Peter Burman, President of EF Corporate Solutions answers the strategic question on how the financial sector can foster a culture of creativity and innovation in the post-recession context.
The economic crisis sparked a wave of interest in innovation as the best way to get ahead amid high volatility. As a ‘growth’ word, “innovation” is an easy fall-back term for businesses. However, reams of research would indicate that there is still a gap between wanting to innovate and achieving real break-through growth.
‘More innovation’ isn’t the answer; communication is. Communication embodies innovation. As the world gets flatter and financial models, operations and processes are standardised against a global benchmark, cross-border operations will continue to thrive, opening up previously unchartered geographies and sectors. Keeping pace with these developments, working across time zones means time really is money and efficiency is king. Just as a common currency facilitates porous borders and greater opportunities for economic growth, we believe that a common working language is as much a currency of exchange.
Productivity and communication
Language barriers have a broad and pervasive impact on business operations. Firms with a high degree of multilingualism and understanding of other cultures are those that have room to innovate and come up with globally relevant solutions to otherwise time-worn practices in the financial sector. A common working language such as English, forges a stronger bond between those doing business, which increases efficiency, productivity, and quality.
Language proficiency may also promote a more open work environment, an issue of significant importance for many multinational banks that have acquired smaller local banks in emerging markets. In adapting the changes in management, these employees may feel disenfranchised if they have a language barrier to contend with as well. This can be a direct threat to employee loyalty and in turn the growth of multinationals in local markets. Similarly, companies headquartered in the other side of the world can be perceived as faceless entities that are far removed from local issues if employees are encumbered by a language barrier.
In line with the realities of today’s landscape, our research shows that the finance sector clearly faces a bottleneck in innovation as employees lack confidence communicating with colleagues in other countries. The commissioned study conducted by the Economist Intelligence Unit– The innovative company: How multinationals unleash their creative potential – indicates that creating new products and services was a top-three priority for 54% of survey respondents, more important than cutting costs or investing in talent. While the sector is quick to establish its priorities, financial firms could fail to capitalise on investments to boost innovation due to confidence issues in communication skills.
The worldwide study found respondents’ confidence levels drop from 96% when communicating with colleagues in their own departments to 72% with colleagues in other countries, suggesting a massive barrier to cross-border collaboration, a key component in the sharing of ideas leading to innovation. Ultimately, it’s a priority for companies to rethink the skills people need to be confident in sharing ideas across hierarchies, departments and countries.
Does innovation stop at the boardroom?
Developing an innovative corporate culture requires creativity and international communication. The financial crisis spawned thousands of start-ups that thrived because of their small size, agility, and flat work structure. In large organisations with offices all over the world, democratising innovation may be a challenge, but it seems to be one that the industry cannot shy away from. Our research found while CEOs use idea-sharing processes a lot, engagement tails off outside the C-suite, with managers and department heads less likely to use them. At a time when departments were made redundant en masse, it’s easy to see why money couldn’t easily be funnelled into training and employee development. Now, as the banking and finance sector has reset itself and aims its trajectory upward, scaling up employee skills and strengths has become a necessity.
Innovation is not a quality inherent only in a fortunate few—it’s a way of thinking and behaving that is intrinsic to human nature. An organisation’s job is to foster the right climate to unleash its employees’ innate innovative tendencies.
Cultivating the culture of innovation
Our research suggests that a creative work culture is one in which each employee feels encouraged to suggest ideas, and in which there is a high tolerance of failure. This strongly resonates with start-ups and communications firms that rely on experimentation and trial and error to strike gold, but for finance firms and banks, risk aversion is a lauded trait for obvious reasons. Breeding a creative environment can be particularly challenging then, as there is little to no room for mistakes in the sector.
While innovation and creativity needs to pervade organisations equally bottom-up as top-down, in finance sector, firms need to transform themselves into business partners that can help innovation teams succeed. For this, change needs to starts at the top, with a CEO defining the vision and setting the framework for creativity in place, which includes accepting that individual projects may fail if the overall strategy is to succeed. Having senior personnel drive the project and communicating these ideas clearly can facilitate rapid adoption.
Reconciling with regulations
Regulation is an extremely involved process that requires collaboration between numerous multiple language banks. In Europe, these banks are involved in heavy negotiations before the European Banking Authority issues regulations. Multiple interpretations of terms can create multiple iterations of the same regulation—a dangerous loophole for those capable of exploiting this. In a globalised and multilingual society, the meanings attributed to terms in banking have a direct impact on the overall soundness of the financial system.
No ‘holy grail’
There is no such thing as a ‘holy grail’ when it comes to creating a culture of innovation in the finance sector. Establishing an environment that breeds creative thought, and making it take root depends on understanding the climate. It’s important to note how firms react during periods of experimentation and creative disruption, and which structures, behaviours, and incentives need to be encouraged. Innovation is firmly entrenched in communication, and ultimately, an idea is only as strong as how it is communicated.