Figuring out a different strategic alignment with innovation being central.

Posted on June 13, 2013 by

Strategy as we have previously known it is officially dead. Strategy is stuck! Competitive advantages have become transient. We are facing situations where advantages are copied quickly, technology is just one constant change, and our customers seek other alternatives and things move on faster and faster.

In a new book written by Rita Gunther McGrath, a professor at Columbia Business School in New York and one of the world’s leading experts on strategy, she has been exploring the changes rapidly taking place called  “ The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business”

 “Strategy (in the past) was all about finding a favourable position in a well-defined industry and then exploiting a long-term competitive advantage. Innovation was about creating new businesses and was seen as something separate from the business’s core set of activities.” “Sustainable competitive is not just ineffective, it’s actually counter productive” says Professor McGrath.

She rightly states:“Think about it: the presumption of stability creates all the wrong reflexes. It allows for inertia and power to build up along the lines of an existing business model. It allows people to fall into routines and habits of mind. It creates the conditions for turf wars and organizational rigidity. It inhibits innovation.

It tends to foster the denial reaction rather than proactive design of a strategic next step… A preference for equilibrium and stability means that many shifts in the marketplace are met by business leaders denying that these shifts mean anything negative for them.”

Innovation needs to finally emerge in a new form.

Innovation cannot be separated from implementing an effective strategy, actually it is becoming far more central. Yet our leaders are constantly failing to recognize their essential role they must play to allow innovation to realize its place within the goals and needs of the strategy. They will be in denial by failing to build the innovators organization to manage this  new transient advantage. One that is highly flexible, agile, built around a constellation of emerging business principles that builds upon the ethos of imagination, exploration, experimentation, discovery and collaboration (Steve Denning).

A new structure that has as part of it one that promotes independence, diverse thinking and seeking out individual contributions. To achieve this innovation needs to be fully embraced as a clear competency that does need to be professionally built and certainly well-managed; it needs leadership’s total engagement for establishing new principles, practices, attitudes, values and beliefs that become central to the new way forward to deal with this new transient advantage suggested by Professor McGrath.

Today the rhetoric outweighs the reality for innovation and we need change!

Survey after survey of our leadership within organizations talks up innovation

  • * Over 70% of CEO’s surveyed constantly named innovation as within their top three strategic priorities
  • * 93% of surveyed executives said the long-term success of their organization’s strategy depends on their ability to innovate
  • * For almost 90 percent of CEO’s, generating organic growth through innovation has become essential for success in their industry.
  • * Also over 70% of the top executives identified themselves as the primary driver of innovation

Yet innovation is failing, reality is constantly hitting home in poor results.

  • * Despite increased business investment in innovation, only 18% of executives believe their company’s innovation efforts deliver a competitive advantage.  Source: a new Accenture study (May 2013)
  • * The “absence of a well-articulated innovation strategy” was identified as the most important constraint hampering organizations from reaching their innovation targets, in a study published by Capgemini Consulting in April 2012
  • * Almost 60% of firms surveyed admitted that they have no explicit innovation strategy ( a joint Cap Gemini and IESE study)
  • * Only one-third of the executives report innovation is fully integrated in corporate-level strategies (McKinsey Quarterly, 2012)

Then you go deeper into organizations current position on innovation

The formal management of innovation is largely overlooked and to quote these statistics from an Innovation Leadership Study in March 2012:

  • *Only 30% of respondents agree they have an effective organization structure for innovation
  • *45% do not have a well-defined governance structure for innovation
  • *40% lack clear roles and responsibilities for innovation
  • *39% state they do not have an effective decision-making process for innovation
  • *49% are not having a well-defined process to prioritize and allocate time and funding to innovation projects
  • * 54% of those surveyed indicate they do not have a formal KPI system for promoting innovation

Innovation comes to a screeching halt because it is not totally integrated and fully supported from the top and embedded into the core of organizations. Innovation is failing to deliver on its potential. Can you imagine all that invested time in innovation, on tasks, products, concepts, ideas that fail? There is real waste  if innovation is not fully aligned to the strategy.

If these constantly don’t align to corporate strategies, someone somewhere should be concerned, I mean really concerned. Perhaps as “mad as hell” and we are not going to take it any more. Something has to change or many of these organizations will not exist in the future .

The great disconnect at the top of organizations for innovation is in plain sight for all to see.

So we must see there is a huge gap that does exists between what executives want, and what the business believes and is knowing what is actually going on.  Innovation for its needs actually lie in the senior executive own hands:

  • Executives need to demonstrate that they want and need innovation
  • They must become more engaged and outline (in some detail) their expectations
  • They must create a framework or structure to ensure it exists

Innovation success starts and stops with senior executives. 

They want innovation success but they consistently fail to understand their part within the innovation need-to-succeed. Only senior executives can:

  • Communicate and develop the innovation vision and work towards actively reducing the barriers it faces within their corporation
  • They need to bridge the existing culture with one that promotes innovation, where both short-term need and long-term sustainability are equally encourages and worked upon
  • Influence and encourage the breadth of skills and capabilities needed in innovation to be given the appropriate focus for its organization to successfully innovate
  • Establish the environment and then create and support the incentives where innovation can flourish effectively.
  • Work constantly at ensuring the conditions for success is well-communicated and the clear goals and expectations are articulated.
  • The top executives must understand the investment required for innovation and provide the adequate resources and funding along with clear directions
  • Actively seek alignment of the innovation activities into the strategic needs they see as critical to work towards
  • They need to set the innovation strategic agenda and provide a robust and clear integrated innovation framework like the Executive Innovation Work Mat, for example.

The sad, sad truth is that many of our leaders still cannot get comfortable with innovation.

Many of our present leadership of organizations are actually uncomfortable with innovation; they want to keep it on the periphery of their thinking.  It disturbs much of what they have worked all their careers upon, honing a highly efficient and effective organisation that minimises the risks, reduces the surprises and works away in a highly predictable and steady way.

They often lack any real depth in innovation experience and training. They are fixated on the short-term, often to the detriment of the longer-term opportunities due to tenure and their incentive metrics.

Today the senior executive loves to get fully involved in the urgent needs of the day, moving constantly from one operational oversight meeting into another, spending decreasing time on the important. The pressures and demands placed on them to respond, to react, to comment on day-to-day events, are growing in priority to be seen as ‘being on top of these’  but are they losing the longer-term perspectives and detachments needed for designing organizations differently? To meet rapidly changing challenges and actively working upon new organization designs to give a new fitness and intent? Often these seem rushed and reactive to threats or poor results.

The larger the organization, also the greater the disconnect is happening between themselves and their employees and this is creating increasing growing barriers to understand the pulse of the business or stay tuned to market shifts. Organizations are losing any competitive advantage as they are failing to see a huge change taking place before their eyes as they remain rigid and fixed, locked in the past. Internally alignment is becoming harder. Advantage is only short-lived, yet our organizations are totally encumbered by out of date designs and structures.

Organizations are being challenged far more today and their relevancy needs radical redesigns and stepping back and designing these is becoming critical. The core of our organizations needs to shift towards more agile, adaptive and innovative designs.

The need for a real alignment of strategy and innovation

Innovation stands in service to strategic goals such as growing market share, differentiation and disrupting adjacent markets, serving the consistent changing and demanding customer needs by spotting these and then exploiting them rapidly and effectively.  Creating clear goals and linking/aligning innovation to those more agile strategies is a vital role for CEO’s and senior executives.  Senior executives must establish the manner in which innovation fits within the strategic context established by goals, vision and strategies.They cannot abdicate this role. Change is hard, so is innovation.

However, even when executives understand the linkage, they may fail to understand how to ensure linkages between corporate strategy and innovation actually does lie with them to be communicated throughout the organization.  When executives simply request innovation and delegate the decisions and definitions to business line leaders or executives outside the boardroom they are delegating the growth and future of the organization to others. They are killing the true potential of innovation as it remains unaligned. This cannot continue, we need to bring innovation into the boardroom as core.

If we are in a world of transient advantage as Rita Gunther McGrath suggests, she also clearly states: “Innovation needs to be a continuous, core, well-managed process rather than the episodic and tentative process it is in many companies”.

Identification comes from the top and from our customers

This new innovation core can only be led and fully integrated from the top, aligned fully into the strategies, organizational design and the goals. In rapidly changing market conditions where advantage is transient then we certainly need very different designs within our organizations to respond.

It is absolutely time that innovation comes fully into the board room and driven from the top. Innovation needs to be recognized fully as the key to more prosperity, more growth and added value – achieving that is the mandate of the board and this requires an explicit integrated innovation framework, no less that reflects the changing reality of the era we are in. Then others can simply get on with the job of responding by delivering the innovation outcomes that are constantly aligned to the needs within the changing landscape and demands placed on all, to read, react and respond differently and this needs total integration from top to bottom through an overarching set of integrated frameworks.

A different alignment is required.

Alignment is just not the internal need any more; it is having clear external alignments as well; in knowing the customers needs and reacting to these faster and with clear competitive intent, aligning with others on different platforms and collaborations.

Having an innovation geared organization that has clear goals, principles, values and attitudes that is working towards a consistent range of organizational possibilities. One that is ready to capitalize on breaking opportunities, aligned to exploit these. Then having in place the capabilities to build rapidly out on these to exploit these through new learning, new insights and growing connections so extending the possibilities even further.

A constant evolving strategy perhaps, one that will give the organization a new more demanding competitive advantage, that is built on anticipating and managing constant change, never standing still, always evolving, being in perpetual transition.

A different ‘sustaining’ capacity built around innovation as the continuous core, constantly evolving, adapting, learning and adjusting. In perpetual innovation motion.

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Traversing different horizons for transformative innovation

Posted on June 7, 2013 by

Irrespective of the organization, we all struggle with transformational innovation. So often we are simply comfortable in our ‘business as usual’. We gear performance to the short-term, we put the emphasis on the current fiscal year, and we support the core business in numerous ways, usually with lots and lots of incremental innovation, so the results are realizable in this year.

We are sometimes comfortable or confident enough to move into adjacent areas, to expand and feed off the core but these are less than transformational in most cases. This space is the one we are the most comfortable to work within, this is the horizon one of the three horizon model approach outlined to manage innovation across a more balanced portfolio of investment.

In summary, the three horizon model for innovation is actually a reasonably simple idea: with Horizon One (h1) being the current business focus, Horizon Two (h2) being more the related emerging business opportunities and Horizon Three (h3) being those that are moving towards a completely new business that can have the potential to disrupt the existing one.

The complexity lies underneath this simple idea, you need to manage these different horizons with completely different mindsets. You need clear well-structured ways to extract the real return from managing a comprehensive innovation portfolio based on knowledge, experience, intelligence but exploring plenty of the unknowns about the future and openness to get you there, as ready as you can be . Its necessary today.

The seeds of destruction lie in horizon one

Within our ‘business as usual’ attitudes lies the seeds of destruction. Today there is a relentless pace; we are facing stagnation in many maturing markets. We place a disproportionately high amount of our resources here to defend what we have and what we know; we actually subvert the future to prolong the life of the existing. We constantly look to make it more efficient and more effective but this is in the majority of cases just incremental in what we do, both in innovation and our activities. These are often simply propping up the past success instead of shifting the resources into the investments of the future.

This is why the three horizon approach has real sustaining value because if we don’t have this longer-term, transformational perspective we are just prolonging the existing until it gets disrupted by others. This is where the working across different horizons for ‘thinking’ through innovation does need different tools and mindsets and these should be based on (h1) see and operate, (h2) adjust your thinking frame and solutions, (h3) more evolutionary. Each has different techniques to explore as I’ve previously outlined in my navigation guide to this approach.

Clayton Christensen has written about this theory of disruption in his book “The Innovator’s Dilemma”. Professor Christensen then went on to write extensively on this and one further book “Seeing What’s Next” co-authored with Scott Anthony and Erik Roth develops this disruptive theory into how the future will unfold and how to make wiser choices on these insights. The three horizon connecting approach is an excellent methodology to use to help in managing these wiser choices.

The hardest part is to traverse across into horizon 2 for new ‘breaking’ innovation

We do need this longer-term perspective and we do need to traverse into the future in clear thinking through steps (or horizons). Our horizon one does begin to decay faster today than ever, it does not fully cover off the strategic fit we want and can begin to lose its dominance over time. We need to manage this transition, not let others manage it for us.

It is how we manage this transition becomes so critical. We need to exploit developing trends that are emerging (h2) and begin to tune into possible options in the future (h3).  Within these options will emerge the winners and become the more dominant systems or solutions that we should be moving towards, even from today. Some of these only have faint emerging signals but they need to be brought into the innovation portfolio activity to explore, often in novel ways.

The horizon two is beginning to address some of the current decay arising from the core within the existing activities (or system). Here we have the highest tension.

The Collision Zone (h2) of the Three Horizon Approach

The Collision Zone (h2) of the Three Horizon Approach

The discussions that centre on often conflicting views of the future, compared to the existing realities and those providing the returns for today’s business. Often we can detect change but we consciously ignore it. This is the place where the disruptor’s are at work, existing or new competitors, working at displacing your products and market positions. They look to be more agile, they might have greater entrepreneurial ways, they are ready to explore emerging practices far more than the established leaders, they look to leverage different business models and are certainly not handicapped with legacy and mindsets stuck in the past. Increasing competition is today’s certainty.

Horizon Two needs a totally different mindset.

You need to see H2 with different metrics, with different perspectives, with more open minds. This is not easy. This needs to become the meeting point or “the space for transition” where you begin to let go of just protecting your core and open up your thinking to experimentation, prototyping, exploring different business models and begin to figure out how these will impact your existing core, to become more agile and adaptive than you are in the existing system or structures

These horizon (h2) concepts being explored  really do need ‘ring fencing,’ so you can protect these from all the ‘vested’ claims that your horizon one focus will continually demand to keep, so as to bring in the results in this calendar year. It is a real fight, these ideas or nascent concepts ‘give off’ negative results, they are still a mix of the tangible and intangibles where you can’t get the ‘hard’ fix on the ROI, on their real market value or potential.

Many executives ‘defending’ the core will ‘attack’ or hold back any release of their resources to help these emerging initiatives. It is a ‘hard-nosed’ reality.  It needs a very high level and conscious set of decisions coming from the top to determine these new moves. Do not believe that when most executives ‘just’ react and shrug their shoulders regarding h2 as a natural, everyday occurrence, it is far from not. Many have to come ‘kicking and screaming’ to supporting emerging activities. Far too much ‘invested’ interest comes into play. They see this more as a threat not an opportunity. It is not their sand box so why should they ‘play’.

The Conflict Sapce of Horizon Two

Horizon Two- Where policy and strategy are played out in the Three Horizons

The tensions are not just visible but played out in many subversive ways.

Just take performance metrics, if these are solely structured on the calendar year, are you realistically expecting a dilution of focus as their compensation is totally caught up  in this. Horizon two poses a real challenge within any management of our organizations. If it provides current small bases of volume, no real meaningful profit from the investments made it can be a hard sell across the organization.

Projects that focus on the future work mostly are based on ‘best’ assumptions. Sadly it is often executives expect to see the same ‘hard’ metrics being applied as the existing business. We ignore significant differences and  this is a huge mistake. So you get these clear sense that many are sceptical or pay lip service to the products of the future as the thinking, judgement and value orientation are at such odds with the existing measures and metrics they apply to run today’s business and how they get judged.

Often we then impose a set of metrics to compensate for this resistance.

This allows for a sudden rush of promising new products entering the market, of chasing and competing for those same resources as the ones focused on the core. The push to validate, explore and experiment might make the situation worse. You introduce waves of inefficiency into your highly tuned supply chain, you detract from selling and competing in tough market conditions and you then hear that comment “we took our eye off the ball”

This new ‘push’ for establishing the rising stars ends up that most of the promising concepts never really cross the finish line of moving from ‘interesting’ to main stream. The core also starts to suffer from these multiple distractions and eventually ‘innovation’ gets a bad rap. Many promising ideas get starved or killed off from emotional reactions.

The demand from supporting horizon two products or emerging concepts demands managements serious attention to getting resource allocation, response and focus into ‘actively’ managing this very real and tangible ‘innovators dilemma’.

Managing the rising stars or future potential one is hard in existing structures.

The concepts that emerge from horizon two will include the rising stars of the organization and will, over time, become even the new core business. These are a mixture of step-outs from today’s core, or extensions that have come from the adjacency work consciously being undertaken or are truly emerging as new activities that need new depth in capabilities and time to build.

These all have the potential to shift the organizations revenue base and challenge today’s cash generators. These need careful ‘portfolio and resource’ allocation. These extend the organization from your existing into new competencies, new markets and new challenges. Just please don’t use the same measures or metrics when you mix H1 and H2, although there is a huge temptation because it is just simply easy.

Horizon two is where you work through your future options

This is where you try out, experiment, explore. This is the transiting point (my space of transition) where you work through different dilemmas and paradoxes to shift the organisation through this horizon two to position it for the longer-term future. This horizon is a real point of disruption to be well-managed as you navigate from shifting resources from today’s core to that third horizon, the predicted future where ideas and proposals are still forming.

Horizon two actually ‘claims’ more time and attention than on the surface it deserves but this is the wrong mindset,  it simply needs too. This is not about supporting the ‘existing’, this is working actively on the ‘preferred’ as it is working to reduce current shortcomings, injecting new life and vigour into the present to offer a broader sustaining future.

Horizon two investments should be challenging ‘business as usual’ and should contain many of the catalysts for renewal, for the future growth. It is renewing the ‘fitness for purpose’ through innovation taking you along different pathways to the long-term successors of your business.

Horizon two can be a powerful catalyst.

 It can alter the way you are currently doing things, in new business models, in new systems, structures and delivery. It points you to a new, hopefully preferable future, worthwhile to pursue and attractive. It refreshes, it can invigorate and this horizon holds the keys and transition path to realizing that vision laid out in the ideas forming in horizon three.

To battle the increasing pace of obsolescence, we need to not just see and operate in today’s world; we must look towards the future. We must break out of incremental steps alone in our innovation activities, they just don’t simply ‘cut the mustard’ any-more, they are simply not good enough, in our rapidly changing world where increased competition is appearing from anywhere. We need to build out new capabilities, capacities through new innovation competencies.

We not only need to envision our future and the part we want to play within it but need a clear approach to working through the challenges and tensions to achieving a real balance in our innovation portfolio that work towards the same goal of being a material part of the business.

That is managing innovation not just in today’s horizon (h1) but in traversing into the future with more breakthroughs (h2) and transformational innovation (h3) that is organized around the three horizon methodology.  Making that essential traverse through horizon two is the toughest part. It needs carefully managing to have any really sustaining pathway to the emerging future.

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Breaking out of the current economic dilemma needs radical innovation

Posted on June 3, 2013 by

I gaze through unbelieving eyes at the continued rise of unemployed in Europe. Unemployment in the Eurozone has reached another record high with the seasonally-adjusted rate for April  2013 going to 12.2%, up from 12.1% the month before according to the European Commission’s statistics office, Eurostat:Eurozone Unemployment May 2013 EurostatAn extra 95,000 people were out of work in the 17 countries that use the Euro, taking the total to 19.38 million. Both Greece and Spain have jobless rates above 25%. The lowest unemployment rate is in Austria at 4.9%.

It seems never-ending.

Youth unemployment remains a particular concern; you simply have to wonder what we are storing up in the longer term with this situation. Can the youth ever catch up, can our society as it is positioned give them the opportunities to turn today’s grim world into a world of optimism and contentment, or is it a lost generation?  In April, 3.6 million people under the age of 25 were out of work in the Eurozone, which translated to an unemployment rate of 24.4%.

Why does this issue of growing unemployment seem to be drowned out by events that seem important on the day but realistically pale in their significance against something as damaging as this present crisis?

Examples of persistent economic and social challenges

We are facing significant society challenges. These include declining Economic competitiveness, deepening Social inequalities, rising Mental ill-health, increasing Crime and social disorder and we see growing Alcohol and drug abuse, to name some of the issues being increasingly tackled as part of the consequences of these tough economic and social times.

We must increasingly recognise that the cost of deferring concerted action to confront these growing set of social challenges is beginning to rise – and could easily outpace our ability to respond.

Can we afford to wait? There are so many pressing questions.

The cost of lock in

More fundamentally, our existing approaches and institutions are also inadequate because, in the main, they lack the capacity to develop the new approaches we need through innovation.

We are faced increasingly with the ‘innovator’s dilemma’, identified by Professor Clayton Christensen, where a company or in this case whole nations can’t seem to address the changes (rapidly) going on around them.

Their existing models become obstacles in the face of changing conditions, deepening issues, new threats from emerging nations, rapidly changing technologies and a growing inability to overcome rapidly changing circumstances wrought by deteriorating economics, (infra) structures and upheavals.

Any organisation or system or even nation is susceptible to ‘lock-in’, whereby it loses the ability to develop novel ways to serve its customers or clients or markets because it has invested so heavily in its existing processes and technologies. This is part of one of the fiercest debates on the future of the European Union we have yet to have.

Our understanding of innovation has broadened

Today innovation is increasingly being understood in a broader perspective than just products alone. We are in a period of major transformation in what we mean by ‘innovation’. We need to push innovation across its broader understanding to explore new business models, unique services, greater collaborative techniques and community engagement.

Traditional innovation is insufficient for the challenges we face, this will not resolve climate change, an ageing society or reinvent public/ private services that match demand and need. We need greater connections across society.

There is a growing buzz around the Quadruple Helix of Innovation, where Government, Institutions (Academia, Foundations and NGO’s),  Industry and Citizens need to collaborate together to drive structural changes far beyond the scope of one organizations and what it can achieve on its own. These will be increasingly through innovation engagement platforms where people use the designed structures to purposefully intensify exchanges to co-create value to solve our growing bigger problems.

Seeking out unconventional solutions through more radical innovation

These are times when we need some visionary leadership and thinkers out there. Those that dare to breach present accepted boundaries of rigid beliefs and conventions. Those that push beyond the normal practices and can depart from the commonly held goals of establishment, by looking for non-conventional novel solutions that can draw in more of the disenfranchised, we are seeing today.

Facing New Challenges: Promoting active inclusion through social innovation

Social inclusion is a pre-requisite for the creation of a just and cohesive society in which each individual can fully participate and realise his or her potential. Active inclusion, as one strand of the broader social inclusion concept is looking to draw in and deal with inclusion into society of people furthest away from the labour market.

We need to make new markets full of engaged young people.

 There is clearly a latent demand building in our societies and we need to turn this into a more ‘effective’ demand, to forge the links between supply and demand that will generate new value and opportunity. For example, who can invest in effective supply by supporting promising projects and collecting evidence of what works that shows promise of broader societal impact?

Then who can we involve who can invest in effectively ramping this up. Perhaps focusing the different Foundations already set up can turn this latent demand into effective demand. This might mean shifting resources from other parts of the world, back into Europe to get the economic engine kick started again.

Applying innovation intensity to what we do.

We need to rapidly accelerate a rigorous experimentation mentality by focusing far more on major societal challenges that need addressing, before it is too late. Ones that can encourage and embraces local solutions needed and engagement within communities but the learning can be rapidly absorbed and the winning concepts can be scaled up to benefit more communities or areas of need and resolution.

Different type of economic statecraft are needed to position ourselves

How can we encourage and accelerate more of our companies to pro-actively integrate environmental and social impact into their business models? To put into place better measures of investment performance over the long-term that ties into greater social good?

There is also a real challenge today to lay out a different position for government. One that is more the facilitator, setting out the conditions for  the impact economy ecosystem and  supporting in ways that invest in the longer-term infrastructure and platforms that can scale the innovations and partnerships needed to achieve sustainable, long-term growth.

Government cannot ‘play’ in all three horizon investment areas, it does not have the capacity, experience, capital and resources. We need leaders who not just make tough decisions but set about putting in place the different conditions, incentives and clarification of who does what and why. The more the short-term crisis extends, the harder it becomes for Governments to participate in mid-term future innovation activities. They simply can’t easily.

A time and place where we are converging to make social innovation a critical element

We are in a current battle to address both short and long-term economic and growing social challenges. We are faced with growing unemployment still, especially here in Europe. The youth of today need to engage, otherwise we are in a great danger of losing a whole generation and that has such significant impact on or nearly everything we have in place today.

How are we going to draw upon the imagination and expertise of a broader set of innovators and tap into the entrepreneurs that are out there, to tackle some of these significant societal challenges?

Are we at the early stages of a new economic order with even more disruption?

Of course we might be in the beginning of a very different set of economic factors. We might actually be heading to a completely different type of economy that melds features which are very different from economies previously based on the production and consumption of commodities. Today we are already seeing blurred boundaries between production and consumption.

We need to think about repeated interactions, care and maintenance and not one-off consumption; and a strong role for values and missions that are far more inclusive for society and less focused on individuals; otherwise we end up with a divided society that clash in ways reminiscent of past revolutions where the majority finally rebel.

Are we facing even more instability in the coming years?

The present value equation in our societies is rapidly getting unstable; we need some fairly radical solutions to reverse the existing trends. I think the challenges will only get harder in the months ahead.

We do need to positively disrupt before we get more unexpected disruption occurring. Innovation needs to play an ever increasing part in this to explore alternatives and allow those lost from current economic activities to begin to participate and make a contribution where they see there is a future for them.

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Casting-around with a wider innovation net.

Posted on May 22, 2013 by

When we ‘cast around’ we are looking for something; to try it out, to think about it, to search for connecting a vague idea with something more tangible. So let’s go innovation fishing.

The word ‘cast’ is around us in so many ways – anglers cast their line, we are cast adrift, we cast or drop anchor, we cast to put about, to tack, we cast our eyes upon the speaker, we cast light, we cast aspersions, we cast someone in a play, we cast a plan, we cast into a certain mould, are all just some of the many examples of how ‘cast’ is part of our everyday thinking.

In innovation, cast can become a fairly dominating action – we can cast about or around for ideas, to devise a plan, we can equally cast off those ideas or concepts we reject or simply cast out, or finally, we can agree to cast one’s lot into a plan or concept to take forward as a united team.

For me casting around is a most important part of how I work through innovation coaching.

‘Casting around’ in coaching is trying to understand and see the possible ways to get someone from point A to a new point B. This needs to be in a safe environment, so as to tackle any blockages or misunderstandings and were established patterns might need challenging can be discreetly explored so we cast around initially to explore the different triggering points. Also by having a ‘neutral’ environment but having a clarity of why we are coaching permits for a growing receptivity based on specifics. This allows for being more specific in changing and shifting perceptions that can eventually lead to better innovation understandings and outcomes. Casting is actually essential and becomes a significant part of the solidification process within coaching.

Good casting needs a clear routine, method and structure.

So why is casting important to innovation? Casting objects has been around for thousands of years. The better your experience in ‘casting’ the more likelihood you arrive at something that is useful and valuable (and highly appreciated) from the efforts put in.

When we think through building the capabilities for more open innovation, it is the finding and developing good ideas that innovation is all about. To get to this end-result of delivering upon the idea into tangible innovations it is often thanks to having in place the process to find, capture and commercialize and providing the corporate culture that promotes and protects these processes, to allow for trust but to execute rigorously against clear criteria and (emerging) objectives measured against specific goals. This becomes the art of casting open innovation.

It is this art of casting around we can increase discovery, we can capture and act on that discovery or set of connections to generate our future innovation activity. The more we establish a set of patterns, perhaps to have a casting process, the more we can evolve ideas and move them along the innovation process. We gain confidence if we know where we are going but we do need a ‘casting plan’.

What is important when we set about casting we do need that certain ‘something’ that gives the process a good structure and a given clarity. I think as we cast we need to work through five stages of casting :Discovery, Generation, Conversion, Diffusion and Acceptance. We raise our abilities if we cast in a prescribed way.

The virtues of openness are like casting a wider innovation net for better return.

Open innovation gives us all considerable benefits from looking outside our existing organizational boundaries for different concepts and ideas. We can also draw in outside help and partly to confirm those ideas in our growing connections with the final consumer. We need to cast more often today in a world where we have to work at being the smartest.

It is reckoned that an organization that has strong and robust open innovation capabilities are seven times more effective than firms with weak capabilities and is twice as effective as those with moderate capabilities, in terms of generating returns on their overall R&D project investment portfolios (source Booz & Co research)

Innovation needs casting practice in knowing where to ‘fish’.

If we keep practising casting, we will be making longer and longer casts as we gain in open innovation experience. Just like in fishing you gradually loosen up the control until you get confident in where, what and why you want to cast (around).

Remember when you are searching for innovation, no different from fishing,  always reel in enough line after you cast to make enough tension, so you can begin to ‘feel’ the response and gain that feel this is worth ‘reeling in’.

The real key to innovation casting though is back-casting.

Back-casting method

The back-casting method helps define our innovation understanding

As you might know, I have consistently argued about having a clear understanding of where you want to go (a vision and awareness) and in particular why I think the mapping across the three horizons is a more than valuable technique for knowing where and why you are ‘casting’ in specific areas. If you have some clarity on the future, those multiple horizons you need to explore, then your efforts of landing from your ‘casting around’ increase significantly.

You can ‘cast’ simultaneously and more accurately for those multiple needs. Those immediate ‘burning needs’ required for improving on today’s products and then you can open-up possible areas for those future ‘winning needs’. But more importantly this back-casting allows you to ‘look across’ new horizons, explore and take a greater time to ‘feel’ out and explore new areas of discovery to take you then through the five stage loop suggested above.

Having three different mindsets of the ‘here and now,’ more entrepreneurial, and more futuristic, based on this vision and awareness and then back-cast, allows for throwing open the innovation net for catching ‘greater’ possibilities.

No, casting is absolutely critical to innovation.

If we can learn the technique of ‘casting forward’ and ‘casting back’ we are gaining insights into ‘casting around.’ We have a much clearer plan of where and why we are looking for something because it has become more specific. Then we can try it; explore its possibilities, to think about it, to search for the connections that turn a vague idea into something more tangible. Open innovation becomes highly focused and well-cast! It becomes aligned.

Casting correctly can lead to greater promise, perhaps the innovation ‘catch of the decade’.

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Moving Towards Globally Integrated Innovation

Posted on May 15, 2013 by

There are so many books out there on innovation that it sometimes gets just hard to decide which to buy and read, to invest time into. I’ve got a growing stack of books sitting on my coffee table or in my e-reader file all shouting “read me, read me!”

Well one I recently finished has been one of those rare books that got the Paul Hobcraft treatment; considerable underlining, scribbles in the margins, circles around some pages that I want to refer back too as quickly as I can. You can never achieve that same sense of ‘ownership’ and possession through the e-reader can you, or am I missing something there?

So the book that joined that elite pantheon to the innovation gods on my top shelf was one written by Yves Doz and Keeley Wilson entitled “Managing Global Innovation – frameworks for integrating capabilities around the World”, printed by Harvard Business Review Press. I really recommend it.

The Key to bridging your Global Innovation Gap

The book is all about providing the understanding of integrating your global resources to build and leverage a global innovation network. I think it does a good job in explaining the different parts, the considerations and the tougher aspects of making this work for you.

Ok, I’m a sucker when it starts off by discussing the innovation challenges, then starts climbing into chapters on optimizing the innovation footprint, then communications, receptivity and then how to organize for global projects focusing on collaborative and integrated innovation, it does draw you in.

I’ll leave you to explore this in your own time, if global innovation and integrating is your bag. Equally I think it will be more than helpful in thinking this fully through or recognizing gaps within your present operations.

What the book does for me

Why it is one of those books for me is where it keeps coming back and placing the focus, on knowledge attainment, seeking out receptivity, transferring and integrating complex and codified knowledge. This emphasis fits so much with my own passion and constantly pushing “Absorptive Capacity” that it felt like coming home, that reaffirming feeling. The difference was the book took you through a different level of journey and understanding to add a whole lot more in my own thinking around this area.

Collaborative diffusion, building distributed innovation ecosystems, compatible strategic ambitions, cultural compatibility and discussing the interdependencies all challenge your thinking. As the authors nicely sum up in Chapter 7 it is how the behaviour of decision makers needs to move from that in-built notion of “being successful by competing” on their individual level and changing their mindset for more collaborative innovation across this diverse and global network.

The authors suggest this new way of managing is a difficult one to adopt and sustain but suggest the best way, perhaps the only way, is through constant practice and having a positive reinforcement of what makes for successful collaborations. I’d also add that ability to experiment, to learn from others around you constantly and recognizing ‘winning and being successful’ is not reliant on just yourself, it is leveraging everything that is all around you that builds your experience and knowledge.

Globally Integrated Innovation

We live in a world of huge diversity and dispersion of knowledge. There is a growth and constant push into new markets, emerging new competitors that are increasingly challenging us to find solutions to this management of global networks, both inside and outside our organizations in more integrative approaches to capture the ‘best’ of innovation.

Today’s present structures of the innovation organization, the systems required, the processes, the diversity of cultures, different mindsets and the focus on extracting the best from this mix of structure and resources is hard and complex.

The authors argue the scope and scale of the tasks should not become an impediment to action and suggest three dimensions of change to help in this. I’ll leave you to search for these.

They warn there is one huge caveat to achievement.

Senior management’s vision, their commitment and attention to this will not achieve this globally integrated network alone.  It is the recognition that failure to implement strategic change is often this lack of buy-in from groups of middle managers who remain happy with the status-quo or unaware of the need and rationale for the required change.

These gaps within organizations are due to the lack of dialogue, openly discussing threats and challenges and being inclusive in the implementation. This took me back, again, to my own arguments and suggested solutions to bridge that gap, through the Executive Innovation Work Mat.

“Knowledge is increasingly dispersed”

We return to knowledge in the wrap up within the book, where the authors have identified five radical shifts taking place that will lead to greater knowledge diffusion and diversity: 1) globalization and the opening of new markets; 2) increasing technological complexity and convergence; 3) demographic changes; 4) greater external pressures, in particular environmental concerns (and scarcity); 5) offshore outposts and outsourcing.

Knowing what makes up the complexities of global innovation and managing and harnessing this in dispersed networks is a real challenge and there is no better place to start than in picking up a copy of this book and working through it thoughtfully and thoroughly, to “organize, build and manage a global innovation capability from design to execution”

My final thought – beyond the previous boundaries of innovation

With innovation increasingly moving beyond its previous boundaries of simply leaving it to the scientists or marketing departments has long gone, for today and in the future, innovation is about open, inclusive, exploration and harmonization to extract the best.

Innovation has moved beyond products into new services, changing value propositions and business models and needs this constant reorganization around changing the innovation activities. Technology- based alone is not enough pursuing greater functionality; we are increasingly in the disruptive era of simplification, which captures far more of the imagination and where the increased movement of wealth generating opportunities lie.

Look at the effects of reverse innovation, jugaad or frugal innovation and where this has potential, the strong underlying movement in start-ups that are far more ‘needs related’ or serving ‘unmet needs’ through lean approaches than those in the past, of simply cruising along for opportunity with a vague business concept.

Everything has become so much sharper in why we have to focus our minds down, it is far more on what and where innovation can give us the next growth opportunity and that comes from all the diversity we can muster. Managing in the global innovation space is no different, it needs a dedicated focus and understanding, to find the unique mix that suits your needs and knowledge accessing and translating becomes the global unlocking key.

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The Innovation Bunker – Avoiding Cognitive Traps Part Three

Posted on May 3, 2013 by

Often we forget to look back as we constantly get into that habit of always wanting to simply keep moving forward. So, sometimes I would recommend we stop and reflect. I, for myself, keep returning to great thinkers in innovation to remind me and these can often bring me back on track in avoiding certain traps.

Part Three of the Cognitive Traps we find ourselves in. Go here for Part One and Part Two

Signal AmplificationI’ve always valued one terrific observation of Professor Clayton Christensen (of many thoughts) where he talks of the core theories of innovation. One small part:

He states “theory helps to block out the noise and to amplify the signal”

So I looked back at a theory to go forward to reduce our cognitive traps

If we link back into Everett Rogers Diffusion of Innovation for much, it is not a bad place to go. He firstly offers us his five stages of adoption or the decision stages of the innovation-process of Knowledge, Persuasion, Decision, Implementation and Confirmation.

Within this five stage approach he raises the issue of cognitive dissonance, where people do have the (eventual) motivational drive to reduce dissonance by altering existing cognitions, adding new ones to create a consistent belief system, or alternatively by reducing the importance of any one of these dissonant elements

Rogers also teaches us that knowledge acquisition, risk evaluation, value acceptance, social/economic/political constraints, adaptation to specific situations, time, money, and the expertise of change agents all influence the adoption of an innovation.  We need to bring these far more into our thinking so they can, over time, alter our cognitive biases to allow for ‘greater’ innovation.

In his work it is suggested we must encourage more comparisons that allow us to make greater connection, attempt to understand the innovation-decision (thinking through) process, encourage all around us changing attitudes, different behaviours and supporting structures and finally mitigate the risk and consequences when we push for adoption.

Isn’t there within all these connections a cognitive resolution pathway?

The more we share, the more we learn. The more we participate in open communities the more we can gain. The more we spend time in seeking new knowledge the more we see fresh alternatives.

Everett Rogers’ Diffusion of Innovations can be a more than useful frame for our learning strategies for gaining adoption that we are presently struggling with. In our board rooms the cognitive bias is partly because much of the thinking is based on their past experiences, often gained in different times and circumstances. They are often more uncertain than you are, due to these increased complexities and volatiles, feeling less equipped to deal with them, so our role is to increasingly bridge these anxieties.

The challenge we have as innovators is to convince those within the boardrooms that there are new tools, new ways, new approaches that do not place the core business at more risk but can provide the foundation for experimentation, for exploring in new ways. If there is no pushing of our thinking and staying within our comfort zones, well it leaves us at greater risk.  So  we need to have a clear approach to allow this wanting to experiment but for it to occur in ‘concurrence’ and support by those that are around us.

We need an adoption process to take into the boardrooms

If we agree still with Everett Rogers characteristics of innovation then perhaps we can start here for raising change in our board rooms more often. To overcome these cognitive traps spoken off by Henry Chesbrough and others, then we do need a framework to unify around and use. We need a thinking through process to work through to reduce these cognitive traps. One that engages others in this agreed structure.

I think we have a terrific one offered up by Everett Rogers to tackle cognitive traps.

To get anyone out of their own thinking trap we need to associate it to what would be valued. We can offer an uniformed path based on Everett Rogers five steps principle

  • What we must always offer in any conversation is a clear relative advantage to what is presently available, so we can gain permission and set about to explore better alternatives, to clarify this and gain general acceptance.
  • If we can offer compatibility with our own and other people’s existing values, and explore a migration path from their past experiences we might get more space to experiment. We need to draw others in and so we have to align ourselves to their experiences to frame it to their thinking bias. This becomes a job-to-be-done on unearthing unmet needs or the needs that can be improved upon.
  • The new tools, methods and techniques can certainly help us to explain complexity to reduce the perceived difficulties of adopting new practices. The whole gambit of gaming, the canvas techniques, visual mapping, design thinking all help considerably here.
  • We then can offer new ways for trialability to experiment in safe and limited risk ways. Lay out a clear path of experimentation and result milestones to manage expectancies and gain increasing support commitment. Steve Blank’s contention of “getting out of the building” and his customer development process offers one of many ways to learn, pivot and progress in bite-sized steps.
  • Finally, we can provide observability, so others can see the results we can make progress. By keeping this open, it can be clearly challenged and blocked in many ways but openness and transparency does eventually reduce resistance. If we can clarify change and our progress in learning we give others understanding. It is when we fail to communicate what they need to hear, we are more likely to be blocked or our project cancelled. We need to ‘demonstrate’ progress and show its value.

Everett Rogers five steps might offer up a possible pathway to unlock much within innovation and reduce our cognitive biases we all have that traps us often not to move forward.

We need to break free of our personal and collective cognitive traps.

To innovate differently, we need to open our thinking to as much of the diversity that is going on all around us as possible. We need to unlock innovation in new, imaginative ways. The more we open our minds, our organizations and allow new tools, new thinking in concepts, experiences and ideas, then the more we permeate and change existing beliefs. We need to start looking around us and see the multiple ways we can get out of our traps and biases in thinking.

Our rationale and reasoning change progressively as we expose ourselves to new experiences and new knowledge, then innovation can surely follow.  I think we do ‘play’ into to many innovation bunkers. We can’t ignore the cognitive traps all around us but if we become more conscious of them I do believe with constant practice we can easily  avoid many of them with the right mind frame, the right approach and the awareness of what others are seeking within the collective frame we need to work through.

Avoiding the cognitive traps  needs consciously working upon in discipline and resolution.

Cognitive traps are not good for any innovation, especially transformational work. They are vital to understand if we are reliant on others. We can work far more consciously at surfacing differences but within a clear, open and transparent approach. A cognitive bias is a mental error that is often consistent and predictable. We can often anticipate them and be ready to offset them, in ways that ‘appeal’ to those with these biases.

So by making innovation a process where we work on reducing all those places of variance where we might not have a clear process, structures and design for innovation we might get less (cognitive) resistance. Equally if we can work more consciously being open, showing ‘increasing’ evidence, talking through probabilities, risks and returns and finally working harder on understanding the pressures, uncertainty and needs of others we might reduce many of the (hidden) barriers and ‘draw out’ those that have reservations.

Open conversations based on mutual knowledge can go an awful long way to reduce these cognitive barriers. Irrespective we need to be constantly aware of others and their opinions.

So we need to consciously  craft the alternative.

I leave you with this final contribution of “we need to craft an alternative path” a visual by John Hagel. It sums it all up at the end: “our actions individually and collectively will determine whether opportunity or challenges prevail“.

For me, innovation needs the challenges of working collectively together, so we all can move towards the opportunities, We need to avoid those cognitive traps and play out of the innovation bunker well and the best way to do this is to learn to seek out knowledge.

We need to recognize, value and exploit together in open and collaborative ways to reduce these personal biases and cognitive traps we can often fall into. We need to leverage all of today’s cognitive structures all around us that include mental structures, mental tools, and patterns of thought offered to us in new exciting ways with a little bit of older theory perhaps, thrown in.

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The Innovation Bunker- Getting Out of Cognitive Traps Part Two

Posted on May 2, 2013 by

Help seems to come from new quarters – unlocking our minds and breaking free from our cognitive biases.

Part two of the Cognitive Traps we find ourselves in. Part one is here

Breaking Free from our Cognitive ChainsSo how can we break free from what holds us back? As we have these cognitive biases then we have to consciously work on reducing their effect in our judgements, decisions and actions. We need to break out of those cognitive chains that can hold us back and limit our innovation thinking

I think there is so much help at hand

If I take www.innovationgames.com, as one example, of where Luke Hohmann and his team are taking us.  I think there is this important emerging ‘rush’ into games-based tools partly because they can significantly help offset cognitive bias. They allow us to become more engaged in collaborative thinking.

On http://www.innovationgames.com site they offer this as their value statement: “our on-line and in-person games help organizations solve problems across the enterprise by using collaborative play to tap into true innovation”. “Games bring your ideas into Action” in our ability to come together and then actively collaborate, helps you discover market opportunities and uncover customer needs and challenge your thinking in new and stimulating ways. Engagement in imaginative ways allows you to break free of some of your cognitive traps.

Have you explored the different books around games, for example Gamestorming: a playbook for innovators, rule breakers and change makers.  They state “we’re hardwired to play games. We play them for fun. We play them in our social interactions. We play them at work. That last one is tricky. “Games” and “work” don’t seem like a natural pairing. Their coupling in the workplace either implies goofing off (the fun variant) or office politics (the not-so-fun type)”.

The authors of Gamestorming, have a different perspective. “They contend that an embrace and understanding of game mechanics can yield benefits in many work environments, particularly those where old hierarchical models are no longer applicable, like the creatively driven knowledge work of today’s cutting edge industries”

I’d suggest that in any industry there is this pressing need to open up the thinking to see ‘things’ in new ways. The challenges are becoming more complex, faster paced and needing far more agile minds. These game storming approach are allowing us to alters our cognitive biases in new ways.

Have you read the article by Jordan Shapiro on “How gamed-based learning can save the humanities” where he discusses example of game-based learning platforms that uses the magic of interactive storytelling–video game design–to bridge the catastrophic gap that undervalues the humanities in education. He goes on to suggest “Metaphors, signs, and symbols are useful. As the building blocks of language, they let us articulate our experiences through a shared system of meaning-making”. Any shared language reduces personal bias.

Take a look at this slideshare “Building a sustainable innovation ecosystem” for exploring translation pathways to new ways of learning in the 21st century. Game-based learning is significant to alter our perceptions and challenge our thinking.

The Blank BM Canvas

Following the success of Alexander Osterwalder’s Business Model Canvas we are all getting more comfortable in building off a ‘blank’ canvas our new business models. Since this canvas there are countless other alternatives that can help us to overcome bias and prompt different thinking around most of the aspects of business design.

Collaborative and visualization tools are equally making a difference

We are seeing the art of storytelling, of taking part in simulation work, making better use of the different visualization techniques and we are opening up in allowing ourselves more time for strategic and concept conversations.

If we take the Heath brothers suggest in their book “Made to Stick” I certainly believe this can help in ‘chipping away’ at cognitive bias. It reduces bias though drawing out, more often than not collectively and giving time to debate. This shifts our personal perspectives and allows us to see things differently as ‘I’ moves to ‘we’ in association and assembled knowledge of the broader community engaged in the conversations and exploring.

Can we use the tool from “Make It Stick” for reducing cognitive traps?

For example in their book “Made to Stick” they (Heath brothers) lay out the critical elements of a sticky idea of Simplicity, Unexpectedness, Concreteness, Credibility, Emotions, Stories. This encouragement makes for more conversations, both within our own minds and in greater participation with others. This idea for structuring conversations will be great offsets to our cognitive bias in my view. It certainly can become a great starting point.

So taking the Heath Brothers suggested acronym of ‘SUCCES to reduce Cognitive Bias

  • Simple — find the core of any nascent concept and allow it to permeate.
  • Look for the Unexpected —let it surprise us so we can see its possibilities
  • Concrete —Grasp it and its potential effects to share this new insight with others
  • Credible — work on the association to give it ‘growing’ believability
  • Emotional — help people see the importance of this to achieving innovation that transforms.
  • Stories and Narratives — for crafting a compelling narrative to change our cognitive biases into new logic and value propositions.

Knowledge diffusion I believe can reduce cognitive bias also

For me the more we can diffuse knowledge, the better, for recognizing its potential new value in enabling innovation to be translated into “exploitive learning”. I’ve previously suggested absorptive capacity as a help in knowledge adapting. I wrote a piece called “Moving towards a more distributed innovation model” can allow your thinking to absorb and have a greater flow.

Envisaging different states for innovation needs clear application.

Scenario thinking is a more than helpful place to go for changing our perspectives. What we have to guard against is that these do not become another cognitive trap where we want scenario thinking as long as it is on ‘our terms’.

I believe if we only ever construct scenarios in one ‘mindset’ we miss so much. As many who have been reading my posts I strongly prescribe the three horizon methodology for approaching innovation. Take a look at mapping innovation across the three horizons to see where this can ‘shift’ our thinking beyond accepted present day thinking norms for innovation to be advanced more effectively.

Langdon Morris wrote in a book called “The Innovation Master Plan” there are four devious mindset traps of 1) fixation on the status quo , 2) short-term thinking dominates at the expense of longer term, 3) too much incremental innovation and 4) ignorance of the real meaning of change, its rate and impact. We need to radically alter these traps. Fixation, biases simply do have innovation consequences.

Seeing across multiple horizons ‘frees’ us from many cognitive traps

I believe we can go well beyond the present value of ‘just’ fitting your existing innovation portfolio and directional management into a one-dimensional framework, viewed in our present ‘here and now’ mindset. You can see opportunities completely differently beyond the existing mindset and activities, if you think in different time horizons. These different thinking positions take innovation from tactical to strategic, then into foresight in your three different mindset evaluations. This three horizon approach challenges your cognitive biases as you really do just have to let go and open your mind right up, to see and that is in different thinking frames.

Perhaps I can go one step further, a final step, by reflecting back.

So in my final post coming up (part three) on the Innovation Bunker – Cognitive Traps I offer a simple framing technique that I think has value. One that we all can relate to it, not so much to each others cognitive biases but on how we can manage innovation and its progress in a ‘common’ approach- It can reduce differences and allow for better results.

We certainly do need to encourage adoption and decrease the rejections in innovation.

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