Reshaping open innovation for service industries

Services companies require different approaches to open innovation due to the different inherit models of sharing information during and after the creation of new service models. In a world where transparency is so important and pushing the boundaries of company secrets, how do we protect our inventions if these inventions are prominently in the intellectual space?

So, lets take a look at innovation in financial services. Banking innovations proliferate at a blistering pace as people move from company to company and as banks share information in semi-post recession (not that it didn’t happen before). Over time common ideas are copied and mutations of ideas are used to drive competitive products and services that require automation. This pace is fueled by the use of technologies as they become pervasive in other industries. The social integration and adoption of technology as it becomes integrated into the service platforms, further push adoption across all interaction channels.

Mobile operators try to protect their inventions, but at the end of the day they need mass adoption to drive growth. This results in invention “leaks” that are needed to push adoption across various different technology standards. Furthermore, the relentless innovation in technology devices for example the new tablets including Samsung Galaxy and Apple iPad, all contribute to educating the world that the device is cool but the service is essential. The telecommunication industry is under stress as pricing comes under pressure, creating a path to start competing with banking organizations.

Realistically the difference in behaviours between banking and telecommunications create barriers for open innovation approaches. Inherently banking is “open” and semi-transparent with regards to banking offerings, telco companies on the other hand rely on strong R&D and protection methods to keep competition at bay. I know that this is a grossly oversimplification of how things actually work, but the point is that “open innovation” approaches and the philosophies that drive change in these industries are different.

Technology does present a tough set of options for the bank that wants to move ahead with innovation. There is an interlinked and cross dependency between tech and business in most services industries not just in the financial services world. Keeping the organization running 365×24 is not a futile task hence the strong attempted convergence of bank and telco. I still think that the inherent business models will shape the approaches of innovation in the near term. The role of technology in banking innovation is essential to drive business performance, especially as business models evolve.