Great to see recognition of non-product innovation
Two days ago I suggested that Bruce Nussbaum’s Davos panel was too focused on product, and didn’t recognize service and ecosystem innovation enough, particularly financial innovations that have led to our subprime woes.
With that in mind, I thought it was excellent that Bruce shared his observation yesterday that the biggest innovations discussed at Davos are financial innovations - the ones that have gone sideways to create the current crisis in the US economy.
Tim Brown suggests that this comes from poor innovation practice - Wall Street didn’t prototype these loans. I’m not sure that’s the reason they led to the current situation - a friend who was a VP at Wachovia flagged these loans as extremely high risk 5 year ago. Loans like this were initially developed for wealthy investors with a deep understanding of the inherent risk. As such, they’re useful financial instruments in certain situations. But like other innovations, offering something developed for one audience to another just doesn’t always go the way you wanted it.
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