For Institute members and other financial advisor readers who have not attended a global, cross-industry innovation conference, this article will give you an overview and insights from this year’s Front End of Innovation Conference(FEI) in Boston last week.

Although there were more than 550 innovation practitioners (corporate innovation leaders, innovation consultants, innovation labs, academics, accelerators, startup companies) from 323 organizations at FEI, financial services unfortunately was not highly represented. The conference was built with speaker/practitioners sharing best practices, case studies and exploration along six key tracks of innovation: rapid product development; leadership, culture and teams; customer-centered innovation; open innovation and new partnering models; business model innovation; and strategy and management.

A key theme resonating throughout the conference was the need for today’s management and business owners to acknowledge that they are operating in a business and cultural environment of accelerating change. No one does a better job of explaining the speed of change today and what’s needed than Singularity University and Trend Hunter. Here are some comments from Kian Gohar, Singularity's executive director of innovation:

Exponential technologies have been a very consistent trend historically and they have applied to every major industry that we have looked at. Also, it’s very deceptive. In linear versus exponential growth, when you are walking exponentially, it starts with the one step to two steps to four steps to eight steps, it seems really slow, you don’t see the growth, but when you get to 256 then 624 etc., etc., that’s when it gets really powerful. So some of the technologies that have come out in last few years you may think that they may not be relevant to what you are doing, but they are moving very quickly and will affect things in ways you cannot see yet. And they are very disruptive as well. 40% of the companies in the S&P 500 in next 10 years will probably no longer exist. Kodak is a great example that - back in 1996 they had 140,000 employees and $28billion and they had invented the digital camera, which they shelved. You fast forward to 2012, they went bankrupt. Next year a small company with 8 employees created a new photo app called Instagram, a new digital product that replaced Kodak. We like to call that the new Kodak moment.

Jeremy Gutsche, CEO of Trend Hunter and author of Better and Faster: The Proven Path to Unstoppable Ideas, provides his views here:
 

Mathematically, the average duration of a company on the Fortune 500 list in the 1950s was 75 years and now it's 15 years. A recent McKinsey study stated that 40 percent of the current list will not be around in a decade. The reason why is that companies are not structured to adapt. We are structured to find a value proposition and put in rules, policies, procedures to brand, structure and optimize that value prop. And in the 1950s that was great, that was fine. But now it’s changed. You are now required to shrink the innovation cycle, to accelerate it… to go from a linear way of thinking where we are great at predicting next year and instead get into a more accelerated mode of understanding of how chaos and new ideas work and how that accelerated pace is something that you can get control of.

In an environment of accelerating change, many speakers urged management and business owners to look at innovation not as a side experiment or one-off tactic, but as a core component of strategy itself. Explaining how that idea can be taken to its fullest development was Vijay Govindarajan, author of The Three Box Solution Strategy for Leading and Executing Innovation:

Strategy is not about the past or present but about leadership in the future. Because an organization is a leader today, you cannot assume you will be a leader tomorrow. And earning that leadership is what strategy is all about. One thing we know is that all industries will change in the future. Therefore if you want to be a leader in the future you have to adapt to change. Another word to adapting to change is innovation. Therefore I say strategy IS innovation. If you are not doing innovation in your company, you are not doing strategy, you are doing something else.

Many speakers spoke about the need for understanding why companies have such difficulty addressing today’s challenges. Only in understanding these challenges will we know how to engineer ways to address the specific obstacles that prevent us from moving faster and being more innovative.  Jeremy Gutsche, CEO of Trend Hunter and author of Better and Faster: The Proven Path to Unstoppable Ideas, commented:

After thousands of years of evolution, we became farmers, simplest metaphor we like to use. Once you find ways of doing things, how to execute an idea, how to rollout a product, we are pre-wired to repeat and optimize whatever was last year’s harvest. The three traps of the farmer are once we become successful as brands, as people, as team leaders, we become complacent, we lose the hunger that we had. Next we become repetitive, we continue the process that got us to where we were last. And finally we become very protective, especially of our egos. So let me give you a different way of doing business to get to the hunter instincts. Fight complacency with instability - always be testing, learning. Instead of repetition feed  your curiosity, look at other industries, trend spot, find ways to collect interesting ideas. And be willing to destroy - destroy egos, old ways of doing things.

 

A number of speaker’s even drew from social scientists and psychologists on human nature and our response to change in order to search for ways to help make the management of change and innovation easier. Dan Heath, author of Made to Stick and Switch:

We have the wrong mental model on change. It’s not: analyze – think – change. You cannot motivate people with information. Knowledge is not sufficient to spark change. You cannot get change in an organization by going to logic, numbers and a detailed business case. The real model is: see - feel - change. Best analogy is one of a small man (rational brain) riding atop of a huge elephant (emotional brain). We found that when change succeeds it follows a pattern. That provides a three-part framework to push behavioral change forward:

1. Make it crystal clear what the direction of the ride is.

2. Motivate the elephant with emotions – feeling is the fuel.

3. Shape the path – remove obstacles.

More from Heath:

Psychologists have isolated what they call fundamental attribution error where we tend to attribute people’s behavior to their character and ignore the situational influences on them. In many cases, we should be working to shape the situation people are working under rather than trying to change the people. Make the right behavior the path of least resistance for people.

And he adds:

A successful strategy for change is to actively look for what is working that can illustrate your desired change, be on a careful lookout to find the bright spots and try to clone it. Remember that big change usually starts small and eventually snowballs.

Many speakers discussed and offered different perspectives on innovation and how to make it happen. This from Denise Fletcher, Xerox's chief innovation officer:

If you are not partnering with other outside organizations in your innovation efforts, you really don't get what innovation is all about. Things are moving too fast, you need to work with other perspectives and capabilities outside your own firm. Hee what others have to say at the conference.

Soon Yu, VF Corp., global vice president of innovation:  Lesson I learned is that there is a big difference between selling a new idea and influencing new ideas. Selling is transactional - idea is sold. Influencing is a big nuance. Instead of just convincing and persuading, you have to listen to have empathy and have willingness to accept your vision may have to be changed, room for improvement, to work to have a shared vision and purpose and common ground. Make it more about co-creation with them.

Sammy Munuswamy, senior engineer, Global Engineering and Innovation, The Manitowoc Company: I don't believe in the Voice of the Customer (VOC) for innovation, maybe good for minor linear innovation. Rather than asking directly, since many clients have developed a certain complacency, better to observe the customer in using your product or service to uncover true pain points and unmet needs ... Customers never knew that all the different products they were carrying around was a problem and that they needed an iPhone till Steve Jobs uncovered pain points and unmet needs and offered them a new option.

A memorable presentation was a talk on the extent you can go to uncover or borrow new approaches and ideas for your business. Alexa Clay, author The Misfit Economy: Lessons In Creativity From Pirates, Hackers, and Gangsters and Other Informal Entrepreneurs:

The Misfit Economy project and book "has done case studies you will never find on Harvard Business Review. We study and isolate the entrepreneurial mindset in the black market economy that has the potential to translate into the formal economy. It’s not looking through the lens of good or evil but really trying to understand the real lessons that we can learn from people away from the mainstream economy and translate that hustle, the experiences that they have honed and develop an incubator for these people to be more connected to the formal economy and where we can isolate principles from speaking to con artists, hackers, gangsters, as to what were the things that they were doing that we may be able to apply to main stream institutions.

On how to structure a serious innovation effort for your firm, Fidelity Innovation Labs hosted a tour of their facilities to describe their structured innovation process. Richard Smyers, vice president of accelerated innovation, and Jon Slote, vice president of relationship management, say:

At Fidelity Labs, we have 150 people across eight different locations globally where we have developed a process on looking three years out as to new technologies, challenges, and opportunities ahead of us. Our process can be broken down to three key steps: Scan, Try and Scale. Scan: in scanning we follow closely emerging technologies, bring in key thought leaders every two weeks, have partnerships with academic institutions, and we play an active part in the VC and startup community. Try: we actively prototype and try new ideas through our group here but also have a separate business incubator, run hackathons, and actively engage with customers. Scale -- we have a three part stage-gate type of process to vet best ideas to continue to invest and work on. Upon determining best new ideas to move forward with, we have a patent program and develop collaborations through appropriate Fidelity business units to move the idea to deployable products or services. In hiring for our group, we look for people with a high sense of curiosity, who are comfortable with ambiguity, and are nimble and and flexible in their thinking. We also run a social media platform across the firm to engage all employees, solicit ideas, and keep everyone aware of what we are doing.

The 2016 Front End of Innovation Conference further reinforced the serious full-time effort that innovation as a management practice is gaining across all industries, across the world, and the need for financial advisors and financial services leadership to be aware and start incorporating more innovation best practices to their businesses.

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information click here.