Creating a Framework for Payments Innovation
Creating a Framework for Payments InnovationDominic VenturoChief Innovation OfficerRetail Payment Solutions
Dominic VenturoChief Innovation OfficerRetail Payment Solutions
October 20, 2009October 20, 2009
2© 2009 U.S. Bank
3© 2009 U.S. Bank
U.S. Bancorp Overview
*As of September 11, 2009
2Q09 DimensionsAsset Size $266 billionDeposits $164 billionLoans $182 billionCustomers 15.8 millionMarket Capitalization* $ 42 billionFounded 1863Bank Branches 2,850ATMs 5,173
4© 2009 U.S. Bank
Diversified Financial Services Provider
2Q09 YTDExcluding securities gains (losses) net
5© 2009 U.S. Bank
Innovation is a Top Priority
USB 2008 Annual Report
6© 2009 U.S. Bank
Innovation Framework
7© 2009 U.S. Bank
Read…
…a lot
8© 2009 U.S. Bank
How to Innovate?
Source: Harvard Business Review, June 2007; USB Calling Efforts
SPREADDEVELOPMENTSELECTIONEXTERNALCROSS-POLLINATION
IN-HOUSE
Percentage of penetration in desired markets, channels, customer groups; number of months to full diffusion
Percentage of funded ideas that lead to revenues; number of months to breakeven
Percentage of the ideas generated that end up being selected and funded
Number of high-quality ideas generated from outside the firm
Number of high-quality ideas generated across the Division
Number of high-quality ideas generated within a unit
KEY SUCCESS INDICATORS
Are we good at diffusing developed ideas across the company?
Are we good at turning ideas into viable products, businesses, and best practices?
Are we good at screening and funding new ideas?
Do we source enough good ideas from outside the Bank?
Do we create good ideas by working across our Division?
Do people in our unit create good ideas on their own?
KEY QUESTIONS
Dissemination across the organization
Movement from idea to first result
Screening & initial funding
Collaboration with outside parties
Collaboration across units
Creation within a Unit
SPREADDEVELOPMENTSELECTIONEXTERNALCROSS-POLLINATION
IN-HOUSE
Percentage of penetration in desired markets, channels, customer groups; number of months to full diffusion
Percentage of funded ideas that lead to revenues; number of months to breakeven
Percentage of the ideas generated that end up being selected and funded
Number of high-quality ideas generated from outside the firm
Number of high-quality ideas generated across the Division
Number of high-quality ideas generated within a unit
KEY SUCCESS INDICATORS
Are we good at diffusing developed ideas across the company?
Are we good at turning ideas into viable products, businesses, and best practices?
Are we good at screening and funding new ideas?
Do we source enough good ideas from outside the Bank?
Do we create good ideas by working across our Division?
Do people in our unit create good ideas on their own?
KEY QUESTIONS
Dissemination across the organization
Movement from idea to first result
Screening & initial funding
Collaboration with outside parties
Collaboration across units
Creation within a Unit
Idea Generation Conversion DiffusionIdea Generation Conversion Diffusion
9© 2009 U.S. Bank
Possible Approaches
Highest execution risk and highly dependent on IP rights
Working within a more complex ecosystem and risk of execution with partners
Higher risk and expense of development and commercialization
Cons ExampleProsBrief ExplanationModel
Avoids the costs and effort required to bring the product to market, better leveraging scarce resources
More flexibility than integration
Usually requires lower investment than does integration
Control of entire process and higher percentage of the rewards
A “Licensor” is the primary owner of the idea of the new product or service, but does not own its development or marketing.
Like “renting” a business system to its licensee(s)
The “Orchestrator” controls all aspects of innovation, but do not execute all of them.
Companies orchestrate when they lack the capabilities required to create a new product or don’t wish to “acquire” the capabilities themselves.
The “Integrator” owns and manages the entire innovation process.
Most familiar model and historically, the dominant one.
Dolby Laboratories
BASFLicensing
Apple iPhone
Microsoft Tablet PCOrchestration
Apple iPodIntegration
Highest execution risk and highly dependent on IP rights
Working within a more complex ecosystem and risk of execution with partners
Higher risk and expense of development and commercialization
Cons ExampleProsBrief ExplanationModel
Avoids the costs and effort required to bring the product to market, better leveraging scarce resources
More flexibility than integration
Usually requires lower investment than does integration
Control of entire process and higher percentage of the rewards
A “Licensor” is the primary owner of the idea of the new product or service, but does not own its development or marketing.
Like “renting” a business system to its licensee(s)
The “Orchestrator” controls all aspects of innovation, but do not execute all of them.
Companies orchestrate when they lack the capabilities required to create a new product or don’t wish to “acquire” the capabilities themselves.
The “Integrator” owns and manages the entire innovation process.
Most familiar model and historically, the dominant one.
Dolby Laboratories
BASFLicensing
Apple iPhone
Microsoft Tablet PCOrchestration
Apple iPodIntegration
Source: PayBack, Reaping the Rewards of Innovation, Andrew & Sirkin, BCG, 2006
10© 2009 U.S. Bank
Framework Decisions to ConsiderOpen / ClosedParticipative / PrivateSuggestive / Directed Mad Scientist or TeamsCentralized Support or DistributedCommon Framework or Entrepreneurial Evaluation Methods
11© 2009 U.S. Bank
Our [current] ApproachDedicated team for emerging technologies and marketsDevelop, Pilot, and Refine within Product Innovation and with business partners where appropriateTransfer/Transition to core product groups once proven
12© 2009 U.S. Bank
Retail Payment Solutions Product InnovationMission:
To discover, test, and assist in commercialization of new payment solutions to seed new Horizon Two and Three revenue streams and to incubate and grow emerging businesses
13© 2009 U.S. Bank
TrendsDesktop
Mobile
Netbook
Web-connected AppliancesSpecial purpose devices
Bandwidth increasing
On demand Social networkingConsolidation of devices
More multimedia
Savings rateLess email (Net Gen)
microblogging
Smart(er)Phones
DVR
Slingbox
Chumby
Cloud computing
3D TV
iAnything
Surface
2D Barcodes
Augmented Reality
Virtual Reality (Natal) Wii, Xbox, Playstation
Nike+
Cisco Telepresence GoogleVoice
Chrome Bing
Satellite TV/Radio
Ford Sync
OnStar®
Tesla & Volt
GPS
Kiosks
NFC & Contactlessform factors
eBook Readers
3G & soon 4G devices
Multi-touch
Siftables
Holograms
WiTricity
Nanotechnology
Biometrics
Laptop
textbell
14© 2009 U.S. Bank
Payment Types
15© 2009 U.S. Bank
Value Exchange
All other trademarks and copyrights are the property of their respective owners
16© 2009 U.S. Bank
Enabling Technologies
© Smithesmith | Dreamstime.com
17© 2009 U.S. Bank
Information
18© 2009 U.S. Bank
Customer Needs / VOC
19© 2009 U.S. Bank
20© 2009 U.S. Bank
21© 2009 U.S. Bank
Concept Development and Testing
22© 2009 U.S. Bank
23© 2009 U.S. Bank
24© 2009 U.S. Bank
25© 2009 U.S. Bank
26© 2009 U.S. Bank
27© 2009 U.S. Bank
28© 2009 U.S. Bank
New Features Add FunctionalitySMS Text / E-mail account alertsSecondary card Bill PaymentMultiple Form FactorsFunds TransferInstant Issuance
29© 2009 U.S. Bank
A single Visa card for identification, purchases and secure facility access• Traditional magnetic
stripe• Visa payWave®
enabled• HID iCLASS enabled
Multi-Application Contactless Payments and Access Control
30© 2009 U.S. Bank
In the NewsIn the News
All other trademarks and copyrights are the property of their respective owners
31© 2009 U.S. Bank
Part 2
32© 2009 U.S. Bank
Getting Everyone in the GameCommunicateTrain staff across other parts of business on innovation and provide centralized process, tools, and supportEncourage innovation through directed challenges and team assignmentsHelp remove barriers to innovationRecognize and reward innovation – even, or especially, failures
33© 2009 U.S. Bank
MythsInnovation is bleeding edge or high riskInnovation is expensiveInnovation requires high technologyInnovation leads to “home runs”
34© 2009 U.S. Bank
ConsiderationsHow will innovation support your strategy?Will your corporate culture be supportive?Are you prepared to invest in “learning”?What do you hope to accomplish by when?• Is this realistic?
Who can you work with or learn from?How will you measure results?How will you communicate success, failures, and learning so there is broad value?
Creating a Framework for Payments Innovation
Creating a Framework for Payments InnovationDominic VenturoChief Innovation OfficerRetail Payment Solutions
Dominic VenturoChief Innovation OfficerRetail Payment Solutions
October 20, 2009October 20, 2009
Recommended