Friday, April 24, 2009

When innovation is perceived as the problem

I recently found this article at UPI. US Federal Reserve Chairman Ben Bernanke recently made some observations on the perception of innovation. Innovation can be successful, but it can easily misfire, the current economic state is a testament to that. Two statements in the article caught my attention:

"Innovation, once held up as the solution, is now more often than not perceived as the problem," he said, adding later, "good intentions," among financiers "are not enough."

What are your comments on this?

1 comment:

Mark said...

I strongly agree with Bernanke on this. Financial innovation has much in common with product innovation, with which I have experience. As most companies know, they may have success when they innovate and bring superb products to market. The inverse is true as well. When a company does not thoroughly vet a design and address failure modes during development, they will feel the pain of failure in the market and perhaps lawsuits.

Financial products, because of their ethereal nature, would do well to have a more thorough vetting process than material ones. The fact that you cannot send a new mortgage derivative product to an Underwriters Labs or the FDA leaves it open to abuse and failure. I think we may have learned this over the last several months, and maybe, just maybe, there will be the will to set up proper laws and vetting processes - open to public scrutiny - and understandable.

Mark Senninger

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