Three Ways Community Bankers Can Increase Their Innovative Thinking

June 11, 2021

By Charles E. Potts

According to the 2020 Global Innovation Barometer from GE, COVID-19 had a significant downward influence on innovation, with 42 percent of business executives reporting a negative impact on their ability to innovate. However, community banks found themselves in a different category—increasing their innovative thinking and nimbleness during the pandemic.

Keeping that momentum started with asking why innovation matters, as discussed in my recent Independent Banker column. Once we know our why, we face a greater challenge: solving for how to make innovation a priority. I’ve been posing this question to community bankers, and I’ve summed up their words of wisdom in three salient tips:

  1. Be willing to fail. Harvard Business School professor Clayton Christensen estimated that 95 percent of all new products fail. And while leaders use this “failure first” adage frequently, few truly live it.

    That’s understandable as most businesses don’t have the resources to let 95 percent of go-to-market plans sink. But there are options to encourage a visionary approach to innovation like removing success criteria from initial product brainstorming.

    If you, as the leader, encourage outside-the-box problem solving, your team will feel empowered to get creative with their ideation—which likely will lead to viable solutions. And, with your nimble structure, you have the flexibility to try new ideas on for size.

    “Because we’re small, we’ll take risks that others won’t,” shared James S. (Chip) Mahan III, the founder, chairman and CEO of $8 billion-asset Live Oak Bank, in Wilmington, N.C. “We care about building a great bank, so we’re going to swing for the fences.”

  2. Don’t focus on the end state; iterate. After many attempts at inventing the lightbulb, Thomas Edison succeeded. When he did, a reporter asked, “How did it feel to fail 1,000 times?” to which Edison famously replied, “I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.”

    Edison was ahead of his time. This concept of constant product enhancement aligns with today’s technological methodologies that require adaptive planning, evolutionary development, early delivery, and continual improvement. The takeaway: a product doesn’t have to be perfect to launch.

    “Innovation is process-driven,” said Kimberly Kirk, executive vice president and chief operations officer at $1.65 billion-asset Queensborough National Bank & Trust Co., in Louisville, Ga. “It doesn’t have to be some big, massive thing. It’s small things every day that help our customer experience.”

  3. Maintain a healthy curiosity. I came across this notable quote from a Harvard Business Review article which states that, “When we are curious, we view tough situations more creatively.” In fact, 92 percent of employees credit curious people with bringing new ideas into teams and organizations.

“Seeking to understand is where we have the opportunity to be innovative,” advised Jill Castilla, president and CEO of $322 million-asset Citizens Bank of Edmond, Okla. “That growth mindset is where it starts … [it’s] less about protecting what we have and more about ‘How do I lean into this and really be part of something to lead where community banking is going in the future?’”

We’ll be posing this question during Fintech South, where I’ll be moderating a panel featuring Castilla, Kirk, and James Capolongo from Live Oak Bank, discussing small business success stories.

By sharing their successes and the winding road to get there, these bankers are blazing their innovation path and providing insight and inspiration for others on an innovation journey.

Charles E. Potts is ICBA senior vice president and chief innovation officer.