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Jo Geraghty

Geraghty

The Rise of Innovation Zombies

Date added: 15th May 2018
Category: Innovation Culture

In recent years the term Zombie has been applied to companies which are insolvent, only being kept alive thanks to outside support from banks or the state.

Whether you are a fan of horror movies or not, you will no doubt be familiar with the concept of zombies; beings which refuse to accept that they have died, capable of movement but not rational thought, infecting and killing others almost at random. In recent years the term has been applied to companies which are insolvent, only being kept alive thanks to outside support from banks or the state. And if you think companies such as these are few and far between, think again. An IMF report in 2016 estimated that globally there was some $12 trillion of vulnerable assets in zombie banks. Add in zombie companies and that amounts to a significant worldwide problem.

But there is another definition of zombie companies which doesn’t specifically relate to their current solvency levels. That definition looks at organisations which are so inward looking that they can’t see failure coming. These are the businesses which still don’t ‘get’ innovation and whose unchanging business model leaves them wide open to disruption from challenger organisations. And the worst thing about it is they don’t even know.

I was recently asked if I could identify which were the zombie banks, using lack of innovation awareness as a definition. My answer is quite simple;

Pretty much every financial institution is in danger of falling prey to the zombie mentality unless there is concerted effort on the part of the leadership to ensure that every process, every decision, every action is taken with customer excellence and innovation in mind.

And that definition doesn’t stop with the banks. When we wrote our book ‘Building a Culture of Innovation’ we listed a number of barriers to innovation including risk appetite, legacy systems and lack of technology capability. Fast forward to last October and an EFMA-Oracle white paper ‘making innovation pay’ suggests that those same barriers to innovation are still prevalent across the financial sector. Add in continuing anecdotal evidence about financial institutions which put internal process ahead of customer excellence and the overwhelming impression is that the zombie army is alive and well in the financial sector.

Why does this matter? Quite simply because not only are zombie institutions wide open to disruptors, their legacy attitudes and systems negatively impact on their private and corporate customers. When people are making decisions based on what their banks can’t do rather than what should be possible then that is quite simply wrong. As a financial institution if you are failing to innovate and deliver customer excellence now then you are potentially affecting people’s borrowing, investing and business attitudes and abilities for decades to come.

If you put a hard business hat on it then innovation is about staying ahead of the game and in the process attracting and retaining customers. And in our book we do partially acknowledge this when we talk about one of the three planks of innovation as being to drive growth for the creator. But we also see innovation as solving genuine problems and adding real value to the customer and if these aren’t your primary goals then the disruptors will come in and your customers will walk. Could you be a zombie institution? Maybe it’s time you took a good look in the mirror.

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