Innovation & Design Thinking PDF

Digital Banking Program Innovation & Design Thinking Copyright © 2023  Access Bank SBE: Innovation course COURSE OVERVIEW WHAT IS THE COURSE ABOUT? The course will attempt to give an overview of innovation and its importance as a business driver. It will also highlight the importance...

Digital Banking Program Innovation & Design Thinking Copyright © 2023  Access Bank SBE: Innovation course COURSE OVERVIEW WHAT IS THE COURSE ABOUT? The course will attempt to give an overview of innovation and its importance as a business driver. It will also highlight the importance of disruptive innovation in the market place. Students are encouraged to keep an open mind all through the course. Attempt all the class exercises at the end of the modules. Pay full attention to the online classes and avoid distraction as much as possible. Be familiar with the eLearning tools to use for questions and expression of reactions Innovate or go extinct “Not what you think but how you think…” Christensen COURSE OBJECTIVES At the end of this course you will:  Understand what innovation is and what it is not. Know the difference between innovation and invention.  Have a clear understanding on what disruptive innovation is all about.  Understand the concept and application of Innovators dilemma.  Understand the concept of design thinking and customer journey mapping. COURSE DURATION The course is scheduled for two days and would be taken virtually and facilitator-led. The course is subdivided into eight modules TABLE OF CONTENT 1) Module One: Introduction to Innovation 6) Module Six: Generative AI in product development 2) Module Two: Drivers & Obstacles to 7) Module Seven: Design Thinking Innovation 3) Module Three: Casestudy of Google 8) Module Eight: Customer journey mapping Innovation journey 4) Module Four: Disruptive Innovation 5) Module Five: Navigating Partnership Dynamics MODULE ONE INTRODUCTION TO INNOVATION Innovation refers to the generation and implementation of ideas or solutions that result in the improvement in value of existing products, goods or services or the introduction of new products, goods or services. The term ex-novation sometimes called the opposite of innovation and refers to standardization of hither-to best-in-class products or services to limit further innovation. Some definitions on innovation: A. ISO 56000:2020; Innovation is used in reference to “practices that result in a new or changed entity that creates or redistributes value B. Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen… It either creates new wealth-producing resources or endowed existing resources with the potential to creat wealth” Peter Drucker. C. The Oslo Manual (OECD):.” a new or improved product or process (or combination of both) that diffres significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process). HENRY FORD: Faster Horse “Quote “If I had asked people what they wanted, they would have said faster horses” Henry Ford  DIFFERENCE BETWEEN CREATIVITY, INVENTION AND INNOVATION o Creativity is developing an idea from imagination to reality. o An invention refers to the creation of a new Device, process or methodology. o Innovation is turning creativity into commercial value. SEVEN SOURCES OF INNOVATION IDEAS- Peter Drucker 1 Unexpected trends This happens where unexpected trends in the marketplace t turns sudden opportunities into successful ventures. 2 Incongruity This refers to a way of thinking differently and trying to rationalize “what is “and “what should be” 3 Process needs Innovation may also come from customer pain points, Example, delays in the process or complexity of operations or delivery channels. 4 Structural changes in the Changes in demand of a particular product or service as a industry or market result of taste, new lifestyle etc. 5 Demographic changes Innovation as a result of demographic changes example, More youthful and vibrant population or elderly and retirees 6 Perception A particular sector or geography may have a certain perception about a product or service example thinking that a certain product or service is for the rich or wealthy 7 New knowledge Sudden production or discovery of new technology can lead to innovation in the value chain of such industry. Example better ways of doing things or providing services. TYPES OF INNOVATION 1) Process Innovation: Process innovation involves the implementation of a new or significantly improved production or delivery method. This type of innovation is not limited to manufacturing industries but is relevant across various sectors, aiming at increasing efficiency and effectiveness while often reducing costs. Characteristics of Process Innovation: a) Efficiency Improvement: Process innovation often leads to enhanced efficiency by speeding up production cycles or delivery times, thereby enabling companies to serve customers more quickly and effectively. b) Cost Reduction: Through streamlining operations and improving productivity, it often leads to a reduction in costs. c) Quality Enhancement: Implementing advanced techniques and technologies may result in superior quality of products and services. d) Environmental Impact: It might contribute to sustainability by minimizing waste and reducing the environmental footprint of operations. Examples:  Automation: The use of robots and automated systems to perform tasks that were traditionally carried out by humans can significantly speed up production and reduce errors.  E-Commerce Platforms: The transition from traditional retail to online sales models allows businesses to reach a global customer base and streamline sales processe 2) Technological innovation: Technological innovation is the application of new or significantly improved technologies, methodologies, or devices that enhance the function, effectiveness, or capabilities of a business, product, or service. It helps improve efficiency, expand market share, and stay competitive in a constantly evolving landscape. Technological innovation in retail banking: 1. Digital and Mobile Banking Platforms: Retail banks leverage technological innovations to provide customers with convenient, 24/7 access to their accounts, facilitating transactions like transfers, payments, and bill payments from smartphones and computers. 2. AI-Powered Customer Service: AI and chatbots offer instant, automated customer support, handling a multitude of inquiries and tasks, while freeing up human agents to manage more complex issues. 3. Personal Finance Management Tools: These applications aid customers in tracking and managing their finances, budgeting, and setting savings goals, providing an added value to the traditional banking relationship.  4. Biometric Security Systems: Incorporating fingerprint scans, facial recognition, or voice ID, these security measures provide an additional layer of protection for users’ accounts. Technological Innovation in corporate banking: 1. Blockchain and Distributed Ledger Technology (DLT): These technologies are instrumental in secure and transparent cross-border transactions, smart contracts, and trade finance operations, reducing fraud and streamlining processes. 2. API Banking: Open banking and API-driven services foster a more interconnected financial ecosystem, allowing corporate clients to seamlessly integrate banking services into their own financial systems and applications. 3. Advanced Data Analytics: Through big data and analytics, corporate banks can offer their clients insightful and strategic advice, assess credit risk more accurately, and enhance decision-making processes. 4. Treasury Management Systems (TMS): TMS provides corporate clients with tools to efficiently manage liquidity, handle payments and receipts, and monitor financial risks, offering a comprehensive view of their finances. Examples of Technological Innovation: Artificial Intelligence (AI) & Machine Learning (ML), Blockchain Technology, Biometric Security Systems, APIs and Open Banking, Cloud Computing 3) Product innovation: Product innovation is the development and introduction of new or significantly improved goods or services. In banking it is the creation of new financial products, improving existing ones, or delivering services in unique ways to meet the diverse and changing needs of customers. Product innovation in Retail Banking: 1. Digital Wallets & Mobile Applications: Retail banks have begun launching digital wallets and sophisticated mobile apps that allow customers to make transactions, buy FX, pay bills, and monitor their finances effortlessly from their devices. 2. Contactless Cards & Wearable Tech: These innovative products facilitate easy, quick, and secure payments, providing customers with alternative methods to conduct transactions without cash or physical cards. 3. Personal Finance Management Tools: These tools, often integrated into banking apps, assist customers in budgeting, saving, and investing, promoting financial literacy and planning. 4. Instant Loans & Overdrafts: With streamlined approval processes and algorithms evaluating creditworthiness, banks can offer instant short-term loans and overdraft facilities to customers. E.g Payday loans  Product Innovation in Corporate Banking: 1. Supply Chain Finance Solutions: Innovative products in this category help businesses optimize their cash flow and manage supply chain risks effectively, providing liquidity and working capital solutions. 2. Integrated Cash Management Services: These services offer corporates comprehensive solutions for managing liquidity, controlling payments, and minimizing financial risks, often through a single, user-friendly platform. 3. Foreign Exchange & Hedging Tools: With real-time information and analytics, these products help businesses navigate foreign exchange markets and hedge against currency risk efficiently. Examples of Product Innovation: Digital Wallets & Mobile Payments, Contactless Cards, Personal Finance Management Tools, Robo-Advisors for Investments, Instant Loans & Credit Approvals 4) Business model innovation: Business model innovation is the transformation of the way a company operates, creates, delivers, and captures value. It is the redefinition of the company's value proposition and its method of generating revenue. Business model innovation in retail banking:\ 1. Digital Banks: Provision of branchless banks aka "neo banks", services are delivered exclusively online or via mobile platforms, resulting in reduced operational costs and an enhanced user experience for tech-savvy customers. 2. Subscription-Based Services: Retail banks may offer subscription models where customers pay regular fees in exchange for access to premium financial products, services, and advice. 3. Loyalty and Reward Programs: By integrating innovative loyalty schemes and reward programs, banks foster long-term relationships with customers, incentivizing consistent use of their services. Business model innovation in Corporate Banking: 1. Banking as a Service (BaaS): Corporate banks provide infrastructure for fintech companies and non-banking corporations to launch their own financial products, often on a pay-per-use or subscription basis. E.g Providus bank and Wema Bank offering Fintechs their infrastructure to generate account nos. 2. Integrated Cash Management Solutions: Offering comprehensive, tech-driven cash management services that address various needs of corporate clients, from payments and collections to liquidity and risk management. 3. Sustainable Financing: Corporate banks increasingly integrate ESG (Environmental, Social, Governance) criteria into their products, offering green loans, sustainability- linked loans, and advisory services related to sustainable finance. Examples of Business Model Innovation 1. Digital-Only Banks (Neobanks): Kudabank, Carbon, Alat by Wema Digital-only banks operate without physical branches, offering banking services exclusively through digital platforms, which reduces overhead costs and enhances customer convenience.  2. Open Banking: OnePipe Open banking initiatives facilitate data sharing between financial institutions and third- party developers securely and in compliance with regulations, fostering the development of innovative financial products and services. 3. Banking as a Service (BaaS): Alat by Wema, Providus Bank BaaS providers offer their infrastructure to fintech companies and other businesses, enabling them to build and launch their own financial products without establishing a bank from scratch. 5) Organizational innovation: Organizational innovation is the development and implementation of new ideas, methods, or processes within an organization to improve performance, efficiency, or competitive advantage. It is centered on reimagining and enhancing internal structures, workflows, and corporate culture. Organizational Innovation in Retail Banking 1. Branch Transformation: Retail banks are reimagining the traditional branch model, incorporating technology to streamline services, while creating spaces that facilitate customer education and engagement. 2. Employee Empowerment Initiatives: Through training programs and the creation of a supportive work environment, banks empower employees to innovate and improve customer interactions and services. 3. Fintech Partnerships and Collaboration: Forming strategic alliances with fintech companies, empowers retail banks can leverage innovative technologies and solutions to enhance their service offerings. Organizational Innovation in Corporate Banking 1. Internal Innovation Labs & Think Tanks: Establishing dedicated units focused on innovation, enables banks explore and test new banking technologies, strategies, and solutions. 2. Cross-Functional Teams: Adopting a collaborative approach, where teams comprised of members with diverse skills and expertise work together to develop and deliver innovative banking solutions. Examples:  Open Innovation: Engaging external stakeholders, like customers, suppliers, or even competitors, in the innovation process to generate and share ideas and solutions.  Intrapreneurship: Encouraging employees to act as “entrepreneurs within the organization”, allowing them to lead and develop their initiatives and projects.  Digital Transformation: Leveraging digital technologies to create or modify business processes, cultures, and customer experiences to meet changing business and market requirements. 6) Marketing innovation: Marketing innovation is the use of strategies and tactics to promote banking products and services and enhance brand recognition, customer loyalty, and overall customer experience. Marketing Innovation in Retail Banking: a) Personalization & Customer Segmentation: Retail banks leverage advanced analytics and AI to create personalized marketing campaigns. Through understanding individual customer behavior and preferences, banks can offer tailored products and services. b) Omnichannel Marketing: An integrated approach is adopted where marketing messages are coordinated across various channels — online, mobile, social media, and in-branch — to offer a seamless and consistent customer experience. c) Social Media & Influencer Collaborations: Engaging influencers and leveraging social media platforms allow banks to reach and connect with younger demographics, building brand awareness and trust among new customer segments. d) Educational Content & Financial Literacy Initiatives: Banks create and distribute content that educates customers on financial health and the usage of banking products, fostering trust and establishing the bank as a knowledgeable advisor. e) Loyalty and Reward Program Innovations: Developing innovative loyalty programs that offer attractive rewards and benefits to encourage customers to use the bank's services regularly. Marketing Innovation in Corporate Banking: a) ABM (Account-Based Marketing): Corporate banks use ABM strategies to focus on individual or specific groups of prospective clients, creating personalized campaigns that resonate with the unique needs and characteristics of these clients. b) Thought Leadership & Expert Content: Banks establish authority and trust in the industry by publishing insightful content and analysis on market trends, economic forecasts, and financial strategies. E.g Zenith International trade seminar. c) Client Relationship and Engagement Platforms: Utilizing CRM platforms and technologies that enhance relationship management, allowing relationship managers to understand and engage with clients more effectively. d) Event Sponsorships & Business Community Engagements: Corporate banks actively participate in or sponsor business events, conferences, and forums, positioning themselves as active contributors and leaders in the business community. Examples of Marketing Innovation: Data-Driven Personalization, Influencer partnerships, social media campaigns, chatbots, loyalty programs, webinars TOOLS NECESSARY FOR INNOVATION For innovation to thrive in an organization, it may require certain tools or drivers among which are: -  Communication: Communication tools are pivotal for facilitating the free exchange of ideas and information within an organization. Effective communication fosters a culture of transparency and openness, enabling individuals to share insights, feedback, and innovative ideas actively. It ensures that all members are aligned with the organization's goals, objectives, and ongoing projects, fostering a sense of unity and collaboration.  Team Bonding: Team bonding tools help in building strong relationships among team members. These are essential for cultivating a positive and supportive work environment where individuals feel comfortable sharing their creative ideas without fear of criticism. Strong interpersonal relationships among team members also promote trust and collaboration, which are crucial for driving innovation and problem-solving.  Task Monitoring: Task monitoring tools are designed to keep track of the progress of various tasks and projects within the organization. These tools provide visibility into the workflow, helping teams to stay organized, prioritize work, and meet deadlines. Task monitoring ensures that the innovation process is on track and that any obstacles or delays are identified and addressed promptly.  Data and information management: Data and information management tools assist in organizing, storing, and analyzing data efficiently. These tools support informed decision- making and strategy development, providing insights into market trends, customer behavior, and the performance of products or services. Well-managed data is invaluable for identifying opportunities for innovation and evaluating the potential impact and feasibility of new ideas.  Idea dashboard: An idea dashboard is a centralized platform where ideas generated within the organization are collected, evaluated, and managed. It provides an overview of all submitted ideas, allowing team members to comment, collaborate, and vote on proposals that are most promising or relevant. This tool supports the systematic development and implementation of innovative ideas, fostering a culture of continuous improvement and creativity within the organization. THE IMPORTANCE OF INNOVATION IN AN ORGANIZATION Why innovation is important for individuals a) Fosters Creativity and Problem-Solving Skills: Innovation inherently requires thinking outside the box. Engaging in innovative processes stimulates individuals’ creativity, helping them approach problems in new and effective ways. This  development of problem-solving skills is not just beneficial professionally but also personally, enhancing one's ability to navigate various challenges in life. b) Enhances Adaptability: In a world where change is the only constant, being involved in innovation helps individuals become more adaptable and comfortable with uncertainty and change. This adaptability is crucial for personal development and resilience, preparing individuals to successfully handle different situations they might encounter. c) Positions them as valuable assets: Individuals who actively engage in and contribute to innovation are often seen as valuable assets within their organizations. They bring unique perspectives and skills that are crucial for the development and implementation of innovative solutions, thus making them indispensable. d) Drives Career Progression and Earning Potential: Being recognized as an innovator opens doors for career advancement. Organizations value employees who can contribute to their growth and adaptation in a competitive market, often rewarding these individuals with promotions and salary increments. Why Innovation is important for teams a) Enhanced Team Dynamics: Innovation inherently requires team members to work closely and collaborate. It fosters an environment where open communication is encouraged, and diverse perspectives are valued. This enhanced collaboration and communication strengthen team dynamics, building a more cohesive and effective unit. b) Shared Vision and Understanding: Through engaging in innovative processes, teams develop a shared vision and understanding of their goals and objectives. This shared perspective is vital for aligning efforts and working synergistically towards common targets. c) Streamlined Processes: Innovative teams often look for ways to improve and optimize their workflows. Through identifying and implementing innovative solutions, teams can streamline their processes, reducing redundancies and inefficiencies, ultimately leading to increased productivity. d) Leverage Technological Advances: Innovation often requires the adoption of new technologies. Teams that are open to innovation are more likely to leverage technological advances to automate repetitive tasks such as the use of generative AI tools allowing them to focus on more strategic and creative aspects of their work. e) Improved Problem-Solving Skills: Engaging in the innovation process enhances the problem-solving skills of team members. They become capable at thinking critically and creatively to find solutions to complex challenges, making the team more effective and capable in their roles. Why Innovation is important for the economy and society a) Economic Growth: Innovation often leads to the development of new industries and the expansion of existing ones, creating employment opportunities, and contributing to a reduction in unemployment rates. b) Social Improvement: Innovation in the education sector, like e-learning platforms and educational apps, facilitates accessible and inclusive learning, contributing to an educated and skilled population. c) Innovations in healthcare, from telemedicine to new pharmaceuticals, improve diagnosis, treatment, and prevention of diseases, leading to healthier societies. d) Quality of Life: Smart home technologies and IoT devices offer convenience and improved living standards, from energy-saving smart thermostats to health- monitoring wearables. e) Global Competitiveness: Countries and companies that lead in innovation often have a competitive edge in the global market, attracting investments and driving economic growth. MODULE TWO DRIVERS & OBSTACLES OF INNOVATION Innovation Drivers Innovation drivers are external or internal pressures that a company or industry faces, pushing it to innovate. Some drivers of innovations are: Competitive pressure Market demand Technological advancements Regulatory changes Globalization 1. Competitive Pressure: The presence of competitors who are also innovating and improving creates a dynamic market environment where companies must continually innovate to maintain or gain market share. Competitive pressure can also emerge from substitute products or new entrants, pushing companies to stay ahead. 2. Market Demand: Customers' needs and expectations are constantly changing, often becoming more sophisticated over time. As a response, companies need to innovate to meet these evolving demands. Market demand also includes shifts in consumer preferences, such as a move towards environmentally friendly products or digital solutions. 3. Technological Advancements: Rapid advances in technology and the emergence of new technological solutions can create opportunities (or necessities) for companies to innovate. Organizations might develop or adopt new technologies to improve their products, services, or operational efficiency, driving innovation from within. 4. Regulatory Changes: Governments and regulatory bodies might introduce new laws or regulations that affect how companies operate. These changes might necessitate innovation in compliance, operations, or products and services. Regulatory changes might also open up new markets or create new opportunities for innovative solutions. 5. Globalization: Globalization allows companies to access new markets, customer bases, and ideas, often necessitating innovation to cater to diverse needs and expectations. It also means increased competition from international players, requiring companies to innovate to stay competitive on a global scale. BARRIERS TO INNOVATION Barriers to innovation can significantly hamper an organization's ability to develop and implement new idea. Some barriers to innovation are: Financial constraints Organizational culture Regulatory barrier Organizational structure Market condition Risk aversion 1. Financial Constraints: Lack of sufficient funding is a major impediment to innovation. Research, development, and implementation of new ideas often require significant capital. Smaller firms or those in financial distress may find it particularly challenging to allocate resources for innovative initiatives. 2. Organizational Culture: A company’s culture significantly influences its propensity to innovate. If the culture does not encourage creativity, risk-taking, and acceptance of new ideas, innovation will likely be stifled. For instance, a culture that prioritizes routine and stability over change may resist innovative initiatives. 3. Regulatory Barriers: Strict or complex regulatory environments can inhibit innovation, particularly in sectors like healthcare, finance, and energy. Compliance with various laws and standards may limit the scope of innovation or slow down the development and introduction of new products and services. 4. Organizational Structure: Hierarchical and rigid organizational structures may hinder the free flow of ideas and slow decision-making processes. An environment where approvals are required from multiple layers of management may delay innovation and demotivate employees from pursuing creative ideas. 5. Market Conditions: Market dynamics, such as low demand for new products or intense competition, may discourage innovation. If a market is not receptive to new products or technologies, or if it’s saturated with established players, newcomers might struggle to gain traction with innovative solutions. 6. Risk Aversion: Innovation invariably involves risk. Organizations that are risk-averse may avoid pursuing new ideas due to fear of failure, loss of investment, or damage to their reputation. This reluctance to embrace risk can significantly hamper the innovation process. MODULE THREE CASESTUDY OF GOOGLE GOOGLE’S INNOVATION JOURNEY Digital Advertising & Media Services This category encompasses products and acquisitions related to advertising, media services, and content distribution. AdWords (2000): The inception of AdWords marked Google's significant stride into the digital advertising space. Applied Semantics (2003): Acquisition that facilitated the creation of AdSense, further expanding Google's advertising capabilities. YouTube Acquisition (2006): A pivotal moment in Google's journey, marking its significant presence in the video-sharing and content distribution domain.  DoubleClick (2007): Enhanced Google’s advertising suite, providing comprehensive solutions for ad management and serving. Productivity & Collaboration Tools This category includes products and services designed to improve user productivity, collaborative work, and content management. Gmail (2004): Gmail set a new standard for email services, offering enhanced storage capacity and integration capabilities. Upstartle (2006): Acquisition leading to the development of Google Docs, part of Google's suite of productivity tools. Google Drive (2012): A centralized platform for document management, sharing, and real-time collaboration. Google Photos (2015): A service providing smart and generous storage solutions for photos and videos. Duet Ai: Duet AI is a suite of tools that are designed to help you be more productive in your work. It includes features such as: Advanced Technologies & Platform Development This section includes acquisitions and initiatives aimed at developing new technologies, platforms, and infrastructure. Android (Acquired in 2005, Launched in 2008): Acquisition of a platform that would become the world's dominant mobile operating system. Urchin Software (2005): Acquisition that led to the development of Google Analytics, a key tool for web traffic analysis. Waze (Approximately 2013): Acquisition that brought in a community-driven navigation app enhancing Google’s location-based services. DeepMind (2014): Acquisition focused on advancing AI and machine learning capabilities. Titan Aerospace (2014): Acquiring technology that explores new possibilities in connectivity and internet service provision. Google bard: Google Bard is a large language model (LLM) chatbot developed by Google AI, trained on a massive dataset of text and code. It can generate text, translate languages, write different kinds of creative content, and answer your questions in an informative way. MODULE FOUR DISRUPTIVE INNOVATION Clayton Christensen describes disruptive innovation as a process whereby a smaller organization penetrates the marketplace or industry previously dominated by larger incumbents and introduces a new or improved product or process from the bottom of the value chain. Key Characteristics of Disruptive Innovation: 1. Market Transformation: Disruptive innovations often redefine market dynamics by introducing novel solutions and business models that challenge or overtake those of established entities. 2. Accessibility: These innovations usually make products or services more accessible, either by lowering prices, simplifying technology, or making the product available to a new set of customers who previously did not have access to it. 3. Technology Adoption: Disruptive innovation often harnesses emerging technologies to develop solutions that are more efficient, effective, or customer- friendly than existing offerings. 4. Value Proposition: Disruptors often offer different value propositions compared to incumbents, potentially prioritizing convenience, user experience, or affordability over traditionally emphasized features or quality. Process of Disruptive Innovation: 1. Introduction Phase: Disruptive innovations enter the market typically addressing niche, underserved segments, or creating new market spaces. 2. Development and Refinement: Over time, the disruptive product or service improves, often rapidly, to meet the needs of a broader customer base. 3. Mainstream Adoption: As the innovation gains traction, it starts attracting the mainstream market, eventually challenging or even replacing incumbent businesses and products. Examples of Disruptive Innovation:  Online Streaming Services: Platforms like Netflix disrupted the traditional cable and rental movie industry by providing an affordable and convenient way for users to access a vast library of content on demand.  Ridesharing Services: Companies like Uber and Lyft disrupted traditional taxi services, offering more convenient and often cheaper transportation options through a user-friendly app. DISRUPTIVE INNOVATION IN FINANCIAL SERVICES S/N Product Disruption 1 Payment (Disruption of Fintech disrupting traditional bank-led paymeny cheque and paper methods. money) MPESA in Kenya, Flutterwave, Quick teller, Mobile wallet. Paystack 2 Insurance Digital platforms: has simplified the process of buying and managing insurance policies. Big data analytics: The use of Big Data and analytics tools enables companies to gather, analyze, and utilize vast amounts of data to make more informed decisions. AI & Machine learning: AI and ML algorithms are employed to automate processes, analyze data, and interact with customers. Telematics: Telematics devices in vehicles and smartphones collect real-time data about drivers' behavior, which insurers use to assess risk and calculate premiums more accurately. Wearable technology: Wearable devices that monitor health metrics provide insurers with data to analyze policyholders’ health and lifestyle habits. 3 Deposit & Lending Renmoney (easy loan faciity) Carbon Migo 4 Investment RiseVest Management Chaka Bamboo 5 Market Provisioning Opay (Food & transportation) Quickteller (lifestyle) Flutterwave store (online digital shops) Jumia & jiji (retail , food etc) BUSINESS RESPONSES TO DISRUPTIVE INNOVATION 1. Improve or Invest in Traditional Products or Services: Companies can enhance their existing offerings by investing in quality, features, or associated services. This approach aims to retain customers by providing value that the disruptive technology may not offer. 2. Disregard the Innovative Threat: Some firms may underestimate the impact of disruptive innovation or believe that their customer base will remain loyal. This passive approach can be risky if the disruptive technology gains significant market acceptance. 3. Disrupt the Disruptor: Organizations can proactively engage with disruptive technologies by developing their own innovations, often surpassing the capabilities of the new entrants. This requires significant investment in research and development. 4. Adopt and Scale Up the Innovation: Embracing the disruptive innovation, companies can integrate it into their existing operations and scale it up. This approach leverages the firm’s established market presence and resources to maximize the impact of the new technology. 5. Adopt and Keep Both: In this dual-strategy approach, companies adopt the disruptive technology while maintaining their traditional offerings. This allows them to cater to different market segments and manage the transition smoothly. 6. Innovate by Targeting New Markets: Firms can use disruptive innovation as an opportunity to enter new markets. They might develop products or services for market segments that the disruptive technology does not effectively address. 7. Innovate by Changing Business Models: Adapting to disruption may require fundamental changes to a company’s business model. This might involve shifting from product sales to service provision, adopting subscription models, or engaging customers through new channels. 8. Innovate by Creating New Value Chain: Companies might reconfigure their value chain by adopting new procurement, production, distribution, or customer service processes. This can create efficiencies, improve customer experience, and enable the firm to compete effectively with disruptors. THE INNOVATORS DILEMMA The Innovator’s Dilemma describes the difficult decision that companies must make between sticking with their existing products and business models (that have led to current success) and embracing new ones that might define future success. COMPONENTS OF INNOVATORS DILEMMA 1. Commitment to Current Success: Large companies are naturally committed to their existing products or services, having invested significant resources in them.  They are often designed to meet the demands of their largest and most profitable customer segments, hence, they're hesitant to divert focus and resources. 2. Risk Aversion: Established firms tend to avoid risks that might endanger their current profitability. Investing in new, unproven technologies or models is seen as risky, especially when current operations are yielding profits. 3. Market Demand: Big companies typically listen closely to their customers, which is generally a best practice. However, customers may not express the need for or understand the potential of a disruptive technology until it’s fully developed and implemented by other disruptive entities. 4. Resource Allocation: Resources in large companies are usually allocated to the most profitable units or products. Disruptive innovations, often uncertain and initially less profitable, struggle to secure the necessary funding and attention internally. MODULE FIVE NAVIGATING PARTNERSHIP DYNAMICS HOW FINANCIAL INSTITUTIONS COLLABORATE WITH DISRUPTORS INCUMBENTS DISRUPTORS Expand revenue streams through Gain capital and revenue through strategic collaboration. incumbent partnerships. Cost-efficiency through partnership with Expand customer reach through low-overhead startups. incumbent collaboration. Acquire customer insights from startups. Leverage incumbent partnerships for credibility. Potentially absorb entrepreneurial zeal Unlock incumbent's proprietary from disruptors. resources. Accelerated technological investment Joint expansion of market and business driven by disruptors. opportunities. New revenue lines through disruptor Access to international markets and acquisition. mentorship from incumbents. RISKS FINANCIAL INSTITUTIONS FACE IN COLLABORATING WITH DISRUPTORS INCUMBENTS DISRUPTORS Risk of unrealized ROI with seed May experience funding delays from investment in startups. incumbents. Concerns over brand dilution and value Mismatched enthusiasm for collaboration. erosion. May experience strategic uncertainty due Resource wastage due to mismatched to unproven innovation. scaling. Adoption of unreliable new technologies. Dilution of entrepreneurial spirit and low morale. Organizational culture clash. Encountering bureaucratic roadblocks. MODULE SIX GENERATIVE AI IN PRODUCTIVE DEVELOPMENT THE ROLE OF GENERATIVE AI IN INNOVATION Generative AI is a type of artificial intelligence technology that can produce various types of content including text, imagery, audio and synthetic data. 1. Enhanced Creativity and Design: Generative AI can produce countless design variations, allowing businesses to explore creative options in product design, graphics, or website layout without human intervention. It can also generate written content, music, or artwork, serving as a creative partner for artists, writers, and musicians. 2. Rapid Prototyping and Simulation: AI enables quicker development of prototypes by creating and testing numerous variations autonomously, reducing the time required from concept to prototype. Generative AI can simulate different scenarios or conditions for a given design, providing valuable data and insights for improvement. 3. Personalized Customer Experiences: AI can generate personalized content, recommendations, or solutions for individual users, based on their behavior and preferences, enhancing customer engagement and satisfaction. TRANSFORMING PRODUCT IDEATION 1. Analyzing Diverse Data Sets: Generative AI can process and analyze vast and diverse data sets at a speed unattainable by humans. It encompasses customer transaction data, behavior patterns, feedback, market trends, and external factors affecting the market, like economic indicators or regulatory changes. It can identify hidden patterns, preferences, or trends within the data that might not be immediately apparent, offering a deeper understanding of the market and consumer behavior. 2. Generating Product Ideas: Based on the analyzed data, Generative AI can propose a myriad of potential product ideas. These are not random but are aligned with the observed patterns and trends, ensuring that the suggestions have a basis in actual market and consumer dynamics. 3. Aligning with Customer Behavior: Since the ideas generated are deeply rooted in actual customer behaviors and preferences, the resulting products are more likely to resonate with the target audience. This alignment enhances the likelihood of product adoption and market success. 4. Accelerating Time-to-Market: With AI, the time taken from initial ideation to conceptualization can be significantly reduced. Quick generation and assessment of ideas allow businesses to swiftly move to the development and testing phases, accelerating the overall time-to-market. ACCELERATING PRODUCT DEVELOPMENT  Generative AI provides value in product development by rapidly generating, testing, and refining product versions.  It helps accelerate the prototyping stage of design thinking process by creating multiple product versions for evaluation.  By enabling rapid and iterative testing, generative AI ensures innovative, robust, and user-friendly final products. ENABLING CONTINUOUS PRODUCT DEVELOPMENT  By analyzing product performance data, generative AI can identify patterns of success or areas of concern and generates potential solutions.  This process establishes a fast, reliable feedback loop for product optimization, allowing for ongoing refinement of products.  It ensures banks can adapt to changing market dynamics and customer needs, maintaining their competitive edge. REGULATORY CONSIDERATIONS (DATA PRIVACY) This includes obtaining necessary permissions to use customer data, ensuring data anonymization where appropriate, and implementing robust measures to safeguard data from breaches. As banks increasingly rely on data-driven technologies like generative AI for product ideation, development, and optimization, they must ensure that they are compliant with data protection laws and regulations. REGULATORY CONSIDERATIONS (DATA SECURITY) This could involve encrypting data, employing secure AI training methodologies, and implementing regular security audits. While these measures can pose challenges to the pace of innovation, they are essential to maintain customer trust and avoid regulatory penalties. The use of technologies like generative AI can pose unique security risks, especially given the sensitive nature of financial data. Banks must, adopt stringent data security measures to protect against potential threats. REGULATORY CONSIDERATIONS (COMPLIANCE) This involves adhering to a wide range of regulations that govern banking operations, including those related to lending practices, risk management, and capital adequacy, among others. When innovating, banks must ensure that their new products, services, or processes are compliant with these regulations. This might involve conducting detailed regulatory impact assessments during the ideation and development phases and incorporating mechanisms for regulatory compliance in the design of new products or processes. MODULE SEVEN INTRODUCTION TO DESIGN THINKING DESIGN THINKING? Design Thinking is a solution-focused, problem-solving methodology that is used to address complex problems and create user-centered products, services, and experiences. This approach is used in product design and development, but its principles are widely applicable across various domains. Key Principles of Design Thinking: 1. Empathy: Begin with a deep understanding of the users, their needs, challenges, and motivations. It’s essential to empathize with the users to create solutions that truly resonate with them. 2. Defining the Problem: Articulate the problem to be solved. It’s important to define the problem from the user’s perspective to ensure the solution will be relevant and valuable. 3. Ideation: Engage in open-ended brainstorming sessions to generate a wide array of potential solutions. The ideation phase encourages creative thinking and the exploration of diverse ideas without immediate judgment. 4. Prototyping: Create low-fidelity prototypes or models of the proposed solutions. Prototypes are tangible or visible representations of the ideas generated during the ideation phase, allowing for tangible exploration and testing. 5. Testing: This phase involves iterative cycles of testing and refining the prototype based on user feedback and observations. Conduct tests with users to gather feedback on the prototypes. This Key Characteristics:  User-Centric: Design Thinking places the user at the center of the process, focusing on creating solutions that address real user needs and challenges.  Collaborative: The methodology encourages collaboration among diverse team members and stakeholders, fostering a multi-disciplinary approach.  Iterative: It is an iterative process, where ideas are continuously refined and improved through cycles of prototyping and testing.  Creative and Analytical: Design Thinking combines creative brainstorming with analytical problem-solving, balancing both perspectives to arrive at innovative solutions.  Organizational Development: Foster a more collaborative and innovative organizational culture. RELATIONSHIP BETWEEN DESIGN THINKING AND INNOVATION 1. User-Centric Approach: It begins with understanding the needs, desires, and challenges of the end-users. By employing empathy, practitioners get an in-depth insight into the user experience. Innovations developed with a user-centric focus tend to be more successful because they address actual needs and problems, enhancing adoption and customer satisfaction. 2. Problem-Solving Framework: It provides a structured framework for identifying and solving problems. The process involves defining the issue, ideating solutions, prototyping, and testing. This structured approach allows for the systematic development and refinement of innovative solutions, ensuring that they are viable, feasible, and desirable. 3. Facilitation of Creativity: The methodology encourages creative thinking and brainstorming, allowing for the generation of a multitude of ideas without immediate judgment or evaluation. This creative process fosters the development of novel and out-of-the-box solutions, driving innovation that may not emerge from traditional problem-solving approaches. 4. Iterative Development: It embraces an iterative development process, where ideas are continuously refined and improved through cycles of prototyping and testing. Iterative development allows for the gradual improvement and refinement of innovations, ensuring they are fine-tuned before full-scale implementation. 5. Risk Mitigation: Through early and consistent user testing and feedback, it helps identify and address potential issues or challenges before significant resources are invested. This approach reduces the risk associated with launching new products or services, as potential pitfalls are identified and addressed early in the process. DESIGN THINKING METHODOLOGIES One of the organizations that has been in the forefront of Design Thinking is the Stanford d’School.. However, there are others such as IDEO, IBM, GOOGLE, Apple who have come up similar methods of the Design Thinking process. While each of the below organizations may have a slightly different approach for Design Thinking and innovation, the goal is the same. Which is to simplify a complex situation from the users perspective and add value to products and services with the user in mind.   Design thinking group: Empathize || Re Frame || Ideate || Prototype || Test  Stanford School: Empathize || Define || Ideate || Prototype || Test  IDEO: Frame || Inspiration || Idea || Tangible || Test || Share  IBM: Observe || Reflect || Make IDEO THINKING PROCESS 1. Start with a question. Why ? The team’s focus should be on the customer or user whose experience you are about to wow. who needs the experience) 2. Build an empowered and inspired team Observe onsite and off-site to determine (What? ) the user really need. 3. Generate Ideas No idea is worthless it may be second or third best. Generate as many as possible and select the best fit for address user needs. 4. Generated ideas should be tangible Make ideas and suggested solutions come alive by building tailor made prototypes to address user pain-points. Where? (is the user hurting?) 5. Test to Learn Test your prototypes, gather feedback, and iterate the solutions and check with user on before and after experience. 6. Share the Story (Wow) The best fit prototype that met the user needs should be shared to colleagues, stakeholders, and the users. Make room for replication of solutions and breakthroughs. THE STANFORD FIVE STEPS OF DESIGN THINKING a) Empathize: This phase focused on understanding the user. During this initial step, practitioners engage deeply with users to grasp their experiences, feelings, needs, and desires. This empathetic understanding, often achieved through methods like interviews, observations, and surveys, forms the foundational insight necessary for the subsequent stages. b) Define: The gathered information is synthesized, and the core problem to be addressed is articulated. This process of defining involves analyzing the collected  observations and crafting a human-centered problem statement. The outcome of this stage is a clear and concise problem definition that serves as a guide for the development of potential solutions. c) Ideate: This is where brainstorming and generation of potential solutions occur. This stage is characterized by the free flow of ideas, with participants encouraged to think broadly and creatively without immediate judgment or evaluation. The goal here is to produce a wide array of possible solutions, providing a diverse set of options for addressing the defined problem. d) Prototype: Involves the development of scaled-down versions or representations of the product or specific product features. Prototypes are shared and tested with users, offering a tangible form through which the ideas generated during the ideation stage can be explored and evaluated. e) Test: This involves engaging users with the prototype to collect feedback. During testing, practitioners observe user reactions and interactions with the prototype and ask questions to gather insights about their experiences and perceptions. The feedback and insights obtained in this stage are invaluable for refining and improving the prototype and the solution as a whole. Design Thinking starts with reframing the user’s challenge as follows: -  How might we ……...improve or solve this challenge for the user?  Why do we want to embark on this journey?  What is stopping us from doing it?  Revise how might we if you identify obstacles and start all over.  Has our concept of the challenge changed after revision? IDEO’S SEVEN RULES FOR BRAIN STORMING 1. Don’t rush to pass judgement 2. Embrace wild ideas 3. Expand on each other’s idea 4. Focus on your assigned area 5. Be present and visible on the project 6. Allow one conversation at a time 7. Go for quantity before quality FUNDAMENTALS OF DESIGN THINKING  Collaboration and teamwork are essential ingredients of the Design Thinking process.   Design Thinking must be always user centric. The user comes first and center throughout.  Incorporation of technology into a business venture for the benefit of the product or service user can greatly improve overall value. DESIGN THINKING TOOLS. Here are examples of some of the tools that are used in the execution of Design Thinking. Stages Methods Tools 1 EMPATHIZE Zoom (Face 2 face), Create, Type form(sirvey design software) 2 DEFINE MakeMyPersona(Xtensio Templates), User Forge ,Miro 3 IDEATE IdeaFlip, Brainstorm, Session Lab, Mind mapping, Xmind 4 PROTOTYPE Storm Boards, MockingBird,Flinta animation 5 TEST UserTesting,(Remote testing tool), Hot jar, PingPong ANOTHER APPROACH TO DESIGN THINKING OLD THINKING NEW THINKING Employees are biggest risk Employees are biggest assets Strict work schedule to achieve results Flexible work schedule for increased productivity Failure is not an option Learn from your failures “The world’s business ecosystem is changing fast and only those who can adapt to the changes will survive the upcoming wave of disruptions”. BENEFITS OF DESIGN THINKING  Provides a systematic and structured way of identifying challenges and providing solutions.  Enhances collaboration and teamwork, early focus on user pain point.  Encourages diversity and better understanding of user persona.  Reduces cost and fear of failure. Early agreement on point of view of the best solution. MODULE NINE CUSTOMER JOURNEY MAPPING Customer journey map A customer journey map is a visual representation of the process a customer or prospect goes through to achieve a goal with your company. The goal may be making an account opening, applying for a payday loan, withdrawing from the ATM, requesting BTA or PTA, etc Customer Journey mapping Customer journey mapping is the process of visualizing how a customer interacts with a business by mapping out the actions they take to achieve a goal. It outlines the key events, motivations of customers, and areas of friction within their experience across different touchpoints. This information is combined into a visual representation that describes a customer’s typical experience with your business. An understanding of this relationship enables employees to structure touchpoints to create the most effective and efficient process for their customers. Components of the customer journey map: - The buying process - User actions - Emotions - Pain Points - Solutions Buying Process: The buying process element of the customer journey details the path from awareness to consideration and final decision that a business intends for a customer to take to reach a goal. User Actions: This component of the customer journey map states what a customer likely does in each stage of the buying process aforementioned. In the awareness stage, they may speak with friends and colleagues about their needs and wants, and potential ways to satisfy those wants and needs. In the consideration phase, the customer may begin to look for reviews of eg Access Bank's payday loan app in comparison to the GetCarbon loan app or branch loan app. At the decision phase, the customer downloads the payday loan app and applies for a loan. Emotions: When customers set out to solve a problem, they are probably feeling some emotion – which could be worried, stress, happiness, or excitement. It follows if your process is long or complicated, they might feel a range of emotions at every stage. Therefore, adding these emotions to the journey map can help mitigate negative emotions about the journey, as messaging can be used to assuage customers so that they don’t become negative opinions about your brand. Painpoints: Where there is a negative emotion, there’s a pain point that caused it. By including pain points in your customer journey map you can identify at which stage your customer is experiencing negative emotions and deduce the reason why they seek to resolve it Solution: The members of the team will brainstorm potential ways to improve the buying process (from awareness to decision) so that customers encounter fewer pain points and have a positive customer experience as they transact with your business. What are touchpoints in a customer journey map? A touchpoint in a customer journey map is any interaction with a company where a customer or prospect can form an opinion of your business. Touchpoints include a social media post on Instagram and interaction with an employee over the phone, a transaction cannot be completed error on the mobile app, long queues at the ATM or cash not available to dispense and even a Google review can be considered a customer touchpoint. The different types of touchpoints must be considered in your customer journey map because they can help uncover opportunities for improvement in the buying journey. BENEFITS OF CUSTOMER JOURNEY MAPPING Informs the development of innovative products: A customer journey map is like a roadmap to the customer's experience. It shows you areas where customers will experience delight and situations they may be face friction. Knowledge of this customer delight and user friction can inform new product development. Improves customer experience: When using a product a customer may experience some friction which may be good or bad, if the friction is avoidable the customer journey map visualizes the process flow and enables reimagination of the customer experience, and remove negative friction. Promotes customer centricity: By visualizing the customer journey, Banks can focus on what matters to the customers to achieve their goal and assist in eliminating negative experiences they might encounter.  Increases customer retention rate: Customer journey mapping can point out the areas individuals have negative experiences with service delivery, which in turn enables the improvement of the highlighted areas, which serves to reduce the number of customers who churn and ensures improvement inconsistent service delivery that delights customers. Proactive customer service: Customer journey mapping helps inform customer service strategy, as the company can plan and communicate to customers in advance of periods where there is the expectation of a surge in activities from customers eg Holiday periods, informing them about support options if the team is unavailable. By being proactive, customers won't feel surprised if they're waiting on hold a little longer than usual or call you outside your new working hours.