How to define--and execute-- "innovation" in investment banking?Reena Jana
Walking to work each day from the subway station to my office, I pass the headquarters of Lehman Brothers. Usually, there are tourists outside, taking home videos of the eye-catching facade, which is covered with giant video screens showing enormous images of iconic American sights like the Golden Gate bridge. Today, after Lehman filed for bankruptcy, the tourists were replaced with news reporters and major-TV-media cameras and trucks with humungous satellite dishes on top. Today, employees of Lehman Brothers are shuffling in and out of the building as if celebrities entering and exiting a nightclub, avoiding swarms of paparazzi.
And with Merrill sold to Bank of America, and Goldman Sachs and Morgan Stanley gearing up to provide what they hope is relatively good(ish) news in their earnings reports tomorrow, isn’t it time we think about how to define and execute innovation in investment banking?
Bruce Nussbaum wrote a blog post in July examining the role of innovation in the Fannie Mae/Freddie Mac meltdown, bringing to the table the idea that innovation may have sparked the current financial-world debacle.
Other innovation specialists in the blogosphere, like Scott Berkun of Harvard Business, reacted to Bruce's post, questioning what "innovation" really means in the context of finance. Berkun that the current financial-world disasters are the result of plain old "greed, ignorance, fools and their money, and downright lack of common sense."
How do you define innovation in the investment banking world? How should we execute it?
Could Goldman Sachs be our best example? It will be interesting to watch the company in the days and months ahead. As we all know, Goldman Sachs wisely saw ahead of the pack that the subprime mess was eventually going to occur. Intriguingly, it is the one investment bank represented in our Innovation Index and the only one in the top 25 of our annual BW/Boston Consulting Group list of Most Innovative Companies.
Okay, so now my head is spinning, too, with the repetition of the word "innovation" and its variations as an adjective and a verb in our coverage, including this post. So let's talk less about the buzzword and more about its definition and its execution. Especially in the world of investment banking.