Recently I had the opportunity to speak with Phil Swisher, Head of Innovation at Brown Brothers Harriman (BBH). Brown Brothers Harriman had hosted several workshops of the Bank Innovators Council in Boston, and I was pleased to catch up with Phil and learn more about the work of his innovation team and the compelling products they are building for the firm.
Can you describe the innovation function at Brown Brothers Harriman?
We are set up as a commercial catalyst type of innovation team – essentially operating as a start-up inside a large bank. Our goal is to generate meaningful revenue for the firm from new businesses. We’re focused on organic growth opportunities, and we don’t buy firms or invest in start-ups.
Our style is to take big swings at things that matter to the firm. We tend to focus on products that are unique to an industry and which have disruptive potential.
How is this approach sustained within the firm?
For an innovation program like ours to succeed, we need three elements: good ideas, the time to work on them, the capital to fund them. Those three elements have always been present since we started the innovation team in 2010.
What’s unique about BBH is that we are a private partnership, with 38 owner-operators who average decades of tenure at the firm. In such a model, long-cycle entrepreneurship is inherent in the business model. A new partner will have their capital invested in the firm for decades, so continuing to innovate and adapt is the only way to ensure long-term survival.
What is also great about a partnership model is that we have very strong continuity of senior management, strategy and capital. And since we also do not do mergers or acquisitions, there is very strong organizational stability from which to build.
From where do you source your ideas?
Our best ideas tend to come from the leaders of our business units. Our business is almost exclusively institutional, so it takes a great deal of subject matter expertise to be in a position to develop something new. Our business unit leaders know their clients and industry exceptionally well, and so they can identify unmet client needs, major client pain points, and where the industry is likely to evolve. We add in our industry outsider perspectives – we’ve been entrepreneurs, scientists, programmers, investors, advisors among other roles, and the resulting outcomes tend to be quite unique.
How do you prioritize among opportunities?
We take a fairly qualitative approach to our pipeline. We look for opportunities that solve an important problem, that leverage the firm’s expertise and core competencies, that are highly scalable, and that could yield an outcome that is orders of magnitude better than the status quo. And since we’re a bank, we also of course make sure it’s something feasible from a regulatory, risk, and compliance perspective.
Of the opportunities that meet those criteria, we prioritize the ones that the Innovation team is most excited about from a long-term potential perspective, and the ones that have the most support from business unit management teams and the firm’s partners.
We don’t believe that ROI metrics are particularly meaningful or useful for our pipeline. We care deeply about the potential upside, and work hard to test and validate the key assumptions for the upside to occur.
What are you working on at present?
We continue to focus on data analytics products that will directly impact how our clients manage their business, specifically ones that will directly affect revenues or costs. We see it as an area with great potential.