The worst thing to say to an in­no­va­tor

Why you need to ig­nore the com­pe­ti­tion if you want to in­no­vate

Finweek English Edition - - MANAGEMENT -

“When Amer­ica sneezes, the rest of the world catches a cold.” At t he height of t he re­cent bad debt cri­sis in the US, reg­u­la­tors in South Africa were con­cerned that the fall­out would af­fect the lo­cal mar­ket. Thank­fully, we emerged rel­a­tively un­scathed. Well, most of us, any­way. The home­loan di­vi­sions of the lo­cal banks at the time might have dis­agreed. The cri­sis ex­posed the poor qual­ity of their loan books, re­sult­ing in mas­sive bad debt write-offs – though noth­ing close to that ex­pe­ri­enced in the US.

The bank where I used to work was feel­ing this pain par­tic­u­larly hard. Some­thing had to be done.

It was just the type of chal­lenge my team craved, and we didn’t dis­ap­point. Within a few months, we had come up with a rad­i­cal idea to ad­dress the prob­lem. If it worked, it would si­mul­ta­ne­ously plug the huge bad debt hole and change the way that homes were f inanced in SA. “Pro­ject Mango” as it was called (I still don’t re­ally know why) was not a nor­mal idea. It was edgy, to be sure. It pushed the bound­aries. It chal­lenged bank­ing con­ven­tions. And I loved it.

The CEO of the bank was not so sure, how­ever. He was chair­ing the se­nior ex­ec­u­tive com­mit­tee whose ap­proval we needed for fur­ther re­sources to in­ves­ti­gate the idea. He pursed his lips tightly to­gether and drummed his fin­gers on the ta­ble. “I don’t know,” he even­tu­ally mut­tered, break­ing the stony si­lence. “I just don’t know. I’m not feel­ing com­fort­able.” And then he said the worst six words that you can say to an in­no­va­tor. Six words that got my blood boil­ing. He said: “Has it been done any­where be­fore?”

He didn’t mean to of­fend. He sim­ply wanted to find out whether or not there was a prece­dent for this idea else­where in the world, and if so, what the mar­ket reaction had been. Fair enough, I sup­pose. But what he ac­tu­ally said – in not so many words – was the fol­low­ing: “I’m not brave enough to blaze my own trail, and I’d rather fol­low one that some­one else has left be­hind.”

There is no quicker way to kill in­no­va­tion than re­quir­ing new ideas to have been done be­fore by some­one else.

SAFETY IN NUM­BERS

Large cor­po­rates are not geared for risk-tak­ing and un­cer­tainty. They pre­fer the well-trod­den path, the safe op­tion. Af­ter all, they’ve got stake­hold­ers and in­vestors to look af­ter and they need to be re­spon­si­ble in how they con­duct their busi­ness.

The only way to get ahead in such a world is to beat your com­peti­tors – to make sure that you of­fer bet­ter prod­ucts, cheaper prices or bet­ter ser­vice than the com­pany next door. You’re all com­pet­ing for the same cus­tomers so the talk in the board­room is all about how to out­smart the com­pe­ti­tion. When the fund man­agers do their stock selec­tions, you need to give them a rea­son to pick you in­stead of the other com­pa­nies in your sec­tor.

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