Systemic Innovation: a discussion series

The Finance Innovation Lab: A case study of system innovation in finance

Rachel Sinha and Richard Spencer - 20.03.2013

How do you change a system?

This is a question which is almost impossible to answer. 'There's so much talk about the system. And so little understanding', as said in Zen and the Art of Motorcycle Maintenance. In this case study we're going to tell you all about the dead ends, the mistakes, successes and what we learnt. And here's a picture of what we learnt.

Where do you start?

Sun streams through the window at Oxford University, it's a hot day in May 2009. A hundred and fifty bankers, academics, and NGO peeps fumble with umbrellas and string, building 'models of the financial system they want to see', led by a charismatic facilitator. A team from the World Wide Fund UK (WWF-UK) and the Institute of Chartered Accountants in England and Wales (ICAEW) juggle post-it notes in the background, trying to remember one another's names.

This is about sensing. You always think you know where you're going to start or end up but what we rapidly discovered is that there's a period where you're in the Chaordic. There's chaos and there's order and you play in the middle of it.  And at the same time, we're trying to build some credibility and convene people around the subject. Ok so what did we do?  

Here's what we thought we'd do 

• Convene representatives from different parts of the financial system- get them think about what the future of finance might look like
• Raise a few million pounds
• Pick a handful of representatives in powerful positions (of course they'd come) and design a programme that will take them through the U process  
• Support them to create new projects tackling different leverage points in the financial system

Lessons learnt 

• We didn't raise a few million pounds: Funders won't believe in you, till you do. From a funders point of view they're asking 'why should I listen to you?'
• Establish credibility: As unlikely bedfellows, the WWF-UK and ICAEW brands attracted people to the Lab. Reos, the consultants we worked at this stage, had a process and the confidence to fight for it when the crowd got mutinous. Partnering with Oxford Said Business School attracted high profile attendees
• Core team relationships are crucial: We spoke different languages at our organisations and didn't spend nearly enough time building understanding. We would spend a week politely 'wordsmithing' one others' attempts to describe what we were doing.

Phase 2: Build community, crowd-source and reconnecting with your own values  

June 2010, Chartered Accountants Hall, London. A tanned investment banker with shiny brown hair stands up amid a seated audience of a hundred and twenty in pinstriped suits, corduroys and summer dresses. 'This feels a bit like alcoholics anonymous' he says, shuffling. 'In answer to your question; the reason why I showed up today is because I want my children, who are 5 and 7, to be proud of their father. Right now I don't feel that they can be'. 

This phase is all about reconnecting people with their values, giving them permission to speak up and to think the unthinkable. Even flaky ideas are welcome here, in fact they're encouraged. All too often being too deterministic at this stage stifles the sheer beauty and range of ideas that can emerge.  

Here's what we thought we'd do

• Build the community and deepen relationships within it. The Hara Collaborative worked with us during this stage and brought with them the Art of Hosting methodology designed to 'welcome and listen to diverse viewpoints, maximise participation and civility and transform conflict into creative cooperation'. They also taught us only to speak when holding a stone (really, it's a good discipline)
• We crowd-sourced ideas for a better system using open space technology and got people to cluster around the ideas that inspired them
• We supported the callers of these ideas, to turn their ideas into innovation groups - solid projects that could be funded

Success 

• There may not have been quite millions, but the money started to come in. We won funding from the Tellus Mater Foundation, which kept our work going for the next year and a half
• We are named one of the 'Top 50, Britain's New Radicals' by Nesta and The Observer, were featured in Forbes and invited to speak at various international conferences
• We built many deeply connected communities, in different parts of the financial system, from technology innovators, to policy advocates by hosting monthly drinks, workshops and large 'Assemblies' of a hundred plus stakeholders
• We experimented supporting around twenty 'innovation groups', amongst the most successful were;
• TEEB for Business Coalition, spearheaded by Pavan Sukhdev of the UNEP was developed in the Lab, funded by Defra and to the tune of $1m by the Gordon and Betty Moore Foundation and incorporated in Singapore in 2012  
• UnLtd Future, a programme designed to 'accelerate alternative business models that connect people, planet and profit' was funded by a private benefactor and successfully incubated nine social entrepreneurs, six of which secure funding at the end of the programme in 2012

Lessons learnt

• Asking the right questions was important. It's very tempting use as the starting point, one's own answer. What we found was being a caller of an issue is all important and working with the community you call to get to the right question. Only then can you hope to get to an answer. Don't worry about holding uncertainty, that's your job as host.  
• Whoever comes are the right people: Innovation doesn't only occur within the existing system, don't worry if 'mainstream' don't show up
• Make gatherings meaningful and fun. Informality wins. Reconnect people to their values and themselves, build models, draw things, use creativity 
• Moving from idea to project takes more than convening: supporting leaders of our 'innovation groups' usually failed because we didn't have a strategy of how to build them into organisations.  

Phase 3: Consolidate, strategize and demonstrate

June 2012 its 6.30pm and the Lab core team are curled up on different parts of a large red sofa, shoes off, eyebrows furrowed, staring down at their notes, scribbling and crossing out. 'I think we need to work on three leverage points at once' says one of them suddenly, 'new business models, innovation in mainstream and leadership in civil society'. The group and coach look up at once, pens down. 

This phase is about turning potential energy into action. How do develop the radical projects you keep talking about and bring them to life? 

Here's what we thought we do

• Shirlaws helped us crack the strategy
• The goal is now 'to incubate and accelerate new forms of prosperity, for people and planet' and do this across the system by;

1. Incubating new business models, innovation in mainstream finance and new forms of civil societ
2. Accelerate the capacity of leaders to create change
3. Creating the wider conditions for change by raising awareness, creating supportive communities and advocating for policy change

 

Success

• We launched AuditFutures in 2012, designed to answer the question 'how can audit better serve society', funded by the big six audit firms.
• We built an influential stream of work Disruptive Finance Policy that included Andy Haldane of the Bank of England and was supported by Carlouste Gulbenkien and the Friends Provident Foundation
• In January 2013 we launched 'Campaigning for the Common Good' a leadership programme in partnership with nef (New Economics Foundation) for 20 economic justice campaigners
• We published our Prospectus and Manifest, a series of interviews highlighting groundswells of innovation within the financial system that are gaining momentum.

Lessons learnt 

• Your strategy takes a lot of work. You have to be prepared to put the hours in and adapt.
• Orchestration over emergence: There's a point at which experimentation is longer the best strategy. What's needed is a strong, clear intention and strategy
• Be rigorous. Say no to things that are misaligned, set clear boundaries and focus - mission first, organisation second, then the needs of any individual   
• Funding gets easier: Once you are clear you attract people and organisations who want the same things and funding has been much easier to secure

Rachel Sinha and Richard Spencer, The Finance Innovation Lab 

About The Finance Innovation Lab

The Finance Innovation Lab is an incubator for systems change in finance. Jointly hosted by World Wide Fund for Nature (WWF) and ICAEW (the Institute of Chartered Accountants in England and Wales), it was launched in 2008 and in 2012, was named one '50 New Radicals, changing the face of Britain for the better' by NESTA and The Observer newspaper.

Further details: http://thefinancelab.org/


(The views in this blog are the author's own and not necessarily those of Nesta)