Innovations are funny things. Often the greater their
capacity for doing good, the more suspicions they arouse.
Certainly, there are wonderful innovations we embrace as
soon as they appear–marvels like the iPod, for example. But these are
generally improvements on existing technology, not radical steps forward.
If you’re old enough to remember the innovation of the
personal computer, do you remember your initial reaction to it? More likely
than not, it was fear coupled with dismissal. It took many intrepid souls many
years to show us, bit by bit, how these devices could actually help us in our
day to day. Today, we can’t live without them.
The fresh air of successful innovation
Lisa Jackson of the U.S. Environmental Protection Agency
(EPA) gave a speech to the National Press Club this year in which she described
the fear and trepidation that often accompanied mandates for environmental
For example, 30 years ago, the EPA used the Clean Air Act
to phase in unleaded gas and catalytic converters. Many major automakers
opposed the measures. The Chamber of Commerce claimed “entire industries might
collapse.” The mandate was positioned as a choice between economic well-being
In fact, the auto industry did everything but suffer.
Innovation thrived, as an entire industry was created around pollution control.
The Engelhard Corporation, which led the commercial production of the catalytic
converter, was purchased in 2006 for $5 billion.
What’s more, the initial cost of the mandate has paid
itself back 10 to 13 times to society. By 1985, the reductions of lead in our
environment had estimated health benefits of $17 billion per year.
So what does this have to do banking transparency?
Transparency–the new catalytic converter?
Today, we are witnessing the results of a massive bank,
mortgage, real estate and credit meltdown. Much of the blame has been leveled
at an industry that is virtually inscrutable.
At the same time, we are seeing the rise of transparency
as a new reality in doing business. Social media and social / environmental
consciousness has created a new generation of consumer–one that demands to be
involved in the decision-making process of companies they support.
Confidence in banks is low. Employee morale is low. And,
as we see from JPMorgan’s halting 56,000 foreclosures, tragic mistakes continue
to be made with little outside oversight.
Yet, roadblocks continue to be thrown up in the way of
greater banking transparency. Regulations and ‘status quo’ thinking seem to be
conspiring against improvement.
Creating safer, sounder banks through greater
transparency seems to parallel the mandate to create a safer environment
through catalytic converters. If history repeats, transparency could bring new
vitality and confidence to our financial system.
The current resistance to transparency is an opportunity
for innovators. Lowering the fear factor around this sort of revolutionary
innovation can be offset by developing an innovation portfolio, comprised of:
* Evolutionary innovations–modifications to existing
products to keep current brands fresh and profitable.
* Fast-fail innovations–ongoing moves to transparency
that are put to the market to test. If they fail, they are improved and
retested. Market learning, and better innovations, result.
* Visionary innovations–visions of transparency for the
future. Technically impossible at present, they will nonetheless provide a
north star to steer by.
HOW CAN WE BUILD SAFER, SOUNDER, MORE SUSTAINABLE FINANCIAL INSTITUTIONS?
Join Bruce Cahan, Ashoka Fellow, founder of the GoodBank model, Sheila Oviedo, Analyst with Jantzi Sustainalytics and Marc Stoiber, VP of Green Innovation at Maddock Douglas to explore the answer to this question and more. CLICK HERE to register for the Webinar.