By
Boniface Okanga
London-England, 2 September, 2024
Recombinant innovation is the iterative process of imagining and evaluating how a combination of the required technologies can be extracted from the existing technologies and seamlessly combined to create a new product or service. When developing a new product/service, recombinant innovation process does not focus just on researching the process of developing the technological components essential for creating such a product. Instead it also focuses on evaluating how such technological components can be extracted and integrated in the new product from the existing technologies.
Recombinant innovation is the process of recycling the existing ideas to create new product/service ideas. As customer needs and preferences evolve to demand the application of new technologies to create new products/services, recombinant innovation bolsters the capabilities of businesses to anticipate, imagine and create new products/services to respond to such needs before the competitors are able to do so (Fabri, 2023).
Recombinant innovation bolsters a firm’s capabilities to continuously create and deliver new products from the existing technologies or products. With time, this improves the enrichment of the portfolios of products that the business has at its disposable. As this improves a firm’s competitiveness as well as sales, revenues and returns on shareholders’ value, recombinant innovation also tends to become less costly for researching and creating new products. Of course, all forms of innovations are very expensive in terms of the required technologies, financial resources, skills and time.
But through recombinant innovation, the business saves enormous amount of time and money that could have been wasted through the periods of trials and experimentation and re-experimentation to get the final product created and introduced to the market. Instead of using all that amount of resources, time and technology, recombinant innovation just requires the business to evaluate the kind of product/service that it aims to create as well as a combination of the existing technologies that can be brought together to create a new product.
When computer and internet technologies emerged, most of the business executives did not know that one day internet and computer technologies would be tweaked and integrated in various products to completely revolutionise how businesses operate in a completely changed ways of how the new world operates. However, through recombinant innovation, very creative inventors and businesses have been able to evaluate and re-evaluate how the application of the existing internet technology can be extended for usage in other areas.
The effect is that as information technology and internet got integrated to create the modern notions of mobile or online banking, the end result has been reflected in the demise of the financial institutions that were not prepared for such changes. As reflected in CGTN America’s video below, it is such aspects of recombinant innovation that not only led to the creation of digital banking system, but also fintech companies like Nubank which is reshaping the Latin America’s banking terrain
Nubank witnesses massive growth in Brazil
CGTN America
Such facts echo the narrative of Professor Clayton Christensen of Harvard Business School who emphasised that countering disruptive innovations requires a business to not only evaluate, identify and mitigate the slightest risks of disruptions emerging from its existing industries, but also to assess risks of disruptions that may emerge from other related and even unrelated segments or industries. When the internet was introduced to the world by computer scientists like Robert Kahn and Vinton Cerf, some banking executives never thought that just a few decades later, a new banking concept would be crafted to disrupt how banks operate and interact with the market.
Instead most banking executives viewed the internet as just the information and communication technology thing that would just aid the linkage of the people in one region with another. Computers were perceived as mere business machines aimed at improving operational efficiency as well as the evaluation, management and analysis of business information. However, as inventors in the banking sector evaluated and re-evaluated the existing technologies, their imaginations gave birth to the notion of online banking. In the evolution of the notion of online banking, it is through recombinant innovation that inventors at the Stanford Federal Credit Union were able to seamlessly link and combine internet technology with computer, cellphone, smartphone and the bank’s financial information technologies to create the first online banking system (Ivey, 2023).
Before Stanford Federal Credit Union introduced the first internet banking in 1994, there had been several other attempts by other American banks to utilise the available information and digital technologies to improve the efficiency of how banking activities are accomplished. Using the limited computer technology which was available at the time, Bank of America introduced Electronic Recording Machine for Accounting (ERMA) in 1959. ERMA was mainly introduced to improve the speed of bank cheque processing which was increasingly becoming a problem that Bank of America had to deal due to a surge in the number of cheques being banked.
To deal with such problems, ERMA would print and scan account numbers on cheques to facilitate the ease of linking which cheque to which account as well as the cashing of the banked cheques. As this improved the overall efficiency of bank cheque processing, it attracted the attention of other banks. In 1960, the notion of Automatic Teller Machines (ATM) spread through Europe and Australia to help banks deal with the challenges of improving the efficiency of cash withdrawals (Ivey, 2023).
However, just like the Computer Loan Machine which was created by Japanese banks to issue loans to clients but not to withdraw, the ATMs of the 1960s also permitted only deposits and not withdrawals. With time, incremental improvements were made to introduce features that would allow some limited withdrawals. After the notion of computer usage had been introduced in banking, Chemical, a New York Bank using a sort of recombinant innovation initiative introduced its Pronto System in 1983.
Pronto System was a recombinant innovation initiative which seamlessly integrated the use of landline phone, computer and TV set technologies to permit home banking by various clients. Using the Pronto System, a customer would connect the computer to the modem facilitated by the landline phone and hook the computer up to a TV set to view or review their bank accounts, pay bills, check account balance, communicate with the bank or transfer funds. Though the system was shut down due to certain operational and technical glitches, it still offered insights into the ideas that would be required for creating and using a more effective digital banking system.
With such insights, it became easier for Stanford Federal Credit Union to use recombinant innovation and explore a combination of the technologies that would be required for creating its first internet banking system in 1994. Its internet banking system was anchored on the website that aided the viewing of accounts, transfer of funds, payment of bills and other bank related activities that clients would require (Ivey, 2023). With time, the effectiveness of internet banking system was enhanced by the introduction of smartphones. Smartphones in turn improved not only the effectiveness of online banking, but also aided the creation of the notion of mobile banking through which clients can accomplish their banking transactions anywhere and anytime using their internet connected smartphones.
As banks moved into the future, insights from LPS’ video below suggests the development of digital banking concept will use even more of recombinant innovation approach to expand its approach from the use of just smartphones, computers, internet and bank information technologies to integrate the use of artificial intelligence (AI) technologies to answer customer queries, automated system and robotics to accomplish some unique digital banking tasks, big data technologies to gather, analyse and extract new insights from the unfolding digital banking transactions and tracking devices for bank staff and customers to work with the shipping companies to monitor and track progress of shipment real-time after making payment for goods in a more integrated international market.
The Future of Banking
Though these imply through recombinant innovation, inventors have been able to forge a product/service called internet banking or mobile banking from computer, smartphone, bank information technology and internet, it is not only the notion of internet banking that depicts what recombination innovation entails. Instead the creation of the notion of e-commerce or electronic commerce also reflects some of the products/services that have been created using recombinant innovation. E-commerce is the use of a combination of internet, retail information system systems, delivery technology and tracking devices to accomplish the online selling and delivery of goods to the areas where the goods are required (Jancheski, 2023).
Whether it is e-commerce system invented by Alibaba, Shopify, 3Dots Commerce, Amazon or WooCommerce, all forms of e-commerce is a product/service derived from the utilisation of internet, retail, smartphone, delivery, tracking and information technologies in the selling and delivery of the required goods to the final destination. Recombinant innovation does not only combine and utilise the existing product knowledge and ideas, but also recycles old information about the product. Hence, it can be an important way of reintroducing a product which was once a disruptive concept as part of the components used in the creation of new products.
In the process of evaluating the kinds of product ideas that must be developed as well as where such ideas can be obtained, recombinant innovation requires R&D personnel to frequently evaluate and assess how the old product ideas and technologies can be used in the creation of the existing products (Bessant, 2022). For recombinant innovation to be successful, inventors or innovators must assess the current industry trends and practices and look beyond the concept being evaluated. This enables discerning additional existing or old product concepts that can be combined with the existing product ideas to create a new delighting product.
After the introduction of the first cellphone concept by Motorola in 1973, further radical and incremental innovations led to the development of the smartphone. Developers of smartphones used recombinant innovation to integrate internet, clock, calculator, lighting torch, TV, Google map, tracking device, radio, telephone and among others microwave technologies to create what is today known as the smartphone. While using recombinant innovation, the first fundamental product concept can always insinuate the kinds of other existing products that can be integrated to create a more delighting new product that not only meets customer needs, but also exceeds customer expectations.
Sometimes, thinking and rethinking when developing the product can enable product developers to easily discover the critical products that must be integrated in the new product to create a product that easily responds to the needs of the consumers. In that process, when the developers of Waze Navigation App were engaged in the development of the navigation app that would provide real-time traffic information and direction to its customers, it became quite apparent that if the app was to provide quality real-time information, it would require a GPS, digital maps, cellular system, smartphone, internet and social networking to provide real-time traffic information to millions of people at the same time. It was such thinking that inadvertently or advertently led to the utilisation of recombinant innovation approach to seamlessly combine and integrate smartphone, social networking, digital map, internet, audio, computer, digital camera, cellular, wireless and even TV technologies to create Waze Navigation App. From such analysis, it is evident that through recombinant innovation, businesses are able to conduct analysis and join dots that combine the existing technologies or product concepts to create a new product.
Further Readings
Ivey, A. (2023). A brief history of digital banking. Washington, DC: CoinTelegraph.
Jancheski, E. (2023). From Brick-and-Mortar to Online: The Evolution of Ecommerce in 2024 and Beyond. San Diego: IWConnect.
Bessant, J. (2022). The Power of Recombinant Innovation. Exeter: Hype.
Fabri, S. (2023). Recombinant Innovation – the Importance of Joining Dots. Pennsylvania: The Sand Reckoner.
