the ability to reach many clients and customers in many businesses. Entrepreneurs enjoy being able to bring these things to market in a broad-based, potentially even global manner and welcome the opportunity to share their experience in different settings with employees of a large corporation.

Google X has a memorial day once a year that’s loosely based on Mexico’s Day of the Dead, where people talk about projects that have died, put defunct prototypes on a small altar and share their feelings. How do you keep morale up in the face of failure?

Failure is critical. Most people in large companies are not accustomed to failure, certainly not in a positive sense. I think most people in large companies associate failure with something that has economic consequences or bad consequences for clients or somehow impairs the safety and soundness of the system. Here we’re not talking about any kind of failure, we’re talking about very small failure without consequence. So if we’re testing an idea or a prototype and a client tells us this doesn’t solve a problem they have and they wouldn’t buy it, sometimes that’s failure right there — the idea is not going to be taken forward. But there are no consequences. We haven’t lost anything other than the time and effort putting together the idea.

It is important from an employee perspective to celebrate whatever you learn, because all of that is knowledge that in the end helps us better serve clients. We do a lot of work with D10X to remember that it’s the idea that fails, not the person. Separating those two pieces is critical because often that employee will come back and say my first idea didn’t work, but I have another idea. This is the kind of spirit we’re trying to imbue across the organization.

How do you celebrate failure? Do you have parties? Do you give out awards, gifts or bonuses?

No, we’re a little more mellow than that. Our entrepreneurs and co-founders get accolades from the senior leadership they’re pitching to, whether their project gets pushed forward or not. That’s very different than in a traditional meeting, if you came in and said, I did this analysis but it didn’t work — that’s typically not something that’s celebrated. We’re creating a culture where it’s just as important to bring forward things that succeed as things that need to be changed or aren’t going to work in the market because it collectively makes us all smarter.

Do these entrepreneurs work with you at the Citi Ventures office in Silicon Valley? Or are they scattered around geographically?

They’re geographically spread around. Similar to the footprint of Citi, we have a big presence of entrepreneurs in New York and London because that’s where we started the Citi Connect program, but we have them increasingly in Asia and Mexico City. They do sometimes come and work in a Citi Ventures office as they’re prototyping or trying to build something. We hold office hours for our entrepreneurs in residence, answer questions and give tips and advice.

Is the founder’s job 100% focused on nurturing these ideas and helping turn them into a reality, or is this a sideline for them?

The amount of time allocated changes over time. In the beginning, if you pitch a great idea, you might start to investigate it with a small portion of your time. As ideas move through the pipeline and get closer to a pilot or a beta launch, employees will spend ever-increasing amounts of time on them. Ultimately as an idea nears pilot, people work on it full time. It’s not dissimilar to some entrepreneurs outside big companies, where you might have an idea about a business you want to start, but you might not quit your full-time job until you’ve validated whether this new idea is viable.

What are a few ideas in the D10X pipeline right now?

One trend we look at is called “changing social structures.” Banking products still serve a traditional head-of-household single earner. That doesn’t describe millennials who are rooming together and might need to have some expenses pooled but not their life savings. And it doesn’t describe people who are happily married with kids but might have been married before and have a child from a previous marriage and are dealing with child support and alimony. It doesn’t describe those of us in the sandwich generation who are raising children and helping parents. We have about a dozen areas like that where people are coming up with ideas about how to better serve our customers.

Editor at Large Penny Crosman welcomes feedback at penny.crosman@sourcemedia.com.

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