We are happy to bring you some of the key points and insights from Steve Faktor’s talk at the Optimizing Innovation Conference, which was held October 21-22, 2009 in New York City.
Steven Faktor, VP, Head of the Chairman’s Innovation Fund at American Express, talked about how when it comes to innovation and your desire to innovate, you have to ask yourself two questions:
- What can you do from your role in the organization?
- What is your credibility within the organization to do it?
He also talked about how when they were getting started, American Express did an innovation readiness survey to identify the areas where they might be able to go fast and those areas where they might face stronger challenges.
And, when it comes to innovation, American Express focuses on the 4 C’s of InnovationTM – Context, Capabilitity, Creativity, Culture.
Steve also spoke about how the regulatory environment influences investment choices, and how the financial services industry has slow innovation because it is highly networked (ACH, POS, branch networks, etc.), rooted (rewards, contracts, convenient locations, etc.), and focused on safety (brand, reputation, conservative, etc.).
There are lots of opportunities for innovation:
- Business Models
- Systems and Processes
- Experience & Design
Here are ten scary reasons to innovate that Steve gave:
- Deep economic shift
- Mass substition – competition for scarce time
- Young customers ahead technologically
- Decline of tech barriers
- Newness no longer a disadvantage
- Business models – local vs global
- Transparency and empowermnent
American Express focuses its innovation efforts on the core, adjacencies (1-3 years), and future growth (3-5 years).
Ultimately collaborative innovation is going to be required – going it alone is not a great option. Over time they hope to move from working with employees and customers to working more with venture capitalists, academia, and other companies.
They have a stage gate process for managing the employee idea pipeline that involves:
- Build & Pilot
- Scale & Launch
American Express looks at a lot of different innovation metrics, including:
- # of ideas submitted
- # contributors
- Revenue potential
- Projected revenue
- Revenue generated
- Payback period
They have chosen to create several roles in the Innovation Network:
- Ideators (people who submit lots of ideas)
- Implementors (involved in selection)
- Promoters (no functional role, but help with communication)
And, at the corporate center, they focus on idea management, portfolio management, knowledge sharing, metrics analysis, rewards & recognition, etc.
It was interesting to see that a great majority of their submissions are focused on the core, but the biggest number of selected projects are adjacent projects. To date they have had 1,000+ ideas submitted, resulting in five pilots, four concepts in development, and three launches.
In the future, Steve would like to eliminate the term innovation and instead focus on growth, doing more experiments, and working with partners more.
Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.