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Pragmatic innovation

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Never in my entire life have I had a genuinely original idea and I don’t expect to. Indisputable breakthrough thinking, and truly revolutionary products are extremely rare. Most alleged new ideas, products and services are, in fact, evolutions of previous concepts.

Isaac Newton famously acknowledged this when he said: “If I have seen a little further it is by standing on the shoulders of Giants”. One of those giants was Galileo Galilei who, like his more contemporary scientific genius, Albert Einstein, shattered the foundations of our beliefs.

It is easy to rearrange prevailing information and improve existing products. But how many of us can be creative to the point of changing the status quo and making others think and behave differently? The well of human ingenuity may be bottomless, but in my opinion, it produces few eureka moments.

Businesses are always being admonished to innovate or perish. While I accept that innovation is an essential ingredient to business success, most innovation cannot be classified as ground-breaking discovery. Rather, it’s the product of incremental change. McDonalds did not invent take away food but perfected the process for delivering fast food through franchisees.

Similarly, the car I drive today has far more gadgets and gizmos than the first car I owned 40 years ago, yet they are fundamentally the same. Both have four doors, four wheels and run on petrol. Only Henry Ford can lay claim to inventing the first massed produced car which rolled off the assembly line in 1908. Today’s modern cars are not brand-new inventions but the result of continuous, small step improvements.

Even in my own industry, financial services, I cannot think of any radical, game-changing products over recent years. Yet again, most innovation in banking stems from process improvement and not breakthrough products. Innovation in financial services lies more in process and organisational change than in new product development. An example of this is the home loan.

Thirty years ago, it took over a week for a bank to approve a home loan as the approval process was centralised in head office. Over time, banks decentralised decision-making and empowered area offices to approve loans and this cut the approval time to about two days. Today, thanks to even more streamlined approval processes, some credit providers approve loans within two hours.

So, what has changed over three decades is not the product per se, but the efficiency of the processes used to deliver it. Innovation in financial services is driven by a culture of continuous improvement. Organisational culture, in turn, is established by the leader. Innovation, therefore, is a function of leadership which is why I have worked hard to create a culture of continuous improvement at Gateway.

[Please allow me to insert a parenthetical note at this juncture. In my ten years as a blogger, I’ve observed that new innovations are invariably proclaimed as game-changers by the acolytes of the tech industry. Yet most of these innovations fail spectacularly to live up to the unwarranted exaggeration and fanfare that surrounds their introduction.

However, when you dare suggest that the innovation is being over-hyped, you are often subjected to ridicule and I’ve been on the receiving end of that stick on many occasions. I was criticised when I suggested that:

  • Bitcoin would not replace national currencies;
  • Google Glass would not find a market;
  • Apple’s smartwatch would not replace traditional watches;
  • Crowdfunding would not replace debt-based funding; and
  • Fintechs would not disrupt traditional retail banks.

In every case I was proven correct. While every breakthrough is presented as a triumph, consumers rarely embrace technology for technology’s sake. Please excuse my digression.]

At Gateway, every employee is empowered to drive change and improve what we do for our Members. Deliberately, we do not have a formal innovation strategy or a dedicated innovation department. Innovation is a continuous change management process, and everyone has a role to play. Employees throughout Gateway can develop fresh solutions and offer new insights into how we can better serve Members.

This leads me to my final observation about innovation. I have long believed that the greatest innovation is the ability to provide first-class service. I have never met a CEO who says that service is not important. Yet how many organisations truly deliver outstanding service? Promising to provide great service is easy on paper but delivering on that pledge day-after-day is incredibly difficult and comes down to the quality of the workforce.

I’m fortunate to be surrounded by a great team at Gateway – they make me look good! They generate winning ideas and work diligently to transform our business processes into continuing innovation. I’m not hanging out for Gateway to come up with the next “big bang” idea in banking. Our success is built on pragmatic evolution rather than illusory revolution. We are reaching for the stars and doing so in small steps rather than giant leaps.

Paul J. Thomas, CEO


avatar Phil Tuck

Well put as usual !

Thank you as always.

Kindest regards

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CEO Paul Thomas