One Quick Thing: How Fidelity Investments Evaluates New Ideas

In this episode of One Quick Thing, Sean Belka discusses how the startup ecosystem has shifted due to COVID-19 and best practices for launching an innovation lab. Belka is a Managing Director in Fidelity’s Corporate Business Development. He also co-founded and led Fidelity Labs, an internal innovation and intrapreneurship group at the financial services company. Five takeaways from the conversation follow. 

1. The Virtues of Treating New Concepts Like True Startups 

Belka observes that startups and large corporations focus on different types of metrics and operate on vastly different timelines. So setting up a new concept to behave like a startup in a large company can be challenging. “When you’re running a large business, you have more GAAP-type metrics: What is our revenue? What are our profits? They’re backwards-looking,” Belka says. “When you’re running a startup, it’s all forward leaning. It’s all about milestones.” Belka’s team at Fidelity Labs decided to create a different process for shaping new concepts that accommodate those differences. 

2. Transfer Both the Project and the People into the Business Unit

One of the challenges of running any innovation lab, Belka says, is handing off ideas that are ready to scale to businesses that can scale them. In order to aid in that process, lab teams at Fidelity will migrate into the business unit, along with their initiatives. “You got the best of both worlds,” Belka says. “You got the speed to market by having a small dedicated team, but then that team has all the momentum, and knowledge, and skills that they [bring] into the business unit.”  

3. Create Criteria to Score Ideas 

During the call, one participant asked Belka how his team assesses ideas. “We created a criteria, we call it BANCA: Big, Adjacent, Nascent, and Clear Advantage,” he says. When evaluating ideas, his team asks the following questions: 

• Is it big enough to matter for a company of Fidelity’s size?
• Is it a logical, adjacent space where the company has permission to play? 
• Is it nascent enough where there’s potential that would enable a high-growth business?
• Is it clear that Fidelity brings something to the space — either with distribution, capabilities, or in another area — that could be successful?

4. Learning from Controlled Experiments Helps Avoid Painful Failures

When describing his attitude about failure, Belka says his team focuses on experimenting and learning from mistakes. These tests in a controlled environment help the team determine which ideas should be scaled. “The failure is if you skip all the steps of risk mitigation…then you launch something and it fails in the marketplace at scale,” Belka explains. “If we had a three-person team, and they worked for three months to learn that an idea…did not have any resonance in the market, we were not going to be too upset about that. … [That’s] a reasonable investment to acquire that learning.”

5. Bring in Your Legal Team on Day One 

When working in the highly-regulated world of financial services, Belka advises getting the legal team involved in new product development from day one. “Those regulators and those regulations are there for a reason. That reason is to protect consumers,” he says. “[The legal department’s job] is to make sure that we’re doing the best job for customers. That’s our job, too. We don’t really feel a tension there. We’re all aligned around doing the right thing for customers.”

Personal Finance: Checking Your Investment Portfolio 

Innovation Leader asked webcast attendees how often they check their personal investment portfolio, including their 401(K). Sixty-nine participants shared their answers. Most participants (43 percent) said they almost never check their portfolio or that they actively ignore it. The second largest group (26 percent) said they look at their investment portfolio less than once a week.

Helpful Links from This Episode

• Learn more about Fidelity Labs and the Fidelity Center for Applied Technology.