Inspiration, Ideation and Implementation

SurrondedFinally I am completely surrounded. I have that feeling of being somewhat overwhelmed, I can’t twist and turn any more, it simply will not go away. Do I throw myself off the building or decide to listen a little longer? It really is forcing me to think.

Today it seems whenever I pick up a business book each chapter has a section on it. Also I seem not to be able to not fall over all the articles extolling its virtues, I mindlessly “Google it” and you can see your whole life flash before you, if you decided to investigate this seriously.

What am I talking about?  Well nothing other than Design Thinking. I know, most of you are so heavily into this you feel you might as well ‘flip’ over to the next article but are you, really?

Design thinking is a mindset

If we believe we can make a difference and even have gone that one step further, many never seem to get there, where we have an intentional process to get us to new relevant solutions that do actually create a positive impact. Then we are getting closer to that ‘magic point’ of transforming ourselves and those complex challenges, into opportunities to be designed and developed to make that difference. Now that would not be such a bad place to be.

Someone has talked me off the ledge, I give in and I want that embracing mindset

  • One that allows me to be human-centred where empathy and understanding of others needs takes precedence.
  • One that allows me to be even more collaborative, where I can link my (great) mind with the views of others, those who can bring multiple perspectives into my own thinking.
  • A place where optimistic thinking prevails, where you chase for solutions that overcome multiple constraints and the work becomes an enjoyable process.
  • Finally, somewhere where it is allowed that you become ’experimental’, given a permission to fail and learn from your mistakes. Why? Because you become resilient, you bounce back with different ideas, you seek out important feedback on them, then you learn to iterate even better than before.

You are a work-in-progress of forward momentum. You become an experimenter and this ‘magic pill’ called design thinking is all about learning by doing. You begin to believe and gain new confidence that new, better things ARE possible and you can make them happen. That gives you real optimism.

So I’ve come off the ledge, have you?

What will design thinking get you? The chance to be more involved in collaboration, one that permits me to be more creative to boost my confidence and where I can learn new ways to engage with others in a defined process and a process that will help me get unstuck, and sounds like it is more fun than where I have been. Maybe somewhere near you there is a Design Thinking AA group.

So what does this Design Thinking process look like?

phases-of-ideation

 

(Image source: IDEO)

So we need to start learning how to put this design thinking into more everyday practice

Design thinking really is ‘design doing’ or ‘design making’ than simply just thinking. It leads the upfront framing before solutions are explored. The framing and solutions need to be separated. The pleasure of design thinking is it’s an iterative process, it wants you to experiment, to build prototypes to develop your knowledge, to go out and test them, to talk about them and progressively validate the concept.

It brings ambiguity into a sharper understanding that eventually moves from all the divergence that initially surrounded it, into a growing convergence. It allows you to move from a concept or initial idea, through a number of working hypothesis, eventually into a final product, business model or service, that is not just new to the world but seen as valuable and an improvement on the existing solutions.

The great thing about design thinking: it’s evolving itself

We are relating design thinking into a great set of tools that can help identify and execute opportunities for growth and innovation. Darden Business School has been leading from the front in this, alongside Ideo and if we just consider ten of these, can you within your organizations feel comfortable that you are actually applying these in your innovation practices?

These are:

  • 1) Visualization
  • 2) Journey mapping
  • 3) Value Chain analysis
  • 4) Mind Mapping
  • 5) Rapid concept development
  • 6) Assumption testing
  • 7) Prototyping
  • 8) Customer co-creation
  • 9) Learning launches and finally
  • 10) Storytelling

How many of these practices are you building into your innovation process to explore and exploit?

I’m very much into Divergent and Convergent thinking

You need both to explore and exploit the multiple possible solutions. Divergent thinking is the ability and opportunity to offer different, unique or variant ideas adherent to one theme, while convergent thinking is the (eventual) ability to find the ‘correct’ solution to the given problem. You encourage and ideate many solutions, both possible and impossible, and then use convergent thinking to move towards a realizable resolution or solution.

I use this ‘divergent and convergent’ structure for many of my workshops, it allows for broader engagement and involvement and that eventual drawing together from this process. Once or twice you have to be nimble on your feet to move from one to the other but the discipline comes from timing these as shared spaces.

The focus becomes one of Validity

Seeking valid answers is the crux of Design Thinking. The process really is a “knowledge funnel” according to Roger Martin, ex Dean of Rotman School of Management. You keep ‘driving’ towards this eventual ‘validity’ by encouraging a future-oriented view. To think in the ‘future’ we do need to think differently, as most of our minds are caught up in the here and now and that tends to keep us locked in the status quo.

We need to design in a different mindset. Envisaging a future state is not easy, it requires observation, imagination and potential for configuration. We need to seek out patterns; we need to keep re-framing our thinking. Design thinking becomes an essential part of that set of abilities.

So to be relevant, you need design principles

design-thinking-principles

(Image source: IDEO)

If we think about inspiration, ideation and implementation we already lift ourselves out of our everyday. What does it take to seek out and strengthen those higher-impact connections and relationships? What does it take to move beyond the existing and strive to define some more high-impact challenges, then how do we amplify the potential impact?

We need principles, and design thinking can allow you to follow a clear pathway to realization of better innovation. Can you feel it is beginning to surround you too? Jump but this time jump into design thinking, it might help you turn your ideas into those things that can really have an impact to your future and your organizations.

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

 

Seeing Your Innovating Future Across Different Horizons

The three horizons offer us much to frame our innovating future

IFD Mountain ViewFollowing a couple of recent posts on reflecting on the three horizons methodology, firstly here and then here, I wanted to come back to where I see real value, in managing innovation into the future.

The 3H methodology enables us to look out into the future, across three different horizons that can manage the transition between short, medium and long term in our innovation activities, something often badly lacking in most organizations thinking.

It allows us to gauge  the challenges, adding aspects we are beginning to gain a sense of, transitioning from one position to another. It allows us to deepen our evaluation of the innovation portfolio of activities, resources and skill sets across different delivery frames of short, medium and longer-term.

It is one that requires us to reflect and possibly make change, then we can move forward to meet the new challenges, within this emerging vision of the possible futures.

So 3H is a way of working with change, it offers us a foresight and framing tool for drawing out our often conflicting discussions and views of what all this potential change might mean, from our established patterns or approaches and those that are possibly emerging. The 3H supports innovation’s management very well.

Accepting everything has a finite life-cycle

From my perspective we see businesses littered with not wanting to make change, rejecting the changes going on all around them. These are happening in changing technology, different business models, threats from competitors coming into the market with different and often low-cost models.

Source: Adapted from Sharpe / Hodgson

Sometimes a concept or product has ‘run its course’ is seen as yesterday solution, or industry segments separated in the past are suddenly ‘fused’ together in new ways due to new technologies, or being purposefully designed, they begin to disrupt the existing.

We can’t afford to ignore the ‘call of change’, it places our business at significant risk. Recognizing the challenges life-cycle management can bring, does need careful managing within our innovation management.

We do need to recognize changing conditions and begin to plan out our responses, both short and longer-term through a well crafted transformation road map. The 3H can underpin this.

So where are you viewing the world from?

Why expand the Innovation Horizon visualMany of our organizations are viewing the world from where they are.This is often in the safety of their offices. They feel comfortable to stay with what they know.

They only see change when something suddenly triggers their perception and the world alters, and it then gives way to a new horizon of sight. Often these can come far too late.

What needs to challenge this place of “the world of where we are” and prompt fresh thinking so we can allow one of emerging knowledge and insight to enter into. One where perhaps we are blending our imaginations, with some envisioned destination, where change will likely alter today’s dominant position. We need to prepare for it as these insights can radically alters our present position. We become open to change, to think differently.

We need to see the clues all around us

We need to reflect and see how we can forge those new innovation patterns. A methodology that helps raises our future consciousness and moves us to building new competencies for future competitive advantage is surely valuable?

We cannot stay trapped in our offices, our constant need is to find all possible means to be fully engaged and well-connected into the changes taking place within and across the world.

Managing the present, moving towards the future

wave tension painitingIn any future thinking there are numerous uncertainties, yet we also need to address the familiar “the way we (presently) do things around here”.

We need to grapple with “how can we ‘keep the lights on” but equally move towards a different horizon without “betting the shop” and totally disrupting all we have built up? This requires even deeper thinking.

Something that requires us to re-equip, challenge existing and entrenched ways of working, bring in and fuse new skills and capabilities, push experimentation and exploration far more, tolerate failures in new ways, keep shareholders happy, recognizing the need to make change for a potential sustaining future. Possibilities of changes in our ways of working and approach begin to unlock and open up to different thinking.

The unlocking of the future is partly recognizing the future patterns, yet is is equally releasing us from the dominance of old ways of working, systems and structures – ways we have been increasingly sensing are no longer truly work well for us.

We need to shape our future intentions

Different Futures VisualIt is the second horizon; you can read a further post specifically on this 2nd horizon, “entering the zone of uncertainty”  within this framework, that is the hardest one to work through.

This is the transitory horizon, balancing today’s business with the investigations and new possibilities to lead towards a future.

Our abilities to manage this transitory zone (the 2h) is vital for our innovation management, it holds the key to staying locked in the present or moving towards a sustaining future built on different views and perspectives

For me the value of the 3H is in its use within innovation’s management.

Three Horizon Challenge 4The three horizon framework offers a map of transformational potential which allows us to move towards finding new skills, degrees of new freedoms and creativity, we are striving for a balance between existing and preferred, based on present day understanding.

Scoping out the future needs for innovation to address needs different thinking. It needs foresight and exploration. It needs to allocate resources across the three different horizons and each of their respective challenges of the future needed from innovation.

This is why the 3H is, for me, a very valuable approach to managing innovation in the present and for the future.

The 3H framework prompts the need for transformational capacity.

I believe there is great value in exploring innovation possibilities through a framework that can support the often diverse management thinking, one that is far more strategic in its focus on exploring the options, working through different scenarios and mindsets, then adjusting the resources accordingly, or identifying required new ones.

A framework that ‘sketches out’ that future promise can significantly improves strategic and innovation alignment, help set organizational direction and defining and allocating resources appropriately.

It frames discussions, it is a navigational guide to allow for framing challenges and seeing perspectives in different frames, so as they can be addressed. The 3H helps scope out the pathway of change from today’s existing innovation approaches. It takes you through the key milestones to the future envisaged and allows you to distinguish different horizon challenges.

Working with the 3H approach can be a very powerful tool for managing our innovation future.

Any framework that draws out concerns, differences of opinions and prompts transformational discussions, can be a very powerful management tool. If it provides the platform for framing and recognizing what needs to change.

If it can help to begin to flesh any capability gaps, stepping-stones to cross and if it can ‘point’ toward the action and activities that need to put into place, so the organization can make their moves towards that different innovation future, then it has great value within any organization wanting to manage and structure its innovation activity.

I believe the three horizons approach can contribute significantly to this aim of managing innovation and giving organizations a sustaining future. I certainly recommend it.

 

Three Horizons – fields of future, full of foresight.

Three Horizon Book Bill SharpeI’d like to relate to parts of a book that came out in late 2013 from Bill Sharpe. His book, or actually more a booklet, called “Three Horizons: The Patterning of Hope”, published by Triarchy Press, has some really helpful insights.

In this book, Bill outlines his distinct ways of creatively working through many of the unknowns, by framing and connecting though the Three Horizons, (3H) as his contribution to the patterning of hope for all our futures.

I draw out a lot within his thinking, experiences and approaches within the book. Some of these initial thoughts outlined here, re-affirm my own thinking and focus on the 3H, specifically for innovation and its management.

Here are some of the ‘triggers’ I connected with strongly from his book:

The three horizons does offer us much to frame the future

Firstly, the 3H is actually a simple framework, see my original opening post in 2010,on a quick explanation if you need it. The 3H allows us all to work with what we know, about today, and a method that allows us to engage creatively with what we don’t know. To look beyond the existing.

The 3H methodology enables us to look out into the future, across different horizons. It allows us to gauge  the challenges, adding aspects we are beginning to gain a sense of, transitioning from one position to another. It is one that requires us to reflect and possibly make change, then we can move forward to meet the new challenges, within this emerging vision of the possible futures.

Tackling uncertain futures for transformational change

Bill asks the question in his book “How can people work together to create transformational change in the face of the uncertain future?”

He suggests we have choices, we continue the pattern of how we have been doing things today or we start a new pattern. What can be abandoned and let go, what can be adopted as new and how do we manage the transition.

Bill’s view is that transformation change comes about when we see that the way things are getting done now has its limits; we cannot get much beyond these limits however much we try to improve the existing system and we must face the reality create to create this new pattern for the future we need.

So it becomes clear the 3H is a way of working with change

The 3H offers us a foresight and framing tool for drawing out our often conflicting discussions and views of what all this potential change might mean, from our established patterns or approaches and those that are possibly emerging.

It provides for a transitory step in its second horizon, full of the challenges of wrestling with change, letting go of the present, holding onto essential aspects for the future, embracing often totally new concepts, skills or thinking through positions. You are intentionally drawing out diversity of opinion to improve the dialogue, narrow differences through pattern recognition. It can be tough work.

As Bill states “a lot of dynamics of change come into view quite naturally, and we are lead to explore them in terms of patterns of behavior of those (involved) who are maintaining or creating them”

We can explore the  possibilities found across the three different horizons

The intent of the 3H is to offer a way to look at the process of change, to view possibilities across three different horizons, that encourages us to look and question a little deeper, we make the future more accessible and relevant to us operating in the present, for future intent and action.

It brings out all the differences, often conflicting ‘voices’ and patterns, to challenge continuity. Then we need to figure out what needs to come into ‘play’ to help us understand those future patterns through these dialogues, so we can begin to determine what resources and emphasis to we place on them.

The 3H can help tackle complex problems or from my own focus, the future intent on innovation; in its planning, resource allocations and skill gap identification to build capabilities and capacities to be ‘future’ ready. We need to map innovation across the three horizons.

The three voices that are to be hopefully found in the same room

The different voices involved can be highly engaged, as Bill suggests, you have the voice of today, more concerned with managing the existing, maximizing returns and keeping the organization going efficiently and effectively. Then you have the second voice, the voice of the entrepreneur, the one eager to experiment, try out new things, explore and extend, accepting some aspects will not work and the third voice,  of the aspirant, who is looking to build a different vision, believing in different, more pioneering ways and visualizes things in their ‘mind’s eye’, far more aspirational, that can seemingly on first ‘take’ look to be totally incompatible to the reality of today.

The ability to draw out tensions, seeing emerging patterns and growing awareness

That tension between “our present circumstances and positioning” is full of possible future consequences and those patterns and indications that are stirring the ‘future consciousness.’ For some this seems to be a little wacky, flaky, far too aspirational, surely inconceivable, incongruous and unthinkable.

The value of the 3H framing is to begin to make the connection’s, shifting individual thinking into team actions and decisions. The 3H connects the future for bringing strategy, vision and innovation into greater alignment of thinking through diverging and then converging.

Bridging often highly divergent differences that are causing a growing and deep set of tensions are in fact, in Bills words “different perspectives on the future potential of the present moment”.

We are actually facing three different perspectives; those immersed in the dominant system of the present, with those that ‘sense’ the scope for new thinking and try something different, to those in the third domain of arguing for radical change or seeing things very differently.

The question for all too answer is “how the present might play out in the future?” The job of the 3H is to raise this in all the three opening and different thinking positions, to achieve a more united ‘future consciousness’.

The Three Horizons approach works well with complex issues

The value within Bill’s book is how he describes the three horizons in his experiences often working within complex societal areas:

“It offers a way to find and shape our own intentions more clearly, as we look over the first horizon of the known, towards the second and third horizons of innovation and transformation towards the future.

It transforms the potential of the present moment by revealing each horizon as a different quality of the future in the present, reflecting how we act differently to maintain the familiar or pioneer the new”.

I have found this book offered me a fresh perspective of the power of the 3H framework.

Bill Sharpe’s book does add some fresh and helpful thinking to working with the three horizon framework. It offers real, insightful ‘nuggets’ of an experienced practitioner, working constantly in futures work, taking on problems that need fresh approaches and new concepts, rather than application of routine methods.

Finally as Bill suggests “to shift from our simple, one-dimensional view of time stretching into the future and instead adopt a three-dimensional point of view in which we become aware of each horizon as a distinct quality of relationship between the future and the present. We call the move into this multi-dimensional view, and the skill to work with it, the step into future consciousness”

Through this book Bill provides his personal perspectives that have added real value to my own focus and understandings on how to apply the 3H to innovation.

Reflecting on the Value of the Three Horizon Model for our Innovating Future

Business as usualThere is that prevailing sense that we are just managing for ‘business as usual’, leaving many increasingly uncomfortable and feeling exposed. Why?

Our businesses are not adapting fast enough to changing conditions in the market, often lagging in the competitive race to update and keep relevant.

Businesses are struggling with conflicting knowledge flows and incoming intelligence, just simply managing their talent to keep them relevant, engaged and outwardly orientated.

They need to constantly adjust and adapt to the demands and challenges within the societal conditions, environments and markets, grappling with constant shifts in consumer demand and coping with the declining natural resources and of what all of this might mean.

We are often short on foresight and certainly struggling with growing complexity.

Bill Sharpe and Tony Hodgson, along with Andrew Curry and Graham Leicester, have been working to bring the Three Horizons framework into a more widespread use . Once I had ‘found them’ through the International Futures Forum they became the catalyst for my own perspective of exploring this framework and applying it specifically for innovation

Bill and Tony have recently provide a wonderfully descriptive view of valuing the Three Horizon Framework within a 3H slideshare deck I’d encourage you to work through. It frames and captures much that reflects the tensions and approaches to overcome these.

I’d also encourage you to go back and explore my different thoughts in this site by entering in the search box: “three horizons”. My trilogy of blogs starting with “the Value of Managing Innovation Across the Three Horizons” I’d suggest is equally not a bad place to start for a clear background to this methodology.

Reflecting on a framework to that can help frame those future discussions?

Three Horizons IFFLet me reflect on some of the thinking around the 3H framework as I relate to it from my more dedicated focus, the innovation management perspective.

Why I so much like this 3H framework is in its value where you can construct distinctly different horizon focuses, based on the present, that allow a ‘growing future consciousness’

Our need is that we all must find ways to embrace the future, to not get simply caught up and washed away, because we were ‘just’ unable to move beyond the present, or simply stayed stuck in the past. I think this 3H framework is very powerful to allow us to move beyond our existing framing, to map across different horizons

Often we are caught be surprise, ignoring many warning signs

With our lack of foresight and lack of actions we lose something that begins us to ‘walk the path towards decay.’ If we ignore ‘taking action’ long enough for a host of seemingly reasonable reasons, when something occurs that simply confirms what we inwardly had felt for some time might possibly happen, it has already grown into a real problem.

By using our ability of using foresight; of seeing this possible set of events, different signals and warnings we have two choices. We could have chosen to continued to ignore it, or we start to make  ‘investments’ into building new defenses, new capabilities, new stepping-stones to the future.

There is this powerful need to look towards the future

Based on what we know today and what we can set about building and exploring does hold the exciting promise of the future. Look out of ourselves offers a more rewarding prospect.

A future held in our own hands then we can help shape it and integrate it into our daily lives or of course, we can simply ignore it and keep hunkered down in what we do, feeling we are comfortable and secure. I would argue we all need to embrace change, not avoid it, it never goes away, it is constantly tapping you on the shoulder.

We need to keep reflecting upon what is dominant, prevalent and pattern-changing, as these positions are constantly shifting. Scanning the horizons and what is simply all around ‘us’ offers those ‘pockets of the future’ to invest in, explore and experiment, to be open to change.

Initially these pockets of the future may seem a long way off, often just really weak signals, but are indicating different, perhaps far more radical and perhaps disruptive changes and our organizations need to constantly re-equip for these by building different capabilities and competencies. Technology clearly comes to mind with wave upon wave of change, crashing against the established rocks, beginning to weaken the existing structures and form new ones.

Just remember the present is already in decline

It is the constant renewing, the transforming and capturing of these weak signals, today clearly seen as marginal to our business, that can ‘permit us’ to explore and begin to re-equip ourselves for the changes that might happen. Small investments anticipating potential changes are highly valuable to consider.

We can choose to ignore these signals or poorly under fund them as they are often seemingly vague, often unrelated to our existing practices. They are unsure in what they bring, mostly experimental in the early investigations,that ‘seemingly’ conflict, even drawing resources away from our existing model but at what risk to the future?

The ongoing dilemma we need to also revolve, is around multiple cross over points, between blending the existing with these possible futures, allowing time and resources to figure out and explore the options these might present as future options to the business.

Not enough time really does constraint and dominate

We never can find enough time to manage all that we would like to. We are forced to (eventually) make many rushed choices, often ill-judged or last-minute, reacting to changes being forced on us .

Our interests, values, mindset all ‘kick in’ and when it comes to discussing the future, well often initial discussions begin to move into conflict, based on established positions, types of personality, vested interests or opinions.

Attitudes and judgement are either grounded in the present, with many executives fairly dismissive of the future, or those that are more future related become increasingly impatient in wanting to challenge and change the present.

We need to manage the tensions between the different views on managing the present and the future.

The rising way of change comes from different experiments and innovations

It is partly through the treatment of innovation, feeding into the system a rising wave of future innovations that alter positions. Staying stuck in ‘just’ incremental to serve the existing conditions in the market seriously constrains you for the future, you stop growing, exploring, being curious and experimental.

Encouraging separate and focused discussions on the future are increasingly essential

Managing future discussionsDiscussions within the boardroom, within our R&D centres on the breadth and depth of the future portfolio and the allocation of resources for innovation, needs to have different mindsets within the 3H approach.

There needs to be a framework to surface different assumptions, often conflicting and entrenched views to surface the potential ‘pockets of the future’ as seen through different eyes.

If we can avoid those initial, often highly personal definitive judgements of the future, we can begin to map these conflicting thoughts back to our existing, to see different emerging patterns that meet many of these seemingly ‘conflicting voices’ and each begin to appreciate and see their role of moving the existing into these futures as they make sense to their lens or orientation.

You evaluate what initiatives are already under-way, that have a more future orientation and which seemed to be more sustaining the present. We are looking to find ways for transformational change grounded partly in the present, partly based on clear movement detected.

We are moving the ‘grounded knowledge’ and assumptions into the potentials that are thought to be emerging, we see the role of the present in the future, we can see much can be ‘let go’ and allowed to be opened up and explored differently. We are beginning to adapt to the new environment. The future might be getting clearer.

We need to take care within any future’s discussion.

The three horizon methodology and how you frame each of the dialogue sessions does need care. You are not only dealing with present complexity, but seeing future scope through emerging patterns and many weak signals; equally, we are often dealing with entrenched positions, insecurity and impatience.

It is the ability to step back, to travel in ambiguous territory, challenge the safe bet of extending the old system, to release these deep tensions these conversations will reveal.

I would encourage adopting the three horizon methodology to innovation

We need to encourage a transformation in our capacities by developing a collective awareness of our ‘future consciousness’ that opens up a greater freedom to act and move forward.

I believe the three horizon methodology becomes an essential framework within any organization wanting to determine their resources and evaluate their innovation pathways.

Exploring the field of futures and foresight as an emerging practice

In a future post I’d planning to discuss part of a book that came out in late 2013 from Bill Sharpe. His book, or actually more a booklet, is called “Three Horizons: The Patterning of Hope”, published by Triarchy Press.

In this book, Bill is outlining his distinct and even highly sensitive way of creatively working through many of the unknowns, by framing and connecting though the Three Horizons, offering his contribution to the patterning of hope for all our futures.

Struggling with the sums of our capital

Sum of all our capitalsOrganizations have been focused for far too long around the importance of financial capital. It determines and drives organizations destinies. We are caught in a constant focus upon our achieving a return on our (financial) capital as our measuring criteria. Organizations strive for improving their ROCE, RONA, IRR,  EVA and a host of other financial measures.

As Clayton Christensen has been arguing the agenda of organizations begins and ends with the “search for numbers”. I think there is a time for changing this, we need to search for the knowledge that makes-up eventually the numbers.

There has been a distant voice for some time putting forward the need to appreciate and value the other capitals sitting within organizations. Much of the discussions have been housed under the term “intellectual capital” which denotes the sum of knowledge made up and contributed by our human assets, our organizational structures and our relationships that are developed. These are the ‘capitals’ that transform into economic value through organization action. It is the financial capital that simply finances this.

Financial capital dominates any discussions

Yet financial capital and all its associated aspects rules, no, it utterly dominates. It totally fails to tell us in numbers alone where and what creates the value, it simply reports it. It is this financial capital through our profit and loss, our balance sheets hides the value, or spreads it out in ways no one really understands its make-up.

Certainly those attempting to judge an organization just have to rely on a ‘history of numbers’ and some ‘selective’ market view to make investment judgements. Equally those often running our organizations have a restricted view of where their real capital lies, as they focus on the numbers and then work down.

Today, in a rapidly changing world, the reliance of financial capital being the absolute measure is being challenged thankfully. Our business world is facing considerable disruptions from the accepted past practices, performance has become more volatile, more dynamic, more reliant on understanding that knowledge is where the value lies.

“Business as usual” is thankfully in steep decline, the necessity today is to be constantly evolving and learning and that comes from knowledge acquisition, assimilation and then transforming and exploiting this into new value. These ‘absorptive capacities’ are where we need to direct our understanding of new, value creating capital. We need to report on these far more as they offer the ‘residing’ value.

Learning capital needs to emerge and dominate future discussions

We need to give increasing incentives for organizations to learn. We need to judge the quality of this learning, not listen to ‘bland’ statements often presented. We need to know where this knowledge is targeted in narrative, discussions, spillovers and interactions. What is being exploited, what is being determined in the decision-making process to give greater confidence that our invested financial capital is “in good hands”.

Keeping reliant on just discussing the financials within organizations we know is not enough. We have to force better discussions on the make-up of the other capitals, as these are still poor, left to individual interpretation and variable and we need to change this.

As organizations become more open (open innovation for instance) the strength of linkages, of knowledge exchange, the translation of these activities is becoming really valuable to understand and focus upon more. Through many of our activities we actually ‘borrow’ and it is then the ‘dynamic linking’ that we bring into the process, gives up the increased potential of innovation. It is the ease of learning, the ability to acquire and apply knowledge that creates the potential for innovation.

How many organizations really articulate their knowledge capital in acquisition, assimilation and transformation? Do we know how ‘path dependent’ they are- are they lagging in the market, are they simply opportunistic, are they locked-in far too much in potential downside risks. Do they suffer from cognitive failure, do they lack the appropriate competencies to meet the constant challenges occurring around them. How much of this can you really extract from cold, hard numbers? Not a great deal.

Recognizing where our true value resides

The real problem we have is the lack of appreciation of what makes up our value, the real underlying wealth creating value, the one that truly ‘generates’. The tangible part is easier to appreciate (plant, land, material etc.) but is becoming a significantly declining part of the total sum of value of our organizations- sometimes it is only making up 30 percent.. It is our difficulties of understanding the intangibles as it is a very challenging task. Yet this has huge implications on the ‘health’ of the organizations we continue to invest in. Most organizations resort to “inferring” the value. This needs to change. The value today is in the interactions between the different components that make up our intangibles, out intellectual capital.

We are in need to identify what ‘drives’ organizations for gaining and sustaining real advantage, and showing why it has the potential for creating new wealth. This needs to be far more forwards looking; it needs to be more open and more transparent. The call is growing increasingly for a new valuation model. Static knowledge where we view financial numbers is just not good enough, we do need to understand the underlying dynamic capabilities that make-up the organization.

Conflicting signals of what makes up intellectual capital dominate still

The same old problem exists today that has plagued the concept of intellectual capital and its promotion. The community that has been arguing for this as a measuring of the real value of an organization remain divided, locked in their own interest and models; the conflicting nature of these different views has held intellectual capital back. Organization management will never invest the dedicated time and interest unless they see some level of coherence and understanding that can be translated into an actionable framework.

There have been many attempts but nothing has really changed our traditional reporting of financials with some (restricted) board discussions. Organizations are hiding under rocks, taking cover from the potential relentless sun that would force them to adapt. We need to change this.

Some change might’ be in the reporting air

One organization attempting to radically alter this current (one-eyed) reporting we have today is the www.theiirc.org  proposing their integrated reporting mechanism, where they are shifting the focus more to where value creation lies. They argue this will improve the quality of the information available to provide for a more efficient and productive allocation of capital. It promotes a more cohesive and efficient approach to corporate reporting that draws on different strands that cover more fully, the factors that are materially important.

The focus is future orientated; it pushes to gain a connectivity of information, in all the capitals and their dependences, and seeks the ability to have integrated thinking that account for the (changes in) connectivity and interdependencies. It expects a greater understanding of how the organization tailors its business model through its activities, performance and outcomes in its use of all the capitals.

The key for the IIRC has been to seek out the connectivity of information flows into the management reporting, analysis and decision-making so internal and external reporting has this integrated reporting as required.

Are we on the cusp of a real change in reporting?

Are we going to see this initiative gathering momentum in the coming years?  It does seem so as the detailed guiding frameworks in understanding all an organizations capitals, of the thinking behind business models and capital have been piloted and tested and recently published. I have written on it here in my “shifting attitudes, thinking responsibly” post.

All I hope, no fervently wish, is that the intellectual capital community comes together and can find the same determination to provide greater understanding of the capitals, so this integrated reporting gains even greater momentum and paves the way for improved understanding of the real value that resides in our organizations.

There is a time, and that surely is now as the right time, in coming together over a recognized ‘standard’ definition of intellectual capital and its organization measurement. What must stop is the continued pushing individuals narrow views of what makes up our capitals but to focus on what our customer needs. Those measurements, which may not be perfect but ones our business organizations will engage in, invest their time and establish the structures to capture those aspects that make up the Intellectual Capitals (IC).

Organizations need to feel utterly comfortable in deploying emerging guidelines so as to understand, test, develop and talk about their capital and the residing values it offers by deploying it through their ecosystem of connected parties. Offering conflicting ideas or frameworks is never welcome within organizations, they want to feel comfortable in investing and backing in the one that they ‘feel’ the winner.

We urgently require a common standard in approach for measuring all our organizations capital.

Measuring often many intangibles is for many very uncomfortable territory, until the approach becomes ‘standard’. If those within the IC community continue to offer conflicting advice, organizations are very reluctant to commit.

Can the IC community come together and give them a clear model to work from? Please, or will it be eventually taken out of those existing hands, passed into the hands of a new, more business savvy group of individuals that can ‘piece together’ capitals in a way organizations will actually welcome and adopt. To encourage acceptance you need clarity, a common understanding and approach, then the value potential begins to emerge with any adoption , because it offers clear language and common measurement instruments that organizations understand and can work with.

It is a growing imperative to gain a common framework to measure the sums of all our capitals.

Forming the unified view on innovation design

Although we are seeing a number of cases where innovation in its structures, functions and design are evolving, we still have not achieved the mainstream recognition of innovations importance within the boardroom. In many organizations it still lacks a clearly separated ‘voice.’ Its present voice tends to be fragmented within its parts represented by the separate functions providing their narrower view of innovation.

You still have marketing, research, financial, strategic development all offering their unique views of what and where innovation can contribute. This often ‘fragmented’ approach reduces the promising breakthrough effect of innovations potential contribution. By not having this comprehensive and cohesive viewpoint articulated at board level by a fully accountable person, the Chief Innovation Officer, innovation often stays locked up in one position or another. No one is stepping in and unlocking its full potential from a holistic viewpoint, totally responsible for innovation by structuring it, for adding real scale, giving it momentum and growing sustainability but more importantly driving it throughout the organization from the top board room perspective.

What this ‘combined’ voice can really bring too many present and future growth orientated discussions is real strategic alignment  significance; it can transform discussions and significantly influence directions the organization can take and where to allocate its resources. Yet innovation still struggles to be fully accepted as a fully functioning discipline and expertise needed in the boardroom to focus innovation on providing real sustaining growth, fully integrated and aligned across the whole organization for its value potential.

The exploring going on around innovation

Many organizations still are exploring how to approach innovation and you can see plenty of experimentations and I’d say interim ‘bridging’ solutions. We are making some progress within innovation for its function, location, financing and ownership, as these have shifted more towards the top of organizations, yet they still lack that final unifying catalyst, of appointing a chief innovation officer for many, and innovation as a strategic activity being pulled together in a unifying strategic innovation framework.

Some that have made this appointment are still working through the make-up of the function and how the ‘arm-wrestling’ works out between the existing groups making up their part of innovation and this new realignment can be hard work. Often, as the CEO lacks real innovation expertise to effectively arbitrate such an appointment, to design in the real accountability and appropriate weighting for managing such a critical component needed for growth, it does not have the executive strength built into the position to make it the pivotal role it should be. The role remains poorly understood in its focused value and contributions, and can be reduced to this in-fighting and trading, to make slower headway than it should.

Driving outcomes often required separate innovation functions.

Added to the lack of recognition of what ‘makes up a clear innovation function’ many organizations are still rather stuck in a silo thinking that innovation is only about developing products and services based on traditional functional lines. Innovation has evolved way beyond this product and service view only, or certainly should have done.

We need to explore making major shifts by thinking through different business models, working on a variety of collaborative platforms and ventures, having increased agility to explore, experiment and step far more out of the ‘classic’ core, into new adjacencies, or even investigate whole new ‘white spaces’ for business opportunities. Many are leaving this to others as they stay ‘locked into’ traditional viewpoints of what innovation contributes.

These significant changes on ‘how to innovate’ are creating organizational tensions that do need resolution as they are increasingly colliding against each other, like tectonic plates. These tensions are disrupting organizations and having a lot of internal friction that reduces performance, at this critical time when a unified approach to tackling external challenges would be better served by aligning the innovation view.

In some ways organizations are experimenting in different innovation designs but these still tend to be ring fenced, islands of experimentation that stay locked in their space and unable to be seen, strategically, for their (rapid) scaling opportunity due to this lack of a comprehensive, innovation view, from the top.

There are different designs being explored, often within the same organization. All serve a ‘given’ purpose but perhaps stay constrained by this lack of an overarching strategic understanding of innovation and its contribution to strategy and driving growth. We might be in real danger of dispersing innovation energy when we should be unifying it.

Diversity is made up of innovation experimentation.

We see today innovation centres, new-business development functions, separate emerging-business opportunities groups and selected incubators along with emerging-technologies business groups and even advanced-technologies or institutional collaborations. Each has a focused and valuable role to play but the cross-over values, the ability to drive cross collaboration and learning often lack that overarching coordination that only a dedicated top person can bring in bringing this together to serve the strategic purpose of the organization. Usually we also have the older established research and development centres, the marketing pilot plants and other more established and traditional avenues that product and service tend to work through.

I think we definitely duplicate resources, loose knowledge, constrain expertise and don’t get the potential innovation ‘horsepower’ out of the combining effect as and when needed. Can this change?  It certainly should to extract and unlock all of innovations true potential.

How we align innovation will decide many of our futures.

Alignment between the goals and objectives at the top of our organizations is still at serious ‘odds’ with what is being worked upon. We need a real strategic innovation framework. I’ve offered some thought on this in the past if you care to pick up on this as one starting point, in this article “The Overarching Proposition for the Executive Innovation Work Mat.

We are daily being faced by significant challenges in meeting our strategic objectives and where often innovation fails to bridge. Examples of this can be seen in the ongoing competition with short-term priorities from across the parts of the business as well as the difficulties of integrating different function’s objectives with those of the core needs.

Then there is still the poor business case or value propositions made often to corporate leaders, or that consistent dilemma of withdrawing funding from an idea that has not lived up to its promise and become one that drags and diverts away critical resources. All work against innovation delivering on its much-needed potential.

We are managing more cross-functional issues than in the past.

The more we engage with open innovation partners or begin to develop promising new business models then more we conflict with many established positions. This slows the real contributing value of innovation. These new challenges need a different type of boardroom representation, it needs a clear mandate for a Chief Innovation Officer, to bring the ‘disparate parts’ together and explore the broader potential that wider innovation can bring in all its potential forms.

A call for a new concerted effort for providing an overarching innovation design

Designing a new strategic innovation framework at the top of organizations helps close the many gaps we see today. We need to move from ‘disconnect’ to ‘reconnect’ and make innovation more centrally designed to meet today’s challenges, those that are cross-cutting, to allow innovation that greater freedom and scope to contribute into the growth organizations leaders are demanding.

To align innovation to the organizations strategic goals, we need to challenge many of the established practices and functions to allow innovation to fulfil its promise of being the true catalyst to growth.