Voice of the Industry

Why the best innovators don't actually innovate

Wednesday 19 October 2022 12:17 CET | Editor: Vlad Macovei | Voice of the industry

Ritesh Tendulkar, Chief Innovation Officer at Modulr, shares his perspective on how innovation works in the payments industry and what Modulr does to encourage it.



When I’m asked about Modulr’s approach to innovation, my response is somewhat surprising, because we believe that innovators don’t innovate.

Now, don’t get me wrong – we’re not saying innovation is something that just happens. But it’s also not something you can just do. 

We can only judge innovations by looking at them in hindsight. There is a litany of failed products and ideas that promised innovation but never took off. At this point, they may have been innovative and interesting, but they didn’t have any impact.

This is why we can look at something like embedded payments and know that it’s a genuine innovation – because we can see the impact that it has on our customers.

That impact is what defines innovation, and you don’t know what’s going to have an impact until it’s out there being tested.

Defining innovation

Part of the reason why I say ‘innovators don’t innovate’ is because it’s the kind of term that companies don’t get to decide for themselves. It’s down to the people who use it whether it’s innovative or not. 

Nintendo created its first ‘virtual headset’ back in the early 1990s and Apple created the Newton Messagepad. Both of these were certainly ‘innovations’ (and fun) but didn’t have any real impact on the status quo; the Newton is probably best remembered for appearing in The Simpsons with an early joke about autocorrect and its ability to recognise handwriting.

The point here is that if something innovative fails to land correctly, it isn’t an innovation. It’s an experiment that was put out in the wild too early.

And really, that’s what innovators do. They experiment. They build smaller improvements and, over time, those improvements and changes add up to something that can be game-changing. 

When we ask ‘what products have people considered to be a major innovation’, Apple’s iPhone is almost always at the top of the list. And that was a perfect example of what I’m talking about – that wasn’t a single innovation. That was the culmination of several different, smaller innovations that Apple (and their competitors) were working on at the time. But it put them together in a game-changing way.

So what is the key to innovation and how do you encourage it in your organisation?

Encouraging innovation

We believe the key to innovation is experimentation. While innovation isn’t something that you can plan, experimentation is.

Now, this doesn’t always come easy. You can’t just hire innovators – after all just because someone did something innovative elsewhere doesn’t mean they’ll be able to do the same for you. Instead, you have to find those in your organisation that are more innovative and encourage them to do so.

At Modulr, we created Modlabs as a way to focus on this.

There’s a classic idea of spending 80% of your time on day-to-day work and 20% of it thinking towards innovative and creative ideas. But, in reality, that’s unlikely to happen, especially in modern, scaling businesses. That ‘20%’ is great in theory, but it’s time that keeps getting put back in favour of completing more of the day-to-day (especially when that gets added to).

So, instead, we created a department based around experimentation, where we work with those who have shown an aptitude for innovation and creation. We spend more time on these new projects and product ideas, which includes the thinking time that this requires. So, by increasing the ‘thinking time’ for those involved in creation and experimentation, we see more of it than a lot of companies.

At Modlabs, we work on these new products and ideas, iterating quickly and getting them to a point where they can be tested. Once they’re tested, they can begin to be rolled out.

Getting buy-in

To do this, you need buy-in. In any workplace, working on something that isn’t as deliverable or deadline focused as some other departments can be difficult to explain and justify. Far more places talk about the need for ‘thinking time’ than actually support it in a real way and see the value in it. 

It’s not just convincing the leadership that the time is valuable either. It also needs to be sold to colleagues as well, especially when they’re focusing on their workloads and deadlines – and, as with any fast-moving organisation, we have a busy product roadmap. And there’s a risk involved, as we don’t know what will work and land well.

Our approach to this has been to create an ‘innovation council’ – this is made up of volunteers from across different areas of the company, who can bring their expertise and understanding of customer issues to the table. They help us with feedback, testing, and by bringing customer pain points that we might be able to consider as future projects.

So, when you’re thinking about buy-in, it’s vital to not just think about your leadership team. While they’re vital, it’s also about keeping a happy ship overall, and making sure your entire company can see the value in what you’re doing – it's a branding exercise.

Measuring innovation

Earlier, I said that innovation can only be measured in hindsight. Experimentation is useful and worthwhile, but it needs to have an impact in order to be relevant. 

For us, this means concentrating on getting things done and out, so they can be tested and measured. We iterate quickly to get to a minimum viable product, and get feedback from colleagues and customers. This is the most important step, because the experiments need to be stress-tested and any kinks need to be worked out.

The worst-case scenario is that you put out something that isn’t tested properly. That’s how you end up as a punchline in The Simpsons. However, by building products quickly and testing them, you gain insights into what works and what doesn’t. And that’s how you build those small improvements quickly and in a way that has relevance and impact (and how you find out that something doesn’t work in the way you hoped in time to stop going too far down the rabbit hole).

And, as we saw with the iPhone, those small incremental improvements can add up and become something game-changing.

So, innovators don’t innovate. They think, they create, they experiment, they test and iterate and optimise. Because that’s what innovation needs. If it works out and has impact, that’s when it can be judged to be a true innovation.

You can find out more about Modulr’s approach to innovation, as well as disruption, infrastructural efficiency, and monetising payments, in its latest ebook, Future Strategies: Five Focus Areas for Forward-Facing Businesses.

About Ritesh Tendulkar

Ritesh is one of Modulr’s co-founders and was instrumental in designing, building, and running Modulr’s API platform as Chief Architect, then CTO, and now Chief Innovation Officer. With proven success in complex IT systems, specialising in fintech, Ritesh previously worked at ClearScore (where he helped recruit the senior leadership team and launched the first version of their product) and CorporatePay (where he designed and built their technology platform, launching multiple physical and virtual card products).

About Modulr

Modulr enables businesses to embed payments directly into their own platforms without needing to build complicated payment systems, become regulated or manage complex payment network membership. Delivered through the FinOps hub, Modulr enables 200+ clients to automate, control and embed payments, processing an annualised transaction value of more than GBP 100 billion. To find out more, please visit: www.modulrfinance.com.

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Keywords: payments , embedded finance, embedded payments
Categories: Banking & Fintech
Companies: Modulr
Countries: World
This article is part of category

Banking & Fintech


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