Dealing with Your Darwin Effect through Innovation

IFD 4

I have been working away, as my labour of love, frustration and sheer determination, on my thinking through the ‘harnessing’ of the dynamics within innovation, to offer organizations their innovation fitness and future landscape design, so as to radically alter their present capabilities and capacity to innovate.

The aim is to relate these to where your organization is in their existing capabilities, where they need to go, in identifying and clarifying the necessary capabilities they need to have, so as to achieve certain strategic goals and then, “we”, together, collectively prioritize the critical ones as ‘must have’ and then set about filling the gaps. This is the innovation fitness journey needed to be travelled.

The building of those more ‘dynamic’ capabilities and competencies are the ones you need so as to provide for a more dynamic innovation environment and deliver unique capacity for your ongoing strategic goals.

This work is covered off partly on this web site but does have its own dedicated site where the articles, post and thinking have been building up over a fairly lengthy period. Go and visit it at www.innovationfitnessdynamics.com.

So let me tell you what this is all about and I will describe this with heavy referencing from Geoffrey Moore’s book “Dealing with Darwin”. Without doubt one of my favourite books in how it helped me piece together a large part of my dynamic innovation fitness puzzle.

First you have the internal view.

Critically, you need to take a fresh look at your internal dynamics, at what happens when core competencies cease to differentiate, how resources must be shifted to new areas, how deeply threatening such changes can be, how a protective inertia emerges as the enemy of destabilizing innovation, and finally, what kinds of management responses can best deal with inertia and redirect its energy towards fresh innovation. This is the inward facing dilemma that needs to be addressed.

Then you have the External viewpoint

It is about creating competitive advantage in an increasingly commoditizing world. To lead that effort, you must continually reappraise what role your company is playing in the market ecosystem, how the market landscape of competition is changing and understand where your competitive advantage has come from in the past and where it is likely to come from in the future and with what kinds of differentiation will be most rewarded, and what kinds of innovation are most required. This is the outward facing portion of the story.

Then you have that growing sense of observations

Innovation and inertia: we often get stuck in particular types of innovation, promote given skills to the detriment of others, equally necessary but ignored or not understood fully.
We fail to adapt to market changes, we fund to much of one type of innovation to the exclusion of others and in the process create internal traffic jams of sorts, frustrations and tempers to match.

We squander our scarce resources of time, talent and management attention on initiatives that fail to give us competitive advantage and get constantly impeded by these forces of inertia all around us. Indeed, the more successful we have been in the past, the stronger the resistance to any subsequent change in the innovation course.

Then you have those real world worries

So what does keep management up at night about their performance on innovation? The rising anxieties stem from that worry that perhaps we are losing our ability to innovate, can our people still compete? Do we really get it? And even if we do, can we still get it to the market place at the right time and feed that need? Can we actually see the light of day?

Then Evolutions can happen

Evolution proceeds more gradually but in times of crisis we are forced to make choices that enable you to step back and reflect. I would argue we are all increasingly facing our own types of crisis in today’s volatile world.

If you were able to achieve an understanding that is based on more informed choice, so you can extract yourself from one path that makes you increasingly vulnerable and provides support to commit to a new core focus, one that offers you a more sustaining competitive position on which to compete through innovation. Would you take this different pathway?

Your task, challenges and keys to unlock your dilemma lie here.

1. The task is to develop a suite of core innovation competencies with proven capability to create (unique) competitive advantage.
2. The challenge for management teams is to choose the type of innovation appropriate to their situation and to exploit it deeply enough to create definitive separation from their direct competitors. This can be completed in different ways but through a thorough analysis is recommended
3. The key is to identify and then to extract (scarce) resource from (existing) context and re-channel this into the new core that will differentiate you through the new emerging innovation competencies and systemic approach.
4. A real need is to reposition resources and provide focus on the ‘right’ capabilities to meet new challenges knowing your “Innovation Fitness & the Dynamics in the Landscape”

The sooner you start, the sooner you will be able to extract yourself from the commitments that make you vulnerable and establish those commitments that will strengthen your new position“- Geoffrey A. Moore

Survival of the fittest dominates irrespective.

  • We are all caught in this Darwinian race- all of us it seems.
  • So where do you want to focus your limited resources? The ‘natural selection’ choice to increase your abilities to innovate linked to your needs.
  • Start by mapping out your innovation direction to the tasks and capabilities on hand and those needed or required to get you to certain predefined goals.
  • Chose the path that will leverage and expand your knowledge, capabilities and capacities and start the journey.
  • Start recognizing the opportunity spaces and gaps when you think you should be heading but feel you might have constraints in moving towards.
  • The greater you can identify the need for improving your ‘innovation fitness’ allows you to get closer to accelerating towards the seen and yet unseen opportunities.
  • The greater ‘innovation fitness’ equates to more value creation potential.
  • As you learn to recognize the difference between managing the existing routines and building the new capabilities, the quicker you can absorb these new learnings within the organization, so they can become the new dynamic routines that are needed.
  • You then begin to reduce uncertainties and strengthen the true innovation capabilities you need to thrive and survive in this Darwinian world.

Interested to learn more?

Then simply contact me. I am happy to discuss this and how this can be applied to your organization and what it means in engagement and commitments.

You build progressively the Innovation capabilities and competencies levels to become dynamic and fitter to compete and succeed.

The proliferation of transitory moments are ahead

Digital DiscoveryRecently I was reading that up to now, each digital technology change was a separate era but today we are facing something seemingly different, a collision, a whole mash-up of disparate technologies and systems, that  seem to be heading for such an explosion of change, a post-digital transformation.

This merging of cloud, big data, social, and the internet of things is becoming the new system of discovery according to some. Others call it the crossroads where the post-digital reality of bringing together the cloud, mobile, interconnected devices, data analytics and embedded intelligence are pointing us to a hyper-connected world, less tomorrow, more speeding towards us in the here and now.

It is through people and things (IoT) we will get new innovation potential

It is through people and ‘things’ (machines and devices) that we will obtain increasing and more powerful insights, that have the real potential of being turned into new innovation potential through the connected businesses. This can generate new value and business propositions.

It is this “turning into new innovation” is where I have my current difficulties. The virtual world of digital is moving much faster than the physical ‘enacted world,’ of turning insights into actual innovation activities, through the innovation pipeline.

The whole discovery to final execution is for most organizations still, a very fragmented, often disconnected system, highly reliant on people to make decisions and organize the more tangible finished result. It is still through mainly a linear process of stage-gates and investigation /validation / move on or not. I can’t see that working in a digital hyper world where insights flood into the innovation engine room, expecting the same ‘hyper’ response and delivery result.

The ‘play’ at present is how all this represents such significant business opportunities for both the large and start-ups alike and how they set about it. There is a real hype and force behind this but until we fix the total innovation value chain, the (new) front end for all these digital insights flowing in, otherwise it will just simply increase the log jam and the significant frustrations will grow even more that innovation is not matching its potential.

Something will have to give or change and needs fixing to be better equipped for this digital transformation of real-time insights and opportunities.

There is significant increased capital and funding going into these technology changes, not the innovation process

Recently IBM was reporting how the VC is funding much of the ‘edge of embedded systems, different gateways of connectivity, messaging and the much-needed security all this means. Equally how the VC is investing heavily in the back-end of cloud services where data services, analytic services and (again) security need different solutions to meet these changing times.

Then we have the leaders in the shape of Amazon, Google, Salesforce and a number of others all-seeing significant ramp ups in engagement. Also this is equally coming from the likes of industrial giants like GE, in their connected world and many, many others, all determined to shape their industry and change its boundaries, through offering broader system products that pull together these technologies and shift the customer value proposition in radical ways.

There are sizeable bets and large sums of new capital going into this front end of discovery.

We are transcending traditional industry and product boundaries

The transformation that is under-way is exciting, actually scary and highly challenging in significant ways. Like in any “wild west” environment advice comes from every quarter, stories feed of each other and magnify but heroes are born or in this case, are created, for this convergence of post digital evolution.

This is the time we are blurring or having so many things flashing before our eyes with the digital and physical worlds combining for this convergence of people, business and things.

The dizzy array of strategic choices will totally disrupt existing business models if they are right in their design. The whole world of communicating, transacting and designing all the different negotiations and products that meet the immediate needs of the customer makes this the “digital business era”, where constant redesigning and orchestrating the parts will keep it at the forefront by a constant evolving set of combinations and leveraging a network of diverse capabilities.

It will be how and where a business or entities of business come together and see where ‘people, things and their business offering’ can come together for mutual value based on the unique combinations of the different technologies available.

There will be a constant evaluation of the assets both internal and externally that make up this digital world (people, the business and things) that will take this out beyond the control of one company, into a system within a larger system to make it work at a constantly evolving speed and gain adoption.

Who will master all the necessary interactions?

Digital Discovery 2The decisions being made will define markets and push way beyond established industrial boundaries to seek out and attract, to acquire both data and sales and keep retaining customers, who will increasingly become more fickle, unless they ‘see’ the changes and the values being offered.

This is going to have a real velocity to it. In our homes, in our personal lives, in connected transport, in our cities, in a multitude of our industries and health care systems, in our shopping, in the way we can buy and engage with the source of our need. None of this will come overnight but it is going on all around us in improved response times, connections and choices.

As the organizations investing in this changing world learn about people, different business approaches and structures and what these ‘things’ are capable of it is the knowledge gained and translated represents a new world of possibility.

Much will become even more highly transitory

I was going back through Rita McGrath’s book “the end of competitive advantage” and although this only came out in late 2013, I realize it does seem to be lacking in much of the change taking place through this new emerging digital era. Yet it does paint a changing world, it does offer many pointers to understand and filter a new thinking through.

Rita discusses “arenas” that are transcending current industry boundaries where organizations ‘spot’ opportunities and look at what needs to fill the space, by pooling and orchestrating different assets to go after that opportunity. A different game is opening up.

Yet digital thinking is transformative and does take us into a different business dimensions, one that can offer greater transparency, connectivity and the need to respond in dramatically different ways than our past business models were capable too. We look out in broader ways.

Those that seize this opportunity will look towards shrinking market cycles, delivering totally different value propositions, seizing vacant space where better job- can-be-done. These will be further exploited through combining technology, social and marketing solutions that explore different innovation offerings, ones that customers will decide (or not) do meet either their needs or unexpected needs.

Some innovations or value propositions  will take them for a real surprise, as they were totally unaware of these, yet they seem to fit into their ‘perceived’ lifestyles and activities, captured more and more through these SMART devices, many of these will offer new premium value price points for business or customers.

The reality is fast becoming our ‘advantage’ will be highly transitory as competition will be seeking all possible ways to match your offer. Shorter cycle times, constant change and update will be the point to chase the value and keep the interest, otherwise others will nip in and steal the ‘advantage’.

The reduced lag time of everything perhaps?

Digital Discovery 1The lag time of everything will dramatically reduce. Be these traditional industry cycles, product development, and customer feedback as the battlefield will be staying constantly ahead of the competitors response through this constant investment and re-engineering of the different combinations of new transient competitive advantage.

A world of rapid testing, experimenting, test and learn cycles, the increasing use of 3D printing, exploring different configurations that resonate or not with customers, so they can be quickly scaled up and delivered as the advantage point.

Digital technologies in their different forms will establish new terms of customer and competition advantage, where the whole cycle spins faster, latency constantly gets destroyed and organizations seem to increase their velocity to simply stay ahead.

If we do begin to believe all of this, the new channels will be digital where products, services and experiences will alter in ways it is hard to image today, although I’m sure they are being worked upon by the next wave of digital / business smart organizations searching to be the next Amazon, Google or GE.

Converting theory into reality that drives increased growth and revenue

The game is presently to convert the theory, the numerous ideas coming from all these digital insights and interactions, into concrete reality and we will have a real difficulty for most on this to convert these quickly enough. Many opportunities might be simply transitory but highly valuable to exploit.

It is not what is coming through our door, it is what we are able to get out of the door at the other end. Most of the innovation systems are designed from a very physical engagement, validation and execution perspective, operating not at any speed like or what we are wanting to get out of all the front end investments from the new digital era.

There will be systems and practices at real odds in speed, agility and decision-making. This will hold any evolution up, until the back end of product, service or business model are equally addressed. This does need the same commitment of funding and strategic thinking and organization engagement or this post-digital era will fail to deliver, due to these up-stream constraints and antiquated approaches to the innovation system.

Digital disruption is with us, it seems to be enormous in its potential transforming effects. It has an enormous potential to alter how a business conducts itself; in seeking out its different (and multiple) value propositions, the design of its new business models in the way it engages with people, things and its business. Yet I have to ask about the physical innovation value creating capacity – can it cope?

I’ve just got one enormous headache thinking about it.

Innovation will certainly not get any easier; it will be faster, more demanding and a heck of a lot more risky. The innovation systems we presently have will simply not cope, the log jam will not be the data flowing in,it will be the amount of innovation flowing out or more than likely just trickling out.

It does not matter what we rush to invest in digital capabilities something down the value chain will have to be radically altered to seize this digital era and turn ‘seen’ opportunity into reality and that is today based on people’s innovation capabilities.

Innovation still totally relies on people not this digital tsunami or digital monsoon as I called it, that is altering the front end. I understand most working within our organizations are lacking engagement, will they welcome the digital age or it will become even more the whipping boy, being forced upon them of reluctant change? The digital front end is going to hit a real roadblock within organizations that needs addressing.

Innovation remains stuck in 20th century thinking

How will ‘we’ seize the opportunities and turn them into the innovations that is needed to be delivered to capitalize on the insights gained? I would think we need to invest in the innovation system and structures to enable this to happen and are we?

Today most innovation systems are broken or one paced, mostly fit for incremental innovation only and as latent as you can get, in reaction, inefficiencies and in delivering any concept to final product or service delivery in anything remotely close to real-time or incoming digital response.

The innovation life cycle is not fit for this digital purpose for most organizations. Is anyone thinking of this? This needs equal attention and fixing. As we assemble highly transformational road-maps we might pause and think about the inadequate one we have for the innovation life cycle.

Or am I missing something here?

Connected Enterprise, Connected World

Connecting the WorldI was delighted to be invited onto a panel with GE at their R&D centre in Munich this week. Dubbed “Innovation Breakthroughs – Igniting Europe’s Growth” They were celebrating 10 years of theopening of the centre and as you arrived, you saw the cranes at work to double the facility as well as further deepen their commitments within the surrounding community even further.

One such community success story has been the co-location they have with the Technical University of Munich (TUM), where both have evolved to share a real philosophy of creating new knowledge and make it available for the industrial innovation process through this partnership. They combine in a number of “sweet spots” or research domains, that move the academic creative contributions of science into the industrial researchers alongside, working to advance products, bringing these concepts to commercial fruition.

The event also combine with the announcement of Euro €18.5 Million in New Research Program Funding announced as GE Marks the 10th Anniversary of its Global Research Centre in Europe with its university partners. A futher community commitment.

Alongside side this announcement, a White Paper was issued on “The State of European Innovation”, drawing down from the GE Innovation Barometer  and from other resources.

I have always liked to read with interest this set of Barometer insights,  and have enjoyed commenting upon (here for example) the results that are published each year. The GE Innovation Barometer I think really does offer valuable insights of innovation thinking by over 3,000 leaders in larger business organizations. It offers good insights into the inner thinking about innovation that has practical implications.

A quick tour of the R&D facilities reveals much about a company

While I was there, I was lucky enough to take a “quick” tour of the GE facility after my small contribution into a fascinating set of debates earlier in the day. I can honestly state the passion, commitment and sense of pride in all the researchers I meet was impressive. It goes way, way beyond putting on a positive spin to the visitor, it is a deep desire and I think a real motivation to push advancement.

Before I went to Munich I really got caught up in GE and its evolving story.

From the outside looking into GE I had felt it was evolving but I was not able to get ‘under the hood’ and see the ‘powerful forces’ that seem to be at work. This event helped trigger that growing awareness and brought it significantly to life for me.

GE often use an awful lot of ‘convening words’ that make you curious to connect into their technologies, their industry areas and explain how and where these are evolving. I think this thinking has been ‘cranking up’ significantly in the past couple of years, and for good reasons. GE has a good evolving story to tell.

Included in their portfolio are some of the essential aspects of our lives, they connect us, connect enterprises and advance many things and reshape the future. When you here about “mapped minds”, “brilliant factories”, “extreme machines”, “energy everywhere”, “super materials” and finally their take of the “industrial internet” it confronts you. That was how I felt when I walked through the doors into their lobby area.

For me it was going to be a promising day.

Irrespective of how or where I could contribute, I knew I was going to learn a lot from the event. As it turned out the panel I was invited upon became fairly lively. I had the pleasure of being on a panel that included Mark Little, the Senior Vice President and Chief Technical Office for GE, Jean Botti, the Chief Technical and Innovation Officer for the Airbus Group and Christian Cahn von Seelen, the Head of Corporate Strategy, China and India Business at Skoda Auto.

The audience ranged from politicians, and senior representatives across industry, research institutions and health and the Q & A I felt could have gone on and on, debating Europe’s innovating future. We simply touched the ‘tip of the iceberg’ as there are equally dangers lurking not just under the surface as complex problems to tackle.

Yet equally, such a positive mass of deep knowledge, real tangible successes and high  absorption of learning across Europe, all needs to be picked apart, mapped out and reconnected in new ways, does provide the promising future in innovative ways to get Europe moving again, in growth, jobs and unified commitments. I only wish it was less left in Politicans and Bureacratic hands and our instritutions and business leaders were more deeply involved in shaping the process, not just lobbying for their specific part.

Plenty of pride, some angst.

Sitting in Germany you can always ‘feel’ that real pride, a clear determination and belief in the achievements made and plenty yet to come- Equally you know what will be delivered in much of the approaches can be summarized as making connected sense. Sometimes the rest of Europe does seem to want to ‘pull’ in other ways and that is hard to understand from a German’s perspective. This is part of ‘our’ creative tensions in Europe to be bridged.

It is part of the challenges we face in Europe, connecting all the diversity and opinions of 28 countries to get growth and a real momentum within the European economy going again. Debating the required innovation fits across Europe is complex and challenging.

What I liked in my visit was a reminder that if you combine much that is good from one culture and fuse it in thoughtful ways that capitalise on the diversity of the other or across many, you can really see tangible results. Collaborating on big challenges would be one ‘unifier’.

I think the combination of the fusion of the mindsets of an American company that believes it is a scale-based entrepreneur organization, managing in complicated technologies and ‘big things’ and a collection of bright researching minds, all drawn from not just across Europe but many part of the world, sitting next to a university (TUM) that are plugging into the German way of doing things is a good example of this collaborating across big challenges.

Of course, managing in complex situations across cultures can be frustrating but this host of ‘connected points’ strikes me to be a winning formula. Of course in GE’s case, you throw in the connected nine Global Research centres you certainly ‘sense’ this motion towards an accelerating future within GE. 2,000 scientists and engineers and 50,000 technologists. It can make you pause for breath, it’s simply impressive, and ‘living proof’ of connecting minds, knowledge, cultures  with machines on how it can generate results that are advancing on what we know today in significant ways.

Then we have the wave of connecting minds and machines.

Mark Little the Chief Technology Officer for GE was heading out of the door early afternoon to catch the flight to get him back to GE’s next event, of connecting minds and machines being held the next day. Now this promises a different, potentially radical new future in industry and GE are placing a lot of resource and commitments into it.

GE are taking a real lead here. In the last three years they have been ramping up their thinking, dubbed “the industrial internet” and moving into the power of connected industrial assets (the machines) through embedding sensor technology everywhere on the machine, bringing back its data from oftem hostile environments and through the analytics applied can turn this into ‘intelligent information.’ This offers the potential of real-time decision making, delivering required and necessary insights at the right time, to the operators and business decision makers so as to manage that dreaded aspect all industries fear of “downtime” better. It also allows for managing more efficiently and effectively the assets.

Already I gather GE has put over £1 billion into this potential game changing move to transform industry. CEO and Chairman Jeff Immelt’s opening to this event with his headline view: “if you went to bed last night as an Industrial company, you are going to wake up in the morning as a software and analytical company” where the separation between data and industry has vanished. Does this change the business model, I think so.

Of course Jeff Immelt is saying this, he runs a “big bets company” and they are setting about transforming industry for competitive advantage. Yet again though, it is the way they seem to be setting about it that makes you feel it is happening and shifting the dynamics of big asset business, in significant ways.

Platforms, Partnerships and the Ecosystem

I strongly believe the future of collaboration is going to be based around platforms and ecosystems, where you bring together the minds and the business interest, gathered around specific but complex issues to solve. GE are working on delivering this.

Through their platform of Predix, GE are providing “industrial-strength software and analytics” and spoke of having 40 apps ready for customer use today at this event. They are also throwing open the platform for others to use, build and develop their apps. GE will offer the backbone, architecture, resilience, and security for others to come onto this platform with growing confidence and work towards ‘apps’ that are even more tailor-specific to their needs beyond ‘just’ sensors.

The partners already working with delivering from this platform are Cisco, Intel and Accenture and GE’s investment in Pivotal, will mean the amount of time GE executives will be spending in San Francisco building the resources behind this is a space worth following.

I gather they have 800 data scientists and GE are on a further massive recruit to ramp this up, well over doubling this in the region, to attract and blend the best in talent, software and analytics. I also gathered they have been but recruiting the ‘forty something’ person as well for their business experience, as they sit down and work through issue upon issue with their customers.

It is clearly evolving at some speed, GE are delivering the Medici Effect of breakthrough insights at the intersections of ideas, concepts and cultures. as our world becomes more intersectional when we merge one field into a new, unfamiliar territory for these radical changes in how we will manage in the future.

The combinations of smart machines, enabling technologies, big data modelling and analytics and determining the customer outcomes in increasing collaborations, will radically alter the Business Model of GE in future years, in ways that we yet can’t imagine.

As I left the R&D centre in Munich

As I look up at the crane as I left and saw the shell of the additional building going up in Munich, I can imagine that science, research and technology will fuse in ways that we are only beginning to grasp. I wonder what type of mix of skills that group of future employees will have, far more a blend, perhaps more broad set, rather than one that is deep only.

We will be seeing software services, a changing portfolio strategy and GE’s scientists, researchers and engineers all managing not just in their deep domains of knowledge but broadening out into far greater engagements alongside customers. It alters and unleashes.

Combining in future ways with the chosen universities, institutions and partners, increasing working through and on these platforms. where collaboration and co-creation will move way beyond today’s open innovation concepts, focusing on bringing ‘synergies’ that deliver those vital winning outcomes.

The future era of innovation suddenly looks even brighter.

So those Asset-intensive industries that are looking to reduce costs, improve efficiencies and search to unlock new sources of customer value, are moving into a ‘connected realisation’ that will bring the industrial internet into increasing focus. It will sit alongside the social side, where the internet of things (IoT) has been making most of the running to date, encrouching far more of our business and personal lives.

The promise of deep, lasting connections and relationships all seem to be offering innovation in a new era of prosperity, were connected enterprise and the connected world come together with very different business models, built on this ‘promise’ of platforms and ecosystems, delivering in very tangible ways through a collaborative common cause.

A place where “Everything connects,” a book written recently by Faisel Hoque, is suggesting where people, insights, capital, infrastructure and ecosystems combine. One where the age of creativity, innovation and sustainability come together as the needed skills required to be continually adaptive.

I’m all for that era. We are at perhaps an infliction point on the way we are thinking, managing, and collaborating in a connected universe for new growth possibilities. I’d like to believe so and from what I can see, GE are well on their way in working this out in their own, highly focused way.

Opening Ourselves Up to the Innovation Mashup

Mash Up VisualSometimes some things come slower than others, and then they suddenly rear up and hit you. We don’t make all the connections we should; we are too caught up in our little world, beating our existing drum, drowned out by its own noise, to step back and appreciate something new is really happening.

Recently I was investigating one strand of thought and then bingo! Something else, leads to something else and the rest, so to speak, becomes history.

I’ve been reflecting on the new era of innovation and opening myself up to exploring alternatives, different thoughts, discussions and viewpoints. Underlying this is a growing sense of my convictions, still partly forming, malleable but trying to drive certain ‘stakes’ into the ground to keep testing and improving on a hypothesis or two; that innovation and its management definitely has to change, and fast!

Of course the cloud figures in this as a whole new different way to orchestrate innovation. More on that at another time as I need to get into some more robust discussions with one or two others on this and expand on my own position a lot more.

My recent ‘bingo’ moment was as I was listening to a round-table discussion within GE and its lighting division with a panel of outside thinkers. Beth Comstock, Senior Vice-President and Chief Marketing Officer was chairing the discussion, so it will always stay lively and stimulating and it did not disappoint on that. Her throwaway line at the end of the panel session was “Perhaps the headline here is the Big Data Mash Up”.

Mash-up?  So am I missing a certain beat here? Or does it fit into my thinking

This started me off – Mash Ups, Ecosystems, Platforms, Big Data so how about the Big Mash Up to help the necessary Smash up?

So off I go on one of my walkabouts, needing to plug into mash-ups a little more.

Business jargon is drawing more and more from our software and computer worlds. We have seen lean, agility, scrum and a host of others entering into our business practices in broader ways than the original application; the principles are being extended out.

So what is a mashup?

In web development it uses content from more than one source to create a single new service, displayed in a single graphical interface. It works if it is fast, easy to integrate and has clear application interfaces that allow this to happen.

The original term of mashup, according to dear old Wikipedia, comes from British – West Indies slang, meaning to be intoxicated or a description for something or someone not functioning as intended. I like this as it is the way many of our companies are reeling from with all the disruptive changes swirling around them. Also within music, it is used when we remix and combine different aspects of music or song from one vocal track to another. Thereby ‘mashing them’ together to create something new.

So why do I feel the innovation mashup is coming?

The main characteristics of a mashup are combination, visualization and aggregation so as to make ‘it’ (whatever it is) into something more useful, for personal or professional (or organizational) use. We have a fair number of mash-ups going on already; in business mash-ups to reveal actionable information, consumer mash-ups that can come through our browser interfaces (maps and info) and data mash-ups that provide new, more distinctive web services.

I’m not going to get into all the technical stuff on this, let alone the challenges but as you read about the taxonomy structures I start thinking innovation taxonomy. Don’t ask me why but I do.

Let’s smoke a little more here (I’m kidding) and think the Internet of Innovation

We have been digesting the internet of things, the internet of everybody so we need to push this a little more and ask “can a comprehensive vision of how this set of events around digital, data etc., alongside our physical needs be translated into returns for a business wanting to engaged in greater, more valuable innovation”. These will come from platforms and connecting everyone.

I hold one additional thought here “virtualizing the core business” and extending this beyond the core, to deliver innovation faster and better by orchestrating its parts to architect the future, based on responding to real needs and extending those existing deliverables that continue to provide value.

We need to manage innovation in more real-time, we need to dramatically improve the process, we need to pull together often the disparate knowledge, we need to inform better, we need to place what we are doing into a greater context and we need greater predictive decision-making. What we have working the innovation activity is ripe for disrupting. Innovation and its management is mostly operating with the 20th century model.

The move towards digital – physical mashups

Darrell Rigby of Bains & Co wrote a recent article in the September 2014 Harvard Business Review entitled the “digital-physical mashup”. You could image that got my attention in my walk about.

His view is we are in a period of upheaval, do we see technologies as a threat or a new pathway. The growing reality is digital has the real potential to destroy our existing positions in existing markets.

We see this with digital platforms, those lean on physical assets attack the incumbents, take Airbnb for example in its mattress and B&B challenge to hotels or Kickstarter for alternative funding. Value creation is being rethought in totally different ways and business models and being staged on platforms.

Now what happens when you combine digital and physical? As Darrell comments there is a growing ‘weaving’ of digital and physical worlds to come tightly together. He cites Nike+ that is giving more than 30 million customers a tracking, sharing of runs, workouts and setting fitness goals as the shoe has a built-in sensor and can work with your iPod to see data on time, distance, calories burned and can all be synced back, compared for charting your progress.

Here we see digital sport emerging, the ones not embracing technology will suddenly have their market position erode (and fast)

Then we come back to GE and Beth Comstock’s throwaway line “the big data mashup”

GE when they decide to move into something, they tend to do it big time. They make “big bets on big things” according to their CEO and Chair Jeff Immelt. Big Data Analytics is one of these exploding for them. They have housed this under “Industrial Internet” and GE Predictivity TM for asset and operations optimization.

This will come from these analytic insights, through the use of sensors and other technologies in aviation, rail, oil & gas, power generation, wind, power distribution, healthcare, mining, water and process technologies, lighting and manufacturing from machines that are self-aware interacting with other machines and their human operators.

The collecting of data is impossible to manually analyse but if this can be translated into insights through analytics’s and big data management techniques, visualization and dashboards techniques, that can manage complex machines, save labour, downtime, direct resources and reduce costs it certainly opens up the thinking.  GE’s estimates could be as much as $20 billion in wasted deficiencies per year. Further opportunities will simply occur as this gets understood more as it gets rolled out.

Wikibon analysts believe the analytics market will be worth more than $47 billion by 2017 and Gartner reckons the rise of the Internet of Things will propel the global IT industry past the $3.8 trillion mark by the end of this year.

I can certainly see this as a valuable and seemingly ‘big bet’ sandbox to go and play in and GE are doing this on a strong execution platform. They already have scale, they are just scaling this more into a different business model and value propositions.

Big Data is coming of age, can we handle it?

Big Data is going to certainly drive IT spending in the next few years, yet it is its translation that promises to be within the value extracted, on how we interpret this though analytics, insights and what it then yields in improved productivity, new product designs and service offerings. It all signals a very healthy set of new innovation activities in new products, services and through new business model designs. The fusing of digital and physical for new opportunities is upon us.

So are we seeing the groundwork for a new industrial age where innovation will increasingly play even more of a part, one that needs us to focus on the data, our people and the whole architecture, where the ability to collaborate, exchange, network and decipher what is coming towards you in meaningful ways to turn insight into commercial opportunity seems beckoning.

So is our current innovation systems fit for purpose?

So real-time comes up against old-time innovation processes – something will have to give.

So there is a whole new world of possibilities, a mash-up of the cloud, data, analytics, digital / physical combinations, real-time activities all crowding into the existing innovation pipeline, manually being cranked along. No, something needs to change. We need to really begin to dump these legacy systems for manual innovation and really step back here.

The BHAG for innovation is needed here

We need to take a very different perspective on the innovation process. We need a greater visual control across our organizations; we need to build a completely new end-to-end innovation management system on a platform approach.

We need to collect and aggregate more knowledge, information and data than ever, the complexity will simply grow as we connect more the digital and physical worlds and innovation is being expected from this fusion.

Fusing the parts, forming the bigger picture

We need to give up on ‘hard end of line’ measures and metrics (so anti-empathy) and go into analytics far more, for driving innovation along its new process constantly at its point of need (note that), embrace data, seek and design new deployment models like cloud and mobility, merge the architecture design of the innovation process onto a visualization platform, seek out those that can contribute both inside and outside the organization.

We need to orchestrate, provide stunningly different user interfaces (beyond the Excel spreadsheet please) that can come into you wherever you are, tailored to the individual’s role within the innovation development process at a particular time to make it flexible as an on-demand need, drag and drop knowledge into your space to make it hugely dynamic full of interactions, modular and capable of being extended within our more elastic (flexible) enterprises.

A future full of collaboration built on real-time and valuable insight

The future will be collaborative, full of mash-ups to make innovation happen. Innovation management needs to be in the driving seat of changing in response to the next revolution of digital and physical that is ushering in the next era of innovation.

Who is going to take up this grand challenge or is innovation just going to be lagging behind again as efficiency and effectiveness remain as the big brothers dominating the organization’s thinking ‘block’? We do need a whooping big innovation mashup. By all indications, what is coming towards us we certainly will need some big innovation mashups.

Are you dependent on other’s best practices?

best-practices

I often wonder if “best practice” is actually a hidden drug within our organizations that everyone simply craves to be taking.

Why do so many advisory organizations promote best practice? Simply because those in the organization constantly feel under pressure to demonstrate why they are falling behind or keeping ahead of their competitors.

They crave knowing best practices, but tell me what really is the best practice of others really achieving?

If you are behind, best practice informs you and you go into a frantic mode to try and catch up. By the time you have achieved the best practice, it is simply out of date as those practising this have most likely moved even further on.

If you are the ones attributed with a best practice it can usually create a level of complacency, while you sit back and bask in the afterglow, or you rack your brains to extend this ‘leadership’ position in even better ways, determined not to relinquish this recognition and start to ‘mess’ with these practices.

Often the result is you can lose sight of why you were a best practice as you upgrade to the next level of automation through technology, forgetting that part of the best practice might have been the personal touch and engagements you had with your customers, dealing individually with their specific problems, as you race to automate these, so you can keep ahead in practice.

I argue you have to be very careful with best practice

Firstly organizations need to move well beyond their lazy reliance on best practice comparison and they need to find better ways to explore emerging practices. But that takes many into the realm of increasing uncertainties, and most people and organizations are not trained for this exploration and experimentation, yet it is the place for gaining leading practice.

quote-other-organizations-best-practices-are-not-yoursIt is just so easy to copy, yet how often do we fail to recognize all the contextual factors that went into making a specific set of (best) practices in one organization as those another organization simply believes it can blindly copy?

Other organizations good practice is their practice, in their circumstances and in adapting the practices to suit their market conditions and I guarantee these are not yours!

Your practices are all that matter to your customer, so keep focusing there

Of course best practice has its comparative use to gather intelligence, to gain competitive understanding of where they are in their development. But these are their practices and to simply set about to adopt these as your way forward is just a huge, expensive mistake in many cases.

I believe if you are focusing on the good and emerging practices within your own organization as the area to focus upon, to leverage and understand. Then to measure these with what your customer expects, your market is telling you or your ability to engineer real growth or not. Those become your practices for learning and wanting to improve into those that make your organization really work effectively in its context.

Then applying, experimenting and learning from novel practices that provide growing confidence in creative thinking.

Also give some thought for next practice, those practices that prompt reinvention. They start such totally fresh thinking; they challenge existing paradigms and move you towards considering new business models.

The Cynefin Framework

One framework I strongly relate too is provided by www.cognitive-edge.com with their Cynefin framework. It places ‘practices’ in its appropriate domain. 

Cynefin Revised 1The Cynefin framework has five major domains

The first four domains are our most relevant for seeking out the appropriate practice:

Simple, recently renamed the Obvious space, in which the relationship between cause and effect is obvious to all, the approach is to Sense – Categorise – Respond and we can apply best practice as it is more for incremental, the space where you are working with more of the ‘established’ routines, extracting the efficiencies and repeating established practice.

Complicated, in which the relationship between cause and effect requires analysis or some other form of investigation and/or the application of expert knowledge, the approach is to Sense – Analyze – Respond and we can apply good practice.

Complex, this is the domain, in which the relationship between cause and effect can only be perceived in retrospect, but not in advance, the approach is to Probe – Sense – Respond and we can sense emergent practice.

Chaotic, in which there is no relationship between cause and effect at systems level, the approach is to Act – Sense – Respond and we can discover novel practice.

The fifth domain- The fifth domain is Disorder, which is the state of not knowing what type of causality exists, simply unaware of what you need to do and in which state you should apply. Often people will revert to their own comfort zone in making a decision adding more complexity to the disorder.

In full use, the Cynefin framework has sub-domains, and the boundary between simple and chaotic is seen as a catastrophic one: complacency leads to failure and tumbles into chaos.

Dealing with different types of innovation really works in this framework

For incremental innovation, constant reoccurring stuff, the ‘simple’ domain applies and best practice pushes down on efficiencies and effectiveness, on being consistent with standard processes and clear structures. Always be conscious of the limitations within best practice.

For a more distinctive innovation you tend to move more towards the complicated domain, where experts ‘kick-in’ to help and offer plausible outcomes based on known experiences. You need to listen to conflicting advice and watch out for entrenched thinking so it can be challenged.

quote-this-type-of-innovationIf you are pushing for more radical innovation then it has a higher complexity and risk and falls into the complex domain. The range of options sometimes seems infinite where we explore more through the lens of perspectives and judgement. The outcomes are never easy to predict upfront and you need to keep looking for patterns to emerge and ‘inform’ your decisions. The use of experimentation, gamification, allowing greater interactions and a place you encourage dissent and finally be patient and allow time for reflection. This type of innovation can change the game.

Then we have the chaotic domain, where disruptive innovation tends to sit. You lack any clear ‘cause and effect’ as it is entering more of the unknowns. The key is deciding to act, not from knowing the practice but recognizing it is novel, as you search for what will work, attempt to take back control and provide clear and direct interventions to firstly stabilize, understand and learn from and then further respond to bring it back into some order that allows you to participate.

The appropriate framework of practices and approach are really valuable

This framework offers a perspective that has enormous value as it offers managers a guide in placing different thoughts with different actions. The Cynefin framework offers a typology of contexts to help you sort out a variety of situations in which you might need to make different decisions and then provide what actions to take from the recognition.

The framework looks to place the appropriate actions and decisions into the right context. The framework emerged from complexity theory and innovation falls into this.

I would suggest focusing and developing your own practices is so much better that attempting to ‘adopt’ others best practices.

When you next think of best practice as your answer, come back and reflect on this first, to place the appropriate innovation into the right practice that meets your needs, not someone else’s.

Publishing note:  This blog post was originally written on behalf of Hype and with their permission I have republished it on my own site. I recommend you should visit the Hype blog site where they have a range of contributors writing about a wide-ranging mix of ideas and thoughts around innovation, its well worth the visit.

Exploring the Value Of Your Innovation Capital

Innovation Capital

 

 

 

Following on from my last post of “Place your future bets- invest in Innovation Capital” which outlined the significant contribution innovation capital plays in our economic growth, let me offer some further thoughts on its value to really capture and understand, so we can measure it within our organizations.

We have the three components; of physical capital, knowledge capital and human capital that are the innovation-related assets, these make-up Innovation Capital.

I have been arguing that innovation capital draws from the core of intellectual capital and its suggested (and broadly recognized) components of human, structural and relational capitals or social capital. I have previously discussed this converging up, as the ‘nesting effect’

Innovation capital needs assessing and measuring so we can understand the relationship between this innovation capitals (and its present and future potential) and organization performance. We need to know the innovation capital ‘stock’.

Why, well ‘stock’ can be ‘static’ and we need to make this more ‘dynamic’ so innovation can ‘flow’ from this constant renewing of our capitals and be transformed into new value.

Let me explain the innovation capital stock in (my) five parts

• It is a bundle of the firm’s resources and assets that renders complementary services in the process of new knowledge (innovation) creation and commercialization
• Innovation capital as renewal capabilities of our organizations in the form of producing intellectual properties that offer value and extracting from our intangible assets
• Innovation capital possesses attributes that make it a ‘strategic’ asset with the key lies in specifying the nature and application of these assets in relation to the new knowledge ‘flowing’ into the organization, for generating and commercializing concepts and ideas, into new forms of innovation
• The innovation capital is made up of the ‘dynamic interactions’ between the intangibles employed and ongoing development of these intangible assets.
• It is the ‘effective use’ of all the different kinds of intangibles that contribute the activity into innovation capital.

For me it is these tangible and many intangible assets that fire innovation, they make innovation combustible, to ‘spark’ new value creation.

Innovation will continue to struggle if we don’t understand its capital make-up.

Intellectual CapitalIf we don’t understand where the innovation value resides, we will certainly struggle to continue to build innovation’s position in the organization. Today innovation is still regarded as ‘expendable’, sacrificed on the altar of short-termism.

This creates a growing uncertainty, often reducing innovation down as that no real ‘sense of urgency’ and becomes ‘contained’ in discrete projects, failing to offer that real, substantial, ongoing value for the enterprise.

We simply don’t ‘unlock’ the real value of innovation. If we lack the understanding and abilities to build this sustaining operational capacity for innovation we have ongoing problems.

There is the need as its longer term goal, to be simply fully embedded inside the organization that it ‘resides’ and simply becomes indistinguishable, it becomes the operating core, constantly aligned to the strategic needs and goals. Innovation’s benefits must be outstanding and well understood.

Innovation will remain tentative, always stuttering along, lacking this absolutely organization innovation rhythm if it is not fully understood in where it generates it capital from and what new capital and stock it provides.

Actually most of our innovation capital is learning capital.

grow through learningThe more we strengthen our knowledge and value our people, the more we can generate new knowledge, build greater narratives, deepen discussions, make better connections and build our interactions out across growing communities.

The more we discover, the more knowledge we gain does leads up to determine a potentially better decision-making and value creating potential.

This should, in theory, give greater confidence, both internally and externally, that our invested financial capital is in ‘good hands’.

The power lies in the linkages we can forge, in acquisition, in assimilation and then into eventual transformation, that allows known knowledge to become new wealth-generating innovation.

Our learning capital needs to emerge and dominate future discussions in improving its quality and value contribution. We need to increase incentives for organizations and their people to learn new things or update their existing knowledge.

We need to learn how to articulate knowledge in its acquisition, assimilation and transformation and that comes back to understanding absorptive capacity.

Managing organizational learning and innovation, more ICT is needed.

ICT InfrastructureTo successfully manage innovation capital and understand the make-up of the intellectual assets, the new main role of ICT is pulling together Web 2.0/3.0, collaborative technologies, social networking tools, wikis, internal blogging and knowledge capture, so as to help people share this growing body of knowledge through common platforms and electronic storage.

As our social networks expand they become the vital source for intellectual capital and innovation understanding. These relationships and networks need to be fostered, constantly measured in their value and contribution, structured in ways to communicate and interpret outcomes for ‘directing’ future value creation.

The whole promising ‘wave’ of collective intelligence, social networking and building real useful communities of knowledge is a real challenge today to pull together. It is becoming a crucial factor and investing in the physical capital this needs, does allow for people to share knowledge through common platforms and strengthen the knowledge, with the human capital that innovation requires, to drive real growth.

For instance, EU investments in ICT’s are due to increase by about 25% under Horizon 2020 compared to FP7. This EU investment will support the whole chain from basic research to innovation that can deliver new business breakthroughs, often on the basis of emerging technologies.

We also need to recognize the work-to-be-done, not work already done!

Work to be done is the need for our future growth and well-being to be derived through innovation activities. These so much made up of intangible parts will provide the new wealth of organizations in the knowledge sharing economy of today and the near future.

We need new forms of evaluation to measure the real asset wealth of the organization to understand the points of intensity, their connected dynamics and what is required to reconfigure the changing capabilities and capacities needed to grow in the future. There is a lot of work to be done out there.

Shifting our investments into today’s more valued capital- Innovation

It is how much we are able to adapt to fast moving changes will determine our success. It is the combination of all the sum of our capitals and knowing what factors and assets contribute into making our innovation capital will determine the ‘health’ of our future.

I think it is essential going forward that we need to significantly increase our innovation capital focus, so it can be fully unlocked, so as to release the true dynamics within the system and structures of our organizations to realize innovation’s potential.

For me, Innovation Capital and its make-up is where we need to focus, to understand and invest into. It drives our ability to create and sustain value creation.

Place Your Future Bets – Invest In Innovation Capital

Value of Innovation CapitalRecognizing the value of our innovation-related assets is where the ‘smart money’ should go. To gain growth and to improve productivity is through innovation. We need to translate knowledge into new values.

When you pause and consider the make-up of Innovation Capital you realize it makes such an economic contribution and  in a report from McKinsey & Co, they have set about identifying this to produce the above summary, covering 16 countries, to understand the real value of this Innovation Capital.

These numbers are big and still don’t fully capture everything associated with innovation as much remains ‘hidden’ or ‘attached’ to other activities as well.

We need to shift our thinking on what makes up Innovation Capital

The shift taking place in recognizing that our capital is well beyond ‘just’ financial is rapidly altering organization investment decisions. The McKinsey approach has set about capturing a broader understanding about innovation than R&D alone.

Innovation and its value creation goes well beyond just R&D, it is made up of a broad range of intangible assets that are firm-specific and due to this, they are being recognized as hard to replicate, providing the growing edge over competitors if they are identified and invested in correctly.

In this report they considered the broader aspects of Innovation Capital capturing software, design, market research, training and new business processes as well as spending by governments and through tertiary education in science, technology, engineering and mathematics (STEM) subjects.

The value of this inclusive approach

By taking this inclusive approach to innovation spending they were suggesting allowed them to document better the investments underlying innovation, to see the greater “innovation infrastructure”

We are clearly seeing the continued increase in the valuations given to certain organizations, up to 80% of the value is coming from the intangibles, with the vast majority of our business organizations are really slow in getting to grips with identifying what is making up this value in their premium.

The urgency for us all, each organization, is to identify the investments and the returns as the innovation impact offered by McKinsey’s report is delivering a significant business case for understanding and recognizing the strategic importance of identifying and developing all your innovation capital.

Just go back and re-look at the graphic above for investing in Innovation Capital for its impact and implications for each of us.

Recognizing Innovation Capital is really important

So the make-up of innovation capital is big, I mean really big, this might help generate a greater innovation wake-up call. In a report from McKinsey and Co, called “Innovation matters: Reviving the growth engine” and first presented at the G8 leaders Innovation Conference, in London on 14 June 2013. This report quantifies the importance of innovation in driving productivity growth and sets out the actions that governments and societies can take to build “Innovation Capital.”

The paper offered is stimulating the need for building the “innovation infrastructure” for our growth and as a key capability for our organizations and countries.

Where to start in specifically identifying Innovation Capital?

Within the McKinsey report they break down Innovation Capital into three components. These are:

Physical Capital is formed by investments in information and communication equipment (ICT) and across the countries analysed it represents 16 per cent of the Innovation Capital.

Knowledge Capital is formed by investments that build firms’ intellectual property and brand equity, including investments in computerized information, R&D and marketing investments, as well as relevant research in universities. It represents 60 per cent of Innovation Capital across the countries McKinsey analyzed.

Human Capital is formed by investments in building individual or organizational skills that drive productivity growth. This includes public and private investments in tertiary STEM education, employee-based training programmes and investments to develop organizational efficiencies (e.g., redesign of business processes or review of business models more broadly). Across countries analysed it represents 24 per cent of Innovation Capital.

It is important to recognize that McKinsey has captured and measured these to produce the impressive impact that innovation capital has. Is your organization identifying these for assessing their innovation capital? Most probably not.

Finding our innovation uniqueness

The make-up of our Innovation Capital are unique to each organization and highly valuable, I’d argue the report by McKinsey on its contribution is still significantly understated but a terrific step forward in attempting to quantify it.

It is the pivotal role of people as innovation carriers – their networks, collaborations, knowledge flows, interactions and tacit knowledge – and how innovation itself is a potent competitive force that drives productivity. All this is often ‘hidden in plain sight’ as our people are innovation’s active ingredient, the catalyst that turns novelty into real benefits.

Innovation capital is the big win if we can harness it well.