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July 30, 2014

All Roads Lead To Digital

Posted by Mohit Joshi (View Profile | View All Posts) at 8:42 AM

Banks, in these challenging times, are embracing digital and data solutions

Without a doubt, banks have endured years of challenges since the onset of the global economic crisis. And there still is no end in sight. The low interest rate environment means banks have seen their most reliable means of income evaporate. What were once extremely lucrative businesses, like fixed income trading and mortgage origination, now yield much lower returns. Ancillary revenue streams such as proprietary trading desks have all but disappeared.

So what are banks to do? Well, as it is often said: never let a good crisis go to waste. Financial services firms are filled with brilliant people. With all these smarts, it is always hard to change a corporate culture very radically. Banks tend to be conservative institutions. However, the latest set of crises facing banks have made their top executives a lot more receptive to changing the ways they do business.

As such, we're already seeing some venerable firms listening to ideas that come from outside the financial services industry altogether. The prospect of a buttoned-down bank executive studying the nimble, customer-focused strategies of a department store can be difficult to fathom. But trust me, it's already happening.

The kind of structural transformation that banks are now embracing is digital. For most of these firms, a digital transformation involves using a vast array of analytics that guides the institution towards the consumer and their expectations. Banks have historically had their customers come in and queue up to talk to a teller. But customers want just the opposite. They expect their banks to deliver seamless digital experiences over their laptops or iPads. They want to do their banking like they do their shopping: from the comfort of their own home and when it's convenient for them to do so. In areas where banks have had personalized services (wealth management, for instance), the focus is on enabling the private banker/financial adviser to do a lot more for the client and to handle a larger portfolio, aided by a stronger suite of digital and data solutions.

In this harsh and trying economic environment, controlling costs is vital. The metric to which analysts typically pay the most importance, in assessing a bank's competitiveness, is the cost to income ratio. A digital program that focuses on the consumer will also help in keeping costs under control by reducing manual exception processing and branch overhead. You can't expect to be rescued by some larger bank that wants to go on an acquisition binge. That era is over for the time being. It's time to rein in your costs for the long term with the assumption that a white knight is nowhere on the M&A horizon.

The digital journey I've touched on has other benefits besides attracting and retaining customers and managing costs. Robust front- and back-end systems help banks stay on the right course as far as regulatory pressures are concerned. Banks paid more than US $100 billion in fines in 2013 alone. Updated systems with the right technology vendors help prevent money laundering and fraud, especially in enormous global institutions that do business in every currency and continent.

Digital investments have multifaceted returns. Across the financial services sector, return on equity for most firms remains dismally low at under 5%. A digital transformation of front- and back-end systems squeezes out every efficiency inherent in global banks, while giving revenue a boost. That's why it's important to sustain long-term relationships with IT vendors who know not just the banking space, but are able to get the best customer experience and cost control ideas from across the world and across multiple industry segments.

July 28, 2014

Mobile Apps Show Us The Way, And The Money!

Posted by Puneet Gupta (View Profile | View All Posts) at 11:12 AM

Need a Lyft? Mobile-based ride sharing program expands [Source: http://www.youtube.com/watch?v=_2iriSELzmY]

I hear anecdotes, now and then, of enterprises that spend an inordinate amount of time and manpower developing apps rather than keeping their websites as technologically up-to-date as possible. Then I hear a snippet in the news about Uber and I know exactly why they're spending so much time on apps.

Uber, you see, is a wonderfully helpful app that does away with the pain and grief of trying to find a taxi in a congested city. Those of us who live in such places know that it used to be dreadful during rush hour to find an open car. But now, because of an app like Uber, you're connected to available cabs in your vicinity. Better still is that their drivers can bid on your trip - a bright spot among my daily frustrations of living in the urban jungle.

It seems that I'm not the only one who values this transportation service. Last week, Uber was valued at a whopping $18.2 billion. That's more than long-established car rental companies like Hertz and Avis. The remarkable valuation was established on a $1.2 billion round of fund-raising from investors. According to The Wall Street Journal, Uber's valuation has quadrupled in the past year and only one other company has raised more money at a higher valuation from private investors - the pre-IPO Facebook, in 2011.

So what is it about an app that is commanding such a level of monetary adoration from the capital markets? Well, Uber is a great app, but it's not alone in connecting available cars to clients. Lyft is coming on strong (to prove a point, no doubt) in Uber's home market of San Francisco. Plus, Uber has had a rocky start in some cities, especially where traditional competitors want it to be subject to the same regulations that conventional taxi services are.

Yet investors are confident that despite some difficult issues, Uber is an app that has a bright future. The reason, I think, is logistics. Most of us look at an app like Uber and see relief from a congested rush hour. But the investors who are validating Uber's impressive valuation see something more: the ability to fill those cars with more than just people but important documents and equipment as well. If it can fit in a car and needs to be transported from Point A to Point B, Uber can take care of it.

Think of what might keep a mega-retailer like Amazon up at night. It's got an amazing inventory, it tracks the wants and desires of an enormous customer base, and it dabbles in just about every consumer-friendly business. What it wants to improve is the rate at which it gets the merchandise to all those people. In that regard, I would imagine that a taxi service like Uber or Lyft would be of interest to a web retailer. It's probably why the China-based Alibaba has invested in such urban transport apps.

Plus, what we're starting to see here is a huge shift in the power and influence wielded by digital enterprises. The reason web retailers don't spend as much time tweaking their websites as they do their related apps is because of the extent to which the latter helps e-commerce. No web homepage is going to facilitate riders and packages in a city-based vehicle better than an app does. Remember how the big race used to be about advertising and page views? It still is, to be sure. But the big race also involves logistics - getting the stuff people want in the digital world into their actual hands. It's where the digital world is hitting the pavement.

That's why apps like Uber are becoming so valuable. Think about what is going to happen when the world's big enterprises want logistics solutions that get their wares into the often-complicated and multi-tiered emerging markets? That's where their next billion customers are going to come from, more or less. So it stands to reason that mobile apps that solve transportation and logistics issues for global corporations are going to be hot for years to come.

July 24, 2014

Building Tomorrow's Health and Human Services With MaaS

Posted by Brian Patt (View Profile | View All Posts) at 9:29 AM

The discussion about Obamacare heats up [Source: http://www.youtube.com/watch?v=Xxz7foLoLrU]

States face a balancing act. They need to comply with regulatory mandates to expand health insurance coverage under the Affordable Care Act (ACA); an act that's been the focus of heated debates, countless delays, and intense scrutiny by millions of American taxpayers. At the same time they need to focus on the effectiveness and delivery of health and social programs to achieve triple-aim: improved healthcare processing, outcomes and lower costs.

Health insurance exchange (HIX) implementation has been one of the most complex mandates that states have had to address within stringent timelines. States have faced many challenges from dynamic regulatory requirements to unprecedented transformation of processes and technologies across jurisdictions in order to comply with this mandate. Timelines and evolving requirements have shifted the focus from delivering care and service to implementing the required technology quickly to achieve compliance.

States need to shift their focus back to healthcare and social welfare from IT and compliance. But how? The answer is simple--by relieving themselves from the burden of complex and costly IT.

Consider health exchanges as an example. As states transition from the federally facilitated marketplace (FFM) or build-out/replace existing state-based marketplace (SBM), they need a solution that helps them comply with ACA mandates and configure and deliver programs in a sustainable way. Such a solution should realize three key design points:

  • Integrated programs and citizen experience to integrate the delivery of various health and social programs - accessible via unified experience to citizens
  • Sustainable operations that address short-term funding mechanisms and build manageable OpEx cost structures and levers to lower healthcare costs
  • Dynamic compliance with continually evolving legislations and regulatory mandates

Decoupling IT from the equation and acquiring right capabilities "as a service" is key to re-focusing on the core missions. I believe, the future for state health and human services is a healthcare "marketplace-as-a-service" (MaaS) - that delivers state health insurance marketplace as-a-service and offers the required flexibility to integrate various health and social programs without the complexity and costs of IT. As a cloud-based platform, MaaS can help states meet today's healthcare reform mandates with a sustainable operating model and can enable integration of state health and social programs without being entirely focused on IT.

I see greater interest from states in leveraging pre-built technology - "in-a-box". "As-a- service" model goes beyond by offering the same capabilities in an OpEx model built and operated by a third-party. This is critical to the innovation and extensibility needed for today and tomorrow. A robust service model helps states reach the end-state faster, with less risk, and allows them to focus on healthcare and outcomes. Such a solution for a state HIX has three distinct attributes:

  • Core functionalities and interfaces with federal and state systems - e.g. eligibility, enrollment, case management, citizen outreach. The core must be common to states to make the model consistently viable. But, dynamically compliant with changing requirements to legislations and Centers for Medicare and Medicaid Services (CMS) guidelines
  • Configurability to state specific programs and business rules to address unique requirements
  • Connections to state program extensions such as Medicaid and partner or third-party value added services "plugged-in" via standard APIs targeting healthcare, costs, and outcomes

By design, such a marketplace will be a multi-tenant platform, allowing multiple states to leverage the common core and shared infrastructure to lower operating costs, while still configuring the platform to meet state-specific needs. As a pre-built and third-party operated platform, MaaS would meet existing and future CMS requirements. Platform's OpEx model and ability to "plug-in" various third-party services like social enterprise models for citizen engagement, healthcare analytics for actionable insights etc. will bend the healthcare cost curve in the long-term by increasing citizen accountability for their own health, while targeting specific health and social issues and needs.

Affordable Care Act has catalyzed everyone involved to connect citizens with care. Yet there's a lot more to be done. MaaS will be the way for states to deliver improved care and outcomes at lower costs, making healthcare more affordable and effective, which is vital for the long-term success of the nation's healthcare system.

July 21, 2014

What Western Banks Can Learn From Emerging Markets

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 9:35 AM

SnapScan to revolutionise S.African banking [Source: http://www.youtube.com/watch?v=8UI4eXAFp-c]

You don't find as many merchant banks today as you would even a generation ago. The point of the merchant bank of old was that Western firms could scour the emerging markets and the Third World to find economic opportunities that, with the right amount of capital and Western know-how, could flourish into profitable enterprises.

How the global economy has changed! Instead of Western bankers applying their monetary rules and economic guidelines to other regions, it's the emerging economies that are giving the Western firms a lesson or two in banking. Frankly, I think the reason that there are generally fewer old-line merchant banks around today is because banks in the emerging economies are becoming innovative and technological powerhouses that can attract and invest capital quite well by themselves.

To see how radically the banking sector is changing, take a trip to Kenya. There you will find an entire national economy embracing a digital currency over a mobile payment system. About a decade ago, the nationalized phone company of Kenya, known by the formal name of Kenyan Posts & Telecommunications, evolved into the publicly traded company Safaricom. About five years later, the executives at Safaricom introduced a product that would disrupt both banking and telecommunications in one fell swoop. This marvelous innovation is known as M-pesa. The idea behind it is that any Kenyan with a mobile phone (in other words, just about every Kenyan!) could take old, paper shillings and transfer their value onto the SIM cards in their phones. Those digital payment units became known as M-pesas. With the creation of this mobile currency, you don't need to have a bank account. You don't need to carry around or store shillings. You can simply transfer M-pesas from one mobile phone to another in order to pay for groceries, taxi rides, clothing, utilities, and even doctors' bills.

I think the success of the M-pesa is a great example of reverse innovation, where innovations from emerging markets gain appreciation or even become disruptive in advanced markets. Reverse innovation is also permeating other industry segments. In the healthcare space, for example, GE has developed a handheld ultrasound scanner to cater to the rural markets. The device, available in the Chinese market at an affordable cost, is now being marketed in developed European nations and the US.

For me, M-pesa also stands as a lesson on the shortcomings of legacy systems. Enterprises and their customers can become so beholden to a legacy system that despite the rapid change and innovation around them, they will plod on with their legacy technology in the hopes that the world will stop changing. The truth is: if a product is superior, accessible and affordable, consumers across the globe will accept it. The origin of the innovation, developed countries or emerging nations, is of least significance.

One of the things that large, Western retailers are wrestling with is how to expand into the emerging markets. Those markets are where most of the globe's financial growth will be in the coming generation. The Western firms are beginning to learn that to do business in the East, you have to think of banking not in the traditional sense but as an innovative part of a greater digital communications system. People will pay for goods and services with mobile currency, but they will also track their financial holdings and even use those same mobile phones to make orders and analyze distribution networks for their growing businesses.

Banks in the West would do well to make sure their consumer-focused computing and software platforms run seamlessly in any global market. If these banks don't start looking eastward, they're going to miss out on a lot of opportunities. So will the Western retailers and CPGs with similar expansion plans.

In that spirit, I leave you with this story: Few enterprises flex such economic strength and prestige as do Goldman Sachs and UBS. Recently, both Western banks used their impressive array of technology analytics and world-renowned economists to predict the winner of the Brazil-Germany semi-final in the World Cup. Both of these banks, in what was seen as a lighthearted public relations display, chose Brazil to win the game. (Germany won.)

Economists at Goldman Sachs reportedly analyzed 14,000 past soccer matches. It turned out that they were correctly able to predict the outcome of just 38 percent of the "group stage" matches. The mantle of what region runs the global economy is truly evolving. What works in one region doesn't necessarily ensure success in another.

July 16, 2014

What We're Learning From Jimmy The Robot

Posted by Dr. Srinivas Padmanabhuni (View Profile | View All Posts) at 6:52 AM

Robot Has New 'Applications' for Technology [Source: http://www.youtube.com/watch?v=6i-gRmlvI8I]

One square inch. That's the size of the circuit board that powers a marvelous new device called Electric Imp.

Electric Imp - it's small and cheap (about US$30) and hooks into its own Cloud. The Imp connects to the Cloud via a wireless network router. A hobbyist or someone wanting to start a small business can use this product to connect whatever devices he wants to the Internet and control them accordingly. Is it any wonder that the Imp's creator used to work on the iPhone? He was trying to find a better way to formulate a Cloud-based system that would allow him to turn the lights on and off in his home when he invented this small Wi-Fi card.

What's fascinating about the story of the Electric Imp, is the democratization of technology.

Another testament to this democratization is Jimmy. Jimmy's not a real person - he's a robot. But he's a product of the Intel Corp., which plans to sell Jimmy later this year. Recently, in New York City, Intel put Jimmy on display and it reminded me once again of how promising and powerful the Internet of Things (IoT) will become.

An Intel employee at the company's Future Showcase 2014 said that robots will someday become as commonplace as the Internet. The reason, I think, is that the Internet will run robots. As the Internet of Everything allows us to connect to everything from our climate control systems to household appliances, we'll look at robotics differently than we have in the past. Because people can make robots with 3D printers, they're going to become more accessible and part of the IoT story as it plays out. I might want to build a robot that takes commands remotely and fetches my slippers. You might want one that turns on the lights before you enter a room. Whatever the intended task, you design the machine to perform those tasks as optimally as possible and then simply attach them to an Intel-provided skeleton.

IoT is essentially breaking down the barriers between robotics and the manufacturing of household appliances. Because of an Internet connection to a Cloud, data goes out but it also comes in. Any device becomes smart from such a connection. It learns how to operate - dare I say "behave" - based on the data it receives back from the Cloud. Given the right schematics and design, I have no doubt that consumers will be creating their own walking coffee makers. Imagine having your first cup of the day delivered to you at bedside by a robot whose arms and legs you created off a 3D printer.

We can learn a lot from Jimmy. Cloud-connected hardware is going to transform the world quicker than we think. And the interest in connected appliances like Jimmy is going to create tremendous consumer demand to which technology enterprises should be catering. If the average consumer can create and operate a robot that performs menial tasks, then the large organization will be able to engineer vast solutions and systems that will streamline the business world.

While we are really looking at this exciting new world of IoT with cloud connected hardware, due consideration is also being paid to critical issues of privacy, and information protection, a key consideration which needs to be simultaneously looked alongside the myriad possibilities of this technology.

Over all it is exciting enough to conjecture that we're only at the beginning of this industrial transformation.

July 14, 2014

Leveraging the Internet of Everything

Posted by Sanjeev Arya (View Profile | View All Posts) at 6:26 AM

Maximizing value from data explosion - social development with insights than mere intuition [Source: http://www.youtube.com/watch?v=Y-Bk5vgavYk]

When oil prospectors began striking it rich in the American Southwest during the 19th century, each one would hope for a "gusher." That meant that he had drilled deep enough into a well filled with oil and the pressure under the earth would force it up in a large plume. Gushers took a while to cap, and millions of gallons could be lost over the landscape until rig workers got them under control. But once it was capped and a pipeline brought in, the prospector could expect to tap into exponentially more oil for weeks and even months. The story of the 19th century oil boom is not unlike what's happening today with the global data boom.

Enterprises are benefiting from the fact that exabytes of data (that's 10 to the power of 18) are created every day. The most successful enterprises control those gushers of information, cap them off, and direct them in pipelines to the right places where that data will be parsed and utilized. The World Economic Forum's latest Global Technology Report (GTR) points to this data explosion as part of the inevitable growth of the Internet of Things. So far, only a small fraction of things that have the potential to be connected digitally are indeed connected as such. As more devices - from sneakers to toaster ovens - become connected to the IP networks, all that data will begin a profound transformation. According to the WEF's experts, we're going to begin to see significant amounts of data result into actionable information.

How? Well, when enterprises have information, they have value. Indeed, as soon as 2020, there will be more than 40 trillion gigabytes (or 40 yottabytes) of digital data, according to the report. That's like allocating 5,200 gigabytes to each person on the planet. Yet at the moment only about 1 percent of the world's physical devices are connected to an IP network. The more the Internet of Everything is able to connect those devices, the sooner organizations will be able to analyze all that data and create valuable insights.

At the base of the data pyramid is the actual IoE, generating huge amounts of raw data. Analysis and analytics transform data into information. But the pyramid doesn't end there. All of that actionable information is further refined and becomes knowledge. Finally, according to the WEF, an enterprise can use that knowledge to discover insights and make informed decisions, which leads to the top of the pyramid: wisdom.

This reminds me of a clever model that astrophysicists like to talk about when helping people understand the interconnected nature of the cosmos. It describes a single butterfly that flaps it wings in central Africa causing, in due time, a rainstorm over a western Canadian mountain range. That's kind of like the current state of Big Data. So much of it exists, and each data point can cause a chain reaction that will eventually cause a number of other events. So until we harness all that data and make use of it, it's like sand slipping through our fingers.

Enterprises aren't the only entities that are beginning to benefit from the power of information. As more devices become connected to the greater world and the IoE continues to grow, entire nations and regions will begin to increase their productivity and spur economic growth. The WEF is understandably a fan of technological forces that can be harnessed for the greater good. I think it's exciting that enterprises are leading the way and showing governments around the world that as more of their citizens become connected, the information their actions generate will result in significant social development. So the IoE is going to go well beyond just connecting, say, your front door lock to your tablet. It's going be about to tracking diseases, proactively monitoring and eventually, eradicating them because of the collective wisdom that comes from a connected world.

July 11, 2014

Should Media Consumers Worry About Consolidation?

Posted by Vaibhav Bakre (View Profile | View All Posts) at 5:33 AM

AT&T buys DirecTV in multibillion dollar deal [Source: http://www.youtube.com/watch?v=kS_lkNXL68g]

Very often we hear of industry consolidation in the media and telecommunications space. Take the recent announcement by AT&T to acquire DirecTV, for example. The press releases that went out talked of how the sheer size of the combined company would have many benefits. The belief is that a merger of this stature would bring economies of scale, enable investments, and help the end-users--the customers.

Consolidations like this, however, are not just for the customer's benefit. The truth is, Pay TV companies are facing tough competition from new entrants in the market, like Netflix and Amazon Fire TV. These new entrants not only stream music and content via the Internet but also create their own content! Moreover, the customer demographic for Pay TV companies is also changing. Younger consumers don't have the kind of loyalty to the traditional TV medium that their parents do. They stream content on their mobiles.

No doubt, market is becoming more dynamic each day. Therefore, it is imperative for Pay TV companies to continuously innovate. A merger can provide both players with an opportunity to bring their strengths to the table and together, they can evolve with the changing, dynamic times.

Then there's the question of an increasing customer base with every merger. According to reports, the AT&T and DirecTV consolidation will triple AT&T's customer base. Naysayers in the industry, who were alarmed at the financials of this particular deal, wondered what else a company like AT&T could do with the money being spent to buy DirecTV. In such a scenario, the question we would have to ask ourselves I this--is it better to have five companies spend $1 billion each investing in technology transformation and spreading it over, say, 5 million customers? Or is it optimal for one company to spend between $3 billion and $4 billion on a customer base of say 25 million? I would have to answer the latter. Scale matters when investments are so massive. If spending a little more money and joining hands with another company will help companies to reach out to a much larger customer base - then that's the way forward.

Thirdly, there remains the tension between content producers and the distributors. I think it's helpful to think about this issue in the context of the well-known "5 Forces" theory from Harvard Business School's Michael Porter. Media producers are churning out content. Then the television networks and syndicates buy the content and distribute it. As it stands now, there are a handful of large content producers and several Pay TV companies. This is a classic case, as in the 5 Forces, of power tilting towards suppliers. Everyone who knows this industry understands that content is king. So what do you have when fewer suppliers are negotiating with more buyers? Nothing close to an equilibrium, that's for sure. No wonder every time a content renewal deal is secured we see a bit of old fashioned posturing and arm-twisting from both sides. Now the buyers are consolidating. If anything, the situation is providing buyers with a much-needed bargaining power.

Mergers and acquisitions are here to stay. But, it's important to remember that consolidation is only the starting point. Companies cannot rest easy, as they are still competing with new, emerging players. To stay ahead of the game, they have to remain nimble in order to offer positive consumer experiences and increase consumer mindshare. Also, America's Federal Communications Commission (FCC) and other regulatory government agencies have to play assertive roles to ensure that consumers will benefit from these mergers, in the short and long runs.

Certainly, these mega-mergers are game changers in the industry. However, consumer satisfaction is at the top of every enterprise's mind. At the end of the day, consumers will still have a bouquet of choices at their disposal. There's nothing to worry about really, from the consumer standpoint.

July 7, 2014

Why 'Digital' Emotions Can Be Powerful

Posted by Puneet Gupta (View Profile | View All Posts) at 4:56 AM

Exclusive: Cannot control emotions of users, Facebook COO Sheryl Sandberg tells NDTV [Source: http://www.youtube.com/watch?v=9EVO-ZKujj8]

If the onset of the age of Big Data has taught us anything, it is that in the ultra-competitive global marketplace, your enterprise must be able to harness the power of Big Data and ultimately transform it into insight.

The quest to excel in the field of analytics and corporate IT involves the parsing of raw data in such ways that sometimes, just sometimes, consumers feel that their privacy has been compromised. It's an ongoing debate that gets more interesting and intense by the day. And yet, the fruits of Big Data and analytics give us better products and services that are aimed and customized more closely to our individual needs. Our expectations become heightened because enterprises keep raising the bar when it comes to the quality of their interactions with us and the way in which they offer us their wares.

So I was bit surprised at the brouhaha over a Facebook project. It's just been reported that a few years ago, the social media giant conducted an experiment with the tools it had at its disposal. The company wanted to see 1) if it could change the overall, mass emotional state of its users as well as 2) to influence them to post more positive or more negative material on their personal pages. To do so, Facebook's data scientists wrote an algorithm that automatically omitted words in newsfeeds that were associated with either positive or negative emotions. They conducted this experiment for one week on some 700,000 customers without letting them know about it. This was a serious experiment: scientists from Cornell University and the University of California worked alongside Facebook. The results of the experiment were recently published in a prestigious academic journal: the Proceedings of the National Academy of Sciences.

The experiment itself addressed a longstanding notion that when someone sees all the great things that are happening to other people on Facebook, they feel down about their lives in general. But the Facebook experiment proved that notion to be a myth. When people had more positive words placed in their newsfeeds, more of the content they placed in their updates was positive as well. When they experienced more negative terms, they, in turn, updated their profiles and pages more negatively.

That's amazingly helpful information for any enterprise to have at its disposal. Knowing that you can change the emotional state of a large group of digital consumers is quite useful, especially when it comes to making product launches extra special or communicating with customers about erroneous information that might be floating around cyberspace about your company. Scientists who have read the findings in the Proceedings of the National Academy of Sciences say that these results have huge implications for digitally focused enterprises.

This experiment is yet another reason why organizations are digitizing rapidly and being as consumer-focused as possible. We digital consumers are a very emotional bunch!

July 3, 2014

Disrupt Or Be Disrupted. Really?

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 5:41 AM

What do banking customers want? [Source: http://www.youtube.com/watch?v=NU0cBL_Anng]

Innovation - literally "to make new" - hasn't always been considered all that desirable, in the corporate world or anywhere else, for that matter. Executives, sometimes, become so focused on pleasing customers and shareholders that they miss the forest through the trees. Indeed, these executives don't fail because they make bad decisions; their businesses fail because of their good decisions! As they focus on bringing more and better products to market (so-called sustaining innovation), the established enterprises tend not to see other things that customers want.

Disruptive innovation doesn't always work out the way it's put forth in books. And the financial services sector presents some interesting examples. A disruptive innovation to the banking industry in the late 1990s was the creation of rolled-up, ready-for-sale products like subprime mortgages, collateralized debt obligations, and mortgage-backed securities. Banks were reaching a whole new audience and creating an untapped market with these "brilliant" innovations.

One banker, the CEO of Canada's TD Bank, didn't like what he saw and instead focused on things like customer service. At the time, he was criticized for not being a disruptor. He kept bank branches open on weekends and past 5:00 pm on weekdays. He made sure customers could bring in their pets and that children could put loose change into coin-counters. Customers received free ballpoint pens. Years later, as the financial services sector was collapsing from the weight of those failed debt products and the global economic crisis ensued, TD Bank was instead expanding quickly throughout North America.

Should we fault TD Bank's CEO for not jumping on the disruptive innovation bandwagon? Of course not. He innovated his organization in a traditional (i.e., non-disruptive) manner and weathered the global economic crisis.

Like lots of theories and ideas, it's easy to get caught up in the hype. Almost anything that sounds good and comes out of a top business school can be especially attractive. But I think at the end of the day, it's not where we create ideas or how disruptive they are in relation to a given market. It's the quality and lasting power of those ideas that truly count.

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