“A Night at the Opera”: Fostering Innovation in Your Business

What does innovation mean to you? When I ask people this question, they often talk about new inventions, groundbreaking technology or scientific breakthroughs. One iconic individual who is often cited as the archetypal innovator is Steve Jobs, as much for the theatrical way in which he introduced new Apple products as for the technology itself. 

For almost everyone, innovation is an act of creation. I have been studying the subject for many years, and one of the things that has always fascinated me is this perennial question: why is it that some innovations take off and become wildly successful whilst other equally great ideas never make it? What I’ve come to realise is that there are two other essential ingredients to innovation that sit alongside the creative component: implementation and adoption.

Let me illustrate with an example. In 1975, the rock band Queen released A Night at the Opera, an album that featured what would become one of the most legendary tracks in the history of rock—“Bohemian Rhapsody.” At just under six minutes in length, it defied every convention of popular music, especially the widely held belief that songs couldn’t last more than three minutes to be played on the radio. Indeed, Queen’s record company famously resisted releasing the track as a single, convinced that no radio station would touch it. 

However, the song found an enthusiastic champion in the maverick broadcaster Kenny Everett. His repeated playing of the track on his radio show was pivotal, helping to ignite public interest and ultimately propelling the song to the top of the UK charts, where it remained for nine weeks.¹  As Queen’s drummer, Roger Taylor, said, this one song promoted the band from the Championship to the Premier League of rock. 

The story of “Bohemian Rhapsody” can teach us a lot about innovation. It was conceived by Queen’s creative genius, Freddie Mercury, but it required the other members of the band as well as their producer and recording engineer to implement Mercury’s ideas and put them on tape. Without Kenny Everett, however, millions of listeners may never have been aware of the song’s existence. So it is that these three elements—innovation, implementation and adoption—work together to produce a successful outcome.

It’s no different in the investment world. In the 1960s, Eugene Fama’s research into capital markets at the University of Chicago challenged the conventional wisdom of Wall Street. His innovative work, as well as insights from other academics, showed it to be virtually impossible to consistently outperform the market through stock picking or market timing. Those foundational concepts later resulted in the creation of a new investment concept, the index fund. But to make that work in the real world required a dedicated team of implementors. In the early 1970s, John “Mac” McQuown led the project at Wells Fargo Bank to build the world’s first index fund and this, in turn, encouraged other firms to bring these cost-effective, accessible investment solutions to market.

In 1981, David Booth, inspired by Fama’s research and his time working alongside McQuown on the index fund project, co-founded Dimensional Fund Advisors to systematically apply academic research to build practical investment strategies. And when adviser Dan Wheeler joined the firm a few years later, his enthusiastic promotion of this new way of investing paved the way for a broader adoption of Dimensional’s approach in the global financial adviser community. 

The role of early adopters in the life cycle of any significant innovation cannot be underestimated. In some ways, it is these pioneers who perhaps take the greatest risks, often staking their reputations and careers on new ideas, trusting them enough to break with conventional wisdom. The financial advisers who embraced this new way of investing in the early days played a vital role in promoting its broader acceptance in the face of scepticism and, sometimes, hostility.

Given these examples of global success from the very different worlds of rock music and finance, you might ask how the combination of innovation, implementation and adoption applies to smaller businesses, like financial planning firms. In fact, it is no different.

Whether you are starting a new firm, developing a new value proposition for clients, or relaunching your brand, these are creative acts. However, to be successful, you will have to invest huge amounts of time and resources into implementation: whether selecting the right technology or platform infrastructure to operate the business, researching the investment partners to power clients’ financial plans or hiring the right people. Innovation and implementation will help you build a world-class planning practice, but without the adopters—the clients who place their trust in you—none of the creativity or energy will count for anything. And, for those early adopters, the stakes are even higher because they are placing their future financial well-being on the line.

A Night at the Opera is a great album, but aside from dedicated Queen fans, who could name the other 11 tracks on the record? It was the unique confluence of innovation, implementation and adoption of “Bohemian Rhapsody” that helped it stand apart. That same recipe can also work for you as you seek to differentiate your business. Be creative for sure, build it the best you can but, above all, find those clients—the ones who will adopt and then enthusiastically promote you—to take you to the top of the charts.