Understanding Challenges Within Innovation Complexity

Complex adaptive system 1

Termite colonies are a complex adaptive system

We need to think differently about innovation and why it needs complexity and adaptive thinking as part of its design.

Complexity within systems challenge us to think differently, it pushes us to think outside often our normal experiences, to confront and understand and then restructure, often the unordered, into a new ordered.

Organizations are in need of understanding the complexities within their systems far more.

Complexity within innovation is always adaptive.

The challenge with managing complexity is that it is made up of many shifting and connected parts, that form much around interactions and relationships. These new ‘connections’ are shifting and challenging much of our previous understanding, built often on past practice and entrenched thinking.

We need to think differently to generate fresh insights and new-to-the-world innovation and this begins by us ‘seeing’ the potential by unravelling the complexities involved. To seek a more radical innovation agenda you need to grapple with much within a complex system to yield the ‘promise’ of really new and exciting innovation.

Innovation is made up of many connected parts when it eventually combines and becomes one, the finished article or concept.You gain constantly from its combining power. Innovation is highly dynamic (or should be), full of interactions and relationships where the individual and the collective whole, changes as a result of the experiences gleaned from engaging within the process. That is a complex adaptive system.

I wrote a piece a couple of years back, as my initial attempt to explain that innovation is a complex adaptive system. There is so much to add to this but recently I was listening to Dave Snowden from Cognitive Edge and this struck me as a great starting point for many.

David is regarded as an authority on the application of complexity theory to organizations, and I think there is so much to learn from following David and his thinking, I’d recommend it.

Understanding complexity – peeling away some of its layers.

A simply complex systemDavid recently gave a part talk on understanding complexity and how to manage it. He offered these thoughts with my summary of what I heard as my add-ons relating more specifically to innovation.

If innovation is complex, we need to recognize and manage this. They make sense to me in the context of innovation and managing its complexity.

These thoughts from David are in explaining a complex system. They might provide you a better understanding of the complexity often found within innovation and help in your thinking the implications through.

* Enabling constraints – without constraints you simply have randomness, you decide the level of constraints for the level of flexibility you are looking for (from innovation) and how much you are prepared for uncertainty. You need to strive for a ‘given’ coherence and place this within a structure.

* Complexity is highly sensitive to small changes (weak signals are too easily dismissed) – small things magnify to produce (over time) major impact. What seems trivial actually might be highly significant. Think new technology, it is often dismissed as you lack the skills or understanding so you quickly dismiss it. Weak signals can provide the possible future directions you need to orientate around. Identifying the weak signals within the frame of the three horizon methodology, can trigger complexity of understanding.

* Granularity matters – if you make something to big and too connected, you can often struggle to adapt and find solutions. Getting the granularity right is key, so we can see the emerging opportunities and this often means we need to break the big ideas down a level or two, to seize perhaps multiple opportunities as well as allocate resources to ‘bite-sized’ pieces of work. It is from these smaller pieces of work you begin to piece the bigger ‘prize’ together.

* You need sufficient but not excessive gradients- the example David uses is the troubles within inequality. If we all had the same equality we provide little incentive for change, alternatively if we have excessive inequality you begin to get preconditions for revolution and potential catastrophic change. So you need some gradient but not to much. For example everyone aligned with the same values might be a bad thing to do as it destroys variety, or diversity of opinion and conflict and that is unhealthy for innovation. Within any innovation activity some ‘creative’ tension equally can give that gradient.

* Proximity and connectivity can be managed – this is the who and what we interact with, we evolve through our engagements and interactions, these give us our cognitive structure. The key is defining who interacts with whom, not the outcomes. Relationships and networks need encouragement and managing.

* You need to shift from fail-safe design to multiple parallel safe-to-fail experiments – we need to stop trying to work out one (big) thing to get it right, we need to encourage anyone who has a contribution to make, a coherent hypothesis to be allowed to run with it, in parallel for other experiments in a controlled safe-to-fail experiment. It is the patterns of potential success that evolves from all these experiments evolves and can ‘collectively’ reveal an emerging pattern or concept that ‘breaks the mould’, sees new solutions. These can be evaluated in parallel to detect something new and value or  presented to others so they can evaluate the emerging patterns of discovery to judge and take forward or not. This more discrete project thinking deploys resources better, gives greater agility and adaptability. You set out to stimulate evolutionary possibilities.

* The inherent uncertainty of complex systems means we have to navigate a fitness landscape of possibilities – You are looking for the evolutionary potential from dispositions (the inclination towards something, the attitudes and consequences) and the propensity (the natural tendencies) to give emerging patterns of beliefs, often called peaks and troughs. Knowing your fitness landscape for innovation is important as I have previously suggest and laid out a possible pathway. You can use landscaping for capturing individual stories or needs to find solutions that are more relevant to those (their) specific needs. Jobs-to-be-done comes to mind here and mapping solutions to closer needs that derive from exploring real stories, through ethnography as an example.

Each of the above has significant innovation implications

If you treat complexity as something you must overcome, reduce it or try to ignore it, you miss significant opportunities within innovation. You can’t force it. To exploit innovation you need to manage it, coax out the possibilities, managing it well, not as simple problems but within a better understanding of a complex system.

It is deciding what complexity within the innovation design and then set about building and placing the right capabilities where they matter.

Avoid the “Business as Usual” Mentality for Innovation.

business as usual oxymoronWe cannot enforce ‘business as usual’ as the modus operandi for innovation to make it ‘fit.’ We are faced with the very opposite in today’s world, the need to ‘embrace’ reoccurring change. We need to manage complexity within the systems and we do need innovation to exploit this to our advantage.

To achieve this we need to obtain as much diversity and non-linear structure in what we do to allow recognition of all the possible options. We need to move well beyond the obvious and move through the complicated, into the complex and once in a while cross over into the chaotic nature of innovation to extract all the innovation ‘juice’ possible.

We need to think differently about innovation and why it needs complexity and adaptive thinking as part of its design.

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End note and further reading: The Cynefin Framework of David Snowden and Cognitive Edge is most valuable to explore. I discussed this from an innovators perspective recently in this post that was describing the value of the Cynefin model towards innovation.

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The Use of the Cynefin Model for Innovation

Cynefin Revised 1

The Cynefin Framework is a sense-making one and is registered copyright to Cognitive Edge

Firstly a very brief explanation of the Cynefin Model and why I find it highly valuable for innovation.

Innovation has many characteristics of a complex adaptive system as I have crudely  attempted to explain here.

The three primary states within the Cynefin framework are Ordered Systems (including Obvious and Complicated), Complexity and Chaos.

Order is split into two, as this handles a key difference in human knowledge between those states, where the cause and effect relationship is obvious and those where it requires greater analysis or expertise.

Exploring a process of emergent discovery for innovation

Most innovators are working in and certainly far more familiar with the ordered domains for ‘obvious’ innovations that extend, enhance or evolve. Equally they understand their place and contribution to be growing in their comfort in the part they play in the more complicated domain, where expertise, dedicated focus and specialization is often required. The ‘new’ in innovation becomes greater in new designs, changing functionality, different technology or significant improvements on the existing that involved greater research and development. Here within this ordered domains the innovation activities are a lot more predictable, more straightforward in their management. This is more about being trained, using expertise where needed, applying skills, making appropriate decisions, having established structures, processes and measurements and then systematically working towards clear objectives.

When you move across into the complex or even chaotic domains this takes on far more new learning, more situational assessments, looking and combining capabilities to manage emerging patterns and knowledge, applying experiences, looking for diversity of opinions and searching for new wisdom or insights. Expertise and experience, collaboration and relationships need significantly leveraging. You often diverge / converge constantly as you work through the potential answers. The mindset here is different and it is more one that is based on detection. Innovation is far more demanding, pushing frontiers, exploring discoveries, dealing in a series of exchanges and recognizing emerging patterns to piece together as real ‘new to the world’ innovation activities.

Let’s describe the domains within the framework

In the obvious domain of ordered, you assess the facts, categorize them, then apply established practice. The system is well set up and you work through this in very controlled ways, you tend to adhere to the practices, always looking to improve and apply best practices. You sense- categorize- respond as your working through approach. Most of our incremental innovation ‘sits’ here as extension to what we have established and where most systems, processes, technology understanding and controls are already established, all we are required to do is manage within a defined set of controls (constraints).

The complicated domain is where you tend to need a greater expertise, initially you might have multiple answers to your emerging concepts and you need to work through a better cause and effect so all involved can see the relationships. This is often termed the “known unknowns”. You sense- analyse- respond. This domain requires degree’s of expertise and investigating various options and working eventually through the trade off’s. If a decision remains elusive then perhaps you have a more complex issue.

In the complex domain you need to really work to extract the right answers. This is regarded as the realm of the “unknown, unknowns” and where much of our organizations have to work. Why simply because situations and decisions are far more complex as much is swirling around in unpredictability and flux. You are looking far more for the emerging patterns and you should avoid the attempt to impose a course of action or place ‘increased’ constraints here, you should allow the pathway to reveal itself. For innovation here, you firstly probe- then sense- and then finally- respond. A solution or breakthrough will emerge and then you can begin to impose growing constraints, looking to move unordered thoughts or patterns into more orderly ones to evolve into final or potential solutions. Avoid imposing order too early as this can preempt the opportunities for these ‘greater’ patterns to emerge. Leaders need to set the stage, step back, allow patterns to emerge and then determine which ones are more attractive or desirable. Design thinking works well in this domain, where you visualize, synthesis, create narratives, build on learning stories, explore multiple prototyping and safe-to fail experiments.

When you are faced with the chaotic domain, this needs rapid response. Searching for right answers can waste time, this is the realm of the “unknowables.” Cause and effect are impossible to determine as no manageable patterns seem to exist, only turbulence, challenge and threat. The need is to quickly act, gain a early sense and respond. It tends to be the domain for top-down decisions, there is limited time for seeking input in ‘normal’ ways. This is the space where you ‘impel’ or ‘impose’ innovation. Run a crisis team in parallel with an innovation solution solving team. Have one team managing the immediate to manage constantly changing issues incoming and another team for working exclusively on exploring doing things differently to move from this chaos back into complex. Your innovation solutions have to counter the disruption or move beyond but the toughest part is ‘getting others to let go’. This requires clear leadership and direct communications to attempt to impose immediate actions and re-establish order.

There is a five domain, shown in the middle and that is disorder, not knowing which domain you are in and we often struggle to recognize which domain we want to be in for innovation and this disorder stays with us, until we impose order, structures or clarity to the thinking. The Cynefin model is highly contextual for innovation in my opinion.

Finally, to complete the understanding, the Obvious domain is next to Chaos because complacency (the extreme of Obvious) can all too easily produce catastrophic failure.  Thus that boundary is represented by a cliff, or more technically as a catastrophic fold. You can find yourself moved from a orderly, steady state, the business that is obvious to you and then thrown suddenly into chaos, by sudden change. You fall off the cliff.

Recognizing and applying the different practices to each domain

Another important distinction within the model is around the type of practices each domain seeks out. In the obvious domain best practice rules, you are looking to constantly improve the innovation activity with repeatable, efficient structures and processes. Whereas in the complicated domain it is the search for good practices, the expertise deployed should bring this into the thinking.

On the other hand in the complex domain you are searching for emergent practices, as you clarify, evaluate, probe and sense. Finally in the chaotic domain this is more the application of novel practice, as you are ‘reacting’ to numerous situations where judgement and experience are applied to find original solutions to tackle mostly unique situations where you are learning as you go.

 You achieve a greater depth in discussions and sense-making around different innovation needs using this framework

Cynefin thus contrasts how things are, with how we know them, with how we perceive them. The overall idea is that the more you allow these three to interact with each other the more likely it is that your actions with be authentic to the situation.

Cynefin goes well beyond a categorisation model that many try to use it for; it is as about dynamic movements. So in the model shown above the prime dynamic is show by the blue arrow.

Sometimes you can move between all four domains and this is shown as the green line (in the above depiction of the framework) and as innovation tends to be more in the complicated and complex space, you ‘operate’ more in these two modes.

So where does the model come from? Dave Snowden from Cognitive Edge. David is regarded as an authority on the application of complexity theory to organisations. David offers so much that is relevant to our work within or for organizations, to listen and learn from.

Innovation is complex and works well within the Cynefin model

Cynefin Revised 3 Ordered UnorderedI like this as a discussion and resolution solving framework for innovation, as innovation can move across and between complex or complicated at different times, if it is more than ‘obvious’ incremental innovation. It places order into the unordered.

New ideas of innovation emerge in the complex domain and are often dependent on the constraints you impose to ‘extract’ and ‘yield’ choices.

You ‘toggle’ from exploration to exploitation across domains. The more you relax the constraints will allow new possibilities to emerge. You want to eventually bring the unordered more in control and become more ordered.

From time to time the dynamic within an innovation concept may have ossified in which case a reset is need; a shallow sudden dive into chaos. You are looking to bring the innovation out of this chaos domain as quickly as possible and impose some order (or constraints). Only when change is no longer significant it is it shifted to Obvious (formerly Simple) as the domain where incremental innovation resides as it relies more on repeatable structures and established practices.

We need to recognize different types of innovation need to be managed differently

I believe truly new (to the world) innovation is in the complex domain and should be treated as such, often we don’t. We need to start with very open minds and then bring the thinking down. We try to apply our existing practices and experiences best suited to regular or incremental innovation, found in the complicated and obvious domains, where practices constrain the idea more than we often want but sometimes need, as the ‘demands’ are imposed. We start to immediately probe and not take the necessary time to analysis. We reduce the potential for greater innovation impact in applying constraints.

When you look at the four domains described here think incremental innovation for working in the obvious, distinctive innovation for the complicated domain, radical or breakthrough for the complex domain and disruptive innovation when it comes to the chaotic domain. Think disorder when you have no established innovation system in place, just expecting innovation to happen!

Each of the above has significant innovation implications

The Cynefin model helps determine the ‘type’ of innovation and its complexity and the constraints you impose upon ‘it’. Recognizing the complexity that can hamper effectiveness to innovate is very different from our usual managing of effectiveness and efficiency. Innovation requires boundaries but it needs the appropriate thinking, analysis and probing, this framework provides the ‘mechanism’ to promote this.

You need to build flexible systems that adapt, are dynamic and responsive and need that bandwidth for innovation exploration. It is a series of challenges evolving to be exploited, not reduced or eliminated.

Cynefin Revised 12 Simple depictionUsing the Cynefin model allows you to begin to think about the appropriate innovation and what is needed in practice and thinking approach and allows you to begin to be prompted in what the possible constraints are to allow you or not to explore innovation in these different domains.

To exploit innovation you need to manage it, manage it well, not as simple problems but within a better understanding of being a complex system, to extract the most from the investigation and discoveries.

It is deciding what complexity your innovation might have within the innovation design and then set about building the right capabilities and framing these appropriately, where they matter.

My end notes: I have drawn from different material associated with the work and explanations of David Snowden and Cognitive Edge extensively. My innovation interpretations are built on this growing understanding and by using this model in my innovation discussions, by seeing its value and power for myself and through others. I just hope I have given justice to this fantastic model here.

BTW- The name Cynefin is a Welsh word whose literal translation into English as habitat or place fails to do it justice. It is more properly understood as the place of our multiple belongings. It is pronounced cunevin.

 

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Are our organizations ossifying their innovation?

Innovate or dieThe balance between risk mitigation and being equipped for risk readiness is still an ongoing struggle to balance for most organizations.

There is still a continued reluctance for exploring new radical innovation opportunities and although organizations ‘talk’ growth, they continue to struggle in achieving it through new innovation.

The incremental commitments to innovation still rule the day to move growth along. Until a new sustaining confidence returns to our economies, risk mitigation dominates as markets continue to be more volatile and unreliable in predictive data and executive sentiment remains cautious.

Our organizations are looking for a higher certainty of return and seek sometimes endless validation and justification before they commit, even to small incremental changes. It is no wonder incremental innovation dominates in our innovation decisions; it is where reality sits for many. Are we heading off in a bad innovation direction?

Solidification in organizations seems to be moving towards simplification

As this incremental set of attitudes solidifies within organizations, have you noticed a growing trend of recognizing the processes and systems built up are actually more complex and creating ‘drag’ on performance demands? There is a move to greater simplification that strengthens the incremental mindset. We are perhaps ossifying innovation in our organizations if we elect to take this simplification route.

Risk readiness might be taking a bigger ‘back seat’ than we expect. This has significant implications as organizations continue to lose the ability to be ‘growth ready’ to execute on any sudden change of executive direction if market condition suddenly change. Many are losing the ability to innovate beyond incremental approaches. It might catch them out badly if markets suddenly change and they are faced with a very different set of challenges demanding a more radical set of innovation solutions.

What signals are showing through?

Often we read of the likely demise of innovation but I think it’s ‘nature’ is changing. At the top of our organizations there continues to be this higher dissatisfaction with the value and returns within innovation and this is possibly being addressed in different ways down below in the organization, to compensate and appease.

Risky projects for the majority are not the place to blaze away in their careers; they want the known reward from keeping ‘steady’ the ship and being part of the incremental growth movement, to be seen as good operators working at constantly offsetting any risks, delivering what is wanted to be heard, not the bearer of bad news.

Do you spot this trend within your organization or industry? That growing movement where the ones intent on developing the routines that increasingly are only focused on incremental improvements are in the ascendency? Those driven by pushing hard for operation productivity to the exclusion of a number of traits associated with more radical innovation or potential breakthroughs.

Driving innovation through productivity has a real drum beat

Are you in that place where there is this constant attention to improving practices continuously, to the exclusion of enquiry and only investing in the capacities that supports the delivery of this drive for greater productivity. A place where organizations are constantly seeking out those best practices, by wanting to eliminate variation, believing to simply copy others gives them the answer.

Do you gain that sense of impatience to evolve and develop in your own unique ways, as you attempt to short cut your own development in this blind copying? All around you feel that growing sense that the movement of six (sic) sigma is resurfacing, tapping into this quest for greater productivity and the ‘richer’ innovation potential seems to diminish?

When you have this incremental mindset then you become dedicated to standardization, you focus on real-time performance that can be measured and judged, you promote a more careful evaluation of innovation practices, striving to eliminate variances, you become relentless to reduce the unpredictable activities.

It becomes the prevailing organization mindset, the radical innovator drifts quietly away, disillusioned with where it is all going. Left to the gods of others making market change.

Organizations are more comfortable with improving productivity

There has been so many years of cost cutting, the consultant is also repacking it’s services from the present col-de-sac, largely played out, by housing organizations needs under the appeal for this quest for simplification.

Recently I was reading a report from http://www.sourceforconsulting.com that simplification is the next step in the evolution of productivity. The argument goes productivity is linked to growth and as our organizations are still very determined to do more with less, rather than simply less, the rise of rationalization grows and the demands to tap into this gathers pace.

Mitigating risk is the easier option

It is the attraction of combining this prevailing risk mitigation mindset with the idea of standardising and simplifying, validating through increased data verification and mining, striving for benchmarking and searching for best practices seems to go nicely with placing the innovation bets on increasing the incremental activities, all to the detriment of seeking out more radical innovation. Less risk, steady growth, fits with the short-termism of the board. Reward and remuneration becomes increasingly geared to this.

The vicious circle of meeting the board’s demands for immediate return simply tightens the noose and the longer-term building of capabilities for new innovation continue to slide, pushed off to yet another day, somewhere in the future. Does that really matter to the current board executive or his external board? Managing today’s volatility and uncertainties means risk mitigation is dominating. Let tomorrow be managed by someone else.

Are the majority of our organizations becoming the great sustainers?

A recent article by Gary Pisano on the HBR blogs was arguing for the defence of routine innovation. He suggests the vast majority of profit from innovation comes from the stream of routine, or sustaining, innovations that accumulate for years.

He mentions Intel as a great sustainer, with its value proposition of higher-performing, higher-margin microprocessor chips has not changed. Growth is slowing but Pisano’s argument is Intel has generated cumulative operating income before depreciation of $287.4 billion. That is a lot of cash generation to keep investing or distributing back to the shareholders.

Equally Pisano argues Microsoft that started as a great disruptor but for much of the recent years it has following a sustaining path, defending its position. Of course it has perhaps missed out with this prevailing ‘mindset’ on some really key growth areas, yet it has earned $325 billion over three decades.

The article is equally suggesting Apple is a sustaining, more incremental organization today. It has generated $150 billion is cash flow since 2011. The emphasis is perhaps less on the next big disruption and more on aesthetically pleasing designs and versatility in their devices.

Are we leveraging to existing strengths and not grasping new opportunities?

Gary Pisano’s point is as an organization becomes well established, its innovation strategy needs to understand how to leverage distinctive existing strengths to generate and capture ongoing value.

It is about recognizing and organizing innovation around the repertoire of existing strengths to extend increasing the value from innovation, to play to your existing strengths. Or is it?

Are we not putting off our future by not investing in the future? How can we strike a balance on this and what should that allocation of resources be like? What needs to be brought in to add to the existing repertoire of skills?

Is the innovation message today becoming more deliberate in its design?

I wonder what is around the corner. So is the message today the one of trading off the risks of radical, disruptive innovation for the more incremental, sustaining innovation? Is this the period of evolutionary innovation, less revolutionary?

Of course, we all know that oblivion is potentially ‘just around the corner’ as there are many competitive forces at work looking to disrupt.

For me, it does seem far too many of our organizations today might be far too focused on protecting and defending their existing positions, they are failing to extend beyond a core. Are our organizations working incremental innovation to the detriment of more radical and riskier innovation? Is that unhealthy or simply prudent?

I fear the innovation balance seems not right.

Of course the strategic view of sustaining innovation while you explore and experiment the next big potential wave is the best approach but I tend to feel the dominating mindset of risk mitigation today, is driving many to simply just become incremental innovators only and that has a growing risk attached to it.

You continue to lose the skills, the understanding that more radical innovation is very different in time, in placing your resource allocation and building all the different skills and experience you need and these need to be consistently worked at. They can’t simply be turned off and on when changing market conditions are suddenly confronting you.

If incremental innovation dominates we lose the future

If one type of innovation prevails and begins to dominate, the risks of not providing for a healthy future increases, we are ossifying our innovation. We begin to lose our abilities to be responsive and flexible. We lose our agility to respond to changes in our markets.

What is always needed is to strike a good balance in our innovation portfolio, between the immediate and the future.

We need to not forget that we all must manage in all three innovation horizons to have a (greater) chance of achieving a really sustaining future.

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The Ability to Move from the Existing to the Preferred

The Innovation PathOne of those defining extracts I came across many years back, as it is one that has shaped much of where I believe innovation needed to go, let alone where I believe it still does.

It is a pathway I want to continue to travel along and will constantly try to encourage others to equally take the walk.

I was working through a set of presentation files today and came across this extract again and thought I must share this. It ‘rings’ true as much as it did those years back.

Strategy is useless without innovation; innovation is directionless without strategy”.

Below is an extract from Reinventing Innovation by John J Kao. For me, it is sadly as relevant today as when I first came across it, some years back. Are we making real progress in our innovation activities?

Read it slowly, can I ask you to linger over its implications, its questioning and its suggestions. The extract offers much for any innovation pathway we might be considering.

The Innovation Pathway

Innovation fits with a designer’s definition of design: the ability to move from the existing to the preferred.

Innovation is the path by which we seek the future we prefer. Not the future that we’re going to get, but rather the future we want.

Today, there is a vast gap between the aspiration to innovation and its reality. Innovation practices that are in step with the speed, uncertainty, and volatility of the new economy are still a promissory note, in this day and age.

Until we have practices that go beyond brainstorming on the one hand or simply tweaking a new product development process on the other, we will never arrive at the promised land of strategic innovation. Few if any can point to systematic practices that realize corporate innovation in a reliable and continuous fashion.

If you take innovation seriously within an organization, it touches every aspect of how business is done. It’s about leadership, organizational structure, knowledge management, corporate purpose and values, norms regarding collaboration, and strategic foresight processes.

Innovation touches everything. An innovation system requires an examination of the organization in a holistic kind of way, which is why most organizations have a tough time grasping the agenda.

We have to talk about the hard work of creating deep capabilities within the organization, capabilities that once established with tremendous effort don’t go away and confer competitive advantage over long periods of time

The economies of scale organization is hierarchical and control focused, as is the mindset of its managers. Economies of discovery, on the other hand, which in my opinion are characteristic of the new economy, work quite differently.

Instead of efficiency, we strive for originality, for what will change the game. Instead of hierarchy and control, the focus of management must be on collaboration and enabling what is new.

There must first be an intimate connection between strategic thinking and innovation. Strategic planning must co-exist with strategic foresight. Innovation becomes an answer to a set of strategic questions. Strategy is useless without innovation; innovation is directionless without strategy. Second, we must develop robust innovation processes

We also need a new sense of the scope of innovation, to look far beyond products and services of seeing things and shifting perspective, so that a new vision, a new set of possibilities can emerge.”

Extract is from “Reinventing innovation by John J Kao, The Idea Factory.

This simply needs re-reading and recognizing what John said then, still applies today. Do you agree?

 

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I wonder who is withering on the innovation vine?

Dying on the grape vine 1This week I tuned into the Pipeline virtual conference for product development practitioners and gained an encouraging feeling that innovation is progressing along nicely. Packed all within a day there was plenty of material ‘fodder’ to feed off of and learn from.

A really good conference but what quickly followed was a strong dose of that withering on the innovation vine.

I read two consulting surveys around innovation

I’ve been suddenly pulled out of my virtual bubble back into the harsh realities of where innovation really is. Just simply how innovation is struggling and that lies far more at the top of our organizations than below, those below who are simply trying to ‘get on with the job’ but with at least one hand (or even two) tied behind their backs.

I have been reading two sets of observations, one from Fahrenheit 212, the other from Innosight and my mood began to change. I’m suddenly back in reality where we have this huge gap between those ‘working’ innovation and those at the top simply not engaging with innovation or still failing to understand it or even failing to connect the dots.

That growing gap at the top in what they need to do to make the connections both inside and outside the organization to manage the changing landscape. One that still suggests we have this consistent failure to align the strategic and innovation activities and provide a more balanced orientation in the mapping to different horizon thinking that is needed. It seems perspectives are totally out of whack.

The Fahrenheit 212 Post on their recent observations left me perplexed.

PerplexedFirstly Fahrenheit 212 asked 100 chief innovation officers a set of questions around their getting their innovation projects to market. They claim that forty-five percent of respondents said fewer than 10 percent of their projects make it to market.

Fahrenheit claim that was an “eye-opener for understanding the challenges that innovation practitioners have,” where Fahrenheit was suggesting 60 to 70 percent of incremental innovations should be the success rate.

As this view came through the Washington Post under “Corporate attempts at innovation are overwhelmingly dying on the vine” I was not able to view the actual results directly or more of the thinking that went into this and can’t find any further reference on this on their website besides a Facebook entry. I’d like too.

Why? – well surely there are significant differences between projects being managed or piloted at the CINO level than passing through the organization as supportive and incremental? Yet until I can understand the context of these ‘statements’ it is hard to judge this piece of information and its real importance, presently it lies as a “oh yeah”. As a starting point what is judged as an innovation project from the CINO’s perspective versus the everyday innovation occurring. Are these numbers so “eye opening”?

The whole position and value of the CINO is certainly up for grabs and in a ‘forming’ stage. One really good point made as a quote by Jon Crawford-Phillips, a partner at Fahrenheit 212 was this: “The primary value of the chief innovation officer is the connectivity between the company’s growth strategy and the decisions and focus of the senior leadership team and the translation of that into an innovation agenda”.

Crawford-Phillips was recommending corporations don’t align innovation with their financial interests and suggesting establishing this. He comments: “There’s a strategic way in which they allocate resources to core innovation, and there’s clear metrics around the performance of core innovation and a clear understanding of the financial impact of that innovation on the company’s balance sheet.”

I struggle with what I should be getting out of this ‘report’ as Fahrenheit 212’s suggestions because if they are determining clear metrics in core innovation performance and a clear understanding of the financial impact on the balance sheet then it is no surprise innovation practitioners have difficulties in getting initiatives and projects through organizations. Can projects that are in themselves innovative be measured on the same metrics as established known ones?

The comments reported from the survey leave more questions than answers and has this set of observations really helped ‘advance’ innovation? Maybe more will emerge. It seems to fit perhaps with their Money and Magic message.

On the other hand Innosight and their Strategic Readiness Survey really is the actual eye opener.

Eye opener 1Innosight offer an executive briefing on their “Strategic Readiness and Disruptive Change” and this survey throws up some serious worries for me.

The report prompts deeper thinking on how organizations are really having difficulties in transforming themselves with all the disruptive change going on around us all. A real eye opener.

Innosight’s summary provides a good snapshot of the issues:

“Disruptive change is accelerating, driven by the rapid emergence of new technologies, the blurring of lines between industries, and competition from both traditional and non-traditional players. As a result, corporate lifespans are shrinking”.

“How does the shifting landscape affect enterprise strategy and corporate innovation efforts? To see how organizations assess their ability to anticipate and respond to disruptive change, we (Innosight) recently surveyed more than 800 executives across 20 industries. The results shed new light onto the challenges and opportunities that leaders face in crafting strategies to steer their companies in both the near and long term”.

Top-level findings included:

  • Fully 85% of respondents say their organizations need to transform in response to disruptive change – yet only 49% say that feel very confident or confident that their organizations are prepared for transformation in 3 to 5 years. That number drops to 42% in a time frame of 5 to 10 years.
  • Large companies face an even greater “strategy confidence gap.” 83% of respondents from companies with over $1 billion in revenue agreed with the need to transform, and only 36% say they are confident to do so in a 5 to 10 year time frame.

The confidence gap suggests that organizations lack both the long-term orientation and the tools to plot long-term strategy. The survey bore this out:

  • Only 12% of organizations have a formal growth strategy with at least a 5+ year time horizon.
  • The remaining 88% either have no formal growth strategy or it is shorter term.

This short-term bias has implications for the ability of companies to develop disruptive or transformational innovations—the kind that open new markets and attract new customers—and which typically require a longer-term perspective.”

What a difference a well-structured survey and report can make.

I would recommend taking the time out to read this report. It signals much of what is so wrong at present in the sacrifice of the future, even the eventual existence of the organization in years to come.

This report seems to reflect a broader trend that this frightening “strategic confidence gap” is a huge one, where senior executives are seemingly being increasingly caught up in the short-term demands.

They seem to have scarce time to re-equip themselves, let alone their organization, for the changing landscape and are simply ‘kicking the bottle down the road’ and taking the pay packet that goes with short-term performance. Surely this has to change? Is it so bad?

This report is indicating it is really bad.

I liked the heading to each part of the executive briefing from Innosight as they do summarize the challenges that need to be faced and resolved.

  • The Confidence Gap: The Desire – But Not the Ability – to Transform
  • A struggle to Keep Pace : A Sense of Falling Behind the Market
  • Strategy Shortfall: Growth Plans Focus on Near-Term
  • Process Shortcomings Undermine Long-term Planning
  • Technology and Changing Consumer Preferences Expected to Be Most Disruptive
  • No Lack of Ideas, But Difficulty Getting Through Innovation’s “First Mile”

The last heading is a clear nod to the topic being explored in a new book. Recently Scott Anthony , Innosight’s managing partner, wrote a book “The First Mile: A Launch Manual for Getting Great Ideas into the Market”. That first mile—where an innovation moves from an idea on paper to the market—is often plagued by failure, in fact, less than one percent of ideas launched by big companies end up having real impact. The ideas aren’t the problem. It’s the process.

Gaining value from consultants insights if it enters the public domain

Thought leadership viewWe should get solid value out of research or insights from any consulting research if it is published. So two of our leading innovation consulting companies, Innosight and Fahrenheit 212 approach knowledge sharing in different ways.

Innosight provide a good depth in their report, although it is perhaps light on final takeaways and conclusions, whereas Fahrenheit 212 reported comments are just, well, simply ‘light’ and lacking the depth I would expect from them. At least their survey should link into their own report. This I simply can’t find.

I finally reflected on what makes good thought-leadership from consulting practices
Take a look at this from http://www.sourceforconsulting.com/whitespace/

What makes good thought leadership?

“The clients of consulting firms are inundated with information and analysis from every direction. Unquestionably, the vast majority are binned or deleted instantly”. So what are the factors likely to attract attention,  Sourceforconsulting.com suggest the following:

Differentiation – will the potential reader pick up and begin to read this piece of thought-leadership? (If it is actually available even!)
Appeal – does the writing style and presentation encourage the reader to keep on reading past the introduction and beyond? Where do they go from this?
Resilience – will the reader feel confident in what they are being told? Whether a client buys into the idea a consulting firm is trying to put across depends on the evidence.
Prompting action – ( I kept all the guidance within this section in, as it is relevant to the two reports I have focused upon) Will the reader do something because they have read this report? Good thought leadership takes the reader beyond the ‘that’s interesting’ stage – it gives them the tools and inspiration to identify issues in their own organization or to begin to address a pressing concern. We ask whether the next steps for the reader are clear. We also check that the material isn’t a poorly disguised sales pitch which would undermine its credibility and chances of prompting action.

A tale of two both working innovation consulting.

Two innovation consulting firms offering up their insights and I feel the one from Innosight is simply much further down the thought- leadership path, in its linkage of its practice and report around disruptive change. It ‘calls for’ and ‘prompts’ action.

Perhaps Fahrenheit 212’s report should have been rooted far more in what it does, that is identifying, developing, designing and implementing profitable new products and services and then framing this within their survey remarks, as this is the space they play in and by all accounts play well. It would have made better sense to me.

I think we all need to think about why innovation might be withering on the vine. We all need to ensure the contributions we make, into conferences, summarizing reports, writing blog posts or being engaged in innovation activities, as consultants or practitioners that we do not lose sight that innovation is still struggling to make headway in the ways it should, with the appropriate messages getting delivered effectively and sometimes we all often miss that ‘line of sight’ on that.

Any thoughts on the observations from the reports or what they contribute into our thinking around innovation?

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Traversing across into horizon 2 for new breaking innovations

The Conflict Sapce of Horizon TwoWithin our ‘business as usual’ attitudes lie 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 in the ‘here and now’ to defend what we have and what we know. A potential ‘big mistake’

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.

Spotting signs of innovating decay

Within the Three Horizon framework for innovation 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 point as it is the place for transformation to take shape and form.

We do need to challenge short-term thinking and balance this with 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 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.

The risk of internal executive ‘attack’

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 Collision Zone (h2) of the Three Horizon Approach

The Collision Zone (h2) of the Three Horizon Approach

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.

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.

Recognizing our present day thinking are at odds with future thinking

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.

We must move our thinking beyond the ‘here and now’ and push it into the future if we want to transform our innovation and that takes a very different mindset and where the three horizon framework can help significantly in balancing any innovation portfolio.

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Make Virtual Room In Your Innovation Pipeline

Pipeline ConferenceSo what are you doing this Friday, June 6th 2014?

Fancy joining me and up to 2,000 others that are expected for an Innovation virtual conference.

One that has been constructed around an agenda, made up of a  seemingly good mix of practitioners, a key-note or two and product development experts working through the end-to-end product development process, or selected bits of it, in a one day event.

Crossing over the crossroads of conferences

Innovation conferences are for me at least, at a crossroads. I find many jaded, struggling to justify the costs and commitment of time we need to put in to participate, often in one way dialogues.

I would argue many have become simply established production lines, where they plug-in the theme, contact a few speakers and then set about finding sponsors and marketing ‘the hell’ out of the events. The costs of these are directly relevant to the pyramid structure of the commission or fees earned by those involved. I simply react badly to these. They are increasingly offering a diminishing return for me.

I know for some, conferences allow them to escape the confines of their offices and immediate problems and console and commiserate with others, swapping cards and hoping someone they run into offers them a passport to better places. Equally I do appreciate a conference can shake the cobwebs from the brain but so many of these lack real learning value and they do ‘suck up’ a lot of time and I believe are getting increasingly expensive to justify.

Then you have (thankfully) a group of experimenters that are becoming more ‘sensitive’ to the attendee and really designing different experience levels, using technology sensibly. I relate too these far more, as they are delivering not just a name or a brand but the ‘promise’ of some decent knowledge.

Certainly the old conference model, located in central cities or great resort getaways that attempt to offer a spattering of ‘big name’ speakers or brands to draw you over three days, is struggling to keep the numbers up and being totally reliant on organizations, quietly accepting that their people need the occasional escape.

Yet it must be increasingly hard to justify sometimes up to five days, when you include the travel and conference time together, for often a very dubious end result is ripe for significant disruption. For me, running my own business, I find it really hard to justify these conferences, with what it entails in time, cost and commitment. I do not see the return on the total investment.

We need better solutions that not just reduce the amount of time down to participate in these but rapidly increase the learning and value for a lasting contribution, replacing the ‘sound bites’ with ‘building blocks’ of knowledge that stays with us, to put to good use.

Using technology to save you time – plugging into the best on the conference block

Within these conferences that are tapping into technology I’m enjoying far more the one hour webinars, turning more and more away from physical attendance conferences, as they suck up really significant time and expense when you factor in travel time, hotel and air fare, let alone rising conference fees getting increasingly complex and expensive.

Give me more of the ones that if structured well are more than helpful, if not then I can simply ‘click off’ and leave and get back to work. These are so much more targeted and productive in use of my time.

The one that has the highest appeal for me is the concept of the virtual conference.

I’ve tuned in to one that I believe has always something to offer and give a take away or two and that is the PIPELINE virtual conference. This has as its host sponsor Planview and well supported by a  good range of event sponsors keen that the content is relevant to product development professionals ,their invested space.

This gives me a significant return on my time. Firstly, it is virtual, so I don’t have to pack a bag, jump into a car or catch a plane or two, stay in an unfamiliar hotel room, and lose two extra days (at least) just too physically turn up and participate.

I can avoid adding to the nine out of every ten conferences average, where I have left disappointed or frustrated by choosing between multiple events, often choosing the wrong stream, or expected something a little bit half decent from a speaker. How often have you been forced to listen to them droning on about their solution, their specific insight that offers such little relevance outside their own organizations environment or been paid to offer yet another platform for extracts from their last book.

Virtual conferences give me control over MY choice.

So PIPELINE allows me to stay home, and watch a conference unfold in a fairly nicely organized virtual space. It’s FREE after you register and the conference itself is available on demand for TWELVE months after the ‘live’ event. I click on or off it if it is not relevant to me and here I can go back and revisit it at another time, so I can take that incoming call.

So if you can’t ‘attend’ the event this coming Friday June 6th, you can catch up on all of it at any time that works for you over the next twelve months. I think last year I went back and revisited selected parts four or five times to really grasp the points made.

So why not find the time? You need to register and here is the link

I think this is well worth registering and attending if you are involved in product development, wanting to extend your innovation understanding and plugging into some good speakers drawn from 3M, PDMA, Swarovski, Stage-Gate International and NYU Stern and others for different views and  hopefully some promising keynotes.

The promise from attending this virtual conference according to the sponsors, is gaining some immediate learning that can become actionable strategies and you will get access to the year-round Product Development and Innovation Resource Center or library where content gets consistently updated and refreshed.

So to register go here. So why not come on in, enjoy a virtual conference from the luxury of your office, home or as you are on the move, going about your business?

Virtual conferences are more of the future. Cracking the networking part is the key. So I stay more than interested and positive that these events will evolve and become more of the solutions to our ‘investment’ in time and payback in relevant, applicable knowledge.

I’ve enjoyed PIPELINE previous so why not join me and more than 2000 product development peers globally at the PIPELINE 2014 virtual conference on Friday, June 6, 2014 and available throughout the year on (my) demand, in my chosen time and no cost to me! I like the sound of that.

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