People talk about reinventing the wheel as if it's a bad thing. But the wheel is over 5,000 years old. Why not reinvent it now?
Our general problem is that we like old frameworks and models we created and we believe they are perfect. We are scared of questioning them. We resist change. But this resistance blocks innovation. Reinventing the wheel can actually solve lots of problems!
Over the years, people have developed frameworks, systems, models, and organizations based on their limited knowledge. These frameworks looked fine at the time. We took them for granted after that and never questioned their validity again. The reason for that is human nature. We hate change. We don't like to fix what's not broken.
But fixing what's not broken is what generates new ideas and results in innovation. In other words, reinventing the wheel is what we should be doing!
Reinventing the wheel is actually pretty simple. There are several steps:
1. Describe the current wheel. List all the assumptions, including the use, the environment, cost, design, etc.
2. Question every assumption. Does this assumption still make sense today?
3. Negate every assumption. Assume this assumption is wrong and pick an alternative solution.
4. Build new assumptions based on results of tasks 2 and 3.
5. Build a new wheel.
EXAMPLE:
Consider the music industry in the early 2000s. When Napster came in, they questioned music CDs. Let's follow the process with them:
1. Assumptions: People want music on CD. People want to listen to music in the car. People use CD players to play music. People want to buy music albums. People like to see cover art from CDs.
2. Question assumptions: Do people really care if music is on CD? Do people always listen to music in the car? Can they use their computers as music players? Do people really need to buy entire albums? Do people care what the cover art of the album looks like?
3. Negate assumptions: People don't care if music is on CD. People don't just listen to music in the car. People can use computers as music players. People don't want to buy full albums; individual songs are okay. People don't care to see the album cover.
4. Solution: Create a product that doesn't require CDs, can use the computer as a music player. Create a model allowing people to get individual songs instead of full albums. Don't show album covers. Resulting product: MP3 files.
OTHER EXAMPLES:
Curves reinvented gyms. Southwest reinvented air travel. Phones were reinvented 60 years after the original invention and now have caller IDs, touchtone keypads, can be cordless, or cellular.
In all of these cases, people took products that everyone else took for granted and redesigned them.
1. This is a quick and easy innovation technique. Take an existing product, run through the "questioning assumptions" exercise, and you will see lots of innovation coming out of it. Think about this: Beta tapes were reinvented and became VHS tapes, which were then reinvented into DVDs and then Blue Ray and now streaming videos.
2. Reinvent management the same way. Question every assumption of management. Why do we motivate people? Why organize? Why assign tasks? Why lead? Why use software for project management? Why present in front of audiences? Why do we need money? Should we focus our business on shareholders' interests or those of customers or employees?
1. Identify the wheel you'd like to reinvent. Be as creative as possible.
2. Go through the exercise listed in the solution section.
I may imagine the government making so many decisions. But not this one. And I am not going to induce a conspiracy logic. The idea is that banking is a matter of trust. What makes you that trustful to support you with 5000 euros capital contribution (generic "you"). Would it be enough for a notorious, even trustful individual to call for capital mobilization and thousands of people would go for it? What is it this new venue would offer me except for a likely return for my capital or a leverage, which is basically a genuine credit? Should it be just a custody service? I do not think that credit is wrong. It has never been wrong. Excesses are wrong.
You have mentioned couple of reasonable vehicles. We have such non-banking financial institutions even here, in Romania, which is not a sophisticated country when comes to financial services and personal finance. But they have been widely proliferated. With limited success in the downturn. Why? There was no capital to support it. They may not be self-sustained lucrative enterprises for long.
I give you very good example: GE Money. They have pursued a market presence in line with the reinvented wheel you mention these companies seems to be. After too years of striving, they have become a credit brokers and eventually they have decided to buy a bank, even a small one.
My organization has a quite mature business similar with Virgin Money. It is called ING Direct. So I would know what to do if the governments would ban traditional banking activity :) I may be wrong, but credit institution, as a banking activity resists for almost 2000 years.
I have asked you about the mobile banking challenge not only from the distribution channel perspective for the banks. But for the challenge that the mobile operators may represent for the banks in offering financial services, even if transactional ones. And this because they may have superior customer experience knowledge. How would you see this challenge from the "reinventing wheel" perspective?
Thank you!
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Thanks for the refreshing look at innovation in action, Matt! Sounds like you are making it happen at the peaks. Bravo!
I noted that your one big challenge is that people resist change. That’s a bigger mental issue than most realize – and it may help to move forward past the challenge - by looking at it from another angle. Folks find themselves protecting your turf or stuck in a rut with boring routines, hen they default to their basal ganglia.
No need to stay there, once they see how brainpower can create neuron pathways beyond these potholes. Probably you’ve observed how static lives come from dull daily routines where people settle into the cortisol that comes with status quo, and no longer seek adventure of innovation.
But folks can learn to recognized the brain’s way to rewire to a better place?
How so? At the center of most ruts, lies your brain’s basal ganglia. It’s like a mental storehouse for habits, routines and every lifetime experience you’ve encountered. It’s also a place to promote and prolong cynicism or other annoying ruts that work against change.
A bit like a tug-of-war - the basal ganglia tugs for tradition and familiarity, while the brain’s working memory pulls for innovation. Have you seen it?
Risk-takers and people who surf the cutting edges of possibilities, simply override the brain’s basal ganglia default daily. In surprisingly straightforward ways, they engage in mental fitness within their working memory and learn to release brain chemicals that override mental ruts. How so?
Use more working memory and you’ll also keep your brain fueled and rolling forward. Whenever you engage your multiple intelligences in new ways, for instance, you also override your basal ganglia’s ruts and rigid routines. The human brain learns to accept and enjoy the wonder of change by mixing it up and doing ordinary things differently. What do you think?
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How would it work for financial services? I mean, can we say that internet banking replaced by mobile bank is in line with your thought? Any other example? Thank you!
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Ovidiu,
I think replacing internet banking with mobile banking is evolution rather than revolution, although moving from brick-and-mortar banking to internet banking is more revolutionary. I would question the concept of banking in general. Why put money in the bank? Why get loans from the bank? Services like prosper.com and Virgin Money are closer to reinventing the wheel. They questioned the idea of borrowing money from the bank and are now allowing people to borrow money from the community. They essentially created a new market for money which is now a substitute for traditional banking.
Here is an example of reinventing the wheel in financial services: There's a new start-up out there trying to create a crowdsourcing model for financing startup companies. For example, if I want to launch a new startup firm and I require capital, I can go to their web site, post my profile asking for $5M and get a community of 1000 people to contribute $5,000 each. Essentially, this is the same as issuing debt in capital markets on the micro level.
Here are some questions I'd ask myself: Do we still need banks, loans, certificates of deposit, money markets, and interest rates? Imagine for a second that the government had just announced that one of these concepts is now illegal. How would you reinvent your business to stay afloat?
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Amazing write up about the reinvent the wheels..May it favorably works for all of us...Check out Auto Shop Anaheim CA
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