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BOA version 1 - MGT 6772 DONE BY RIKHAV PARIKH BEHNOOD...

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MGT 6772 DONE BY RIKHAV PARIKH BEHNOOD GHOLAMI GAELLE TONDRIAUX NISHANT JAIN
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Key elements of the Innovation strategy for Bank of America In early 2000, the American Banking sector was undergoing a major consolidation phase. Intense competition had forced over 7000 banks to shut down. Banks traditionally functioned without dedicated R&D departments and considered new product innovations as the domain of marketing departments, which lacked formal processes, methodologies and resources needed for genuine effort. Innovation was critical to survive in such a competitive environment. In this context Washington Mutual (WAMU) was the first bank to try innovative banking solutions but Bank of America quickly followed suit and started extending its product line by innovating. In the late 1990s, Bank of America structured an Innovation and Development (I&D) team to conduct a series of formal experiments aimed at creating novel service concepts for retail banking. The team operated 25 branches in Atlanta as experiment centers each one being called as a ‘live laboratory’. Atlanta was chosen by the I&D team because these were high tech branches equipped with latest technology and also because Atlanta was considered a “stable market”. This was important because in spite of the requirement of direct customer presence in the experimentation process, normal activities could not be hindered in any way. The managers of each of these branches agreed to work closely with the I&D Team in carrying out these research efforts and they also agreed to provide much of the required funding out of their own budgets in order to get early benefits of the resulting innovations. Integrating the program into normal operations at the branches was a risky step - experiments after all carry the potential for disruption. But Bank of America realized that only by carrying out experiments under realistic conditions - organizationally, operationally and economically - would the I&D Team ensure the reliability of their results. The team received considerable support from the senior management for experimentation to occur in a live setting which bolstered the team’s learning and confidence. Having established the "market" for experimentation, the I&D team formally defined a framework for the innovation process where ideas and concepts were generated, assessed and queued up. The team then prepared a plan of action based on the design and needs for operational implementation and ‘rehearsed’ the activity in a closed setting to maximize fidelity and achieve perfection before rolling the idea out in test centers. The team had most of the necessary testing and benchmarking measures in place such as the concept of ‘control centers’ which enabled the team to make fair comparisons and ‘repetition of outcomes’ for greater learning and hence minimal distortion in experiments due to noise. The whole process also allowed for rapid feedback allowing redesigning the experiments for better outcomes.
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