I am coming off of a whirlwind tour of payment related conferences, and am once again struck by the observation that innovators, when faced with the immense inertia of the status quo, can choose from one of two confrontation strategies: a frontal assault, or a jujitsu throw.
In military terms, frontal assaults are slow and bloody. The rule of thumb for armies seeking to displace an entrenched enemy – and this applies to companies as well – is that the attacking force needs to have a 3:1 resource advantage to have any chance of success (and at times, even that isn’t enough). Sadly, this is how many wars – and unsuccessful business initiatives – have been fought.
Jujitsu is a form of martial arts where an opponent’s momentum and energy is used against him. Wikipedia says that Jujitsu techniques “were developed around the principle of using an attacker’s energy against him, rather than directly opposing it”.
When it comes to innovating, I’m struck by how many plans are set up to be unsuccessful assaults on the status quo. Few innovators, after all, enjoy a 3:1 resource advantage in anything except, perhaps, headaches.
Let’s think about how we pay for things. If ever there was an immense ecosystem which is resistant to change, it is the payments world. It is an interconnected series of banks, retailers, processors, hardware manufacturers and….well, the list is too long. Suffice it to say, when something big happens in the payments world (like the Target breach), the ability for innovators to identify solutions is quite high, but their ability to execute – to change the entrenched ecosystem – is abysmally low.
So payments innovators can choose one of two paths – to wait for the industry participants to agree on a new ecosystem, or to practice the art of innovation jujitsu (my term) and redirect the energy of the existing ecosystem in a way that is relevant to new business problems and new consumer behaviors. Let’s look at two companies that I think are doing this today: Mitek (my employer), and Loop.
Loop is a company that has entered the crowded mobile wallet space, which is a burgeoning set of capabilities designed to enable consumers to store payment credentials on their mobile device and easily pay for purchases using one of those payment instruments. Many companies in this space are betting on near-field communication (NFC) – a set of standards enabling phones to communicate with an enabled device in it’s near proximity, such as the point-of-sale (POS) systems at your local retailer. One of the big industry problems with NFC however is that the POS systems would need to be upgraded, and nobody wants to pay.
Loop, on the other hand, has created a technology that communicates with existing mag-stripe readers in the stores where you currently shop. I already have a iPhone charge case on order with Loop that can serve as a mobile wallet and am looking forward to trying it out.
Did Loop sit around and wait for a bunch of industry players to agree on NFC standards? No. Did they come up with a better protocol than NFC? Not necessarily.
What they appear to be doing is creating something relevant for mobile consumers today (who overwhelmingly want to leverage their mobile devices in their shopping habits), and using the established fact of existing POS implementations to create something new, something exciting.
Let’s turn our attention to Mitek. Mitek has created a way to pay bills – either via a bank’s mobile bill payment service or directly via a biller’s mobile app – by simply taking a picture of the detachable coupon from the paper bill. Despite the efforts of billers to get consumers to go paperless, most have said “no thanks”, plus many of them don’t like the idea of “auto-paying” anything.
Over the years, there have been a number of efforts to automate the entire bill presentment and payment cycle so that paper disappears, yet we still live in a paper world. Perhaps more accurately, our paper world now coexists with our electronic world, which causes me to think that innovation is more about “adding” and “changing” rather than “subtracting” and “replacing”.
So Mitek has combined the power of the mobile camera with the demonstrated consumer desire to use that camera in their daily life (see the overwhelmingly positive consumer response to banks’ mobile check deposit feature), and “mobilized” an experience that all of us are familiar with: receiving a bill in the mail and paying it.
Did Mitek wait for banks and billers to suppress paper? No. Did Mitek create a new electronic bill pay standard? No. What Mitek has done is to inject one of the first whiffs of innovation in the bill payment space in over a decade without waiting for some grand bill payment strategy to come together. The existing momentum of the status quo was not opposed. It was redirected.
All industries have this dynamic at play. If you’re an innovator, you probably don’t have a 3:1 resource advantage in any market opportunity worth pursuing. When you find yourself in that position, let me recommend a little jujitsu.
Work smarter, not harder. Good luck.