The Real Race is to Invest in Knowledge Assets and Grand Innovation Challenges

Connecting Knowledge and Grand Challenges 1We need to connect our knowledge and put these assets into solving ‘grand challenges.’ Lets focus on the bigger picture here.

Developing our knowledge and then putting it to good use gives us the potential for securing a competitive position- that goes without saying, perhaps.

Living in Europe offers us enormous history, diversity and a constant respect for the make-up of its different cultures. Europe is a very proud continent forged from this history of competitiveness but it is grappling with its place in the global world where others seem to have greater present day advantage.

For many, Europe seems stalled; in jobs, growth and its future space, it seems not so sure on what and where it can effectively compete in a complex and challenging world. There are so many competing voices within, draining vital energy, while others outside Europe are getting on with the job of equipping themselves for the changes taking place to effectively compete in today’s world.

The forging of the European Union needs more ‘heat’ to meld into the force that many want, yet every time it seems to be getting to that required temperature for effecting a real change, someone or something comes along and throws ‘cold water’ on it.

“Herding cats”

Perhaps that idiomatic saying of “herding cats” summarizes many of the discussions and debates that often occur all over Europe, offering up their part of the solution to what seems to me, increasingly an intractable problem. There is this ongoing attempt to control or organize what seems intent on staying uncontrollable or chaotic.

It just seems incredibly difficult to get the required direction or united determination to channel ‘our’ energies, perhaps impossible is a growing feeling that is fuelling even more the nationalistic pride built from centuries of disputes and disagreements in alternating alliances of the day.

Europe in whatever eventual union or collection of entities needs to stop focusing inward as that seems simply not to help. It needs to look outwards and recognize the challenges it needs to go after and organize around, that shift the ground it competes uon, so it can offer the foundations to build from for many of these individual voices to unite to move all those concerns that need clarity, work and a sense of clear direction. We are focusing on the right aspects to unite behind, to identify with and combine our unigue resources.

At present we are all pulling in our own directions, to secure our own piece of the declining economic pie and that is undermining any ability for improved performance.

“Fiddling while Rome burns”

You do get this sense we enjoy “crisis and opportunity”. The institutions and bodies that are set up to lay out the broad direction within the EU, start with good intention and then occupy themselves with a host of unimportant or less important matters and neglect priorities during a crisis. They get lost in the details, determined to defend and spend the budgets and lose sight of the need for clear commercial or social outcomes.

The source of this “fiddling while Rome burns” is the story that Nero played the fiddle (violin) while Rome burned, during the great fire in AD 64. The flaw in this was there was no such instrument as the fiddle (violin) invented in first century Rome. Equally the events of a fire have been constructed in all the rivalries and conflicting accounts that came after. I get a sense of this today within the EU, we are failing to orchestrate even the violin player, everyone is playing their own tune!

Europe stands at a real crossroads today, where it travels determines its future

It can stay locked up in conflicts, often chaotic decision-making, in its many disputes and simmering rivalries or it can learn from those events across its history and find a different path.

I doubt that path is integration of countries, even freedom of movement or common currencies or a given language. These are ideals suffering from imposition yet we can integrate and combine in ways that allow us as individuals to prosper and grow but also to unite in projects and across challenges that deliver a more promising future.

Grand challenges we can unite behind.

These comes from the challenges that should be of the uttermost importance to our future well-being:

1. The long drawn out integrating the digital infrastructure across Europe to bring down the present barriers and allow less of a divide across Europe.
2. The ability to connect across a European energy grid that delivers on security, and is moving purposefully towards clean and efficient alternatives that are economically viable alternatives.
3. The formation of a scientific research community
4. The harmonization of intellectual property to accelerate invention not just protect it
5. The overhaul to our educational system to deliver the required skills we need for the future not based on the past.
6. Putting in place the roadmap to renewables that give investment confidence
7. Adding even more momentum towards key-enabling technologies
8. Having a reusable framework that reduces the ‘throw-away’ culture and mind-set
9. Tackle health and wellbeing in clear, coordinated and integrated ways across all.
10. Redoubling the efforts on food security, sustainable agriculture and land and sea management through a greater agricultural revolution.

I could add a few more but these are all ‘big bites’. We should possible go back to the approach to EU flagship programmes where the big agenda gets the required focus from politicians, bureaucrats, business and our institutions, at every level and engaging in meaningful ways with our broader society, then we are achieving more in ‘common cause’ and integration than where we have been heading recently.

We should push the EU agenda towards delivering integrated models to offer new value and opportunities, the innovation part, as central to achieving the need for new growth and jobs.

These big challenges give us our future, they break down the barriers, they open up our minds to what is the real borders to protect, to push out towards in different ways If we can unlock the barriers and ring fencing on many of these that are the blocks today, we are laying in the foundation for growth and jobs.

There is nothing new in this appeal but the speed of change occurring outside Europe requires us to shift internal disputes and channel this energy into resolving the big challenges.

Europe needs to shoot for a different moon.

Structural issues are longstanding, we are attempting to protect far too much, we are falling to move towards a ‘creative destruction’ where innovation-lead solutions provide the better alternative in growth and challenge We link to these common causes as they benefit the individual, as well as the communities we are in (national, local, scientific, educational etc).

The push for a common market of ideas and knowledge that are allowed to flow

I detect some positive movement in seizing some of these outstanding big challenges in the way the European commission is being set up and structured. The new commission structure is pointing to big issues; it is veering away from past integration mantras, wanting to deliver on some of these challenges suggested above.

I just hope it does not extend the list too much or we go down the path of dilution, spreading and stretching our capabilities and resources too thin and ending up with the usual past compromises, all wrought out in eleventh hour late night deals. Of course this is perhaps wishful thinking and certainly early days.

Can we move out of our fiscal consolidation mind-set? We must

As we continue to have fiscal consolidation, we get rising Euroscepticism. We nibble away not so much at the edges we are actually attacking our core and this is where we are facing the defence of knowledge assets and finding ways to promote by, perhaps, uniting behind our bigger EU challenges.

So where does innovation fit, I’d say front and centre. Every conversation in every boardroom, in every political meeting, at each EU summit and discussion, it is the outcomes we await to hear. These need to be far more centred around innovation in outcome, not just in nice declarations with little behind them but in cohesive plans that move us towards this agenda of tackling the ‘Big Challenge Agenda’

Scaling and building innovation waves

We need to scale and create the positive waves through innovation. Reality is not in what is going on inside Europe, it is what is happening elsewhere. It is the organization of those knowledge assets to scale and develop the waves of innovation that Asia and America are clustering around in better ways than in Europe.

These can be seen in numerous ways as geographical regions all look for ways to become the dominant force for innovation. Asia, especially China is testing that existing dominance and Europe and others in the West need to embrace that challenge, not attempt to defend against it in legislative efforts but in this necessary knowledge asset re-equipping.

Keeping innovation high on the EU agenda but in new bigger ways

Innovation features higher in national policy than ever before in many parts of the world. Let us all hope Europe does not drop the innovation ball, but cutting its commitments to what has already been hard fought over, delivered in the Horizon 2020 programme.

Equally let’s not dilute its effort and whittle away its value in thousands of small, perhaps meaningless gestures built on political threat and fragmented thinking. Getting Europe moving again will need a much bolder vision and then stay focused on funding it if it links into these grand challenges in clear or valuable (experimental) ways that can be a catalyst for others to pick up and run with over the next mile, as innovation is not a sprint, it is a marathon to run, at this big challenge level.

Who is that knocking on my door?

* China has set itself some ambitious innovation targets, in its production of patents, in producing more PhD’s in science and engineering than US institutions or European ones and twice as many undergraduates in these fields than the US.

* China is going about outpacing the US in investments in research and development, it is growing R&D expenditure by 15 to 20% per year, not just to catch up but to drive innovation into its future.

* Asia and America invest more than Europe in R&D at the ratio of 3:3:2. The technology-intensive activity in the Asian region is fast approaching that of North America and Western Europe.

* China’s invention initiatives are producing rapid results as the government seeks increasing actively in cooperation’s with its Asian competitors. Asian countries are mutually fuelling one another’s innovative success

* The precise impact of Asia’s IP expansion is impossible to predict. But its transformative potential is obvious as the commissioners of the patent offices of Japan, South Korea, China and, to a lesser extent, Singapore and Taiwan meet increasingly to define and coordinate their intellectual-property (IP) policies although a number of territorial disputes and political divides do often get in the way.

Each of these are examples are building the future knowledge assets to unlock innovation potential.

* America equally continues to work through a clearer innovation framework than I feel we in Europe seem not to have, or it seems incapable of delivering in our current fragmented view of innovation understanding. We want to spread innovation either too thinly or distort its value and meaning. We need a clear overarching innovation message.

* Take the reports from the “NII Innovate America Council on Competitiveness” or the White House view on “A Strategy for American Innovation” as debate documents or guidance indicators that offer an overarching view of how innovation needs to work and on what is needed to achieve and maintain a competitive position for America, written by both Business leaders and Government officials.

So what’s next?

The European Union has consistently failed to exploit its potential for innovation-based growth. Europe remains less inter-connected in critical areas due to political grandstanding and catering to vested domestic interests.

Does Europe lack the capacity for change as we constantly fail to convert much that seems promising, we are often not commercializing on all our hard work? Others pick up the baton and make the ‘risk’ investments off of the work and initial investments in Europe.

We constantly get caught up in the politics of the day, that seem to continue to divide and rule in old fashion ways, yet technology, science, and innovation are moving at a force and speed we are often guilty of not appreciating its impact or wealth-creating prospective. Innovation does not respect borders, it seemlessly moves across them but we need to forge the infrastructure to allow it to flow in more efficient and effective ways.

It is high time we did understand the real value of innovation, it ‘touches’ us all, we can all ‘feed off it’. We need to mobile around innovation and find the right ways to release our knowledge assets that are residing across Europe in a myriad of guises, waiting for the organizing forces and challenges to unite behind and solve. We have the latent capability clearly.

**Note : A really useful source of knowledge is this overview of the National Science Board’s Science and Engineering Indicators 2014 highlights some major developments in international and U.S. science and engineering (S&E) that explores many useful indicators in the race of Science, Research and Technology. It’s worth a read.

Making those increasing connections

I am always looking for innovations connections. This last week I’ve been working around some different themes that grew in interest the more I investigated them, both in their importance and messages.

I’m undertaking a rather exciting approach to describing innovation, within a collaboration venture, that gets more exhilarating and inspiring as we explore, clarify and document. Regretfully I can’t share this here at present but I certainly will when it gets to that point of ‘release’.

Some of the different areas or themes I’ve been investigating have flowed from one set of enquiries that have taken me into another and then yet another. These simply get my innovation juices flowing and really are allowing me to make so many new connections. Here is just a few of these in this last week that have emerged from some of my researching that provide a host of thoughts:

Leaders & Laggards

In this group of investigations I started in trying to gain a better perspective of the discussion of leaders and laggards and what differentiates them. Timely to these investigations has been some recent studies by Capgemini Consulting and IESE Business School with a recent leadership study “Managing Innovation: An Insider’s Perspective”

I’d suggest the slideshare presentation is well worth taking some time out to view and understand as it covers views from those leading and managing innovation in their organizations and how they think about the innovation function http://tinyurl.com/c9o7cuw

Then I have been reminded of the continued great work of Chris Zook and James Allen, both partners at the consulting firm, Bain & Company, in their article “The Great Repeatable Business Model” http://tinyurl.com/d483eqq

The message of differentiation and the level of focus on clear specific areas of innovation and its management makes a real difference for separating leaders and laggards.

Those that endure and adapt

In the article by Chris Zook and James Allen they speak of differentiation that tends to wear with age and often the real problem is internal. It is complexity and in this a complex organization forgets what it is good at, it proliferates, it losses key people, it moves away from its core business, it losses focus and it begins to have that ‘great disconnect’ between upper management and the front-line employees. It seems to me the organization just simply begins to break down and lags even more in performance and returns.

They go on and suggest a lack of consistency begins to kill the economies of scale and equally retards the organizations ability to learn that adds up to them struggling with increasing complexity and fading differentiation.

I was looking for some of the enduring points of what needs to be put into place. This was offered “When a company internalizes a set of principles, the message no longer gets garbled. A shared point of view, core beliefs, and a common vocabulary improve everyone’s ability to communicate and foster self-organization.” They go on and suggest “this increases the speed of business, you capture more growth opportunities ahead of competitors and accomplish more per unit of time.”

I also liked one comment they made that “up and down the organization, information slows and grows distorted.” I would suggest without a clear knowledge capturing and dispersing structure for information this is not the only thing that gets distorted, often it is the real values of the innovation activities themselves. Those products or concepts that emerge eventually as completely out of shape from what was intended initially, due to this complexity within the decision and approval process, become totally different before something eventually gets ‘out of the door’ in finished design. So much gets lost or ‘distorted’ along the way and the end result becomes far too compromised on the customer need it was intended to resolve.

Innovation effort may not be worth it

Equally I always enjoy the thinking of Vijay Govindarajan and in a recent article along with Manish Tangri entitled “Why that innovation effort may not be worth it” http://tinyurl.com/847ah4c they discuss two key factors of motivation and competence and how you can put your organization and its leaders to the test.

They ask two great questions “How hungry are you for innovation?” and “Is the initiative set up for success”. I did like the point made of “a leader provides direction under ambiguity” and how many of our leaders would be truly comfortable in doing this?

Looping back we need to ask  how far are you from your core?

We come back to increasing complexity, straying from our core, communicating mixed messages, showing a clear lack of decisiveness.  If your innovation message is not sharp and convincing up and down your organization, or even understood by your customers you eventually lose out, you become even more of a laggard and allow others to slip away into clear leaders.

Part of our need in organizations is to stop breaking down the parts, layering on that increased complexity. We should be designing the innovation framework and system to clarify and inspire more. We need to reinforce more on where the key differentiation points are. We need to be sharper in our understanding of true differentiation and stick to this.

The key here is the real need to simplify and focus down within organizations.  Also we need to seek consistency wherever we can, in communications, in our strategic intent and in our dialogues to clarify. We tend to do the opposite, we make it too complex and this is killing innovation, killing growth, killing organizations. Above all we need to work up and down the organization with some clear, compelling messages that give clarity, allows for the necessary linkages and make sure the parts reinforce one another.

The last part of my walkabout in my research was “Creative Destruction”.

I recently wrote a blog “The Innovating Era: Creative Destruction or Destructive Creation?” http://tinyurl.com/dyy964s and in particular the destructive creation part and how this was destroying more than what was coming in its place. I finished with this comment: “All I hope is it will let us make sure we put the emphasis back far more on the “creative” innovation part and not the ‘destructive’ nature we have moved towards recently”.

Chris Zook has just written on this “When Creative Destruction Destroys More than it Creates” in the last week in an HBR blog http://tinyurl.com/7pe8qvf and makes an important point (in my mind) that “the extinction of once-great innovators is less often caused by technological or market evolution, and more often by self-inflicted wounds and slow cycles of decision and adaptation.”

He brings us back to the point “it is internal complexity that turns companies into lumbering dinosaurs.” The suggestion is, if we can’t keep ourselves clear on simplicity and focus and really tackle complexity as this is the “silent killer of profitable growth,” and “the greatest inhibitor of adaptability”.

Leading the way does falls to leaders.

My last extraction was from another lead and laggard viewpoint:  “A leader doesn’t tell people what to do. A leader helps people understand what needs to be done and brings the people and resources together to make it happen”

We need to focus on our greatest strengths but to do this we do need to understand them. It seems to me, so many leaders surprisingly don’t have a clue on how and where innovation can contribute in lasting differentiation, where the growth should be coming from or how to galvanise the organization to be simply on the same page to make sure it can happen.

We need some consistency in how we set about innovation.  Sometimes what simply scares me is that this basic task is often missed off the leaders agenda to actually make sure it is happening, often because they has not been fully involved or understood their role in this.

The Innovating Era: Creative Destruction or Destructive Creation?

Creative Destruction

We have been entering some perilous times recently and I can’t imagine when Joseph Schrumpeter outlined his groundbreaking efforts for explaining “creative destruction” he or anyone else, could image this being flipped around to what we are facing more today, that of “destructive creation”.

Schrumpter saw “creative destruction” as the renewing, through new innovation, society’s dynamics that would lead into higher levels of economic development and welfare. At the same time recognizing that this destroyed a few of the incumbents to the benefits of many more newcomers and increasing value creation for broader society.

Today it seems we are caught in the reverse of this- the process of “destructive creation”- where it benefits a few rather than the many. This sets out often to destroy or greatly diminish the usage value of existing products and services before it is optimal to actually do so, and in the process incurring often significant costs not taken into account at the time. These unforeseen issues have consequences that negatively affect parts of society not foreseen or contemplated at the time.

The shift has placed the emphasis on the role of destruction rather than creation in driving innovation activity. This is getting uncomfortable, innovation then becomes not so good for you perhaps? This is becoming the game for a few to make money, to corner markets, to dominate and wanting to achieve monopolistic positions and not so worried over the wealth creation aspects of creating jobs, building communities, cherishing certain values.

We need to be on guard in understanding the fundamentals within innovation as it should advance for the good of society, not be actually working to its detriment. Actually who is benefiting from the distribution of new wealth? The developed world is seeking desperately ways to regain growth but it needs to be more equitable, not in the hands of a few that determine our choices but increasingly seem unaccountable for their actions.

Firstly a couple of examples of “creative destruction”

A really good one was the arrival of the personal computer, the economy significantly profited without significant economic upheaval. It raised productivity and ushered in significant value for many.  The typewriter of course quickly became obsolete for this “creative destruction” and certainly the organizations investing in this lost out.

Another one has been the general advancement of technology. For example within the telecom sector where we were able to benefit from massive increases in managing data, calls and volumes around the world to connect us all up into a global economy. Old switch boards, chunky mainframes and old communicating technology were thrown out and this advancement in technology allowed the scarce resource of people to be employed differently and more productively. Technology has provided huge advancements but it also has its downsides.

The problem both of these examples have though is they are technology lead. Technology has been racing ahead. With the active encouragement of “policy innovation” and its stimulus we have been building more complexity as technology became more powerful. Complexity is everywhere. You add in scientific advances it has been a powerful combination effect of promoting social change- often radical social change. All positive, or has it been?

Today, we are dependent on complex technological systems to manage much, often incomprehensible to most if not all of us. Let me give you a couple of examples of the growing downsides we are seeing.

Let me provide some examples of “destructive creation”

Destruction form of creation

Derivatives- that dirty word that we have been struggling with over the past few years, that has been causing much within our current global downturn. At its heart was a system no one quite understood that created mortgage leverages, financial convertibles and it was in this proliferation of complexity and uncertainly these highly leveraged investments had become totally incoherent to us. The “destructive creation” part then kicks in often in unexpected ways with tragic consequences for many in lost jobs, lost homes, lost lives and lost investment money for  many, while a few made massive gains.

Asia was another example; its lightening speed in its growth had lead to a recent financial crisis simply triggered by capital account converting that shifting into a myriad of different financial instruments. The downside of that had not been anticipated in policy intervention and we had a significant scale of financial destruction that was not creative but destructive in its effect to the economies for some time. Again many people lost out, for some, recovery from this effect never occurred -it changed their lives, often to start again.

Although we are told there are sound risk models in place to assess and antiscipate, we certainly can’t look upon the promise from these with the same naivety in the future after a number of recent events. Much seems unpredictable in hidden consequences. But I would ask “have we lost the plot a little here”, perhaps we can’t really predict and control anymore, when the complexities we have built still continue and add even more layers. We need to accept more ‘destructive creation’ will occur.

The destructive effects presently going on in Europe

Let’s take Greece and its ‘melt down’ of the past twelve months. Could we have predicted the massive social unrest and serious economic decline in the approaches taken by the parties responsible for managing an orderly recovery?  How many times are we hearing “structural adjustment” to cover massive upheaval and watching a civil collapse happening on front of our eyes. Thousands of previously healthy businesses in Greece are being starved of finances, of demand and caught up in such social upheaval. This is destructive creation for the many who have got caught up in the ‘collective adjustment’ applied.

How will the Euro shake out in the coming months when our leaders just seem unable to get their heads around its complexity? This is a proliferation of complexity fuelling uncertainty. Is this because we have been great inventors and innovators or poor at working through all the consequences as analytics alone can’t explain these things in coherent ways, we just watch “destructive forces” being applied in the name of social and structural adjustment sweep away whole swaths of creative good as well.

The pursuit of growth and wealth is fine but are we balancing the conflicting values, consequences and upheavals well enough in the equation, otherwise it tips from this “creative destruction” over into “destructive creation” and that is not a healthy place for innovation to be.

The obsession with innovation- myself included!

Presently our Governments are obsessed with innovation- it sometimes feels it is the only game in town for future growth. Let’s just keep adding novelty and ever increasing value to get our economies going seems to be the mantra.  The problem is we seem to be destroying more than we can build at present, yet a ‘few’ gain from these seeds of “destructive creation” while a majority don’t. We need to flip this back to “creative destruction”.

How much of a society cost are we prepared to pay? Should all this be laid at the door of innovation? We need to inquire about, to explain and understand these forces, both the positive and negative far more. You can get to a certain point where you hit innovation saturation and we will begin to reject it unless we see its value invested within our community, not in others far away.

The replacement rate is speeding up

The other part of “destructive creation” is the attention we are all paying to the replacement rate. The way we discard our mobile phones, cars, household goods and creative increasing ‘toxic’ waste has its destructive creation part. These were foreseen, even have been actively encouraged to promote our economic well being but are they?

I know Steve Jobs and what he built at Apple is regarded as a beacon of success but there is a darker side to this. High rates of innovation, often not truly needed, can be disruptive to the larger society as a whole. A few jobs, many outsourced into low cost environments is leading to a jobless growth in the rest of the industry, it is destroying the usage value (useful life left) of existing products to the benefit of the few, rather than the many.  Some might call this a “shutdown game” establishing conditions that negatively affect values of other products, or is that still called offensive marketing, knowing exactly what the customer needs? I’m not 100% convinced.

Shareholder value is our focus point but what about the shut downs, those old, empty, rusty building that seem to be increasing not decreasing. We are faced more with de-industrialization issues than seeing re-industrialization coming from the present ‘destruction’ forces unleashed upon us all today. What is the cost of disruption and destruction of whole communities in social costs, in our investments for the future when we can’t ‘feel’ or see the benefits of “creative destruction” emerging?

There are many industries that start out thinking they are on the path to “creative destruction” but somewhere along the road got flipped into “destructive creation”. Often this was not the intended path but it became the consequence. Adding more just reinforced the greater destruction leaving it less creative, except in pockets of expertise.

Pressures suddenly built. Competition fell away, they went into troughs of uninspiring innovation for some time. Consumer software upgrades come to mind here, killing off perfectly good software to force us into upgrading but actually pushing us to search for alternatives, killing off useful gained knowledge and continued utility. Where is the cross over point in “creative” and “destruction”?

The quicker we adapt, the sharper we suffer declines somewhere else- technological choices and social consequences- new gadgets vs. decline in privacy for example. Yet the total industry consequence of one party dominating in “destructive creation” is only seen that much later on when the total decline cannot be stopped. It is often not one parties fault unless they are deliberate in their design but we are losing the ability to understand all the consequences of decisions, with unforeseen knock-on consequences .

For instance, if our banks don’t change as society is perceiving they should, and the policy makers seem unable to work through the complexity of this level of change, then society has two choices: remain with the present system where a few seem to gain over the majority, or seek out a change in the financial lending system so society again puts back “creative” at the front of “destruction” to benefit the broader community.

Let’s be honest, the banking industry has not been so innovative in many ways, besides enhancing wealth creation by the use of financial instruments or just to constantly sustain the existing ‘world order’. Will an alternative to our existing financial system evolve and or disrupt, but at what destructive cost?

Disconnects are all around.

There is, when you look around, a lot of seemingly partial and disconnected aspects to our advancement. Where are we in our debates on climate change, stem cell research, toxic chemicals, landfills and plenty more.

How will we manage the feeding of the world in years to come? How will we manage the old and sick. How will society re-integrate growing groups who are getting disenfranchised? All of these can be destructive or built on constructive ways that ‘create’ orderly change. Yet, they seem bogged down in complexity, opposing forces and we are not breaking through these in new order ways. We somehow must.

There are always it seems contesting sides and consistent daily arguments from all sides in complex arguments about how the world would work and why their solution provides the answer. The problem is we simply don’t know. We seem to be losing comprehension of the bigger picture. I’m not sure when you try to describe the big picture it really is so coherent and that is one of our big problems.

Issues are just far too complex.

We are facing more uncertainly and incoherence than ever. Should we call a moratorium on innovation or is it just invention? Can we afford too?

It is interesting observation, we do seem to have moved back to enjoy narratives, myths and cult stories more than in the past, is that a yearning for something from the past in our  lives where one person tells a story that just made sense as it seemed full of wisdom and real good for many?

I think we, as humans, have been reduced down and until we can regain mastery over the complex, needing a structural and societal adjustment or we otherwise will continue to suffer the consequences of “destructive creation.” I think we might start yearning for the good old days of just “creative destruction.” Is technology leading and we are lagging? Can we regain control?

So some commentators have suggested that we have to reawaken our imaginations and really think deeply about our values. Then innovation can perhaps return to being context-specific working in positive enhancing ways to improve society as a whole and not be used for a selected few. All I hope is it will let us ensure we put the emphais back far more on the “creative” innovation part and not the ‘destructive’ nature we have been moving towards recently.

Certainly inspired and some points drawn from a paper “Destructive Creation and the New World Order” by Paul Harris & Daniel Sarewitz

Those disruptive moments when you simply need to let go

Emotional attachment prompts some incredibly strong bonds, a host of clear affections and different reactions when it comes to our favourite brands or products. When something suddenly ‘disrupts’ this, it triggers a set of mixed emotions that shakes you and stirs up different feelings that take some time to re-order in your mind. I try to seek understanding and then simply have to let go, even when they so often staring you in the face. Sometimes you still don’t want to finally let go until you are ‘hit’ by such a disruptive event.

The recent Kodak moment is one of those

One of those has happened to me with the filing of bankruptcy protection under Chapter 11 for Kodak. For so many people those “Kodak moments” make up such incredibly important parts of our lives. Stuffed under the beds, in boxes, in cupboards are those images of youth, family, important occasions and holidays that sit happily in the back of our minds waiting to be prompted by those images captured with the help of Kodak.

Hindsight and that regrettable smugness, that seems to always emerge.

I’ve been reading in the past week or two about all that might have gone wrong at Kodak and you feel that certain smugness that hindsight often gives us. I wish all that I read would make it so simple. I’d argue you should ‘walk in someone else’s shoes’ before you rush to offer reasons and cause. In Kodak’s case such a fundamentally different technology was unleashed, the ability to see what was coming towards you at such a rush and from so many sides was never easy and I’m sure they tried.

Disruptive technology can be subtle as well as prominent in its impact. Confronting something so enormous in a society’s movement to this change would challenge anyone. Technology, especially digital technology, has been such a whirlwind of ‘creative destruction’ taking Blockbuster, Borders and other film producers that were caught out in this- Ilford Photo in 2004 & Agfa in 2005. All I know is we can expect that many more will be caught in the new technologies ‘destructive’ path.

Process technology is struggling with the rapid changes

Process technology is under enormous threat. Not just Kodak but similar transitions are being managed (or not) by newspapers, book publishers, movie studios, broadcasters, record labels although some of the issues are different it is technology, new technology, that is reaping the destruction. Yet the core is stronger than ever- capturing moments digitally, storing and using information and pushing entertainment in new ways.

It might be also premature to fully write off Kodak. It has this protection and from this a certain time and space to restructure and by all accounts, it has a technology portfolio potentially worth billions. To remake itself though, is going to be really tough, I grant you that.

We all have great emotional attachments

I can think of three really important ‘shock and letting go’ moments for me in recent years. Kodak being the latest one, the other two, for me, was Swissair, the icon of everything Swiss and F W Woolworths, or “Woolies” a real icon for the Brits.

Swissair was special for me

Swissair got so caught out after the terrorist attacks in September 2001 as it was in the middle of a massive expansion plan and was suddenly hamstrung with debt and a wrong strategy of expansive exposure. Bad ideas, poor top management left the airline in an incredible state of providing large sums of cash to their pilots to purchase fuel at foreign airports. It shocked the Swiss, it shook me also as this was the one airline I had real emotional attachment too when it ceased trading in 2002.

Living in Saudi Arabia, then followed by Kenya and travelling to some less secure countries in Africa and the Middle East, Swissair stood out like a beacon. One you could run too every night, come rain, sun or attempted coup attempt that seemed to occur all too frequently, in the 1980’s, whenever I travelled in these regions. That tail fin seemingly always illuminated to show the national red flag with a white cross (a bold, equilateral cross) in its centre. On board Swissair simply conveyed those Swiss values such as “personal service”, “in-depth quality” and “typical Swiss hospitality” and “reliability and dependability,” offering a safe haven.

Letting go was hard. I’ve never had the same emotional attachment since with its revised Swiss International Air Lines and part of the Lufthansa Group. I let go of a strong emotional attachment.

Good old Woolies.

I grew up in the UK and Woolworth’s was essential in my life. You entered the store confident you would find that something you needed and many things you didn’t but ended up buying. With over 800 stores at its peak, Woolworths was very much a part of everyone’s lives on the High Street. You got your basic school supplies (pens, paper, ruler), sometimes a bargain item of clothing, basic house-ware but for me, its magic was the ‘mix and match’ sweet counter. Any selection of sweets for the same price and all you had to do was select them and then take them for weighing. Did I love that, my parents I think less so, although I can often remember their hands ‘snaking’ into my sweet bag pulling out their favourite sweets well enough.

So when Woolworth closed, some real emotional attachment suddenly detached and floated away into the memory.

Kodak is up there in emotions for me.

It simply has played a role in my life, my family’s life throughout most of the 20th century. Those slides, those prints hold our most treasured possession- our memories. I’ve already lost far to many in my countless moves, rashly thrown away. Digital images just do not seem the same, no feel, that tactile effect. Digital certainly triggers reactions but not that moment but they are certainly easier to store. But for me nothing evokes more emotion than a faded, slightly out of focus picture that you are forced to focus upon to make out the details.

Would I have preferred these on digital, perhaps, but having that print in your hands, passed down from parent to parent or from a friend who took the picture, not to post it on Facebook for all to see but to hand it to you, so you could both relive that moment and what it meant, a tangible connection- a real provenance.

Emotional attachment is important for brands to build into our lives.

As we work through innovation we often forget the emotional aspects of people, emotions and relationships. Today Apple stands out in achieving that. One real trigger that Kodak prompted in me was revisiting the ten commandments of emotional branding suggested by Marc Gobé as they need to be revisited when we go about our innovating business for business, products and services.

Ten commandment of Emotional Branding

  1. From consumers to people
    Consumers buy, people live
  2. From product to experience
    Products fulfill needs, experiences fulfill desires
  3. From honesty to truth
    Honesty is expected. Trust is engaging and intimate. It needs to be earned
  4. From quality to preference
    Quality is the right price a given today. Preference creates the sale
  5. From notoriety to aspiration
    Being known doesn’t mean that you are also loved
  6. From identity to personality
    Identity is recognition. Personality is about character and charisma
  7. From function to feel
    The functionality of a product is about practical or superficial qualities only. Sensorial design is about experiences
  8. From ubiquity to presence
    Ubiquity is seen. Emotional presence is felt
  9. From communication to dialogue
    Communication is telling. Dialog is sharing
  10. From services to relationship
    Service is selling. Relationship is acknowledgement

Based on the book Emotional Branding, written by Marc Gobé and updated recently as “Emotional Branding: The New Paradigm for Connecting Brands to People” as fully revised paperback edition.

This is a terrific list about brand feeling which can be defined as peoples emotional reactions and responses to brands. These brand feelings also relate to the social currency induced by the brand which can be positive, negative, intense or mild. Identification is still so important for lasting relationships between company and customer.

So why do big companies suddenly fail?

The reason is that while big companies are often good at fostering “sustaining” innovations – ones that enhance their positions in established markets – they are generally hopeless at dealing with innovations that completely disrupt their market. They fall into that trap of consistently looking at solutions through their lens of the market; they want to always put existing assets into the new business. They fall victim to their history and this baggage becomes an increasing liability that gives huge drag at the very time you need to be bold. This is their emotional attachment.

Schumpeters “Creative Destruction”

When you have something iconic, full of emotional investment, something that defines an industry, standard or practice, it simply is not easy to let it go. Companies can in theory live forever but today if you are not willing to cannibalize yourself, it does seem others will do it to you.

Applying Innovation today is often like being in a fight to the death or struggling on a path to survival, it is a constant march searching and sensing for possible change points, investing in the creation of new and often untested ideas, to learn and discover and to shed those that can’t match this new ‘creative destruction’ going on around us. Innovation is absolutely essential so we have to embrace it, like it or not in what it disrupts that is all around us.

Kodak was well aware of the future; it failed to confront it with a strategy that needed to be more ‘transformational’, ‘revolutionary’ or ‘evolutionary’. Sustaining innovation must be either ‘discontinuous’ or ‘continuous’. Today it is expected, big companies simply disappear if they don’t do great things, executed well and on time to stop destruction hammering at their door but please don’t tell me this ‘letting go’ of what we have is easy or simple, it is not. It is full of emotion.

The reconstructive rides we face.

Sustaining does not come from incremental innovation; it comes from embracing amazing things and letting go often faster than you like in what you have built up in legacy and getting that right is really, really hard. No wonder there are more and more successes coming from start ups with no emotional baggage, they don’t need to deal with these harder emotional issues.

Emotional attachment, we all have them and to simply let go is not so easy and this should not just happen when we are facing those disruptive moments, we need to equip ourselves a lot earlier. The issue is seeing the challenge early and plunging into it head first, confronting it, taking the wild ride that comes from such destructive forces and hoping you come out the other side better. I think there are going to be more and more of these ‘destructive to reconstructive rides’ I feel in our present challenging times. Sometimes we simply have to let go.

Hard times need a plan, based on what-survival?

I was looking through some ‘sage’ advice from McKinsey on managing in a crisis, in really hard times, and one really got me thinking, so I thought I’d share this.

“Use the hard times to concentrate on and strengthen your competitive advantage. If you are confused about this concept, hard times will clarify it.

Competitive advantage has two branches, both growing from the same root. You have a competitive advantage when you take business away from another company at a profit and when your cash costs of doing business are low enough that you survive in hard times.”

This challenged my thinking of competitive advantage but then again hard times certainly do questions all our thinking. I always felt it was the uniqueness within, in what you offered, that separates you from your competition. This alters that perspecitve.

It seems this piece of advice boils down to the hard dollar gained by showing advantage within the market place- where it really counts, in fighting for every sale by being able to make a profit or simply cover your costs to simply keep going.

Isn’t innovation simply stripped away here-lost, forgotten, ignored, abandoned? Just thrown overboard along with any branding and this seems so stark or am I missing something here? What happens when markets come back? Maybe you have survived and you pick up the pieces. Do you agree this is where competitive advantage lies?

Perhaps this is ‘creative destruction’ and ‘innovation productivity’ in its rawest form? See my recent article on ‘seeking innovation productivity through creative destruction’ on this.

Any thoughts?

Seeking Innovation Productivity through Creative Destruction.

The whole issue of innovation productivity is getting more and more one of the key arguments for re-gaining economic growth. The problem becomes the real impact of ‘creative destruction’ that can often go with this.

I recently wrote in a blog (http://bit.ly/mXZjC3 ) called ‘the Risks of Dampening down Innovation Productivity” that with contracting economic performance, innovation performance suffers as well. I’d like to look at a few of the hidden or even darker sides to this, not because it is simply a Monday blues sort of thing, but there are growing implications if we don’t clarify why ongoing innovation investment is really needed and what it can often cost on society.

The tough economic times we are presently facing

We are faced with some tough times; markets are contracting, business performance is struggling to maintain its previous levels, there is increasing argument we are heading for a double dip recession, although I feel we are already in this. Jobs are tough to hold onto and even harder to find.

Presently economic policy is driven by the need to hang on to what we have got. Is this the right approach?  Does this really deliver a growth strategy that generates new jobs or simply try to hold onto the ones we have? Many people feel the later and anyone in a job that feels vulnerable or concerned for their immediate future, welcomes any economic stimulus that helps protect them.  The concern though is the ill wind we all feel, blowing in from the east and its global competition effect requires us to become more productive to compete. We can’t stagnate. We can’t simply tread water.

We need a clear set of growth strategies not just stimulation packages

For a growth strategy, needed for attracting new jobs it is going to be tougher, far more politically unattractive. Many of the bigger organizations recognized within our economies are already part way into a risk-adverse approach, not really experimenting or pushing aggressively for new growth opportunities that involve higher than normal investments.

Talking around a number of different issues and opportunties recently with Drew Marshall of Primed Associates (http://thinkprimed.com), he further confirmed that it seems ‘Scarcity’ has become something of a touchstone conversation with organizations recently; even those sitting on large capital reserves are framing all their innovation efforts in this context. Large ‘chunks’ of the economic stimulus being announced in different countries presently will go into these organizations, to further strengthen their balance sheets but to create new jobs is more questionable. Scarcity can be viewed in many ways- of markets, of opportunities, of qualified people, of fresh capital, informal panic, reacting to worrying news by reducing activities.

There is a strong argument for a more dynamic growth distribution.

Innovation calls for strong experimentation, for investment, for seeking out new bolder opportunities. If we lose this real investment appetite for innovation, we lose our business dynamism and productivity growth. Economies become increasingly ‘static’, the organizations that were inefficient either have to change their ways to expand their current capabilities, or shrink and exit.

It is the increased competitive pressures of a ‘stalled’ economy in the West, increased global competition that will create this further disruption.  If everyone hangs-in and settles for a shrinking share of the markets we simply lower the productivity growth as investments get cut back, saving are sought out and then offers of economic stimulus support are gratefully taken to help in this. All of this ‘negative’ activity creates longer term prosperity problems. We ‘play’ into someone else’s’ hands who are making appropriate investment and we simply can’t afford to do that.

Creative destruction comes in many different forms

  • Policies that support ‘selective’ industrial policies skews existing producers interests even more and often at the expense of the consumer. In a global economy others that are better equipped, more modern, more efficient can make a more competitive offer. If your selections for support are really subsidised favours you often don’t improve the competitive climate, only ‘healthy’ competition really does that. If you don’t invest in advancement and keep active in offering consumers improvements (not necessarily lower prices) you lose market share…..eventually. Others see these times as opportunities and invest appropriately.
  • Ploughing increased investment in R&D also has a very limited short term effect. The horizons from research are longer in distance than the immediate need. By offering for example economic credits to R&D has value in the longer term but less for immediate impact. It is the value of deepening the intangible capital that need the focus but ‘stimulus packages’ don’t target the specifics just often the generalities.
  • When we invest and support a number of our less than dynamic industries we are passing up the chance to invest in the future. New high growth firms account for a disproportionate share of job creation and can have up to a 2.5 multiplier effect over three years. Of course these firms are contributing small economic share to the economy but are the very seeds of our future. We need to accelerate the entrepreneurial climate, not hold it back by starving it of capital or its share of any stimulus package. Policies tend to favour the ‘mature’ not the young at heart.
  • The more we can support organizations willing to invest in innovation activity, the more the uneconomical ones in the same industry shrink, this adds growth and new economic activity that is a much healthier position. This enables organizations to withstand and re-equip for this increased growing global competition but this does comes at a price of disruption. We need a greater ‘selective’ survival of the fittest otherwise we prelong the organizations that actually create a drag on the industry they operate within. We do need real Darwin-ism here not prelonging inefficiencies.
  • As increasingly more calls will be made for deeper structural reform and reducing barriers to trade even further, you will get growth but at a cost, the cost of destruction of many of the existing organizations. Greater disruption and increased uncertainty.
  • This has its ‘knock-on’ effects, the ones that become even more politically unpalatable; the shifting job market where people and their families get uprooted, in search of a new job.
  • Society is facing a tough set of challenges- if organizations do not innovate, create new growth, new products and compete effectively we fail to get what some call ‘creative destruction’.
  • It is the need for rapid diffusion of new technologies, new methods and designs that facilitates ‘creative destruction’ as it equips those that invest with the ‘capital’ to compete better.
  • Livelihoods, established communities, institutions and economic security all get caught up in these tough decisions that have an inevitable occurance for many, at some time. Seeing destruction is extremely hard when it has these very personal impacts on our lives and politicans often get caught in the middle.

Subsidies, tax credits and lower taxes it is argued never quite generate the solutions promised.

There can be both ‘productive’ and unproductive churn taking place.

The need of any crafting of policy in times like these, is to look well beyond the ‘knee-jerk’ effect, we need to have clear job creating purpose underlying economic stimulus. Innovation needs to be clear, is it the means to economic ends? More jobs, better jobs, greater productivity. The answer is yes but the real-world trade offs do have higher destruction than we often want.

Sometimes innovation in the short term is neither giving us societal or economic good.  I recall recently an article by Michael Schrage where he suggests innovation has “perverse and unpredictable impact on nations and employment.” He points out “innovation comes with risk and costs attached.” Innovation ensures creative destruction.

We seemingly need innovation in all its different forms and we need to continue to invest in it, otherwise we reap the cost for even more destruction. We are facing much uncertainty as we see these job losses continue from many less than ideal organizations simply shedding to survive.

It is through appropriate investment in innovation productivity we can see the rise and potential for growth. We are travelling down a hard road at present with social and political costs. Managing innovation investment correctly today is critical but it has to be continued, even with all the disruptions it provokes. As Michael Schrage poses in his conclusion in his article “what kind of growing economy do we want to have?” We sometimes pay a high price for innovation.