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Innovation: from the lunatic fringe to the avant-garde


Dear Reader, this week please allow me the indulgence of sounding a little philosophical; I will need it if I am to illustrate my point effectively.

Avant-garde is a French word which means “advance guard” or vanguard. In its adjective form in English, it is used to describe people or works that are experimental or innovative.

It represents a pushing of the boundaries of what is generally accepted as the norm or the status quo.

The term was originally used to describe the foremost part of an army advancing into battle, and now applies to any group that considers itself innovative and ahead of the majority.

The vanguard, a small troop of highly skilled soldiers, explores the terrain ahead of a large advancing army and plots a course for the army to follow.

The concept is that of opening pathways through new treacherous terrain for others to follow. It is about blazing trails. From the foregoing description, avant-garde is, by any standards, a complementary and prestigious description of one’s characteristics.

Lunatic fringe, on the other hand, is a term used to characterise members of a movement which espouses extreme, eccentric or even fanatical views.

It was coined by Theodore Roosevelt, the 26th President of the United States of America to describe Americans who were considered to be anarchic in their disposition.

To say the very least, lunatic fringe is therefore a most uncomplimentary epithet, if not a downright derogatory way, of describing someone.

Having sufficiently introduced these two movements which sit at opposite ends of the viewpoint spectrum, let me now turn to current affairs in local financial sector circles, with the intention of rounding up this discussion by referencing the lunatic fringe and how I think it relates — or perhaps should relate — to the avant-garde.

On November 4, I attended the launch of the Zimbabwe Independent’s Banks and Banking Survey 2010.

Sam Muradzikwa, a son of the soil who is the Chief Economist of the Development Bank of Southern Africa (DBSA) delivered the keynote address in which he spoke about a Zimbabwean banking model badly in need of a review.

Easier said than done, Sam, especially if part of that change involves injection of significant amounts of capital by bank shareholders.

Luckily, despite its paramount importance, capital isn’t everything, otherwise some banks would no longer be in existence as we speak and besides, there are other things which are also important for the survival of a bank.

While Muradzikwa made particular reference to banks’ priorities in terms of loan advancement, it is tempting to appropriate his call and apply it to broader banking issues.

At a time like this, perhaps what is required is a financial revolution, not the evolution that we are currently partaking in. After all, isn’t it said that problems cannot be solved at the same level of thinking at which they were created?

Let me however hasten to add that revolutions are typically impatient and sometimes unruly, while evolutions are slow, patient and thorough. Revolutions take people out of their comfort zone, which is why they are often vigorously resisted.

The evolutionary process might for instance, demand that we wait patiently while deposits grow organically at the familiar rate of about $100 million a month, but a revolution will demand that we get up immediately, go out there and do something, anything! It could be increasing the velocity of the available liquidity through perhaps something like aggressive promotion of factoring, which would in turn have a multiplier effect on market liquidity.

Turning back to the two movements I introduced earlier, the theory I put forward is that if our banking sector is to forge ahead in a manner that enables it to change its model, the lunatic fringe is as important to the innovation mix as is the avant-garde.

While it is absolutely critical to have
trailblazers, the need for those who question things and throw some interesting, counterintuitive views and dimensions into the mix and challenge us to think again, cannot be over-emphasised.

We need such people in every facet of the banking landscape – in Treasury, IT, international banking, trade finance, corporate banking, retail banking etc – who can push the envelope and seek to expand the frontiers of banking knowledge.

I deliberately exclude accounts and risk management because when all is said and done we need someone to apply some logical thinking and clean up after all the lateral thinking has been executed and besides, there are already enough Enrons and WorldComs out there to last a lifetime!

If you sometimes find yourself asking some of the questions below, and people around you find them challenging or even inconvenient, chances are that you are viewed as a member of either the lunatic fringe or the avant-garde, depending on how well the innovation matrix is embedded in your company’s DNA:

l As a bank, we have done what we could by rationalising this and rationaliasing that — from human capital to the branch network. What more can we do to cut costs without curtailing revenue-generating capacity itself? Wasn’t it John Maynard Keynes who once said: “The engine which drives enterprise is not thrift, but profit.”?

l Current market spaces are oversubscribed – how do we open up new ones and cater to the needs of the unbanked and under-banked at affordable cost and on a sustainable basis?

l Capital raising has — across the debt to equity spectrum — been very difficult. What other initiatives can we embark on that don’t necessarily involve mobilising direct financial capital?

l How can we make innovation a way of life, without necessarily needing to reinvent the wheel? Aren’t we late developers who get the benefit of walking paths that others have walked before simply by looking at what is working or has worked elsewhere and customising it to our peculiar situation?

l Should customer service be our main means of managing competition? Isn’t it — by its very nature — restrictive to business development since it caters for existing customers?

l In this very competitive environment, how can we hook those that are not yet our customers and transition them from the so-called “suspects” to “prospects”? Is the game not more about product/market development than customer relationship management?

l How can we integrate existing, older generation technology with new cutting-edge technology in order to lower the cost of delivering banking services?

l How do we contain the evolvement of the telecommunications industry into a formidable intermediary to the extent where certain aspects of banking no longer need banks? Do we compete or collaborate?

So, which movement do you belong to — the lunatic fringe or the avant-garde? You can’t be in the middle, otherwise you are not making things happen; things are instead happening to you. That reminds me of an inscription on an old T-shirt of mine that advertised bungee –jumping.

“If you are not standing on the edge, you are taking up too much space,” it said. Anyway whether you are one or the other, do not fret because in my book, there is a thin line between the lunatic fringe and the avant-garde.

You should have asked Aristotle or later, Isaac Newton, when they were suggesting that the earth was round instead of flat as had generally been believed until then.

Omen N Muza is a banker and Managing Director of TFC Capital (Zimbabwe) (Pvt) Ltd. He writes in his personal capacity. For feedback and your views on the issues raised in the article contact:

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