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Want Radical Innovation? Here’s Where to Look

Want Radical Innovation? Here’s Where to Look

Innovation happens behind-the-scenes. It’s often not the faces of a company–the directors and managers–who come up with breakthrough ideas but the individuals working out of public view, in the background. These are the people who can see where the dots connect, who can tell where there are opportunities for change.

Think of the structure of any large organization in terms of a mid-office and a back-office staff. Mid-office and back-office team members work in legal, IT, and HR departments. Most of these units in larger and more complex organizations are traditionally vertically oriented so that everyone reports to their own sector’s manager. The few places in an organization that are also horizontally oriented are these back-office departments. Here, people can look across the business: back-office workers see where the points of contact are between all the parts of the larger company.

That is the insight that helped spark a wildly successful innovation in a large, well-respected Wall Street investment bank at a key moment of transition.

When the Chief Financial Officer first brought me in, it was the end of the go-go 90s, when all the mega-mergers were ending and all of the powerful investment firms were looking for new ways to make money. This venerable, old banking institution was out of position: while other banks were experimenting with different strategies or trying to put together mergers, this bank had stayed traditional, maintaining the same structure it had relied on for nearly one hundred years.

As a result of this dependence on the old way of doing things, the company was disjointed. Each of its locations around the world was successful, but there was very little–if any–communication between each of those locations. Now, the executives wanted its regional chief financial officers to be more active in advising the leaders at the center of the company, to be more anticipatory and responsive and planning for the future.

I recognized that there was an opportunity for a new source of revenue–a previously untapped area of income: the strategies developed by the legal team and other behind-the-scenes sectors. These back-office teams had come up with effective solutions to the company’s problems, to issues that many other big global companies face. In particular, they had mastered the process of moving and repositioning the assets of client companies so that they had limited legal and tax exposure. These now controversial maneuvers where not highly valued by the bank and where merely considered part of the complicated details that had to be worked through to mitigate risk for their clients.

I suggested that the company take these problem solving strategies and processes developed by back-office members and repackage them so they could sell them as a service to other industries.

The issue was that the financial officers and controllers of the organization were simply not aware of how their company worked, what went on behind-the-scenes. They gave directives and all they really knew was that the back office simply carried them out. Once these financial officers learned what they could do with these invaluable sources of creativity, they made use of these back-office solutions. The back-office started creating a book of business policy and sold it worldwide. This new initiative brought in a huge amount of revenue for the banking firm. While some business that bought these strategies didn’t replicate the original success, many–especially those in similar cultural environments–did recreate that success.

The point is this: everyone always talks to the new technology people and the trend experts when they want to achieve radical innovation, but the people you should talk to first are the ones in your own back-office. These are the people who really know where and how the business comes together–they see the opportunities for growth before anyone else does. They are the ones who can search for and reapply great ideas quickly. Don’t look far for new talent. Your brightest stars are likely already shining in your backyard.

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