How do new ideas get started? How do they get propagated? Why is this a key issue as we enter a new millennium?
The change this country, indeed, the world, is going through is the result of new ideas. Some of these are internally generated and some are external realities or drivers of change. These ideas cover all areas of human endeavor - philosophical, scientific and behavioral. Credit unions are in the midst of all of these forces, both contributing to and coping with change.
Trying to Change
The way new ideas are spread is of critical importance in an area of change. In the 1950s a book called Lifetide described how new behavior was learned among monkeys. The book reported that one monkey taught another to wash potatoes. That one taught another until soon all the monkeys were washing potatoes where no monkey had done this before.
The book also claimed that once a certain critical mass of monkeys (the 100th monkey) had learned the behavior, then, mysteriously, monkeys on other islands with no physical contact started washing potatoes as well. While this latter assertion has been refuted, the spread of new learning is still a critical phenomenon. For the speed of adoption of a new idea, practice or business model can affect all of our life - from the popularity of a political candidate to the impact of new Internet solutions on everyday human needs.
It's a Small World
A second look at how ideas become circulated is the Kevin Bacon game created by a University computer scientist to show the power of networks. This illustration put Kevin Bacon at the center of the movie universe. The game goes as follows:
Think of an actor or actress.
If they have ever been in a film with Bacon, they have a Bacon Number of one.
If they have never been in a film with Bacon but with somebody who has been, then they have a Bacon number of two, and so on.
The claim is that no one who has been in an American film has a Bacon number greater than four. Elvis Presley for example has a Bacon number of two. The computer scientist later expanded the universe to include all nationalities and proved that the highest Bacon number was eight.
This game was an illustration of the fact that our day-to-day experiences are pervaded by the "small world phenomena." It formalizes the notion that "you are only six degrees of separation" from anyone else on the planet. So while our social world is perceived to be only a small group of immediate acquaintances, the fact that we are a very short chain of contacts away from any other person anywhere in the world does seem more plausible.
Enter the Internet
The Internet brings a new reality to these theories of behavioral and social networks. The Internet is both an enabler and an example of significant change.
But the Internet raises a question about whether there are more new ideas or whether it is just that the adoption curve is steeper, broader and faster due to an increasingly interconnected world.
Is it possible that simple ideas can become circulated so quickly that the spread of the idea itself creates a much more complex series of outcomes that the original concept? We see, perhaps, a parallel process in nature in the creation of many complex design in flowers and trees from a very simple initial pattern.
Whatever the explanation, there is no doubt that credit unions are in a new era. For most of the 20th century the credit union system was fixed, and competition was predictable. The innovation of the pioneers of the '20s and '30s gave way to the professional managers of the '80s and '90s. But then the combined forces of deregulation, digitization and changing demographics created a new environment in which structure and predictability have been replaced by uncertainty.
Blueprints and long-term plans increasingly don't work. Business strategy becomes much more like a game plan for football or a poker match. In these circumstances, an opportunity missed can quickly become a threat. Planning becomes a challenge with no solutions. Competitive advantage is gained by learning faster than an opponent.
The reverse side of uncertainty, however, is unprecedented opportunity. The same factors that remove the structures and protections of the old era provide enormous potential for entrepeneurs thinking in new ways.
The Internet is a critical part of this innovative opportunity. Three factors make this so.
1. Insight using the new technology is not restricted to scientists and technicians. The Internet is a democratic medium and force that virtually all can use to launch new concepts.
2. New ideas can be circulated and people can use them much more readily than ever before.
3. The investment to establish the concept is minor compared to earlier eras.
The result is that innovation becomes much easier. A person can see something and quickly test the concept. Credit unions are not disadvantaged versus larger competitors. They, too, can participate, innovate and share new solutions quickly.
The Need for Monkeys
The key to innovation is still insight, the new idea that can realize a whole new way of bringing in new value to members.
Sometimes this will be in seeing new ways to do things, that is, applying means differently to reach a better outcome such as shared facilities. Sometimes this may be in seeing completely new outcomes to serve members. And in other circumstances this may be a process improvement in how something gets done better.
Credit unions are a cooperative network. Their willingness and ability to embrace change is motivated by service, not private gain. Credit unions should be able to implement faster than competitors, those without "natural" networks.
Innovation, however, starts with one monkey learning to wash potatoes. This may be someone like Warren Marshall promoting the Internet before the concept has reached the public. Or it could be a regulator such as Ed Callahan who believed that deregulation was really about giving boards and managers the opportunity to make their own business decisions, not just modifying rules. Or it could be technology breakthroughs of a Tom Sargent who has been involved in creating new and better home banking solutions not once but three times. Or it could be the business insight of a Paul Horgen who has made multiple CUSO investments with uncanny insight about areas of change.
To continue their evolution, credit unions will have to engage in a lot more monkey business in the 21st century. But isn't that how we got to where we are today?