WASHINGTON--The best way to get ahead in the mutual fund business might just be to step away from it, commented Tom Kelley, author and general manager of IDEO, a design and consulting firm started in San Francisco.
The keynote speaker of the first general session of the Investment Company Institute's General Membership Meeting here Wednesday, Kelley challenged an audience of about 1,250 mutual fund industry insiders to innovate by looking at old processes from the perspective of an outsider, specifically their customers.
"You can't just look in the rearview mirror to get ahead," Kelley said. Getting ahead means innovating, and doing so faster and better than one's competitors, Kelley said during the conference where the theme for the week was "Creating Shareholder Value."
Innovation creates value not only for shareholders, but for forward-thinking companies that can lure clients away from the competition and keep those they have.
Too often executives acknowledge that innovation is important, but fail to recognize its urgency.
"If you keep putting it off, the next thing you know, someone has stolen your market," he said.
The most effective way to see new opportunities is through a process Kelley calls "Vous-ja-de." Unlike its better-known counterpart, deja vous, whereby a person has the "been-there-done-that" sensation, "Vous-ja-de" occurs when a person approaches a task or situation they have encountered countless times before as though it is entirely new.
Such observations lead to what Kelley calls "meta-lessons" or things that are learned through the process. Soon, innovators ask questions about why processes are done a certain way, and devise ways to improve them.
"You have to go beyond the rational. Beyond the facts lie a lot of opportunities to learn," said Kelley.
In his book, The Ten Faces of Innovation, Kelley outlines 10 different roles divided into three groups: those that build, those that organize, and those that learn from others.
Key among them is The Anthropologist, a learner, who simply observes. In the mutual fund industry, these are the people who watch what investors do--even when it makes little sense--and ask why it is they do that.
Automatic enrollment, for example, is an innovation that could address the problem of why people fail to participate in 401(k) programs even when they know they should save, and often and pass up matching contributions and tax incentives when they don't.
Kelley also urged attendees to silence "The Devil's Advocate," the person who is quick to point out potential problems, but does not offer ways to address to ameliorate them. Instead of allowing this "speed-bump to innovation" to halt progress, the innovator should challenge the challenger, Kelley said.
"Life is never like the marketing brochure," he said. Those who act like the anthropologist, identify the problems real-life investors and customers face, and then cater to those needs through products that are relevant and valuable to their clients, will profit.
The key, he said, is to question the status quo, and to do it continually. "If you can nurture this anthropological gene, build and reinforce it, you will nurture your own, unique culture of innovation;" said Kelley.