Charaka Kithulegoda keeps looking at his boss, who just told a room full of other CIOs how much he likes him. No wonder he has the confidence to talk about the success and occasional failures of innovation. The CIO of ING Direct Canada admits that while new ideas flourish at the bank, not all of them take off. He referenced the company’s early foray, about 10 years ago, in biometric security. It was an idea a little ahead of its time.
"We had this really cool mouse that had a biometric grid on it. We found that even in our internal pilots people were taking it because it was orange and cool and not because of the biometrics," he said. "We realized three to six months down the path that it was not the right time."
That’s okay, though, Kithulegoda said, because now that biometrics is a more mature technology, ING Direct has hands-on experience about what worked and what doesn’t.
Kithulegoda appeared on stage at CIO Exchange with ING Direct Canada CEO Peter Aceto in a conversation moderated by TechLearningSpace.com instructor Rick Swanborg. What follows is an edited transcript.
Rick Swanborg: How do you make innovation happen?
Peter Aceto: Since our birth 14 years ago, we’ve tried to maintain ourselves in terms of being an innovative organization and entrepreneurial. We have about 1,000 employees now and are one of the larger banks in Canada, and keeping that has been a bit of a challenge. We’ve tried a bunch of things. Being innovative was part of the culture from the first day it started, and being the 8th employee – and Charaka not far behind, actually – it was part of our responsibility to make sure we were always solving problems in ways that are new and innovative. As we grew we tried lots of different things to make sure we didn’t lose that. We said to the IT group, "You have to make that innovation doesn’t stop in this organization." We found that that didn’t really work the best. We went to our marketing group – we see our core competencies in IT and marketing, that’s what ING Direct is good at – and said, "Make sure we keep our ideas up and running." And we found that didn’t get us the result we wanted. What we’ve come up with --
RS: Excuse me, but why didn’t that work? It sounds like you have an innovative culture, people working towards that –
Peter: One of the challenges of a rapidly-growing organization, particularly one that is regulated, issues like compliance, issues like risk management kind of creep in. And when you have shareholders, the bigger you get, the more interested your shareholder is in making sure that you don’t screw up, because that can impact your global brand and your local brand. But what we found most important was to go back and make sure we never lost a culture of innovation, where it’s everybody’s responsibility to think innovatively, to challenge the status quo. We very much tried to create a platform where people feel free to share their ideas, with me and with others.
RS: How do you deal with failure?
PA: I think one of the biggest killers of innovation is fear of failure. If you’re going to innovate and try things new, you’re going to have to stick your neck out and take a chance. If you’re going to stick your neck out, the organization has to acknowledge that if you’re wrong, you’re not going to get your head cut off, and you’ll get rewarded for taking a risk in front of your peers, possibly losing something in the process. So one of the biggest challenges for myself as the leader of our organization, is to create a culture where execution is perfect and vital, but where people feel comfortable coming up with ideas and failing from time to time.
RS: So how do you deal with the budgeting issue – the evil CFO?
PA: Yeah, well we have our own evil CFO, and I’m glad that we have him, because he helps balance and me keep informed, even though I’m preoccupied with being cool (laughs). Because it’s embedded in our culture, we don’t have a specific innovation budget. We don’t have an element of our budget that says, "This amount of our budget will be spent towards innovation." We’re not rules-based, we’re principles-based. Things like budgets and CFOs can kill innovation, so we have to be careful to have a discipline and still be a place where you can innovate.
RS: And are you part of the overall IT budget process?
PA: Yes, in fact Charaka and I carpooled today in my SUV and this is what we talked about for quite a while today. Because at the end of the day, we have to prioritize. In our organization, our challenge is we have more ideas than we can implement. We have to make choices all the time about which ones we’re going to go after and which ones we have to leave.
RS: Charaka, any insights on the governance or budgeting of innovation?
Charaka Kithulegoda: I think the key is, it’s built into the process. As Peter said, we tried separating it, having separate groups, separate functions, but continuously looking at it and getting people to almost unconsciously – whether it’s a business project, a technical project, or whatever – to think about it constantly, has worked well. We’ve also learned to take things in small steps. Every time we’ve had to take large steps – even when the intentions have been good – that’s where the failures have come into play.
PA: The way we do it requires constant communication. We do talk a lot to make sure we’re ebbing and flowing on the same page so that Charaka will take the message not just to his team but to the entire organization, because all of you have learned in your careers that the most successful IT people are the people who can work seamlessly with the business. You cut down these barriers of, "Well, they gave me crappy requirements, so I built what they wanted." You cross that gap.
RS: What kind of innovative technologies excite you?
CK: There are a lot of cool things, and as a technology guy, a lot of things excite my team. The key thing I’ve learned with some guidance from Peter and the team over the years is not to look at it from a technology standpoint. To look at it from a customer standpoint, and I mean customer from a very broad standpoint, including internal and external. Purely from a technical standpoint, I can talk about new technologies for another couple of hours and not get bored about it, but if I do that with Peter, pretty soon I’ll be using about 16 acronyms, and by that first slide he would be yawning and asking me to leave (laughs). From a pure technology standpoint, things that interest me include social media, biometrics, mobile computing, but I don’t think we ever have conversations about specific technologies. It’s always about use cases, and what we can achieve. The initial conversation is, how do we keep things simple, how do we provide value?
RS: Any type of innovation that you’re very proud of doing together?
PA: The reason I joined ING Direct 14 years ago is that we wanted to change the way banking is done in Canada. I don’t want to "sell" at all here, but Canadians know how to bank, and it’s based on what we’ve been doing for 175 years, which is how long the big banks have been here. And we think banking has a different role to play in the lives of Canadians and we were going to use technology and marketing, the Internet and fantastic customer service to do that. Technology enabled us to deliver on promises and help, well, so far 1.7 million Canadians to know how easy and simple it can be. Using technology to help Canadians see there is a different way to do banking and the way they live their life is the most overall proud thing we’ve done. In terms of recent things, we’re very pleased with the work we’ve done in the mobile side. We identified this trend and were able to move very quickly, and because of the nimbleness of our organization and this iterative process, identify the importance of mobile in this country and how important it is for our business model. I’m very, very proud of the product. In fact, if you come out to my house for dinner tonight, you will not leave without me pulling out my iPad and showing you how simple it is to do business with us on that device, and on a BlackBerry as well.
CK: We used to do a lot of things from an enterprise standpoint. You know, getting secure e-mail on our BlackBerry – nobody thinks about security. As long as you have a password on your BlackBerry, you’re cool. The things we are being challenged to think about is how can we take that functionality that they’re used to in a corporate world and offer some of that in an innovative way to our customers? That excites me.
RS: You two look like you even like each other. How much does the relationship play into working on new innovation?
PA: I am blessed in that I do like going into work every day and I love the team I work with. I have wonderful people who work with me and it’s a very collaborative approach. They love that we can have nearly violent dialogue if necessary. We all care about the business. We’re not fighting for how big your department is, or how much money did you get. But it doesn’t matter really. At the end of the day I have responsibility to my customer and the shareholder and my employees. To me it’s a bit of a luxury. Although I do get to hire these people. But I’m not looking for people I want to hang out with. Actually, when we hire, we are looking for people who can challenge us.
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