By Mark Meyer
Product innovations are often thought to come from “break-through” ideas conjured up by geniuses in top-secret labs. In reality, we can all do things differently in our own jobs to create innovation. Recognize that innovation comes in various shapes:
Some of the most powerful new ideas are considered soft innovations, for which big R&D budgets aren’t even needed. An excellent example is frequent flyer programs. Who could have imagined how they have transformed business travel?
To come up with your own soft innovation, ask “What’s the little thing we could do differently with this product or service?” Lifestyle Lending programs, which were developed by one of Filene’s i3 groups, is a credit union-specific example. They took something CUs already offer—indirect loans for “things” like cars and RVs—and tweaked them to finance medical procedures, like plastic and bariatric surgery, that are often not covered by insurance.
You can get even more ideas from Seth Godin’s book Free Prize Inside: The Next Big Marketing Idea.
A second way to bring new products to market is through value innovation, such as the “Blue Ocean Strategy” discussed in the October 2004 issue of Harvard Business Review. The article describes how “despite a long-term decline in the circus industry, Cirque du Soleil profitably increased revenue 22 fold over the last 10 years by reinventing the circus. Rather than competing within the confines of the existing industry—red waters—Cirque developed uncontested market space that made the competition irrelevant. Cirque created what the authors call a blue ocean—a previously unknown market space. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. Creating blue oceans builds brands. So powerful is blue ocean strategy, in fact, that a blue ocean strategic move can create brand equity that lasts for decades.”
So in the red waters of competition for loans and deposits, swim out to the blue water where no one else is competing. Is it microloans, serving young adults, an unserved neighborhood, a retirement home?
Incremental innovation is yet another variety of innovation. You might not even notice when you innovate in this way, because the changes may be hidden behind your credit union’s ongoing quality improvement process. Yet, even small changes add up. Capitalize on this in your marketing!
The final type of innovation I’ll leave you with is disruptive innovation. This is the big one, where you need to ask “Are we leaving a portion of our marketplace behind because we perceive it is unprofitable?” Recognize that as an organization fails to meet basic needs of its customers, other industries will step forward with new products, services or business models to meet the customer’s needs.
Do credit unions need to change their business practices to meet these needs? Today, over 22,000 payday lenders and check cashers are profitably serving households many mainstream financial institutions label as unprofitable. These alternative financial providers now want to offer deposits, investments and insurance. They want to become upscale!
If your credit union decides to become a disruptive innovator, one of the greatest gifts you have is the ability to be swift and nimble, responding quickly to implementing a new product, service or business model. Many believe credit unions were disruptive innovators to the banking industry in the early 20th century. Does it remain true today?
Lifestyle Lending, mentioned earlier, was a “quick hit” generated by an i3 team. The teams also generated what we call “big rocks,” which are one-year innovation projects. One on the verge of implementation is called Moneyworks based on the Pampered Chef or Amway model, which leverages members’ trust in CUs and their cooperative structure to build membership and new business. Through the program, credit unions would reward their own customer evangelists for bringing in this new business. You can read about and comment on Moneyworks here.
Everyone can be innovative but sometimes we get into ruts. To boost your own IQ (innovative quotient), get out of your comfort zone. Go out to lunch at least once a month with someone not from work. Visit another business and spend 30 minutes doing some “bird-watching,” some “field observation.” You might just take away some ideas you can use to innovate in your own organization.
Mark Meyer is director/innovation at the Madison, Wis.-based Filene Research Institute .
Get more innovative ideas from Meyer and i3 participants Doug True, president of Forum Solutions & SVP/lending & technology for FORUM CU, Indianapolis, and Elizabeth Hayes, SVP/chief relationship officer at Affinity Plus FCU, St. Paul, Minn., at CUES’ CEO Network, Nov. 6-9 at the Four Seasons Hotel, Las Vegas.
Hear more about Blue Water Strategy at CUES’ Execu/Summit or the CUES Nexus Conference.
