Your cart is currently empty!
Eye on Silicon Valley: Where Innovation Never Sleeps
![](https://hmgstrategy.com/wp-content/uploads/2023/09/sv.tmb-medium.png)
Companies succeed in different markets for a variety of reasons. Some companies are known for their products or services and others differentiate themselves through the customer experiences they deliver.
But in today’s era of disruption, what truly separates industry leaders from the rest of the pack is their commitment to innovation.
While there are different levels of innovation – e.g. smaller-scale innovation efforts that can streamline an internal operation or process – roughly 25 percent of innovation efforts cited by respondents to a recent KPMG study are centered on transformational innovations that can turn into significant new sources of competitive advantage.
As a digital innovation leader at Citi Ventures, Beth Devin has experienced innovation from many different perspectives. HMG Strategy recently caught up with Beth, who is an Advisory Board member for its upcoming 2020 Silicon Valley Global Innovation Summit on February 11 in Menlo Park, CA, to learn about the areas of innovation she’s involved with at Citi Ventures.
HMG Strategy: What are some of the more exciting areas in innovation that Citi is involved with?
Beth Devin: Innovation is happening across Citi and we’re deeply committed to empowering employees to develop and deliver new solutions that meet the most pressing needs of our clients. The Citi Ventures team is particularly focused on identifying the areas of opportunity where Citi can innovate – whether that be researching next-generation technology trends, investing in startups we think show great potential, or partnering with colleagues to build our own products and services.
Three areas in which Citi is making major strides are the applications for artificial intelligence (AI) and machine learning (ML) in financial services, the evolution of digital payments and ecommerce, and the growing demand for impactful investment opportunities.
Across the company, Citi is finding ways to leverage AI and ML to automate internal processes, drive efficiencies and cost savings, and attract clients through new and improved products and services. We are both partnering with companies like HighRadius, a Citi Ventures portfolio company that our Treasury and Trade Solutions team uses to automate matching open invoices to payments received for its corporate clients and building our own AI solutions from within.
Thanks to digital technologies and automation, we are seeing an incredible evolution of how companies process transactions from new payment apps to blockchain and automatic collections. At Citi, we’re launching solutions like Spring by Citi to help our institutional clients accept online payments from consumers in their payment method of choice and partnering with another Citi Ventures portfolio company, PPRO, to streamline access to 140+ payment methods.
Last but not least, impact has become front and center for Citi and our clients. I am really excited about Citi’s new impact fund that just launched. The newly launched $150 million fund will make equity investments in private sector companies that have a positive impact on society and will have a focus on companies founded or run by women and minorities. At $150 million, it will be the largest fund of its kind to be launched by a bank using its own capital.
In your experiences, what are the most important steps that organizational leaders must take to ensure that innovation programs are sustainable and successful?
BD: Great question — and I don’t think there is a one-size-fits-all answer. It has so much to do with the industry and state of disruption, the company culture and willingness to embrace change, and having the resources and patience to invest for the long term. There are no silver bullets.
That said, I can share three guiding principles to which we adhere at Citi Ventures that help innovation thrive and collaborate effectively across the enterprise:
- Client Focus – Always approach your innovation efforts with a client mindset. What does the client need and/or what is the problem? Before you build anything, you must validate there is a need and be able to state what you are trying to solve in your client’s voice. It’s amazing how many ideas are nice to have and not really important to the client. At Citi, we conduct many client interviews and co-creation sessions to get to the heart of our clients’ issues. We’ve also adopted the “jobs to be done” approach, which is gaining traction across the globe. By focusing on the goals of our clients – the jobs they are trying to get done, the problems they are trying to solve – we can build better products and services that truly fit an essential client need and avoid ideas and prototypes that are likely unnecessary.
- Business Engagement – For new, innovative programs to thrive, it is critical that everyone from the most senior executives of the firm to the most junior employees are engaged. And, if you work at an organization with several businesses or verticals, it’s essential that business leaders across the firm see the potential impact for their respective stakeholders. At Citi, many of the ideas that are incubated inside Citi come from Citi operators who are closest to our business and clients. Whenever we see an opportunity to innovate, we work closely and, in some cases, even rely on business leads to make the argument for how a process should evolve. Growth boards comprised of Citi executives listen to pitches, make decisions on further investment, and ultimately decide whether to fund developing and launching a minimum viable product (MVP). This is also true for our corporate venture investing efforts. We collaborate regularly to ensure we understand our business needs so that we can tailor our innovative efforts to helping Citi’s business and that of our client’s.
- Acceptance of Failure – Of course, even if you see a product-market fit and have buy-in from business leads, not every innovative project or program will succeed. It’s important to embrace the fact that experimentation and failure is part of the process. Across all of our innovation efforts we start with a broad mandate and openness to new ideas, solutions, and companies. This broad exposure and initial exploration ensure we are not too narrowly focused or making decisions with confirmation bias. It also allows us to test ideas – some of which will fail – so that when we do home in on ideas, we’re confident we’ll succeed. Our Venture Investing team meets with close to 2000 companies each year. Our incubation team has approximately 100 ideas in their pipeline at any point in time. Our emerging tech team monitors several trends and new technologies. Every year, we get smarter about what ideas have a high probability of succeeding and which ones we should say no to. Most importantly, however, we are building a culture where failure is seen as a learning experience.
Can you share some of the ways that you work with senior leadership to help identify and then execute on innovation opportunities?
BD: In addition to the three principles already mentioned, we are intentional about how we align and map to the various organizations, businesses, and leaders across the Citi enterprise. We are constantly meeting with leaders to identify areas of opportunity and acting as a thought-partner and co-creator to build innovative solutions from within the organization. We also see great benefits to working with academics, startup communities, and thought leaders across the industry to understand trends they are watching. We curate what we learn from them to see what we can bring from the outside in.
Tactically speaking, we do a lot of listening for the problems, gaps, and areas of opportunity where innovation is needed. We conduct research to make sure we understand the market, the external players, and potential partners working in the field. Then, we start building, experimenting, and iterating to make sure we are producing changes for the better of our business and our clients. Especially at a company as large as Citi, communication is key, so we spend a lot of time sharing our learnings via newsletters, workshops, and presentations.
One model we have found particularly useful is the development of a new role on our team called “catalysts.” Catalysts are colleagues who act as a pipeline to connect our resources in Citi Ventures to each business. Each catalyst is assigned a 1-to-2-year rotation with Citi Ventures in which they deeply embed themselves within a business. Thanks to our catalysts’ connection, we are able to stay even closer to a business’s strategy, challenges, and needs. Our catalyst teammates have played a key role in commercializing close to 50% of the Ventures’ portfolio companies within Citi. In addition to our catalyst program, all Citi Ventures leaders spend significant time building relationships with Citi business and technology leaders, always with a curious mind and the desire to support their growth strategy. As an example, I represent Citi Ventures on our Institutional Client Group tech and ops leadership team. It has been extremely helpful to get to know the leaders, understand their challenges, and seek ways to have impact.
Generally speaking, what are some of the technologies you feel hold the most promise for enterprise organizations?
BD: The Citi Ventures Emerging Technology team is constantly monitoring and learning about many nascent technologies we think will have an impact on the future of business and financial services. However, it is important for business leaders to distinguish between the technologies that have near-term commercialization potential and technologies that are farther away.
For example, distributed ledger technology (DLT) infrastructure and a number of applications that are viable on DLT are nearer term and important for Citi to build expertise and learning, which we are doing. Unfortunately, much of the hype has focused on digital currencies and bitcoin. We are much more interested in applications such as stablecoins, shared, multi-party ledgers to eliminate reconciliation and increase transparency, as well as the benefits of asset tokenization.
Another technology-enabled disruption with which we are experimenting is decentralized digital identity. Trust and identity are critical underpinnings of the financial services industry. There are also many identity-related regulatory requirements to operationalize such as “know your customer”, fraud monitoring, and anti-money laundering (AML). We are hopeful that the investment and innovation in new digital identity paradigms will strengthen our capabilities, provide more power to customers, and significantly reduce the friction and overhead we experience today.
Much nearer-term technologies that may be commonplace for digital natives but are still proving themselves to banks such as ourselves include cloud computing architectures and processes (e.g., DevOps), AI/ML, and platforms designed and built with an API-first approach.
Looking farther out, we’ve done quite a bit of research on the ongoing quantum computing race and the key tech players and innovators shaping its future. While we are still years away from implementing quantum computing at a commercial level, it is an example of a technology we are actively monitoring and sharing updates on to keep our Citi colleagues informed of its promise.
To learn more about HMG Strategy’s 2020 Silicon Valley Global Innovation Summit and to register for the event.