Things To Ponder: Does Innovation Ever Happen Anymore?

*Does Innovation Ever Happen Anymore?*
**By Roger Gudobba**

***I remember back in the late 90s when everyone was saying the e-mortgage is only three to five years out. Here we are 20 years later and e-mortgages are still a very small part of the market. As I was thinking about this topic of innovation, I thought I’d do some research to see where we were in the 1990s as compared to where we are today. To this end, I uncovered the Mortgage Banking magazine, March 1991 issue. The cover story was “Technology: More systems, less paper”. One article stated, “There is still a lot of paper out there—no threat to Federal Express is emerging yet from this industry. But then again, change is rarely delivered overnight.” What do you think of the progress in the industry in the 20 years since this issue was published?

****As I am told, the definition of innovation is the process of improving an existing product or service and not, as is commonly assumed, the introduction of something better. Personally, I disagree and believe that innovation is about the introduction of new or different tools or methods, especially as it relates to the mortgage industry. This may be a matter of personal perspective, but when I look back at the significant changes in the industry, like the development of loan origination systems, automated underwriting systems, converting from paper to electronic (more on that later), product and pricing engines; all amount to the introduction of something better rather than just an improvement of an existing product. What was the common thread?

****Each of these innovations took a subset of the overall mortgage loan process and thought “how can we do this better?” They began by looking at the start and the end of the process. You need to determine what the objective is, and what the end result is that you want to achieve. From there, you brainstorm on different ways to achieve those results and ignore how it has always been done in the past. It was thinking outside the box that lead to these innovations.

****Michael Fruhling, Founder and CEO of bfs innovations, Inc., in his article Bridging the Innovation Gap published 3/8/2011 stated:

****“In a 2010 McKinsey survey of over 2,000 corporate executives, 84% said that innovation was very or extremely important to their company’s future growth. However, 40% claimed that they select their new ideas on an ad hoc basis. Further, 57% agreed that while they execute well against the few new ideas that they had… they needed more big ideas.

****Net: most corporate executives believe that innovation is important, but a good number of them don’t appear to dedicate sufficient time, attention and resources to building and maintaining their innovation pipeline. The result of this would appear to be an Innovation Planning Gap.

****The McKinsey survey highlights overall, what Michael sees on a more micro scale. A good number of his R&D colleagues lament their inability to carve out adequate time away from the current business to pursue and develop new opportunities. They are similarly frustrated that they lack a proper forum to serve up their inspirations to their marketing peers to build their interest sufficiently to pursue some of these ideas.

****Many marketing managers have new product development responsibilities in addition to their current business obligations. Time restrictions can cause some to feel pressured to pursue more conservative, expedient opportunities, as opposed to more ambitious concepts with greater potential (but also with greater risk).”

****What does all this mean? For “an innovation, to be effective, it has to be simple and it has to be focused. It should do only one thing, otherwise it confuses. If it is not simple, it won’t work. Everything new runs into trouble; if complicated, it cannot be repaired or fixed. All effective innovations are breathtakingly simple. Indeed, the greatest praise an innovation can receive is for people to say: ‘This is obvious. Why didn’t I think of it?’” —Peter Drucker

****What will 2011 bring? PROGRESS in Lending honored five top innovations in 2010. I am honored to be a judge for the competition. Some of the entries were very impressive. I hope to see even more impressive entries as we work toward Innovations 2011. I’m waiting…

Roger Gudobba

Roger Gudobba is passionate about the importance of quality data and its role in improving the mortgage process. He is an industry thought leader and chief executive officer at PROGRESS in Lending Association. Roger has over 30 years of mortgage experience and an active participant in the Mortgage Industry Standards Maintenance Organization (MISMO) for 17 years. He was a Mortgage Banking Technology All-Star in 2005. He was the recipient of Mortgage Technology Magazine’s Steve Fraser Visionary Award in 2004 and the Lasting Impact Award in 2008. Roger can be reached at