Navigating the future landscape by developing adaptive innovation skills

So where are we focusing upon to make sure we are developing the right proficiencies and abilities we will need to manage our innovations of the future?  For me innovation capabilities and competencies needs to be far more adaptive and aligned to the different emerging skills we should be bringing to bear, so we are able to find better innovating solutions for our collective futures.

The issue is this: if we do want to reshape much of what we are struggling with today – poor growth, diminishing futures, disconnected communities, stagnating economies or ones struggling to emerge from devastated and austerity measures inflicted upon them – we do need to change our skill sets to reflect a more realistic and up to date need to navigate and transform knowledge to tackle these. Often our present skills are not equipped to manage in these more “disruptive” environments.

I wrote in a past post about “Learning to absorb new Knowledge for Innovation and the ability to understand Absorptive Capacity and how it works. Recently I followed that up with two recent posts about our pressing need that Jobs can be created but our skills do need very much adapting and refining, from where we are at present. One post was “Innovation Job Chasing- A Race Needed to Win” and the other was its precursor “The Present Innovation Jobless Era We Face.”

Our real need is to put in place those stronger adaptive skills  as our foundations so we can be better equipped to compete in the growing innovation race we all facing at personal, community and national levels. We need to equipped differently to meet the tougher global conditions that will be with us for our lifetimes, irrespective of our present age.

Competition won’t go away; it will only increase in its intensity.  To meet this we need to be far better equipped to be ‘innovation-ready’ in our skills. What forms a better ‘innovation ready’ skill set?

So what are those future skills we should be working towards to group around?

There was a report published in 2011 by the Institute for the Future (IFTF) and sponsored by the University Of Phoenix Research Institute to understand the skills workers will need over the next decade in our changing world, based far more on technology and its continued advance.

The report “Future Work Skills 2020” looks initially at what it feels are the six drivers that are shaping our landscape and then the ten skills they see as emerging that need to be where we place our future focus upon. These are:

Future Skills Set

  • Sense-making: the ability to determine the deeper meaning or significance of what is being expressed
  • Social intelligence: ability to connect to others in a deep and direct way, to sense and stimulate reactions and desired interactions
  • Novel & adaptive thinking: proficiency at thinking and coming up with solutions and responses beyond that which is rote or rule-based
  • Cross -cultural competency: ability to operate in different cultural settings
  • Computational thinking: ability to translate vast amounts of data into abstract concepts and to understand data-based reasoning
  • New-media literacy: ability to critically assess and develop content that uses new media forms, and to leverage these media for persuasive communication
  • Transdisciplinarity : literacy in and ability to understand concepts across multiple disciplines
  • Design mindset:  the ability to represent and develop tasks and work processes for desired outcomes.
  • Cognitive load management: ability to discriminate and filter information for importance, and to understand how to maximize cognitive functioning using a variety of tools and techniques
  • Virtual collaboration: ability to work productively, drive engagement, and demonstrate presence as a member of a virtual team.

A call to action

As the report authors of Anna Davies, Devin Fidler, and Marina Gorbis suggest, the results have clear implications for individuals needing to learn these skills. They will be asking from where will these come? From the educational institutions that need to grapple with changes that are occurring fast. Also it is the actions both  in business and at government level on how they will encourage and develop the strategies and policies fast enough, so as to offer the incentives to drive the changes needed. It is how quickly we move towards any organized ‘grouped’ learning of new skills can we begin to build within these new groupings.

All institutions certainly do need to provide the leadership to embrace the shifts needed in a constantly changing set of lifelong learning. It is recognized increasingly that skill renewal is constant to meet tomorrow’s ever changing global challenges.  A place where skills are far more heavily reliant on technology and we are able to manage these constant changes effectively. So as the knowledge that is emerging gets translated into new values offering new opportunity, learning and growth. We discover, absorb and translate.

Teaching both hard and soft skills that reflect tomorrows needs

The underlying need is to teach skills that promote quickly in response to changing conditions that will include a higher emphasis on critical thinking, depth of insight and the analysis capabilities to ‘translate’ the information or data emerging from multiple sources.

Equally the soft skills, so often ignored as crucial become increasingly relevant. The ability to collaborate and network, to read social cues, not ignore them as not important to me and respond with this much higher level of adaptability. I wrote about “Recognition of better soft skill taxonomy for Innovation some time back that has a useful way of grouping soft skills.

My summary

Predictions can always be difficult but the impression I gained from looking at the suggested ten future skills suggested by IFTF is that they do seem to make for a solid basis for us to gather around.

What of course we need to do is to develop what ‘lies underneath these ten skills ‘to allow us all to become more ‘innovation ready’ in our skills needed to survive. These might give us that better chance to thrive in the future and find fresh innovating opportunities because we are better equipped in relevant skills.

The burning issue is that our window of time to change and incorporate these into our organized learning is shrinking at ever faster rates. We need to move from recognition of these skills into the setting about of building them far more systematically.

We need to build our future innovation capacities on more relevant skills that are based more on what we need to have within our ‘natural’ skill base based on today at least, and not ones still based on 20th century practices.

Going innovating step-by-step for renewal makes sense.

Renewal- this seems to be really an important issue we all need to think about today; in society, in our organizations, in our institutions. Renewal of what we already have does can give us further opportunity to improve on it for what we know that works, what we think is right, what we value and what we just simply need to enhance.

We don’t always need to just throw away what we have and simply replace it with something completely new. This has its real adoption problems, it takes time and often a lot of money. Sometimes is just does not make sense to simply abandon, when recognition and adjustment would simply really do. Knowing what is good and with that clarity of what needs to be changed is often a better route to take.

We should look at what you have, in our current portfolio of products, services, guidelines & policies and see if they can be ‘freshened up’. In today’s difficult times exploring renewal is very worthwhile. Offering change constantly is very disturbing, improving, if we can, on what we already have is not, it is cheaper and often far more effective.

A more structured and systematic approach though, should be taken

I would recommend for building a renewal programme that you can work through a step-by-step approach, enabling clarity and understanding as you go; so everyone involved can see the problems, challenges and then actively contribute to the solutions. This should be our goals always in renewal programmes, inclusion, be these to address societal or business challenges.

What this step-by-step programme does call for, is a very structured, comprehensive investigative approach across the organization. firstly to build the momentum for recognizing what a sense of renewal can bring as important for the future, and then secondly, seeing an emerging clarity for this future built upon a sustaining innovative culture that all contribute and become involved in.

Making the first critical steps

Firstly you have to start out with why you feel is in need of a freshening up, of challenging, and form an opinion of what should be required, should this be radical, distinctive or incremental?

What do you actually want to achieve that takes you closer to your aspirations, to resolve some specific problems? This is not just immediate goals of simply continuity by providing ongoing value but adding that ‘refreshing’ aspect into your growth objectives to extract more?

We should question many of the ‘established’ approaches and challenge them with fresher, more up-to-date thinking based on current data, innovation thinking around economic need and the ability to provide improved value.

A handy 12 critical step process to work through

I feel this can provide a useful diagnostic structured framework for equipping yourself for working through a renewing programme:

These are:

  1. Assessments that firstly evaluate your present position. Build this not only on simply internal observation but on external evaluations. Separate the opinions and the facts, highlight potential weaknesses, and investigate the culture needed for renewal to be integrated into your innovation process.
  2. Next, benchmark quickly your competitors, your peers. Also search quickly across other activities that are normally out of your ‘existing line of sight’ for different insights. These investigations begin to build the momentum for ‘why’ change, ‘what’ justifies rethinking and ‘how’ others have seen shifts to adapt and respond in more relevant and interesting ways to todays tougher environment.
  3. Seek out those pockets of resistance internally and externally. Often these are constantly just below the surface or even can be quite deep seated that undermine, block or resist the re-visiting of past products, processes, policies or services as they have vested interest in keeping the ‘status quo’ in place.  Address the critical issues through a change resistance grid and resolve the obstacles through a variety of exploritory methods and techniques used in often ‘classic’ change programmes, to draw out resistence and gain increased recognition that this need for review, leading to renewal, makes real sense.
  4. Making a battery of tests to assess the readiness for change. Turn blockage into ‘seeing’ opportunities. Build the resilience and capability understanding so as when you make change you are better equipped. Make an evaluation of where innovation has contributed to your performance in the past and where you can extend this further through a strategic renewal approach. Talk about this broadly as a team. Make this an ‘ongoing’ build from constant learning.
  5. Approach solutions with a greater understanding of the different people style options. Seek out that diversity, look for those traits of leadership and really draw in that fresh and different dimensions that might have been trampled on in the past,  to improve your thinking and extend all the potential options. Look to break down possible blockages and past resentments by recognizing and adopting different techniques for different people, seek inclusion whereever you can. One size certainly does not fit all and respecting all the diversity across the organization, within your customers, those lapsed ones and those that have never engaged, will add such a ‘zest’ within any refreshing, re-evaluating exercise, to build a richer portfolio of renewing options.
  6. Apply the learning techniques of facilitation to mobilize latent energy. Provide encouragement, revitalize and respond to the multiple layers of potential to contribute, within your organization. Spend the appropriate amount of time in building this into the renewable actions you are needing to take for changing the environment and climate for innovation you have today to thrive even more.
  7. Focus upon the critical aspects of your offering that are core. You can begin by assessesing, realigning, restructuring and redeploying around the three critical aspects of your core offering through clear innovation thinking : 1) making the ultimate customer the centre of your thinking 2) addressing your products and service quality and offerings at the new innovation speed expected, 3) build increasing agility, flexibility and anticipation into what you want to offer to meet the new constantly changing market or societal needs. Make these central to your new thinking as you work through opportunity areas for renewal.
  8. Managing innovation change needs a clear, dedicated focus in clarifying plans, thinking through new systems and practices. You need to commit to more training and constant support, providing feedback, managing the inherent stress this any renewing still has and can cause by placing the building blocks of commitment and shared identification as central to this effort.
  9. Knowing where the levers are to revitalize innovation requires a range of techniques and dedicated innovation champions to clarify objectives and to provide guidance and authentic authority- listen to them. It is through these dedicated champions of innovation change that you begin to organise around, involve them in any decisions, work with them to communicate new policy or shifts in strategic position to integrate these across the organization.
  10. Innovation regeneration needs setting new visions, new directions and goals . You need to construct the appropriate action plans, track results, update and re-adjust from fresh knowledge and learning so these begin to restore a growing sense of identity and corporate value. Construct a clear set of communication plans to cascade these changes throughout the organization. Let everyone feel, hear and see the changes and identify with your ‘sense of renewal’.
  11. Provide clear solutions that define the structure, systems and processes. Don’t duck them. Invest in the design considerations with care and forethought. Plan any cultural or structural shifts so as to provide the learning platforms for the potential you will be needing in investing in new competencies and skills that place a premium on what needs to be adapted. Invest in growing your networks that inform, promote and identify the emerging vision of why we need to do things differently.
  12. Place innovation at the heart of any regenerating process. Exploring new growth opportunities that have been discovered needs to be structured back into the process. It needs equally a constant checking of alignment of renewed innovation back into the organizations strateg to be thoughtfully aligned across all activities. This alignment is a C-board imperative, otherwise nothing really changes as you don’t want to simply achieved a simple ‘lick’ of innovation paint to an extremley valuable area of (re) growing your business.

Renewal through innovating often needs to take away redundancy also.

The need for making the case for renewal and charting the path towards the solutions is no different than any other corporate initiative. Making the commitment and getting others to sign on is sometimes hard, but essential. Seeking out places of ‘duplication’ and latent redundancy is also necessary to build into any renewal programmes.

It takes a real innovation spirit to renew, thinking this through in different new ways. Focusing on renewal offers much. Don’t just rip-up or simply dispose of what we have, think through what renewing can give us in improved solutions, often at much lower cost and customer acceptance.

Economic growth is an outcome of the innovation trajectory we set.

Today managing innovation is complex; often success is measured and valued by the creative destruction of others. The ability to ‘evolve’ is very determinant on the knowledge base, either within a given economy or within a ‘federation’ to bring together as something new, offering more value than what is on offer today. Innovation is highly dynamic in its constant change but also in its needs of constant co-ordination of its parts.

Nations are Very Different

No one nation can just copy another, the same as one business entity cannot simply copy another, each has distinct characteristics, a history and a certain set of ‘physical’ boundaries on where it is located. Different cultures, different histories set each Nation apart.

The main differences of Nations requiring to innovate is they simply just can’t migrate to another country or spread themselves around the globe to tap into the activities in these different places, they are geographically bound. Nations have to think differently, they are firmly anchored and the job of nations is to attract innovation activity so as to ‘create the right conditions’ and facilitate these as best they can, and work within the economic circumstances they find themselves within. They can’t escape but they can create the ‘right’ conditions and now what they are good at or could be good at.

Proactive Innovation Needs to be Channelled through Entrepreneurs

Innovation is considered one of the few proactive strategies available to promote wealth and growth. It does need organizing; it cannot be left to chance. It is working on the connectivity points; to reduce often abstract agenda’s and turn them into tangible opportunities. We need to make the approaches and thinking around innovation as coherent, accessible and open as possible.

At the heart of any future within innovation is the entrepreneur and the ability of nations to succeed in today’s environment of ‘stagnation’ is to provide the environment for these new entities and smaller ideas -rich ones to grow. Joseph Schumpeter talked about ‘creative destruction’ many years ago, back in 1942, that applies even more in today’s world. “Creative destruction resulting from innovation and entrepreneurship is the force that creates sustainable long-term economic growth”.

He concluded that radical innovation can lead to a better society but it is the way you interpret this will determine the winners from the losers. In Europe the entrepreneur exploits existing structures whereas that shinning beacon of entrepreneur activity lying in Silicon Valley and in a number of other innovation hot spots of the USA seem to have a greater appetite for radical change. This has its consequences and its attractions. Venture capital has its concentration in the US; failure is not only tolerated but talked about as a learning point, a certain badge of honour even. In much of the rest of the world failure is a heavy stigma that constrains and is often judged harshly by society.

The USA does have the inbuilt structure and capabilities to realize a new innovation spirit

If the US was to really extract and study its emerging innovation activity, that certain ‘collective learning curve’ often not captured enough to see the discernable patterns. It might realize it has its new launching point, to position itself even further as the vibrant ecosystem for innovation start up and acceleration, the place where you do create new jobs and future wealth of a nation.

The US has most, if not all, of the factors needed in place or easily put into place, it just needs a collective recognition of what it has, what it can provide and that is simply, going back to what America use to do best; to provide the best possible conditions to pioneer, to explore, to extract, to venture forth and simply innovate.

It is through the recognition that the small business is the economic generator of jobs and through recognizing and then intensifying the factors that will allow entrepreneurship to flourish, that a path to growth can occur.

The American dream is still caught up always in the adventure, that pioneering need; innovation can certainly feed that ‘desire’. The Americans are curious, enjoy experimenting and pushing the limits. They need to reawaken the entrepreneurial spirit further and regain that roaming spirit by moving across the new innovation landscape or prairie, this time a global one, to explore and experiment. It is certainly a place that the US can grasp, as a nation and transform its economy back to an engine of value and real worth it is through entrepreneurism.

Encourage proactive practices not protective practices

To do this policy needs to ‘anchor’ everything that entrepreneurs require and seek to protect this by all the means possible, not in protective practices but in proactive practices and stimulus.

So if I was setting innovation policy in the US or even Europe. I would certainly clear the current innovation ‘wood for the trees’ so it can then allow the emerging best to grow tall and give the new growth needed for the ‘ecosystem’ it will attract around it to provide new jobs and fresh growth. This is focusing clearly on entrepreneurs as the place to give the best return for moving our stagnating economies forward again.

The ‘pull’ of the dual forces within our cultural thinking

I lived for about fifteen years in Asia until a short while ago, and in the before and in the in-between period, I travelled there a lot. Participating in Asia, watching how Asia has evolved has been a real experience, that stays with you as something hugely valuable, as it partly shapes your thinking and how you look at things going on in the world. Some events today set me thinking that resulted in this blog.

It was August 3rd 2010, exactly one year ago today,  I wrote one of my first blog entries for this site, entitled “the Yin and Yang of Innovation” (http://bit.ly/gXeWir)  and talked about the ‘fluidness’ in innovation that makes it hard to manage. How do you get the balance right in managing the innovation activity?

I described yin yang as polar opposites or seemingly contrary forces that are interconnected and interdependent in the natural world, and how they give rise to each other in turn. Opposites thus only exist in relation to each other.

Yin and yang are bound together as parts of a mutual whole

I’m presently working through Langdon Morris’s new book “the Innovation Master Plan”, written to compliment his previous book “Permanent Innovation”. Both offer such good, solid common sense around innovation. I recommend you lay your hands on copies if you can.

One comment made in this latest book by Langdon was talking through the strategic viewpoint and what and where innovation fits. He was describing this strategic viewpoint stating innovation is the means of gaining advantage while from the operational viewpoint it is often the means of survival. He suggests the most effective approaches to innovation will continually strive to address both the strategic and operational benefits, neither to the exclusion of the others.

So here I am one year later back at my feeling of yin yang of innovation. Again the two aspects discussed by Langdon are in need of mutual support. I value the mutual forces innovation needs.

The cultural opposites when East meets West are worth considering also.

East and West- the different meeting points in understanding

This yin yang triggered me to reflect on the constant dilemma we have between Asian and Western thinking and I thought I should share these orientation opposites with you. They might help you.

These orientations have built up for me in my understanding over this extensive periods, living, travelling  and working in Asia over many years. They are structured on cultural aspects well studied, certainly well written about and discussed with many people trying to figure out the many cultural differences they seemingly encounter in dealing with the East or visa-versa, the West ,and trying to understand the behaviours behind these differences.

Clearly not each person can be ‘assigned’ a specific label but these suggested observations serve as useful generalizations and as a broad reference to refer too, that might help resolve ‘cultural differences’ and gain a better understanding of why innovation is often seen through different cultural lenses and can produce very different insights and observations that can lead onto completely different innovation solutions to meet different cultural needs.

Dilemmas of orientation and management when East meets West.

There is a real importance in fully appreciating sometimes really big differences between not only cultures but ways different groups go about their ‘collective’ business.  For instance we, in the West, often fall into a trap of ‘forcing’ the pace, whereas in Asia ‘pace’ is determined by a number of often complex factors that need to be fully appreciated and accounted for. We need to recognise differences and balance them.

When you assess your progress in Asia, your ability to engage effectively,  this handy list might be a useful guide and reminder to refer too on measuring your progress and ‘seeing’ why you are often not making the necessary progress you expected or get caught out by surprise. This clearly is a generalization but more often than not, stands the test of difference.

Western orientation                                                                      Asian orientation

Focus on the individual Focus on the group
Individualist cultures promote individual success and self-assertiveness. Individual responsibility, individual uniqueness, and freedom of decision are highly appreciated and valued. In cultures, which focus on group affiliation (often called collectivist cultures), loyalty to groups and social relationships is more important than individual principles and success.
Achievement orientation Status orientation
Often Power and influence are determined by achievement and by the results of actions and clearly acknowledged. Power and influence on ascribed status parameters such as academic degrees, social background, age, position within the organisation etc
Hierarchical organisation and authority Participative orientation and autonomy
Inequalities are accepted, often freely discussed openly outside the organisation; responsibilities and obligations are hierarchically structured. Decisions are centralised and limited to a few persons. Participation and consensual decision making is highly appreciated. Symbols of status and power are minimised. Decisions are passed up the chain of command and debated, often at great length
Time orientation monochronical Time orientation polychronical
Structured time schedules, punctuality, sequential organisation of daily and long-term activities, strict time management are dominant and valued. Flexible time schedule, synchronically organisation of variant activities at the same time and minor importance placed on punctuality, are markers of this cultural orientation.
Time orientation past/present/future
Time perspectives are differently valued: orientation towards the past values tradition and traditional types of corporate identities, often symbolized by historical heroes;

Orientation towards the present focuses on the here and now, on short-term consequences and immediate profit;

Future orientation is guided more by long-term perspectives, and a tendency for planning on a well-founded empirical basis.

 

Pragmatic approach Conceptual approach
Decisions are favoured if based on empirical facts and are evaluated according to their concrete effects on clearly defined areas. Decisions are favoured if based on knowledge and coherence; they are evaluated by criteria of logical coherence and intellectual insight.
Universalism Particularism
The search for the single best solution and strategy is a dominant idea, often totally dismissing the opening up to new possibilities as to hard to achieve. The necessity to adapt to concrete situations, changing conditions and specific relationships is a guiding principle. Compromise and flexibility are sought by knowing the others position.
Communication and Social Relationships
Explicit Implicit
The ideal communication means are written detailed and explicitly formulated texts, agreements and contracts. A lot of important information is transmitted by the “non-said'; the context, partner and subject influence the interpretation of information. This keeps it fluid and open
Conflict oriented Harmony maintenance
Conflicts should be expressed as early as possible and tackled in a direct and overt way. Often this creates embarrassment to the other party and creates inner conflict Resolution of conflicts is less important than maintenance of good relationships; group harmony influences the interpretation of information.
Affective Neutral
The overt expression of affective and emotional reactions is considered normal and freely offered as establishing a ‘relationship’ but this really occurs over a long time of mutual trust and reciprocation. Emotional reactions have to be avoided as a potential source of embarrassment and status loss.  Personal thoughts are rarely expressed in private and non-professional life until the parties become extremely comfortable and trusting.
Diffuse Specific
Role and status ascriptions are not limited to specific areas or tasks. Many often superfluous relationships prevail and seen as normal and valuable but don’t have great value attached to them. Personal relationships are well defined and often very specific, as far as their range and importance are concerned. Long-term value of the personal relationship is highly valued

Valuing these orientations, respecting what they mean can help yield better results through appreciation.

These orientations have given me a good understanding while working in Asia.  Over my extensive periods living and working in Asia for the past 20 plus years I’ve been able to validate many of them. Innovation needs equally  a clear balance in orientation, so does our cultural lenses we view the world through. I hope they provide you a useful way to balance out and appreciate differences in a world of growing mutual dependence.

Valuing cultural differences and diversity offers many more innovative possibilities, explore them all, one is not mutually exclusive, they offer different perspectives .

Learning to absorb new knowledge for innovation

In a blog I wrote in November last year entitled “Moving-towards-a-more-distributed-innovation-model”( http://bit.ly/b38ixv)  I outlined some thoughts on the flow of knowledge in a distributed innovation model and discussed the Absorptive Capacities more from an internal organizational perspective.

Increasingly we are looking outside for new knowledge that needs internally managing.

As organizations seek increasingly outside their own walls, the appreciation of how they are managing knowledge, learning and interpretating this is becoming a critical aspect of open innovation to be successful. There is a growing need to absorb, integrate and apply this in new and novel ways for accelerating the innovation performance.  The more we seek, the more the knowledge increases in complexity as markets are rapidly changing. The more we are relying on knowledge flowing into the organization the more we have to strength our inter-dependence and collaboration efforts to extract the knowledge we are acquiring for it potential value. Are organizations recognizing the value of structuring their knowledge flows? Do they have the right learning mechanisms to accelerate and exploit new potentials from this knowledge?

Organizations tend to be set up for incremental learning.

Often the markets we operate within are volatile and suddenly change. Our capacity to change is often governed by the new knowledge we are provided. To make a change beyond incremental learning we need a different path of learning, we need often new capabilities to learn. We all tend to place what is being said to us as highly situational and we often interpretive it in the way that we know, we reject alternatives to see things differently and as such we do not spot the innovation opportunity that was actually in front of us. We look for what we know. This is sometimes called being locked within your own ‘competency trap’. To move away from this risk we need stronger learning mechanisms, a change in the path of learning.

Understanding Absorptive Capacity and how it works

“Absorptive capacity” is a term introduced through some academic research by Cohen & Levinthal, back in 1990 to describe an organizations “ability to recognize the value of new, external information (knowledge), assimilate it, and apply it to commercial ends”. Since then there has been significant academic contributions for exploring and validating this, in order to improve innovation performance and competitive advantage yet it is still not well integrated into our innovation process.

What we do need is to improve our HR management systems to build a more efficient transfer of knowledge throughout the organization to leverage it. This is part of applying the principles of absorptive capacity as we increasingly use more networks, external partners and collaborate with others we are accessing wider skills, inputs and competencies and we need to learn what this provide to aid the innovation process. The theory goes that the more we understand, the more the innovative behaviour and capability goes up in potential, then the more we have in richer innovation choice .

The Model of Absorptive Capacity explores potential and realized knowledge.

The Absorptive Capacity Components

The need for a distributed organization innovation knowledge system

In some studies by Van den Bosch et all (2003) they suggested the need for three combined capabilities to manage and absorb the flow of knowledge coming into the organization

  1. System capabilities that are used to integrate explicit knowledge
  2. Co-ordination capabilities that build upon teams that establish the routines for structuring communications
  3. Socialization capabilities that begin to share a ‘certain’ ideology, understand the potential of new paradigms and work towards interpretating tacit information for the good of the community.

When organizations are acquiring new insights, new knowledge that is not as closely related to their existing knowledge base there needs to be a very active set of efforts to manage this new incoming flow so as to extract all its potential value, to absorb it and disseminate it across the relevant parties within the organization. Having the three capability parts structured clear helps establish different areas of capability focus and embed it more fully.

Can you imagine the need for rapid learning of leading-edge knowledge that is required to be absorbed within the company, these require dedicated structured learning, and these cannot be left to individuals or ad hoc measures. When you are learning anew you are searching for cognitive structure, managing implicit, often un-codified knowledge (tacit) that is difficult to transfer and also increased complexity, where you need to absorb a greater range of ‘components’ and apply new‘ architectural’ knowledge. The difficulties multiply if you do not recognize the needs to structure knowledge but to explore it in more open unbiased ways.

The ability to use external knowledge has three sequential processes.

A)     Exploratory Learning- recognizing and understanding the potential value of the new knowledge that lies outside the organization

B)      Transformative learning- dispersing and assimilating the valuable new knowledge

C)      Exploitative learning- using the assimilated knowledge to create something different in knowledge or product and seek to exploit this in commercial ways.

The more open Absorptive Capacity Process leading to understanding and outcomes

The more ‘open’ Absorptive Capacity Process

The call for managing the effective use of knowledge

One of the central drivers of the competitiveness of organizations is its effective use of knowledge. It is the generation, acquisition, integration and application of (new) knowledge needs managers to manage learning. Knowledge underpins innovation, the more it changes, the more it becomes complex to discover, the more we have of this real need to upgrade how we experience, experiment and absorb learning. This needs structuring. As we absorb more external knowledge from our collaborators the need is to organise this well. Absorptive capacity needs to go beyond good theories into increased application. Absorptive capacity is an integral part of an organizations innovation capabilities and its healthy development is a real significant dimension of innovation management that we all need to consider well.

The importance of managing our intangible capital is the key for today’s innovating business.

Today, we are valuing organizations in completely different ways than some years back. In the past we were valuing organizations purely on their tangible assets, the ‘hard’ (easier to) quantify assets, shown on the balance sheets as the basis for the value of the organization. Today that is not the case; it is more the off-balance sheet bound up in networks, relationships, connections and the ability to manage the fluidity that is occurring constantly around us, and the organizations ability to respond appropriately in seeking out improved, new value through better innovative offerings .

Intangibles are providing the new value system equation to focus upon

We are valuing the knowledge perspective far more and this is increasingly recognizing the importance of the intellectual capital that makes up the organization. The more intangible assets are being recognized as the valuable aspects of the potential future of a business. These are the more ‘dynamic’ parts that come under human capital (competency, sharing, collaborative, learning quickly, collective competence and enduring value for the future), the innovation capital (creativity, fast prototyping, risk taking, empowerment, replacement/ renewal), the relationship capital (responsiveness, retention, connections), and customer capital (the customer base, the potential and the ability to connect) and finally, the process capital (productivity, cycle time, process yield, on time delivery) is perhaps more traditional that has many intangibles that are becoming far  more tangible in outcomes today that are highly valued.

It is these five capitals that together are making up the intellectual, more dynamic, capitals that are valued far more today than traditional assets ‘seen’ on a balance sheet (buildings, machinery, the physical more static assets).

The real value creation capabilities of the five intangible capitals

It is the ability to combine these five capitals (human, innovation, relationship, customer and process) that offers the real value creation capabilities of organizations yet these are the very things ignored in existing current balance sheets, not valued in the assets of the organisation. Surely this is wrong and indicating we need our accounting systems to catch up and capture the real valuable picture within our organizations?

These ‘capitals’ are often well hidden yet they are the real, ongoing value creation capitals. How can we identify these both internally and externally in better ways to give us a clearer understanding of the investments that are going into developing these capitals to measure against the results?

How can we develop the right story of how the organization creates value? It is by bringing together these more intellectual capitals to reflect the shifts that have been taking place in knowing what is within the organizations actual asset base; the assets that create the wealth.

We need to re-think the old world value delivery systems to assess organizations

The value chain that is good for one day is often not good for another. It needs to be constantly challenged and changed, to meet the consistently ‘disruptive’ conditions being faced. We need to have an effective ‘innovation machine’, we need to have increasing reliance on open networks as the new key assets and a really clear understanding of the new dynamics of power, the difficult-to-replicate capabilities and competencies that are made up with the five capitals mentioned above. Within these five capitals lay the unique competitive edges that offer real advantage that cannot be duplicated or replicated or often matched easily. These need increased focus.

An organizations ability to flourish in today’s hyper competitive environment organizations will be totally dependent on their abilities to manage the five capitals that make up most of its intangibles. Often these are left as not as fully realized in their potential value. Unlocking these you unleash the true potential of organizations to be constantly ‘dynamic’ in their activities to adapt and respond, listen and learn and leverage their unique assets.

Finding the right solutions – moving intangibles to tangibles.

Are we focusing enough on these five capitals of human, innovation, relationship, customer and process? Perhaps until we learn how to capture and measure their true value they will remain hidden from plain sight and still constitute investment risk for many. This applies to both inside the organization and in external understanding. Internally if you are not consistently measuring your capitals you don’t leverage them fully and as these five capitals are often intangible, they are not well measured. Equally investors are very reluctant to invest without this necessary insight to judge the organization’s real value creation potential, and so they simply rely on historical data, old formats of accounts and balance sheets and then simply apply selective discounts to the investment premium.

We need to find better solutions to quantifying and qualifying the intangibles within organizations, by making them increasingly more tangible, so all can see and value them for their real wealth creating potentials.

We need to provide tangible outcomes from managing the intangibles, as these are making up the really important wealth creating capital of the organizations and this is where internal  investments need to be well positioned, clarified and defined. To create new value you need to innovate, to innnovate you need to invest in these five (more) intangible capitals but you need to know where, why and what you are getting for that investment. You need to understand these capitals and make them tangible for everyone involved, it is the key to unlock your latent wealth.