The creativity of the campaign was inspired by the breakthrough nature of the product itself. As of June 2023, over 12 million people have registered for the free solution, with the average person’
s FICO score increasing by 13 points. Consumers, consumer advocacy groups, and even some regulators have applauded the innovation, and it’s helped significantly accelerate growth for Experian’s Consumer Services business over the past four years. Fast Company selected Experian Boost to their 2022 list of World Changing Ideas.
Inspiring (and entertaining) as this individual product success may be, the more interesting story is the broader organizational transformation that made it possible. In 2018, CEO Brian Cassin kicked off a company-wide initiative to transform Experian’s approach to innovation. While the company already had a strong track record of launching innovative solutions, Cassin recognized that to realize its full potential the company needed to build a more systematic approach. The story of how Experian designed, piloted, and scaled its innovation system globally holds a number of valuable lessons for leaders seeking to transform innovation from a series of one-off, serendipitous successes to a predictable source of enduring value and competitive advantage.
Experian’s Innovation Challenge
Read the client impact story to discover how Innosight helped Experian scale innovation to a competitive advantage.
It traces its roots back more than 100 years as one of the first companies to aggregate the credit paying histories of borrowers to inform risk assessment in lending and other end markets. In 2001, it made a foray into the direct-to-consumer world by providing individuals access to their credit reports on a one-off basis or as a subscription. This business, Experian Consumer Services (ECS), grew rapidly over its first decade, fueled in part by the growing interest of individuals in personal finance, increasing internet access, and Experian’s expertise in customer acquisition.
Then, in 2008, the Global Financial Crisis ushered in a number of disruptive entrants that targeted ECS’s customers. Their value proposition was irresistible: similar access to personal credit reports and scores, but free of charge as they monetized through targeted advertising rather than member fees. By 2013, these new competitors were beginning to have a meaningful impact on growth at the ECS division and on Experian overall.
Experian found itself in a classic “Innovator’s Dilemma,” in which a successful, market-leading business is unable or unwilling to respond to upstarts. It responded by re-evaluating its ECS position and approach to innovation, adding new leadership, and modernizing its technology. Until then a largely one-product business, it introduced a series of value-adding features to its paid offerings, including identity protection services, financial wellness, and ways for members to better control data and save money.
In parallel, it launched its own free offerings, and positioned itself as a digital lending marketplace with several differentiating benefits. For example, Experian used its sophistication in data analytics to ensure it would only offer its members credit cards they would be approved for, making the experience more seamless and positive. This benefited the card issuers as well, as they avoided leaving rejected consumers with lingering disappointment and a negative image of their brands.
Experian has been able to fundamentally reorient its relationship with consumers, positioning it as a driver of financial inclusion and empowerment globally.
Initially, the renewed emphasis on innovation within the ECS business was reactive. However, a similar pattern was unfolding in Experian’s other businesses, where comfortable growth trajectories were at risk of being disrupted and the organization slow to respond. By the time Brian Cassin took over as CEO in 2014, Experian’s overall growth had stalled.
As Cassin’s tenure began, he knew there was tremendous untapped potential across all the company’s businesses. Realizing this potential, however, would require even more innovation – and it needed to be faster, more strategic, higher value, and take advantage of Experian’s global scale.
Addressing the Challenge
To realize this ambition, Experian launched a global initiative to build a more systematic innovation capability across the company. From the beginning, the project had the visible support of the leadership team, with senior leaders appointed to lead the effort, and a steering committee consisting of the CEO, COO, and CFO. Experian engaged Innosight, and partners David Duncan and Alasdair Trotter, to bring perspectives on best practices and relevant models from other companies.
The first step was to assess how innovation was currently happening, what was working well, and what could be improved. Mapping the current approach was critical as the team believed Experian was already doing many things right and wanted to build on this strong foundation.
This exercise highlighted several distinctive capabilities (Figure 1). For example, Experian Data Labs had launched in 2010 to conduct R&D on new data technologies and products, sparking a series of exciting launches and becoming a magnet for some of the most in-demand data scientists in the world. Another bright spot was Experian Ventures, which had been created to invest in promising startups and develop commercial partnerships, resulting in over $200M invested in nearly 40 companies over the past 5+ years.
The team also discovered areas for improvement. While innovation was embedded in strategic priorities, it was often not a top-level driver of them. Experian, like many companies, had too many attractive opportunities that it could pursue and it showed in the broad range of projects underway, some focused on relatively small spaces. Reaching its growth targets would require the company to focus innovation on the biggest and most strategic opportunities.
A second theme was the wide variation in how innovation was executed across the organization. Some geographies and businesses were very advanced, and others were earlier on the learning curve. Because there were no commonly shared definitions, processes, or metrics, it was hard to understand the relative strengths of innovation pipelines in different parts of the globe or to share learnings on what was or was not working.
Finally, there were issues with how the company resourced, governed, and evaluated innovation. Regional and business unit leaders were granted a high degree of autonomy over how they ran their business which, while a key driver of business performance, also resulted in a siloed approach to innovation. Leaders’ visibility into the full set of innovation initiatives underway was obscured, impeding a portfolio approach to resource allocation decisions.
Some of these issues were compounding in their effect. Experian’s global scale should have been a clear source of advantage, as it could – in principle – take innovations developed in one part of the company and scale them across its markets. But without a standard approach to innovation, it was difficult to compare how advanced different projects were in different parts of the world, and where it would make sense to scale them. Without sufficient portfolio-level visibility, it was hard to know if two regions were working redundantly on similar technologies or products or to know where there were local portfolio gaps to be filled. And without clear top-down strategic direction for innovation, the priorities for global scaling were unclear.
In other words, these were system challenges; the only path forward was to develop a systems solution.
Building the Innovation System
Hear Experian CFO Lloyd Pitchford on breaking through “the frozen middle.”
The resulting “Experian Innovation System” consisted of three major pillars: Strategic Focus Areas to pick the right market spaces to invest in; Innovation Pathways to systematically uncover customers’ jobs to be done, and develop and de-risk potential solutions; and an Innovation System Management approach to enable the entire effort to be managed as a whole, rather than a set of discrete initiatives.
While each pillar played a distinct role, the real power came from how the three worked together. Nevertheless, it is instructive to consider the role and impact of each in turn.
Strategic Focus Areas
A key finding from the assessment phase was that nearly every Experian business unit had a different way of describing their strategic priorities for innovation. Further complicating things, innovation opportunities often spanned multiple customer segments, technology platforms, timeframes, and even potential M&A targets. This inconsistency made it challenging to compare priorities across different parts of Experian, ensure alignment with the corporate-level strategy, spot the best opportunities to collaborate, and identify redundant investments.
The solution was to adopt a common framework, known as “Strategic Focus Areas” (SFAs), to describe where Experian would focus its energies.
An SFA is defined at the intersection of answers to four questions (See Figure 2 below):
- What is the customer group we are targeting?
- What priority problem (or set of problems) will we solve for them?
- How will we solve this problem (at a general level)?
- Why is this strategically attractive and why do we have the right to win?
Answering all four questions ensures that strategic priorities are clearly defined, with customers and their problems as the most important elements. The Experian team first undertook a retrospective analysis of all recent strategic plans, examining 100+ strategic growth and innovation initiatives and reframing them through the lens of the SFA framework. The result was the articulation of five global SFAs (See Figure 2) that could be used to orient and align the entire company. These, in turn, were used to guide development of narrower, localized SFAs in different regions and business units.
The SFAs now provide a common language for developing strategic plans across the business, and a bridge to connect a high-level strategic direction with more granular guidance for investment, M&A, ventures, and innovation. They are embedded in strategic planning and are a central feature of quarterly business reviews.
This exercise also brought a new level of clarity to how the organization described its business, and immediately became the primary way the CEO communicated Experian’s strategy both internally and externally. The five global SFAs, along with the SFA framework itself, now feature prominently in Experian’s annual reports.
Despite all these benefits, the full value of SFAs could only be realized by connecting them to how innovation actually got done, which required the second pillar of the system.
Innovation Pathways
An “innovation pathway” is the set of steps an innovation takes from initial idea to implementation. Pathways exist in every organization, and are often a mix of formal processes, informal ones, and completely ad-hoc activities. The goal in innovation system design is to make all pathways explicit, intentional, and customized to the types of innovation needed.
During the assessment, the team discovered that Experian already had well-functioning pathways for core product innovation (though these varied by region). However, there was no standard approach to pursuing higher uncertainty, non-core opportunities, what Experian termed “new product, new platform, and transformational innovations.”
To address this, Experian developed an “Innovation Pathways Framework,” inspired by best practices drawn from different parts of the business and supplemented by learnings from other companies (Figure 3). Rather than a rigidly defined process it was a set of standards that would ensure consistency of approach while allowing for future improvements.
To drive the behavior and culture change required to ensure widespread adoption of the framework, the team designed a multi-tiered training, coaching, and support program aimed at innovation practitioners, leaders, and supporting functions. The centerpiece was a series of five-day “pathways bootcamps” for innovation practitioners to learn the pathways stages, tools, and approaches by applying them to live projects.
By 2023, over 4,000 people had been trained across the globe. Eventually, an online learning repository was created where practitioners could deepen their knowledge, brush up on their skills, or see how they were being applied in different parts of the company.
The impact of pathways has been transformative. All innovation teams now routinely gather direct customer insights before investing in solution development, a key shift that improves the ROI on innovation spend while increasing the odds of success. Innovation leaders now spend much more time engaging project teams on questions about customer needs, product/market fit, and assumptions testing, in contrast to the historical emphasis on listening to financially oriented status updates. Experian Boost was an early beneficiary of this program, with its team participating in the initial pathways bootcamps and using the experience and tools to shape the Boost value proposition, business model, and plan for testing it further.
With clear priorities defined by SFAs, well-functioning pathways to pursue them, the remaining gap was a way to connect local innovation projects to the broader enterprise strategy and then to operationalize it all – the purpose of the third pillar of the system.
For additional information on Innovation Pathways, please see our E-Book, Unlock the Hidden Value in Your Innovation Pathways.
Innovation System Management
While Experian has long recognized its operational excellence and decentralized operating model as real strengths, the innovation capabilities assessment revealed an unintended consequence: insufficient visibility and insight into the full set of innovation activities underway across the organization at the portfolio level. This made it challenging to manage innovation at the corporate, business unit, and regional levels.
To address this, Experian implemented the third pillar of the system: Innovation System Management (ISM — See Figure 4). ISM is the common approach and toolkit leaders use to evaluate and manage innovation portfolios across the company. At its heart is a new focus in management meetings on the three most fundamental portfolio questions:
- Are we doing enough innovation?
- Are we doing the right kinds of innovation?
- Are we allocating our resources to innovation efficiently?
To enable these discussions, new portfolio-level insights had to be generated from data about in-flight innovation projects across the company.
Initially there was significant resistance to “yet more reporting”. Experian had previously tried to track innovation activity, but the additional reporting burden on project teams had provided relatively little insight to leadership. Now, with a common language for innovation across the business, and data requests linked closely to pathways activities, reporting became both manageable and far more useful.
To make adoption easier, Experian integrated portfolio reviews into the existing Quarterly Business Reviews (QBRs) and capital allocation discussions; not only did this avoid layering on new processes but it actually helped reinforce the link between strategy and execution.
Innovation System Management has had a major impact across the organization, with benefits for innovation practitioners as well as finance and other supporting functions. Finance leaders previously had to prepare for and conduct resource allocation discussions based only on their limited visibility into the pipeline, and with multiple teams making educated guesses about market sizes and revenue forecasts using different methodologies. Now, those same conversations are powered by standardized reports which provide the relevant information for all projects in the pipeline, along with sophisticated analysis and visualization tools which allow insights to be clearly depicted and used to tee up discussions about strategy and resource allocation.
In addition, it’s been a key driver of culture change. In QBRs, for example, the CEO routinely asks leaders about the projects they had “shut down or doubled down on” to reinforce the ongoing importance of taking a portfolio view and balancing a pipeline of both short- and long- term opportunities.
For additional information on Innovation Portfolio Management, please see our E-Book, Reset your Innovation Priorities.
Experian took a staged approach to rolling out the system globally, with leaders of the three largest regions asked to sponsor a pilot of one component of the system. The pilots were guided by a small, dedicated central team, and designed to demonstrate the value of the new approaches immediately. This created local champions who could share with their peers how the system helped them to drive real business results, a key success factor as the focus shifted to scaling the system globally.
The Impact on Performance and Culture
Discover more resources on our Innovation Performance Hub.
Between 2020 and 2022, Experian made great progress in improving its ability to focus on a smaller number of higher-potential projects. The average size (expected revenue) of those projects increased by 100%, and the aggregate (risk-adjusted) revenue expected from the innovation portfolio rose by 60% – highlighting the power of the innovation system and bringing focus and resources to a smaller number of more valuable opportunities. Furthermore, the Time to Pilot, a key measure of throughput for the innovation system, was reduced by up to 75% for some projects – meaning that Experian could bring new innovations to market (or choose to shut them down!) more quickly.
While Experian recognizes its innovation system will always be a work in progress, it has already built enduring new business models and revenue streams from new customers. However, the benefits of the innovation system have transcended financial results, with Experian boasting increased scores on key cultural performance indicators that gauge how employees feel about their role in driving innovation and the attractiveness of Experian as an employer. Indeed, Experian was named to Fortune’s “100 Best Companies to Work For” for the 4th consecutive year in April 2023.
Cassin is proud of the company’s performance over the past few years, but cautions that “while results are good, we aim for better. There is even more innovation, growth and value creation to come”. With its innovation system now maturing, Experian is well on its way to “Boosting” performance even more. John Cena and the purple cow would agree – and the bulls have good reasons for optimism.
