Disruptive culture: How to grow in a risk-averse industry
with Luke Williams, Professor, New York University Stern School of Business
Author of Disrupt 

One of the biggest challenges for individuals and organizations today is how do they achieve this balance of keeping the existing business running, but also building options for the future. I often talk about this model with two opposing wheels. 

GRAPHIC: [Sustainable growth Continuity, Sustainable growth Continuity = Discontinuity]
This is the wheel that you’ve got to keep spinning in terms of your existing business, which is all about maintaining continuity. However, in order to grow sustainably, you also need to introduce discontinuity into your organizational system.
So that’s basically the wheel running in the opposite direction.

GRAPHIC: [Innovation is a skill.]
We love to celebrate the antics of like Elon Musk or whoever the latest entrepreneur is on a magazine. We often think, “I don’t have the personality to lead innovation.” I think it’s much more helpful to think about innovation as a skill, not a set of character or personality traits.
This is a skill like any other skill (like learning a musical instrument or a language). It’s a set process that you’ve got to treat as rigorously in your organization as you currently treat finance, marketing and operations. It’s a skill available to anyone wherever they are. They just need the willingness to actually adopt it.

GRAPHIC: [Innovation must be in your culture.]
So in every business, whether it’s small or large, we need to think in terms of different layers.
The top layer is your values layer.  Are you as a firm saying that innovation is important and that you need fresh ideas?  It’s going to be very hard for ideas to come from the bottom-up if you’re not valuing that at a senior leadership position.
The second layer down is normally where the disconnect is. This is your metrics, rewards and incentives.  Normally, there’s a lot of people running around saying, “Yes, we want fresh thinking. We want new ideas. We want innovation.” But their metrics, rewards and incentives are aligned for rewarding the status quo.  So how are you changing your rewards and incentives to motivate people to actually innovate?

The third layer down is how you are organizing yourself.  Do you centralize?  Do you decentralize?  Does every idea in the organization have to go through the boss?  If it does, that’s not a recipe for effective growth and effective innovation. You need to find a way to empower everyone to contribute new thinking.

GRAPHIC: [ROL: Return on learning.]
An organization needs to find a way of rewarding effort for people’s contribution (fresh thinking), rather than just rewarding the results of those ideas. An organization can’t possibly implement every idea that an employee suggests.  They’re got to be very selective with what they let through or implement. However, they need to find a way to keep people motivated and contributing fresh thinking.  It’s all about rewarding effort and not the results of those ideas- and using the ideas for their effect on the organization’s thinking, and the way it thinks about its future.
We often contrast ROI (return on investment) with ROL (return on learning). The main reason you’re developing unconventional ideas and keeping that system of disruptive thinking going is you learn something from every new idea you experiment with.

GRAPHIC: [Success minus risk equals complacency.]
The biggest danger for organizations that are successful is that complacency sets in. And I think ‘complacency’ is literally the most dangerous word for any individual, organization or industry, because it basically means that it sets in at an implicit bias level (below the level of conscious awareness). We don’t realize we urgently need to challenge the existing ideas that we’re using because there’s no need to challenge those existing ideas. Now, of course, we think, “We’ll get a new idea when we need one. When our circumstances change we’ll get a new idea.” But it’s always too late.

GRAPHIC: [Create dramatic simplicity.]
I think simplicity for this industry is absolutely critical. It’s so complex out there, people need so much help and there’s so much confusion.  But the existing way of thinking about offering financial services doesn’t seem to be helping solve this issue of simplicity. My advice for anyone working in financial services would be take everything you take for granted and start moving it in the opposite direction- basically turn it on its head. So if there’s a one-way relationship between two parties, reverse that relationship 180 degrees. So it’s no longer you advising the client, it’s the client advising you.

Now, from the positon of the client advising you, think about how simple you would want the advice to be. What would you want them to be telling you?  This should open up new perspectives for thinking about how to simplify your interactions with a client. 

Think about the typical products that you offer to clients. What are the typical features and benefits you’re always trying to explain, or a typical attribute you’re always trying to persuade them on? How can they be simplified? Finally, think about things like fee structure and all those other financial costs. How can you radically distort or exaggerate those numbers? What’s expensive that could be made free?  What’s free that might be made expensive?  Start to mess with these- what I call clichés.  This should help you start to think about ways of dramatically and radically simplify financial advice.
GRAPHIC: [Charles Schwab  Own your tomorrow]

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