Written by Omeed Mehrinfar, Director of Plug and Play Fintech in Europe. Join Omeed at Money 20/20 in Copenhagen on June 26 where he will go on stage to discuss best practices for corporate innovation.
In the movie, “Lucky Number Slevin,” Bruce Willis’s character coins a term originating from a 1926 Jazz Song: “Kansas City Shuffle.” The phrase refers to misdirection, by guiding people to look one way you avert their eyes from the truth.
In regards to corporate innovation, it isn’t quite the same as Bruce Willis’ term. We are not talking about an assassination plot against two of New York’s most notorious mob leaders. Instead, we are talking about concealing the truth of innovation behind their four walls.
It’s a clear indicator that fintech is causing a threat to financial institutions when they are forced to stop turning a blind eye to innovation. Successful startups like SoFi, N26, Betterment, and Lending Club are encouraging incumbents to proactively engage with Fintech startups, but the reality shows that not all stakeholders are willing to take the next step and would rather just promote themselves as innovation leaders.
In the long term, this will cause harm within an organization when fintech begins to eat bigger chunks of the financial market away and, in turn, chomps at the revenue streams too.
There’s a disconnect between the innovation lab and the rest of the organization.
Executive committees typically leave the head of innovation across business units (Chief Innovation / Digital / Technology Officers) to create their own matrixes of what defines success.
As a result, a number of corporate innovation leads will spend their budget building glamorous labs and host startup pitch sessions to brand themselves as a startup-friendly and forward-thinking enterprise.
The problem with all the expenses innovation practices incur is that, for the most part, it doesn’t generate many proactive engagements for Proof-of-Concepts (PoCs) or investment.
It does, however, lead to a lot of “great conversations.” These lavish initiatives create appeal today, but eventually, if these expenses continue to accrue without any tangible returns from startup engagements, this could totally wipe out innovation from an enterprise’s overall strategy.
This would, in-effect, leave business units in a disadvantageous position as startups and other competing entities begin advancing their product and service offerings.
So where does the “Kansas City Shuffle” come in?
Well, having a smoke and mirrors tactic with no tangible results places the innovation leads in the limelight at the expense of the enterprise’s long-term well-being.
Most of the time this allows them to grow through the ranks and gain recognition for making a lot of noise. In parallel, decision-makers are kept busy looking at the bright lights and company culture, while in actuality, no actual value is being created for the business functions to augment their products and services for a dramatically changing industry, market, and customer demographic.
At Plug and Play, we’re working with close to 190 of the largest corporations, of which, over 75 are financial institutions. By working as a third-party innovation platform, that sits alongside all business units, we are able to successfully work with corporations in a top-down approach; whereby, executive committees and innovation leads jointly, work with the startups and experts in our ecosystem to understand their capabilities and limitations when it comes to new technologies.
Come see us at Money2020 Copenhagen on June 26 to hear more about how we have helped partners like BNP Paribas and Daimler AG successfully develop strategies and tactics to work with startups.
As for the “Kansas City Shuffle”, make sure to look to the right every now and then, even if all the raucous is on the left.
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