The late Steve Jobs once suggested that “innovation distinguishes between a leader and a follower.” He was certainly qualified to know the difference.
But while his personal take on the nature of innovation fits nicely with the dictionary definition we have for the word today, the prospect of being labeled an innovator was not always quite so appealing.
Back in the 16th Century, “innovation” was an accusation generally leveled at those who took it upon themselves to challenge established church hierarchies, and a crime that resulted in one English Puritan having his ears cut off before being thrown behind bars. Alas, being a great innovator at this point in history was a risk few would be bold enough to take, and one wholly unlikely to earn you a sizeable following on Twitter.
The growing popularity of the word “innovation” over time, according to Google Books Ngram Viewer.
The word retained its negative connotations far beyond this unpleasant de-earing incident, as noted in Politico’s post, “The Rise of 2016’s Newest Buzzword,” which cites numerous examples of old-time politicians and presidents chastising the innovations of their opponents. Even Teddy Roosevelt, so closely linked with the victories of the Progressive Era, was quick to deny “that his trust-regulating proposals were truly innovative.”
By the early 20th Century, however, “innovation” was losing its unfavorable associations and beginning to assume a more positive identity. As world-changing inventions and scientific advancements came thick and fast, the term was swept along for the ride and became the common cry of any and all determined to champion the cause of progress. Interestingly, as The Atlantic notes, by the early ‘70s the word “innovation” had overtaken “invention” in popular usage.
Nowadays, instances of “innovation” appear to be at an all-time high, with the word permeating more and more writing and analysis on business, politics, and everyday life. Summarizing just how far the term has come since its dark and distant origins, one recent White Paper proposed “innovation” is now, “a word used in the business world to describe just about any concept, product, service or strategy that is potentially, currently, or retrospectively commercially advantageous, but evidently different than competing offerings.”
They say familiarity breeds contempt though, and the increasing abandon with which the term “innovation” is being thrown around also invites cynicism over how much actual innovation is taking place. A Bloomberg Business article suggested, “Innovation in mature economies such as America’s seems stuck in a perpetual holding pattern.” While The New York Times also ran a comment piece referring to the “decline of innovation across many fields—with notable exceptions like Silicon Valley, biotechnology and clean energy.”
The identification of Silicon Valley as one of the few remaining hotbeds of true innovation is contentious—just Google the phrase “Silicon Valley running out of ideas” and witness the (slightly ironic) abundance of headlines containing those keywords. One recurring theme among commentators cynical about the nature of innovation today is the notion that real innovations elicit dramatic change, rather than incremental improvements.
It seems clear, then, that each individual’s definition of innovation will determine the extent to which they believe it is taking place.
For many though, the term can be legitimately applied whenever the long-accepted conventions of any given mode of working are significantly altered for the better.
With this definition in mind, it’s easy to see how an industry such as banking is frequently categorized as being ripe for “disruptive innovation.” Take B2B transactions, for example, where long-outdated processes have left businesses buried under mounds of paper and complexity as they settle up invoices; with the Federal Reserve estimating that U.S. companies spend a combined $40 billion every year just to track down payment information. Factor in the number of B2B transactions that require complex information not supported by existing payment methods and you have an arena which is crying out for innovation to the tune of billions of dollars.
One of the greatest innovators of them all, Henry Ford, once said, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
Today though, there is certainly enough of an understanding among FinTech companies that the banking system is inadequate for the needs of modern business. And the revolution it will take to put things right is well and truly underway.
Stay tuned for a follow-up blog on this subject, in which we’ll take a closer look at some of specific payment innovations set to transform global commerce.