ZB Financial Holdings unveiled their Innovation Hub today. I know, I know, you hear Innovation Hub and you think ‘co-working space in fancy dress’ but ZB does seem to have an interesting model here.
The hub’s official name is ‘ZB Financial Holdings Innovation Hub,’ which is as bland as they could have made it. They could have innovated on that name just a little but that’s just a name, what matters more is what’s done there.
There are two main uses of the ZB Hub and the first is internal. ZB wants to use the hub to explore and provide solutions to their customers’ pain points. So, essentially the Hub is an independent ZB department that’s set up to research and innovate on behalf of the group.
This idea of creating an independent and separate entity to innovate was made famous in The Innovator’s Dilemma. The advantage of having a separate entity is that it allows for faster experimentation and decision-making, making it more agile.
The separate entity can focus on disruptive technologies and can also attract or pursue different kind of talent. Allowing for truly unique ideas that would never have come had the duty to innovate been on the same team running the day to day business.
ZB says the Hub will “drive the ideation, experimentation, prototyping and commercialisation of new products and services.”
Now, the second use of the Hub is external but internal at the same time. The Hub will be used to incubate businesses (aka startups).
There are actually some fintech startups operating from the Hub today. ZB approached some fintech startups it thought had brilliant ideas worth pursuing and will incubate them.
This is why I said this incubation business is for internal use. ZB will be seeking out fintechs they can have synergies with and so it will mostly be those involved in financial services of some kind.
Good idea
I think the Hub is a good idea but success is far from guaranteed. As we have seen over the years, setting up a separate business is hard because for it to succeed it really has to be independent and holding companies have struggled to truly relinquish the reins.
With no sufficient independence the Hub will become just an extension of the ZB office and what’s the point of that? I hope for ZB’s sake that the Hub will be free to go crazy.
That’s easier said than done because imagine the Hub having a mobile wallet idea that cannibalises ZB Bank revenues whilst not bringing in nearly the same amount. Can such an idea be pursued earnestly? Food for thought.
The ZB CEO seems to be okay with the idea of the Hub failing at times as it tries to find what works. I hope he’s still okay when that starts happening in real life.
Then when it comes to the incubation business, I’m a bit skeptical. I don’t think incubating startups is as simple as giving entrepreneurs desks to work from. Not to say that’s what ZB is simply doing. It’s just to say I was not aware ZB had incubation skills.
That said, I love the idea. ZB is trying something new (for them) and I hope it works out.
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