The Innovator’s Dilemma

Today, Matt Davis, aka the CUWarrior, whom I had the pleasure of meeting at last October’s 2008 Indy Partnership Symposium, and has a blog here, posted a great article on Open Source CU, titled Using the Blue Light to get a Green Light.

He brings up some great points about innovation, which I can’t disagree with in the abstract. It is indeed an excellent technique to start an innovative project at the lowest cost possible in order to get buy-in from upper management. It doesn’t make sense to spend large dollar amounts if the payoff is unsure. Financial institutions, or any businesses for that matter, would go downhill rapidly if they did so often.

But I want to make the case that it’s not always possible or advisable to innovate by dipping a toe in the water. Here are a few cases where “DYI” innovation won’t make the grade:

1.) The innovation requires a large scale for the desired effect to be realized, or it’s launched in such a small scale that it doesn’t get noticed.
2.) More cost in dollars is expended trying to do it yourself than it would have taken to hire a professional
3.) The innovation does not take off because it was ahead of its time
4.) Your competitor spots your innovation, and implements it more fully than you did, stealing customers in the process

But on the flip side, here are reasons why you SHOULD attempt something on a small scale before going bigger:

1.) It turns out no one wanted your innovation after all. At least you didn’t through money away, and you’ve learned something along the way about your customers and/or your organization.
2.) Your original idea was too complicated; it turns out that the foundation was right, but it needed to turn in a different direction. By expending the minimum resources in development, you can make the necessary adjustments without having spent too much.
3.) If the innovation is a good one, it should reach a self-funding state relatively quickly. You can test, prove the business case with results, then develop it in due course as funds warrant.

So how do you tell in which camp an innovation belongs? It comes down to your organization’s DNA, the filter by which you run everything. The more an innovation directly lines up with your organizations brand, its DNA, the more resources should be allocated to the innovation.

On a completely unrelated note, check out this cool restoration of an old school traffic light, made before the color yellow was invented.

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One Response to “The Innovator’s Dilemma”

  1. Credit Union Warrior/Matt Davis Says:

    A few points:

    1) It’s not a matter of “dipping your toe in the water”. Rather, it’s a matter of will the project be approved/funded at all? Again, while the DIY strategy isn’t the preference, it is sometimes the ONLY option.

    2) Large scale doesn’t have to mean large budget.

    3) You are so right about the implications of an organization’s DNA. Taking a chance sometimes means throwing more resources than just manpower at an issue. Some CU’s don’t have “taking a chance” in their blood. Nothing wrong with that at all…but it certainly makes those organizations much less likely to make a significant impact in terms of innovation. Not impossible, just unlikely.

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