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Five easy steps to practical innovation

By: Keith Riddle, EVP, Enterprise Solutions Development

Change, alteration, revolution, upheaval, transformation, metamorphosis, breakthrough. These are just a few synonyms for the word “innovation.” Innovation is a growing trend within our industry as demonstrated by the statistics in the 8th annual Innovation in Retail Banking report issued by Efma, which listed the top areas in financial institutions with increasing levels of innovation investment:

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  • Customer/member service: 82%
  • Channels: 82%
  • Processes: 67%
  • Products: 63%
  • Sales and marketing: 56%

Although an exciting trend with enormous potential, innovation is often a misunderstood process within the financial services segment as many financial institutions try to leverage innovation in a gigantic, revolutionary way (significant effort and change) versus a practical way (smaller impactful changes). A question many credit unions ask is “We have no experience with innovation, so how do we get started?”

It’s important to remember that the most basic yet still accurate definition of innovation is simply “the introduction of something new.” Today’s article outlines five easy, fundamental steps for leveraging practical innovation in your credit union. By implementing these five steps, your credit union can keep thinking big while starting small, which is the foundation of practical innovation.

Five steps to practical innovation

1. Define the problem.

This process should be performed through an open discussion with a cross-functional team. Key questions to ask to define the problem include:

  • How much effort is involved in solving this problem?
  • What happens if we do not solve this problem?
  • Is there a deficiency we are experiencing in member service?
  • Is there a specific void in the product offering the competitors are addressing?
  • Is this problem being driven by deficiencies in internal processes?
  • Have we received feedback from members regarding the problem?

2. Identify the “friction points.”

Next, your cross-functional team should address the current workflow/process associated with the defined problem.

  • Define each step in the current workflow or process and discuss with the team.
  • What are the specific “friction points” in each step of the workflow (i.e. those issues that prevent/hinder a completely user-friendly experience)?
  • What is the loss in time or efficiency for the credit union staff or member?
  • Has the credit union lost new members or opportunities to enhance the current relationship with members?
  • What is the high-level financial impact of allowing the problem to remain unaddressed?

3. Design a minimally viable solution (MVS).

Once the problem is defined and the friction points identified, the same cross-functional team should begin working to prioritize and design manageable changes.

  • What is an MVS the credit union can outline to optimize a solution for the defined friction point(s)/challenges?
  • Allocate time during this stage to create an environment where credit union staff can state creative solutions without judgment.
  • During a review of the MVS, the credit union should ask the following:
    • Can we address a solution for key friction points with limited expense or time involvement?
    • Do we need to involve any third parties to address the minimal change?
    • Can we automate or streamline any of the changes through existing technology?
    • If we address the minimal change, what is the expected outcome (better member service, internal efficiencies, easier process to add members/loans?), and is it measurable?

4. Deploy and test the MVS.

This stage of the process involves deploying and testing the MVS for a defined period of time and measuring overall impact.

  • Establish specific measurement goals for the MVS (i.e. time saved for the member, improvements in back-end processing time/effort, increases in new members).
  • Establish a daily/weekly update process for communicating the status of the MVS test period. Key components of the communication process include:
    • Celebrate the incremental success when the MVS delivers impactful results and is acknowledged by the members.
  • Document the result(s) of the MVS. Once the initial deployment and testing process is completed, document the results, distribute to key staff members, and establish a process for continuous feedback.

5. Accept feedback.

This fifth step focuses on establishing a framework for reviewing internal and external comments related to practical innovation. For example:

  • How will the credit union secure and review feedback from members and staff related to enhancing the MVS?
  • How will the continuous feedback process be managed throughout the organization?
  • How will the credit union outline the practical innovation efforts for the board and incorporate the process into strategic planning efforts?
  • How will the credit union foster innovation at ALL levels within the organization, and avoid the filtering efforts that can occur within the management levels?

Collaborating with staff and current members to understand the deficiencies within the products/services within your credit union, designing and deploying an MVS, measuring success criteria, and establishing a process for continual iteration will put you on the right path now for big impact later.