how to innovate in a regulated industry wenceslao casares

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May 2010

How to innovate in a regulated industry

Wenceslao Casares

2Copyright © 2010, Bling Nation confidential.

Regulated industries startups

Formed by people with experience in the sector

Generally, large structures are built too fast

Initial product without sufficient innovation

Slow business model and product iteration

Formed by people without experience in the sector

Tendency to be much more innovative and disruptive

Much higher road-kill that average startups

Innovation

Undesired effects

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Regulated industries startups

Innovation

Undesired effects

There is value to be created operating between this two opposites

Showing minimal but serious infrastructure

Keeping dynamism and flexibility to iterate business model and product

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Innovation

Undesired effects

Let’s start looking the opposite ¿which environments are designed to eliminate innovation?Example: An Army

Which environments produce innovation?

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An Army: The importance of hierarchyand symbols

General

Brigadier

Colonel

Lt. Colonel

Major

Captain

Undesired effects

Innovation

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An Army: The importance of processes

To give some consistency in similar situationsTo reduce the redundant effortFollowing process reduces undesired effects

Undesired effects

Innovation

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Innovation

Undesired effects

¿which environments foster innovation?Example: IDEO

Which environments produce innovation?

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Which environments produce innovation?

Undesired effects

Innovation

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Which environments produce innovation?

Undesired effects

Innovation

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IDEO: Organization structure

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No processes

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An environment that produces innovation...

Is innovation in the best case

40%

The rest are undesired consequences:DisorderHigh costsInefficiency

60%

You can’t get one without the other

… doesn’t produce

innovation

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Regulated industries require more creativity to innovate

Regulated Industries are regulated for a reason

That's why they are most likely the Army than IDEO

It requiresmuch more creativity to innovate and at the same time to fulfill the regulations

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Regulated industries require more creativity to innovate

Examples of different approaches to tackle this dilemma

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Example: Microsoft

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Cisco: Another way

And many more…

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Innovation and regulation: Myths

Processes that produce innovation can be established

Common mistake in a regulated industry

Regulation prevents innovation

You can not innovate in a regulated industry

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Innovation and regulation: Realities

It is more difficult to innovate in a regulated environment

More structured environment

Lack of fear to die

The regulations became our own limitations

To innovate is not always desirable

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An attitude that leads to innovation?

To understand the client’s needs in the most pure form

Example of College Fund Product

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Which is the objective of innovation?

To give a better service to our clients or to be more profitable?

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May 2010

How to innovate in a regulated industry

Wenceslao Casares