Journeying across the darker side of the innovation moon

When you decide to make any trip, you need to have some sort of roadmap to navigate yourself by. The difficulty is when you decide to step into the other side of the often known, into the lesser known or completely unknown sides of innovation, where there seems to be no decent roadmap, the enjoyment is partly in setting about it and trying to create it, to piece it together.

I wrote about the dark side of the innovation moon in mid-2012 and why it should always make us curious. Within my blogs that I’ve written here on this site I have kept coming back to its initial stated aim of “building the DNA of innovation” This has become a real journey of ‘stated intent’.

My journey of the past 18 months

For me, in the past eighteen months or so, I have achieved much of what I wanted in ‘advancing’ awareness of innovation, mine as well as others, for those that cared to read my ‘wanderings’. I wanted to wander and explore innovation, go where it takes me, sometimes follow a whim , pursue an avenue of enquiry or rely on the known facts and see if they ‘stand up’ to examination, to analysis, to actual practical application.

While I’ve also travelled on this investigative journey I have equally had to stay ‘grounded’ in the work that allows me to make these ventures. This grounding is the work I do with clients in advising, coaching, mentoring or consulting on innovation. It often is from my exploring comes the very source or triggering points, that many need to have explained, to help them in overcoming their problems or roadblocks.

Often these conversations determine where my next foray will take me in my explorations. I am just always uncomfortable when there are open issues left over from these engagements, that I felt I did not have the best answers when asked. It makes me want to go and find better answers. It is in all honesty, a never-ending quest if you have an enquiring mind. Innovation is always restless and constantly evolving, so we also need to be. So I have to certainly be.

So much within innovation is hidden, it is implicit not explicit, it relies on the people element for its generation and that is so often reliant on gathering a set of experiences to translate this dispersed knowledge into all the necessary connections to make something different, something new, something that is needed in the market place.

Exploring the lesser known regions of innovation, amplifying the known

In my travels I’ve explored much of the less understood sides of innovation. I have set about to try to explain them. I’ve tried to relate them to the aspects of everyday innovation, give those novel and logical frameworks or some method and structures to approach them, so they can be integrated into this work. Some have worked better than others.

When you arrive back to a certain point, you take stock, you reflect, you judge what has made a contribution or not, what still needs explaining more. Don’t get me wrong this is not a one man quest to explain innovation but it is borne from a real belief we do need to push the boundaries of innovation.

We do need innovation to enter the mainstream of our everyday thinking, to be something we feel naturally comfortable undertaking, as part of our make-up for our growth or prosperity. I often feel those that ‘see’ innovation that listen and engage, still make up the minority. It is those that don’t understand innovation, and I feel this is the majority, including most of our leaders, who simply pass over it, these are the ones we must find ways to draw into our circle of influence.

Presently those that are not fully picking up on the value of innovation are happily assuming others are fully active and totally switched on to all that makes up innovation potential. We need to get them involved. They have not fully realized they are as essential to contribute to a sustaining future, based on innovation solutions, so we can collectively tackle growing societal problems. We need to move ‘many’ from being the problem to being ‘engaged’ in mapping out the innovating future so innovation can fulfil its latent potential .

Drawing in the vast majority so we all become innovation savvy

The sad truth is, until we bring innovation up in each person’s thinking, we stumble along. The joy of any investigative journey that you undertake, is that you meet fellow travellers along the way. I am blown away at all the creative and thoughtful innovation thinking going on but sadly, still have to ‘put up’  with that not so imaginative thinking that goes equally under the guise of innovation writing.

I’m not just talking about those tired old lists of handy, instant solutions to follow that conveying that promise that this will help you to master innovation, but the many trivial comments that are just beyond twitter length. These often do not serve innovation well, or for the person grabbing at them feeling that if they clamber on board, they can float along quite safely. How wrong they are, they are simply drifting along, most probably moving further away from their real objective.

We all need some form of roadmap or blueprint I feel for innovation and life

We do need our roadmaps, our blueprints of innovation. They are essential when we decide to undertake a journey. If you don’t have the essential of a compass, spare food and drink, warm clothing, good walking or mountain shoes then you should not venture out into the mountains. I am more than fortunate, to live in an area surrounding by mountains and you give them a certain respect, I think innovation deserves that as well.

So I have taken stock of this journey I’ve been making in the name of innovation. I’ve written about 120 articles (blogs) in this time, applied the learning wherever possible. Some of the results have been highly satisfying, even gratifying, others upon reflection simply did not work out as well as they should have done, I felt they did not get the ‘resonance’ I had desired or intended.

Clearly I set out in my search and have ended up eighteen months later, very clear on one absolutely basic point for innovation. If we do not come together and gain a common language for innovation, not as a throw away buzz point, but as a unifying point, we will never be able to teach and transfer innovation to all the others that have not bothered to pick up on understanding the innovation language.

Why is a common language for innovation important?

Innovation has so many pockets of confusion and traps to fall into for adding to our inefficiencies. We still see so much fragmented energy, plenty of differences of approach and potential misunderstandings. It often saps the very juice of innovation. Organizations have plenty of unproductive capital, even when they hack away at all the undergrowth. Resource allocation required for good innovation remains patchy, under-served and often starved. We all become increasing busy at fixing what we have, trying to understand those hidden costs, spent energies and lost opportunities.

Until we arrive at a more uniformed approach to innovation, improve the management of innovation and its development within our systems, structures and processes we stay stuck in constant re-invention and duplication. Seeking a common language allows us to form ‘stickiness’ in value, it becomes the glue to align the parts that make up innovation and forms the whole we seek.

Reflecting on a journey, translating it into clear outcomes

I think I should stop journeying and focus down in the future just a little more. There are real focal points of need that will be required for us all to live through in 2013. Having available possible solutions, providing some objective advice (hopefully) so as to discuss and demonstrate these for clear points of impact can be more beneficial at this time. My journey needs to become more based on an ‘expedition’ to deliver even more tangible benefits and outcomes to all that care to engage.

Moving into 2013

So 2013 will be for me, one that becomes a ‘converting and driving’ of many of the areas I have been investigating in the recent past. Exploiting and extending, experimenting and exploring.  It allows me to extend further in that constant sense of renewal I always feel we need to have when one year closes and another one beckons.

Any ’journeyman’ always welcomes those moments of recuperation before that need to go back out and ‘push out’ on the next adventure. Certainly for me innovation is certainly that, full of excitement where you can be enterprising and intrepid, thoughtful and determined.

I just need a ‘touch more’ of the enterprising to come out in 2013 as my stated intent and be more focused on those impact points we are all in search of. Tackling the issues, challenges and problems where I hopefully can contribute clear solutions too, one way or another.

So my goal is to be “the innovation translation point” for providing the needed impact and focus by supporting and delivering different solutions to the challenges we will be facing in the year ahead. Simple huh! Why not set a challenging target?

Please enjoy your Christmas and New Year celebrations, I certainly will.  Thank you for all your time that you have invested in reading my thoughts, its highly valued and greatly appreciated.

The seperation effect required for innovation

I have recently been in some different discussions about the merits and balances required to manage incremental and radical innovation. Partly this is in preparation for a workshop later this month but partly from a conversation I am having with a sizable, well respected organization, with its head office based here in Europe.

In the conversation within the organization we were discussing the breakdown in their treatment of incremental and radical and they suggested this was being managed within an “ambidextrous structure” yet I was not convinced. I have to point out this was only a part of a broader story on the difficulties of managing conflicting innovation demands that they were having. One key constraint in their thinking I feel was not having distinct units as they were trying to manage incremental and radical through the same process and that, for me, is a basic mistake.

I feel to truly claim an ambidextrous organization you have to be working towards the conceptual model offered by Reilly and Tushman on the “Ambidextrous Organization”

Reilly and Tushman’s argument was to truly flourish, not only do you need to maintain a variety of innovation efforts but  it does need more of a recognition of the full organization to manage these differently, not in isolation or selected parts of your organization. You need to consciously address the differences and build those into the twin process of managing incremental and radical. Let me offer my take on this.

Simultaneous the need is to manage the differences in Exploration & Exploitation.

I love how two words have such potential in their meaning and approach. It is the same as ‘divergence or convergence’. They clarify distinct differences, you don’t merge them, and you treat them as one leading into the other (divergence into convergence) or running in parallel (exploration & exploitation) for good reason.

The exploring and exploiting does needs separation. In organizations that practice ambidextrous design they separate the new, exploratory units from their more traditional, exploitative ones, allowing for different processes, structures, and cultures to emerge but it is at the senior management level they maintain tight links. This way you can pioneer more breakthrough or even disruptive innovation while allowing the incremental gains to be focused, and optimized without this consistent set of  distractions of trying to balance the two within the same resource pool or trying to squeeze it through the same assessment and time line process.

It is very different when you have to go on exploratory expeditions which are harder to determine and the last thing is having the constant pressure of balancing for time and between types of innovation. Exploration & Exploitation approaches need really different measuring metrics also.

It is at the senior leadership level any conflicts are managed not within the unit or organization department or even by a head of the unit if the organization does not manage in this ‘ambidextrous’ way. If you attempt to manage these together I think you don’t extract the full benefits you can gain from a more dedicated focuses working on distinctly different innovation needs.

What does radical mean to you?

The other issue I have is the use of ‘radical’ within the discussion. This can create such different meaning for each of us and can certainly be preconceived, so it already becomes hard to let go or change. Also ‘radical’ is often felt in larger organizations as something that simply does not fit as they are not a radical organization but a careful, often too cautious one. So ‘breakthrough’ seems to be a more natural fit and sits opposite of ‘incremental’ far more in my mind and it seems most others, worried over the ‘radical’ label. For incremental you exploit  through upgrading, adding more choice or building on what you presently offer, whereas you explore far more for breakthrough projects.

You can rightly point out there are numerous different type approaches and I recently wrote on what is the appropriate design within our organization (http://bit.ly/zdUhKp ) using radical I know. Your type is partly determined by your structure and its degree of optimization of its potential flexibility and what you need to achieve.

So what are differences to be recognized for Exploring and Exploiting?

The understanding has to come back to alignment, the alignment to strategic intent (of the innovation need) and the recognition of distinct differences in critical tasks. It is defining the differences is the role of the leader, who is either managing incremental or breakthrough innovation,as they should focus on different competences, controls, rewards and the environment you are expected to work within, to deliver these as effectively as possible. It is difficult to ‘flip’ between the two as they call for distinct mindsets.

Again it is the power of the difference in thinking about these. Using the comparison of exploitative versus exploratory in this two word comparison that I love, does give you the real differences in the focus that needs to be recognized and undertaken.

Exploitative focus Exploratory focus
Incremental Breakthrough
Cost Growth
Operational Entrepreneurial
Formal Fluid
Rigid Adaptive
Linear Self-organizing
Attainment Grasp
Efficiency Experimenting
Development Research
Continuous Discontinuous
Inside-the-box Outside-the-box
Analytical Investigative
Examine Explore
Verify Detect
Extract Probe
Protect Challenge
Productive Milestones
Lower-risk Risk-taking
Directive, top-down Visionary, involved

I’m sure you can extend this list even more but the point is that the difference in mindset is significantly opposite. Can you apply these within the same business group or unit? I seriously doubt it.

Eating from the same innovation stew pot everyday might not be the best solution.

As we think of innovation we have to be careful not to limit ourselves, not just in approach or types but in the way we set about and manage this. Trying to bring all aspects of innovation activity into one ‘pot’ means you end up with a often underwhelming stew. It simply fails to really deliver, as you failed to do the necessary separating and distinctive preparations that all the parts needed to be achieved as your end result, to meet the different market needs that are around.

You need to seperate. Innovation that sets about protecting the core, building and strengthening it and that that pushes and extends the business beyond this really do need really different mindsets in approaching and managing across the organization.  Not just in  isolated pockets struggling to balance the different demands being placed on them.

Within these ‘collective’ silo’s they can’t differentiate distinctly enough and until this is fully understood it constrains and adds unnecessary pressures. Unless you address this  it is never fully appreciated across the organization on what is needed to be going on and how you should support and measure it’s results. Bundled up it all becomes a compromise.

There needs to be this realization that incremental and breakthrough are so different in activities, processes, structure, cultures and metrics to achieve the optimized effect. Having a clear seperation in managing incremental and breakthrough innovations is more effective and efficient but please don’t tip them in in the same pot, but distinct and seperate innovation ‘cooking’ mediums, to achieve a more outstanding and differentiated set of results where compromise was not down to being mixed into the same general approach.

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.

Can innovation lead us to economic recovery?

After some recent #innochat debates (www.innochat.com)  around innovation including the future of Nations, of the US, and of innovation itself and how it needs an organizing framework to work more efficiently,  I wanted to dig a little deeper, to get my own head around all of this. We do have real problems in the world and we need to find solutions but something strange is happening and I was not sure I understood it. So I’ve been on a little investigative journey that is beginning to make some good sense, well at least to me.

A host of financial contagion has been heaped upon us progressively in recent years.

We have gone through a host of speculative bubbles, rising debts, global recessions in the recent years and we are still standing. Our real financial assets seem to have been refinanced a few times to enter into our jargon the use of ‘toxic assets’ that we are still working through. Many of the developed world’s economies are far too weak to create jobs or achieve the economic growth spoken about by our politicians. Increased government backed spending is heading us to another bubble based on imported price inflation, rising commodity prices and steps that might take us back to increased taxes, higher inflation and lower public services. Even if some form of deal is made at the eleventh hour to raise the debt ceiling in the US, it will only be a short term stop gap. We seem to be in deep trouble.

Yet we still seemingly function, in some parts extremely well, others badly- why?

Where I do puzzle though, is why do our economies still function?  We seem to be still standing, well hopefully, as I write this blog with the US debt deadline fast approaching of August 2nd. There is a set of arguments that build on the thinking that we are measuring the wrong activities. We are still caught up in the economic theories of the 20th century of models and doctrine.

According to some, a new theory is emerging in the last decade, the one called “innovation economics”. It is based on knowledge, technology, entrepreneurship and innovation and these take a more centre stage and are combined forces that are mutually dependent.

The issue is that the ‘force’ of innovation has not yet been fully grasped in economic models or government policies. It is ‘lagging’ partly as many of the dominant advisors advocate older models of measures that ignore or simply have not been adequately captured enough to influence or change the economic thinking around the importance of innovation.  The present older economic thinking is still based on allocating efficiently, searching for equilibrium, trying to ‘force’ rationality into markets, thinking individuals are constantly searching for this but are they?

Innovation economics works in different ways according to what I’m still trying to fully understand (if I ever will). Firstly there are constant ‘disruptive’ forces that keep the markets constantly out of equilibrium or disturb it simply to knock it out of this ‘even’ state. Resources are invested not according to ‘edict’ or just policy levers alone but seek to go where there is a natural ‘intersection’ where the convergence of those factors that meet the ‘need’ just simply combine. These respect no borders, they go where they seem to work, and these are where innovative activities thrive.

Nothing is as predictable as we have come to expect in the past, it is this seeking out extraordinary changes in new ideas, concepts and connections that has a powerful new force behind it for this new economic force. We live in simply ‘chaotic’ times and we need to manage this accordingly, to ‘grab’ the breaking opportunites and to ‘anchor them’ onto our shores, by providing the innovation factors that are needed and attractive; to commit and grow them around mutual partnerships and dependencies.

Recognizing this quantum change

If we accept or get a ‘sense’ that “innovation economics” are driving economies, often in hidden ways, then the quicker we identify the critical levers of innovation the better. The old school of capital accumulation and its value (to stockholders), budget management thinking of surplus or deficit, social spending all get challenged in very different, perhaps unique ways. Governments and the different sectors (business, non profit, communities) need to work out the building blocks of innovation in far more smarter ways than today.

We need to value agility, flexibility, knowledge adoption and rapid diffusion; we need to view productivity in different ways. People, skilled in different appealing ways, using the new value drivers have increasing value that needs greater premium recognition.

The new innovation productivity need

The measurement of how each organization is improving its productivity needs some rethinking. It is the ‘relentless’ focus on technology, on knowledge acquisition, absorption and diffusion. It is opening up the ‘black box’ of actual innovation activities going on in organizations and valuing these.

We need to focus on the adaptive efficiency that constantly takes place within organizations to spot trends, react to them and absorb the learning to adjust and innovate through these, to provide the new innovation coming from this set of activities.

This calls for investments in knowledge, in infrastructure that focus on activities that spur new productivity approaches that lead to innovation. These are not just the traditional ones based of lower costs, still judged today, as the winning value but on the new innovation value scale of ‘new generation activity that is occurring’.

We need a deeper innovation grounding of internal workings

It calls for a deeper grounding in what is actually going on inside organizations within their innovation activities. It is combining of these four emerging forces of knowledge, technology, entrepreneurship and innovation that make the growth models of tomorrow and innovations ‘black box’ as our need to really get into to understand.

What are your thoughts?

We need to find a new economic order that reflects the changes that have beeb going over in the last thirty years, know we have to learn there real value points. We unleashed a series of events in pursuit of opening up across global markets which are destroying much of the past in whole communities, shifting jobs and wealth creation, complex trading policies, chronic imbalances in tax and managing through national vested value generating stimulus packages. The world is simply different, our need is to find the economic levers of this new world.

We are seeing speculative investments that are always seeking constant new ‘feeding grounds’, erratic monetary policies  along with the quest for low interest rates and increased monetary supply leading to speculative asset investments. Some past lax oversight, forced consolidations for organizations to continue in existence when they should be closed, and changing capital reserve requirements are all adding even further to uncertainly and draining financial reserves.They are equally draining our personal reserves of respecting the institutions charged with managing these. These need understanding better.

So we do need some very different economic thinking, one that reflects the change in the economy. Are the new denominators of value, based on creation through innovation? It does seem the concept of ‘innovation economics’ based on knowledge, technology, entrepreneurship and innovation might hold something important within its emerging theories to consider? Do you see this also?

Renewing Innovation through the Social Innovation Agenda

The challenges are growing in their social dimension across Europe, the United States and a host of other countries, both developed and developing, that are needing new fresh responses. Social demands will inevitably increase as nations are being confronted with budgetary constraints, increased deficits and mounting debts to resolve. Social needs will become more pressing and innovation, social innovation, will increasingly explore opportunities to extract ‘more from less’. Innovation can play an increasing part in resolving social challenges that are increasingly confronting us.

Starting a new movement on social innovation in Europe

Recently I became a member of www.socialinnovationeurope.eu . I certainly  feel this is going to offer something exciting and vibrant. It is a growing community of thinkers, creators and innovators with the knowledge and skills to change the way we face Europe’s most pressing issues. Contributors to the site will take a strong hand in shaping the direction of social innovation across Europe, breaking down silos and raising a unified voice. I need to find my own part in this, as there are multiple ways for contribution, which I’m still presently figuring out.

Social Innovation Europe (SIE)’s online hub present aims are to become an indispensable resource providing the latest information on European social innovation. It will feature interviews with prominent innovators, case studies of successful ventures, the latest research, and in-depth analysis from the leading thinkers in the field.

Why do we want to address social innovation even more now?

Social needs are now more pressing than ever, they will regretfully get worse before they get better. The combinations of the recent global crisis, the economic shifts from the West to the East will increasingly reduce opportunities and increase the social dimensions that will need to be dealt with. We are in social strife with unemployment challenges, ageing and climate change that all have growing stress on declining revenues in the West.

As our financial resources are getting more limited, new solutions must be found. The short term fiscal stimulus packages and bailouts have alleviated the short term but we do need to provide new innovation solutions to pressing social demands that will occur in increasing ‘waves’ over both the short, medium and long term perspective.

Social challenges are actually innovation opportunities

The challenges are tough but should be viewed as potentially new opportunities for economic and social innovations to take place. Providing solutions that are high in quality (or high enough), beneficial and affordable to the needs of the users requiring these, and that can add hope and provide value to improving their daily lives. These can offer different combinations of business, government, and entrepreneurs different avenues to explore, that are both worthwhile and contribute to society but can offer valuable job and yes, profitable enterprises, and returns for investments made.

Social innovation means what?

Social innovation is innovation that is social in approach, in both the end result and the means of getting there. It offers new products, services and business model opportunities that simultaneously meet social need, that deliver more effectively than alternatives,(if there are ones) and most importantly, it create and builds new social relationships, communities and collaborations to achieve these ends. They can make ‘us’ feel good by our direct contribution to enhancing society’s capabilities to act together to resolve part of the challenges we need to confront. Social interactions and vested interests need to be combined and as a direct result it generates a ‘social capital’ that builds in value by its activity and by its increasing movement up the experience curve.

There are barriers that will need to be knocked down to accelerate social innovation.

Like any innovation, social innovation has risks. It offers all the usual ‘suspects’ associated with innocation of good imagination, perseverance, overcoming adversity, shortage of funds and a continued optimism that your idea to create a product or service and its implementation, can and will happen.

There are some important differences for social innovation though.

Social innovation is far more a participative process, partnership forming, constantly identification seeking, that has more ‘scaling-up’ problems than business innovation and that is hard enough! You are confronted by more society barriers, which is often at odds with what you are trying to resolve. Sometimes you meet a totally incompatible barrier that need that extraordinary leap of creative design to navigate around and that is where the model (social against business model) comes into play in analysing and resolving to overcome this. Social innovation does needs its own tools, techniques and models that today are somewhat lacking.

Equally, when you step more into the social innovation space you come up against a more traditional risk-adverse and cautious mindset unless the crisis is dire. The culture of administrators, their wish to stay with closed systems and often fragmented systems are tough to overcome. The skills of many around you, wanting to help, can be more limiting in experience but often can make up this ‘deficit’ through their enthusiasm. There is also the constant battle for funding through the scaling up from pilot or experimentation to larger scale (the social innovation life cycle) which can be demanding and often distracting, often taking you away from your primary task of resolving the social problem.

Scaling up seems a huge obstacle to overcome

In all I read and understand, the scaling up from that perfect local project into a regional than national one, is immensely hard. There are very few examples where the combination of coherence, comprehensiveness and broader outlook come together without significant changing of a workable local model. The art of communicating, of diffusing the skills, knowledge, understanding of the key variables and the local experience are hard to often translate. Much in social innovation is intangible, more than business; as it is in tacit knowledge that often successful social innovation solutions are made.

How do you scale up a highly fragmented set of solutions when we lack more often than not the developed networks and the intermediaries that can assist? Some of our established institutions like the Salvation Army can find major new roles to invent and work within, that provies the structure and need of networks, contacts and established infrastructure well established. Its mission and role emphasis might need to change to capitalise on this.

The three categories of social innovation

In a report, which has certainly helped shape this blog, on “Social innovation in the European Union” they are suggesting that you can schematically classify social innovation into three broad categories:

Firstly, grassroots social innovation that needs to respond to pressing social demands and directed more at the (growing) vulnerable groups in society.

Secondly, a broader one that addresses societal challenges where the boundary blurs between social and economic and directed more towards society as a whole. (My Salvation Army could be a clear example or the Red Cross or even the Open University)

Thirdly, the systemic type:  that relates to fundamental changes in attitudes and values, strategies and policies, organizational structures and process delivery systems and services. These include climate change, recycling as examples.

All three categories play a part in helping to manage and shape society.

Economic & Social Dynamism

There are many social challenges that will need creative and careful strategic framing that require innovation thinking. The pressing social issues will continue to rise to the highest political level and eventually ‘they’ will act, they will be forced too. Social Innovation will then explode in importance when the combination of all our forces: government, non profit, business, communities and entrepreneurs all come together, as they have to, so as to resolve growing social problems through new innovative approaches.

We all need to firstly be aware and then engage in understanding the power and opportunity social innovation can provide and the part we can play. Innovation can be a powerful enabler to many of our social challenges we are in need of facing up too. It should be on everyone’s radar as it is only one ‘touch moment’ away from social issues that are all around us.

How can we decouple growth and consumption through innovation?

Some weeks back the International Herald Tribune (June 7th, 2011) offered a view by Chandran Nair, the CEO of Global Institute for Tomorrow, under the title “Can the planet support more Americas? Then this week an article “Over-innovation makes US firms suck at Sustainability because they are too innovative” by Jens Martin Skibsted and Rasmus Bech Hansen (http://bit.ly/oGDObX). Each makes me stop and come back to my deepening view we have to decouple growth and consumption through innovation.

This is not an easy subject but let me lay out some opening views and thoughts. Why bother? Well I really do believe we need to radically change our approaches through the use of applying innovation in new ways.

These two articles added further to my personal concerns that we do need to (quickly) come out of the denial we seem to have in all societies. Innovation needs to be radically applied in new ways that alter the present mindsets of politicians, economists and business people who feel that the only path is continued consumption and growth. This approach is simply not sustainable and we need to find a radical alternative that still offers all of us progress but in a radically altered world.

The two articles in summary first

Try to imagine a world with three Americas- three giant economic super powerhouses with citizens all pursuing their equivalent American type dream of buying, selling and just consuming more. It is a prospect that excites many business people hell bent on growth as their yardstick. Can we deny Asian governments and their people after decades of poverty, struggle and hard work to be on the brink of obtaining a greater degree of abundance? The answer is our planet will become unimaginably stressed; we have already passed the earth’s regenerative capacity. We all would be condemned not blessed by this. The world does not have enough for two more consumption driven Americas. Yet we stay in denial and the spin of innovation is all about achieving more.

Equally America today is an amazing consumer. Some argue the US is the biggest environmental sinner as the economy is based on consumption, throw away consumption. The argument is the American company is innovative, entrepreneurial, and intensely competitive and they tend not to look at sustainable solutions, only the next big thing. Getting any change here is challenging those deep-founded and engrained beliefs and that is seemingly unlikely to happen, especially when the Government and the parties wrangle on increasing the debt ceiling. It seems we are not addressing the long term problems that are hurtling towards us. Can America become more standard to allow more recycling, greater re-usage and shared systems? Can America actually slow down and optimize and not chase consumption by encouraging change in a throw-away society? Can America redefine consumption by adding extra value and prolonging product life cycles?

What would it take to make such dramatic changes?

Clearly innovation thrives when there is a crisis. We seem to be heading for many, like rolling thunderstorms building up until they are so over our heads we just jump. Jump in real fear but jump in responding with a desire to survive by changing our habits and supposed consumption needs.

The main need is in finding fresh ways in taking those first big steps to radical change.

We must find ways to constrain consumption that do not continue to stress, deplete, degrade or waste our natural resource base. We need to reward, and reward heavily those “more is less” activities that put natural resource management in the centre of our thinking. Governments will be looking more at carbon taxes (Australia has just announced one), resource taxes and ensure producing organizations use far fewer materials and far less energy in their products and these can only be  radical not incremental as it is today. This will slowly change consumption habits. We have to get multiple-fold increases in resource-efficiency that don’t move the problem from one stressed aspect to another or trade off mutual dependencies. We must REDUCE dramatically fossil fuels, fisheries, grain stock consumptions and forest products by applying disruptive intervention by Governments that impose tax on the people that ‘pollute’ and don’t want to face the radical change necessary that continue to ‘consume’ more than they really need  . We will have to “name and shame” the ones that have vested interests in maintaining the status quo. Leadership, global leadership is needed but re-orientating innovation away from consumptive growth can be one of the major enablers to support this need.

Managing in an uneven world

There is a good book called “What’s mine is yours? Collaborative Consumption”  by Rachel Botsman & Roo Rogers that tracks and explains the rise of a fascinating new consumer behaviour they call “collaborative consumption.” Driven by growing dissatisfaction with their role as robotic consumers manipulated by marketing, people are turning more and more to models of consumption that emphasize usefulness over ownership, community over selfishness, and sustainability over novelty. Although it focuses more on exploiting the ability of the Internet so as to create networks of shared interests and trust and to simplify the logistics of collective use it offers some further thought to managing change in consumption.

Collaborative Consumption appears in three “systems” suggest the authors, product service systems, redistribution markets and collaborative lifestyles.

The movement described in collaborative consumption helps but it is not radical enough. We need to constrain consumption, to channel this into smarter solutions that continue to create value for both the business and society so the consumer sees extending use as critical. Out of this shift can come entirely new industries that manage product life to extract, to extend and enhance and the consumer gets rewarded by constrained consumption in different imaginative ways -getting sent consumption tax pay checks for instance, to continue to invest and fuel the consumption of them wanting to consume less because they get paid for it.  Radical but necessary and this would be needing every ounce of innovation ingenuity and reshaping of whole industries, government approaches and our mindsets. A tough one that!

There is no easy path but we have to take the right one.

I like the idea of these three parts- systems, markets and lifestyles. We do need significant breakthroughs in innovation that allows for ideas that feed off of novel life-changing concepts that meet cultures different adjusting needs of expectation. One that values a more sustaining lowering of consumption and does not add deepening conflict and strife but allows for a more balanced consumption for all to share. Call me an innovation idealist!

Recently Don Tapscott and Anthony D Williams famous for their Wikinomics book commented recently “the rate of business model innovation has not accelerated” since they wrote their book in 2006. They are beginning to understand the reason as “it is becoming difficult or even impossible for companies to achieve breakthrough success without changing their entire industry’s modus operandi”

I would suggest we have to go even further on this observation, we have to change entire society modus operandi over to ‘more is less’, away from constantly increasing consumption and growth. Otherwise in the 21st century of a very crowded planet, already highly stressed in its resources we will be facing a very tough, bleak world.

Taking off the blinkers

It is time to take off the blinkers and find alternative ways to put innovation to work. Are you an optimist or pessimist? Can innovation be put to work and be so radical to alter habits of lifetimes? Can societies recognise and reward ‘more is less’ as a viable alternative to today that pushing consumption is simply not sustaining- higher growth through increased consumption is a road to depletion? Seemingly necessary is a huge shift away in how we manage in society in what we seem to be told of our current planets problems. I have to admit, privately, sometimes I wonder where it will all end?

It is time we made one of those extradordinary  steps on how we value progress and put to work innovate solutions in completley radical new ways, of ‘more is less’ as the sustaining and rewarding path that societies all have to work towards.

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.