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Innovation and Social Sustainability

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16 October 2022
Rob Norris

In recent months, I have seen an uptick in client conversations about sustainability. Financial institutions are increasingly thinking about the role they should play in making the world better for present and future generations when it comes to factors such as the environment, the economy, and social justice.

Sustainability is becoming an integral part of corporate strategy, not just a public relations tactic, a piece of a corporate citizenship program, or an external reporting function. Companies are exploring how sustainability can become the basis of competitive differentiation.

As it becomes more strategic, sustainability will naturally create new demands on IT departments and other groups involved in managing innovation. There will be new business processes to support or automate, new needs for business intelligence and analytics, and new systems of engagement for internal and external stakeholders. These demands, unfortunately, come at a time when IT departments of financial institutions already have their hands full.

Many companies are mired in multi-year, multi-million-dollar legacy transformation projects that are holding up other initiatives and creating long development backlogs. This is hurting agility at a time when agility is desperately needed. Companies need to adapt to elevating levels of what Warren Bennis called VUCA--volatility, uncertainty, chaos, and ambiguity. Instead, they find themselves wrestling with excessive workloads, short-staffed teams, and burned out employees.

As a result, senior leaders are often unhappy with innovation outcomes, despite massive investments in technology. There is a gap between expectations and reality when it comes to innovation throughput, timeliness, and return on investment. As the digital disruption of financial services continues, it does not seem, well, sustainable for these innovation struggles to continue. In a world of rapid and unpredictable change, companies need innovation sustainability.

How can organizations find success executing on their social sustainability strategies if they are struggling with innovation sustainability? One way is to look for opportunities to improve both kinds of sustainability at the same time.

For example, consider the beneficial impact of cloud computing. In terms of social sustainability, the cloud offers the potential for greater energy efficiency, especially from its inherent elasticity—the ability to dynamically allocate computing resources in response to changing demand for those resources. Also, major cloud providers are moving toward renewable energy sources to power their data centers, which will reduce the effective carbon footprint of cloud-centric financial institutions.

Cloud computing also helps innovation sustainability. It makes it faster and easier for IT departments to provision computing resources necessary to support development projects. Various software-as-a-service and platform-as-a-service offerings enable IT departments to offload entire domains of technology administration, freeing resources to focus on creating business value.

Another example of winning on two sustainability fronts can be found in apprenticeship programs. Providing on-the-job training to high school students or adults lacking a college degree can provide an alternative path to career success for disadvantaged communities—a clear win on the social sustainability front—while also giving companies another source of desperately needed talent.

There are also opportunities to infuse sustainability into innovation processes. For example, consideration of sustainability implications could be a key element of project management on any major initiative, in the same way project managers attend to management of budget, organizational change, and enterprise risk.

For example, a marketing project team might consider energy usage as a factor in evaluating different approaches to a marketing campaign. A project team implementing automated underwriting might explore the potential for machine learning models to be inadvertently discriminatory if trained using historic data sets that were a product of earlier societal bias.

Sustainability will increasingly be a priority for all executives. You might say their own sustainability will depend on it. As financial institutions increasingly become all-digital businesses, IT leaders will be expected to lead—not merely support—the development and implementation of sustainability strategies throughout the enterprise. These leaders can step forward now by finding opportunities to improve both innovation and social sustainability.