“Leading innovation at a central bank – isn’t that an oxymoron?”

Sunayna Tuteja

Full transparency: that was one of my initial reactions when approached about this inaugural assignment of chief innovation officer of the Federal Reserve System (Fed). Having spent my career in the private sector, leading change and transformation at the nexus of finance and technology, I am equally optimistic and pragmatic about the obstacles and opportunities in advancing meaningful innovation. Hence, I was a bit sceptical.

In this case, my curiosity far exceeded my scepticism and into the rabbit hole I leapt. Having completed my first 180-day adventure in post, I am grateful to share perspectives garnered from listening and learning sessions with colleagues at the Fed, counterparts from central banks around the world, and partners within academia and the industry.

There is a wholesale recognition that innovation is a business imperative. The volume and velocity of new technologies coming our way is equal parts exhilarating and daunting. Add to this equation the rapidly evolving consumer behaviours and expectations, and it becomes abundantly imperative for institutions of all stripes and sizes to create a culture of evergreen innovation.

However, building a scalable practice that is no-go on chasing shiny objects but all-in on solving gnarly problems, shipping meaningful value and future-proofing is a complex puzzle in itself. Here I share a few thought-starters for a building an innovation game plan that yields compounding returns.

While it may seem like an innovator talking her book, I would submit that we are all innovators regardless of our span of control and ‘day jobs’. Innovation does not start or stop with a person or an office — this is a shared accountability as we work together to deliver value-added outcomes to our constituents.

One of the attributes that attracted me to this assignment is the fertile ecosystem of decentralised innovation within the Fed. I am grateful to be a node in this network and to serve alongside my colleagues in amplifying a culture that empowers and enables our talent to innovate, put wins on the board and makes a meaningful dent in advancing the mission of the central bank.

Slowly at first, then all at once

The proliferation of new technologies, combined with accelerating consumer adoption, is unlocking new experiences and stress-testing the status quo across industries. The delta between novelty and normality has closed rapidly — catalysed by the pandemic, we have experienced first-hand the adoption of new ways we work, school, socialise and shop, and accelerating digital transformation. ‘Nice-to-have’ technologies very quickly became ‘need-to-have’, proving their utility and creating new norms.

Innovation driven by shiny new tech and fear of missing out is maybe alluring, but it’s a sugar high that wanes quickly

They say it takes 21 days to build a new habit; as we are coming up to 21 months of living through a pandemic, suffice to say some of these new digital norms are here to stay.

Studying the S-curve of nascent technologies, many are achieving scale and maturity in tandem, often with the S-curves bleeding into each other. This is important from a business point of view, since macro transformations are seldom driven by an individual technology; often a confluence of many trends and technologies come together to render new experiences.

For innovators, this extends the urgency and agency for mapping out an idea maze that leads to unprecedented opportunities. Scanning the Fed’s portfolio of product, process and policy innovation, it represents a diverse spectrum of initiatives ranging from the application of artificial intelligence and machine learning, execution of a next-gen payments system, exploration of central bank digital currency, and experimentation with new interfaces and platforms.

With so many things to pursue, it is like an innovator’s candy store. This can sometimes work against the cause, wherein innovation is equated to ‘shiny object syndrome’. Put another way, innovation driven by shiny new tech and fear of missing out is maybe alluring, but it’s a sugar high that wanes quickly.

To complement our enthusiasm for harnessing the power of frontier technologies, a three-fold anchoring heuristic method for strengthening our innovation mindset and muscle memory, especially within the ethos of a risk-prudent central bank, is useful:

  • Are we focused on solving gnarly problems? Borrowing from the sentiment of this Jeff Bezos quote, “Your margin is our opportunity”, for innovation leaders the friction within our existing processes, policies and products is often our opportunity for disruption.
  • Are we putting our customers first? An obsession with customer experience versus technology — both in identifying the problem statements and designing solutions — can be the secret sauce in ‘shipping wins’, ranging from incremental to transformational. Getting as close to the end customer, and the talent that is closest to the end-process and customer, is an effective and efficient way to shape an innovation portfolio.
  • Are we future-proofing our value proposition? There is an awesome mission-driven element to serving in these assignments within the central bank and adjacent agencies, which is often underappreciated. We are part of institutions leading important and impactful work, and we stand on the shoulders of the giants who came before us. It is incumbent on us to pay it forward by investing in innovation that helps us build for the future, both in the way we serve our mission and in creating a desirable destination for next-gen talent to join and contribute to the mission.

Making it happen

Solve gnarly problems. Kickstarting the innovation journey with clear responses to these questions can help garner credibility, alignment and focus. Plus, it serves as a consistent and transparent litmus test for ongoing decisions and investments to propel innovation: what’s the problem we are solving? For whom are we solving this problem? Why does it need to be solved? Why now? And most importantly, why are we uniquely qualified to solve this problem?

Deliver with speed. The velocity of change behoves us to speed up the innovation lifecycle – from exploration and experimentation to execution and exit. Optimisation across the innovation stack can rend efficiencies, break down unnecessary barriers and cultivate a bias for action. We should adopt easy-to-access and use contemporary tooling, agile development methodology that embraces perpetual beta, a proportional and prudent risk framework, and most importantly, a culture that accepts and rewards productive failure.

Build for scale. I once read a quote that has since stuck with me: “Think big, start small, scale fast.” This is super applicable when planning innovation sprints. Even when our immediate goal is to experiment with a new solution or test a hypothesis, we ought to be thinking ahead and planning for the potential of moving from prototype to production. Innovation as a hobby seldom garners value, hence cultivating innovation at scale requires an evergreen investment of time, talent and capital. Cheap and cheerful only goes so far.

Co-create with symbiotic partnerships. The allure of building solutions in silos can be a drag on innovation. Alternatively, focusing on the things we are uniquely qualified to do, and augmenting subject-matter expertise and execution capabilities by partnering with industry and/or academic, can accelerate lift off on new initiatives. Our colleagues at the Bank for International Settlements offer an excellent venue for partner-centric innovation that encourages collaboration among the central banking community to address common pain points, and research and experiment emerging technologies and trends. Partnerships are also powerful in unlocking new talent on-ramps and bringing a diversity of experiences and expertise to the table, which enriches the overall innovation experience.

Always be shipping value. A core ingredient in elevating the perception of innovation from a fad to a persistent business imperative is putting those singles on the board. The classic “what’s in it for me?” holds true for innovation. At the end of the day, we ought to hold everything we do accountable to the metrics that matter to our constituents. What outcomes are we delivering through our work in exploration, experimentation and full-scale execution? Clarity and transparency in defining the value of the work, via frameworks such as objectives and key results, creates alignment and advocacy — hence bringing everyone along in the innovation journey.

In my teens, I went through a mild phase of ennui. Witnessing the explosion of tech and transformation around me, I was bothered by the fact that by the time I was an adult all of the important changes would have come to fruition. Well, I am elated that I was 100% incorrect in this particular forecast. We live in exciting times and I am grateful to have this opportunity to contribute to the Fed’s innovation journey, alongside my colleagues across the central banking community.

Sunayna Tuteja is chief innovation officer at the US Federal Reserve System.


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