An Inside Look at How Mastercard Innovates

In 2023, Mastercard Inc. grew by 12.6% and earned US$25.7 billion in revenue—something Chief People Officer Michael Fraccaro attributes in part to the company’s culture of innovation. 

“Innovation is one of the standards we have within our cultural statements about how we create value,” he says. “It’s very much inherent in what we do as an organization.”  

That culture of innovation helped Mastercard rank as one of the World’s Most Admired Companies (WMAC) in 2024. The top growth strategies of these prestigious organizations—developing new products and services, enhancing customer experiences, and improving existing products or services—all rely on a healthy dose of innovation. 

Want to turbocharge innovation at your company to improve growth? Fraccaro shares his innovation tips.   

1 Take a Holistic Approach 

At many organizations, innovation is the responsibility of only the most senior leaders. Mastercard takes a different approach, encouraging and incentivizing innovative thinking across the whole company.  

“The role of leadership and of the HR function is to create an environment where ideas can come from anywhere,” says Fraccaro.  

The result is an organization in which innovation touches every department. “We embed it in everything we do, from performance management to the way that we recruit to how we develop people.” 

A few examples of the ways Mastercard fosters company-wide innovation include: 

  • Hosting various events and activities where people can brainstorm and share their ideas. At Mastercard, they regularly host “sandbox challenges” and “hackathons” to drive innovation across the organization.  
  • Launching an internal talent marketplace so project teams have access to the company’s skills and talent from around the world. The initiative has been so successful that some of Mastercard’s line managers have reimagined solutions based on insights they got from other parts of the organization. 
  • Including innovation in all systems and processes—for example, Mastercard added behavioral metrics focused on “thinking big and bold” and “sharing different perspectives” to its year-end performance evaluations.  

Encouraging innovation throughout the organization is an effective growth tactic, says Jane Edison Stevenson, Global Vice Chair at Korn Ferry, and coauthor of Breaking Away: How Great Leaders Create Innovation That Drives Sustainable Growth—and Why Others Fail.  

“Innovation is a team sport,” says Edison Stevenson. But to get that widespread culture of innovation that everyone participates in, she says, “It has to be sponsored directly from the top.”   

2 Create a Diverse Work Environment 

Eight in 10 companies on the World’s Most Admired list say they intentionally develop inclusive and diverse teamsbecause they believe doing so improves team performance and creativity.  

Mastercard is no exception. “We believe different experiences, backgrounds, and geographies actually help fuel innovation throughout the organization,” says Fraccaro.  

Research into inclusive teams backs that up. Compared to their homogeneous counterparts, diverse teams and companies: 

  • Make better decisions 87% of the time 
  • Are 70% more likely to capture new markets 
  • Are more likely to see their ideas become marketable products 

People who have similar backgrounds often make the same kind of assumptions, which can be the enemy of innovation, says Edison Stevenson. “Having that diversity in the workplace—to be able to look at the same information and data without the same assumptions—allows you to come away with a different, more impactful outcome,” she says. 

3 Leverage AI 

Artificial intelligence (AI) has long been a core part of many Mastercard operations, such as fraud prevention and detection. But, like 88% of the World’s Most Admired Companies, the organization is now actively leveraging and experimenting with AI across its entire business.  

For example, soon after ChatGPT first launched, many companies rushed to restrict or ban its use. Yet Mastercard actively urged its employees to try out the generative AI bot to see where opportunities for efficiencies might lie. The company provided caveats, of course, including adhering to its AI governance principles, such as not using it for customer briefings and not uploading sensitive data and information.  

This type of guidance is an important part of creating a culture of embracing AI as a supportive tool, rather than a replacement for human skills. After all, the success of any technology relies heavily on the people involved.  

“When we think about the key enablers for driving innovation, it is technology, the brand, the data, and obviously, the talent,” says Fraccaro. “It's really important to have all those things working together in harmony to drive that whole growth mindset within the organization.”

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4 Look Beyond Your Walls 

You don’t have to cultivate all your innovation in-house. Innovation at Mastercard, along with almost a third (32%) of WMACs, sometimes comes from mergers and acquisitions, which can unlock new markets, technologies, and talent. 

The key is to be market savvy about what’s already out there. “See where it makes sense to acquire innovation into the organization and where to do it from scratch,” says Edison Stevenson. 

To that end, Mastercard implemented a “start path” program that invests in small start-ups with funding and mentoring.  

The idea is not only to see whether the start-up’s idea can take off and scale so it can run independently, but also for Mastercard to stay in the loop on burgeoning tech. “Are there ideas that we’re seeing out there in the marketplace that can be brought back into the organization?” says Fraccaro. 

5 Invest Strategically in R&D 

One of the innovation lessons Mastercard learned early on is the importance of prioritization. “It’s knowing when to continue to invest and when to cut ties,” says Fraccaro. 

That means closely tracking and measuring innovation efforts. Each quarter, Mastercard reviews its newly launched products and services to see how many are delivering a return and how they align with the company’s overall strategy. 

“Failing fast is one of the fundamentals of innovation,” says Edison Stevenson. “When you try new things, you want to take a nickel bet, not a million-dollar bet. And if it fails, move on.” 

Innovate Your Way to Growth 

“Innovation” has officially left its buzzword status behind. Today, it’s a critical element of growth in an ever-crowded marketplace. With a few key strategies, any organization can foster improved innovation that can boost the top and bottom lines. 

Inspired to up your innovation game? Download our eBook: Beyond Innovation as Usual to learn how to implement five elements of strategy and innovation to create long-term transformation.