Where are the new feeding grounds of innovation?

Credit Wildebeest migration, Kenya, by Bonnie Cheung

Wildebeest migration, Kenya by Bonnie Cheung

I am presently reading an early release draft of a book written by Mike Docherty of Venture2, on innovation, and I would certainly recommend the read when it comes out. The book Collective Disruption will be available as of February 2015.

The book as Mike wrote to me, is aimed at corporate leaders, both in large and small companies, charged with new sources of transformative growth and makes the case for co-creating new businesses with entrepreneurial partners. It builds on a foundation of open innovation, but is focused specifically on new business creation (vs core business support).

I know that Mike is passionate about the intersection of corporate innovation and entrepreneurship for co-creating new businesses and business models. As CEO of Venture2, a consulting and new ventures firm, he works with leading brand companies and start-ups to commercialize breakthrough new products and businesses.

Mike has experienced disruption many times.

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A call for a more open collaborative innovation consulting framework

We are coming up to nearly 10 years since Dr Henry Chesbrough wrote his first book on open innovation as the necessary business imperative.  There has certainly been considerable progress in many business organizations to embrace this open collaborative principle.

“Open innovation is a paradigm that assumes that firms can and should use external ideas as well as their own internal ideas, and explore both internal and external paths to market. Firms need to look to advance their technology, resources, their knowledge and understanding through innovating with partners by sharing risk and sharing reward”.

Isn’t it strange that the very consultants expounding ‘open’ for innovation are as closed as ever? Why is this?

I would argue that the consulting industry specializing in providing innovation services is its own worst enemy today, by not being more open themselves. It is actually failing to recognize that this is inhibiting their own long-term prospects. Nearly all within the innovation consulting industry seem to be resolutely staying very internally driven, self- promoting, still trying to convey the story of their mastery, when clearly this is so painfully lacking from the results in growth by many of their clients from their existing innovation activities.

Due to this lack of openness they are failing their clients by not offering them leading and emerging practice advice. Yet the client is increasingly requiring more complete or holistic solutions, not from a ‘piecemeal of innovation offerings’ they are presently receiving. These separate pieces currently being offered by one group of consultants often don’t dovetail into a complete innovation system because they are supplemented by a variety of different service providers, all having their own ‘pet’ approaches, methodologies, techniques and tools.

Why is it when many clients who are actively working on increasingly open complex innovation challenges and working through a more diverse range of collaborative platform solutions, that the innovation consultants working alongside them, are still such a different story of being closed up? Consultants seem so reluctant to open themselves up and embrace this more open collaborative culture and gain from embracing that essential more divergent thinking that innovation often calls for by the use of external collaboration.

Innovation consulting is a fragmented consulting industry unable to achieve scale to match client needs.

Today innovation management advisory firms are mostly small, loosely organized, some highly specialised, that have a flourishing complexity of activity but often spend inordinate time reinventing many aspects of innovation management that are not necessary and serve little value for the client.

While client’s requirements for structuring innovation are often claimed as unique and distinctive, they are in many cases, actually not. What they really want is to acquire is a common, repeatable, scalable innovation structure that allows them to manage their distinct innovations on a consistent basis. The understanding of the innovation process is basically common or should be. Until this point of difference between what a client’s wants is a common, scalable process and yet the providers want to offer, their own versions, innovation in general will face many disadvantages in not advancing, as it is not formed around a basic set of common standards.

Consultants are ignoring the richer places of competitive advantage or doing a poorer job of exploring variability, diversity and within the organizations building capability as it is people who offer the real value within innovation. Managing the intangibles is certainly far harder and messy but it is the ‘sweet spot’ of innovation, where the multiplying of the degrees of connectivity, interactivity and sharing, offers the new innovation equation point.

Consultants are far too cautious for their own good

Consulting firms on the other hand are moving far too cautiously to any form of collaborative engagement; it is far too ad hoc. Wherever possible consultants want to manage as much as possible internally to ‘keep’ the fees generated inside. This is not a recipe for building lasting relationships that have mutual value in growing understanding. They stay’ in-breed’ and are not reflecting the commonly held view today, “that all knowledge does not reside within your own walls”; they still reluctantly hang on to the closed system of  ‘invented only inside here’.

How do we resolve this? Should we? Are Disruptive Forces Around?

Combining all these islands of innovation knowledge into some form of combined force would be a healthy step. Innovation is consistently ranked among the top three strategic imperatives by business leaders yet it is not recognized by consultants with the same strategic commitment.

Of course there are some big challenges facing innovation consultants today:

  1. How do you break out and resolve this fragmenting industry of many niche consulting players certainly not matching the clients’ ideal profile of global span and support?
  2. The inability to offer broad innovation experience or depth in capabilities is another negative working against many consulting firms.
  3. Forward thinking innovation centres within consulting are rare so there is little fresh ‘knowledge stock’ being added to tackle increasing complex issues around innovation.
  4. Sophistication & specialization is highly sought after but expensive to keep around. And having this expertise sitting on the bench within one consulting company as it is regarded more as a cost liability and not as a valuable asset to leverage.
  5. Strategic understanding in fast changing, complex markets and organizations is extremely hard for outsiders (consultants) to grasp in the detail required to be able to contribute into clients with the impact often justified by the fees demanded.
  6. Limited experiments are currently being undertaken in the innovation consulting practices, yet clients are actually crying out for this, it is a massive unmet need or job-to-be-done.
  7. Lastly consultant partners should change their remuneration models that drive their consulting business to actively seek more ‘win-win’ solutions in collaborative partnerships.

A bolder, more open collaborative model is required.

  1. Consultant companies should become the host and potential ‘orchestrator’ of platforms for the ‘best’ to gather and collaborate and offer this to clients as a real value benefit.
  2. Clients are learning how to collaborate and to openly network.  So shouldn’t consultants embrace this and seek out the places of complimentary knowledge by recognizing they can only, as they stand today, make a limited contribution and cannot claim ‘total solution expertise’ without active collaborations themselves.
  3. There are growing sources of advice alternative– clients are recognizing this and seeking it out so why not the consultant through being the platform provider for this ‘clearing house’ in diversity, thinking and understanding.
  4. The appeal of bringing together experts that can come together and work on specific complex problems and then disperse has great value for all concerned providing it has a retaining clause and gives all involved their own specific returns on their business model.
  5. The need today is to have real access to great quality thinking and this does not reside within the walls of one consulting firm. However large a practice of consultants they are repeating the same solution set, mindlessly pulling down their ‘best’ practice from their internal knowledge and then, attempting to apply this to someone else’s unique circumstances, failing to evaluate this sufficiently and eventually failing the client.
  6. Consulting practices need to address rework. Much of the profit comes in reworking what has previously been delivered, selling it time and again. This would need changing but is not so radical a change as first thought. It is extracting the repeatable parts intelligently, evaluating the points of difference in a more forensic way from ‘available’ expertise.

A revolution for innovation consulting comes from opening up.

The resolution or (salvation) of innovation consulting is to build transparent networks of expertise, brought together on platforms provided by the nominated host or consultant, so clients see and value the access to broader, best available expertise that is working through their own, often unique challenges, not being felt as ‘cookie cutting’ recipients.

Complexity, uniqueness and expertise need to be addressed in more customized ways and that challenges the existing global consulting model of maximizing repeatability. Applying the best in knowledge application for innovation consulting services offers the client a real value for accelerating growth and job creation based on more radical and breakthrough thinking.

So what I propose requires us to think through a new model that can combine the best available expertise on a given client platform, hosted and orchestrated by the innovation consulting firm, pulling together the best advisory and thought leadership around to solve unique client challenges. We need to alter our ways to achieve this.

What will it take to shift the existing practices? Possibly clients demands better support or simply keep voting with their feet by investing in their own experimental learning themselves, as they don’t feel the consulting advice available gives them much they don’t or can’t find out themselves.

The alternative is someone sensing the opportunity to disrupt the existing consulting model and bold enough to make that fist mover advantage and take innovation consulting up a level or two of engagement. Actively working on finding ways in their value offer, so as to position themselves with clients as a critical ‘must have’ for working alongside them on their current and future problems in richer collaborative ways. They share the joint objective of achieving a higher level of innovation growth and return that the client can’t achieve in their current approaches to innovation management.

The Challenges of Real Change Required by Innovation Consultants

Recently I was reminded of an article by Daniel Krauss, writing on the Forrester blog site (http://blogs.forrester.com) about the “Path to Revolution In Management Consulting” which lead me to reply to his question of “what constitutes a management consulting firm 2.0?”

I’ve adapted my view here to reflect where it becomes even more relevant to the innovation consulting companies that I feel are in general struggling in today’s environment, for multiple reasons.

The challenge today lies for many in that they are not providing real consulting value to clients, and unless this will change it will continue to erode the clients confidence in these service providers.

In many ways, the consulting industry specializing in innovation is its own worst enemy. They are resolutely staying very internally driven, self promoting, still trying to convey the story of mastery, when clearly this is lacking and due to this failing the client. The client is increasingly requiring more organic or holistic solutions not a piecemeal of innovation offerings. These separate pieces often don’t dovetail into one complete innovation system because they are supplied by a variety of different service providers, all having their own ‘pet’ approaches.

Why is it when many clients who are actively working on innovation challenges have moved to a more open collaborative platform for obtaining and underpinning their own internal knowledge for product development? Clients have embraced (sometimes admittedly  reluctantly) into entering strategic partnerships in supply chain, purchasing, HR management and a host of IT related activities, in research and development.

Clients are pushing even closer to engaging the final consumer within the understanding of meeting their needs, or working to discover the ‘unmet’ needs. Yet the innovation consultants are still a different story of being closed up, reluctant to open up and gain from more divergent thinking on the problems these changes are causing to clients.

Consultants are far too cautious for their own good

Consultant firms on the other hand are moving far too cautiously to any form of collaborative form, they tend to bring ‘experts’ in for ad hoc, one-off assignments when they need deeper expertise. Wherever possible consultants want to manage as much as possible internally to ‘keep’ the fees generated inside. This is not a recipe for building lasting relationships that have mutual value in growing understanding. They stay in-breed and are not reflecting the commonly held view today, “that all knowledge does not reside within its own walls”; they still reluctantly hang on to the closed system of inventing only inside here. This you see in the host of variations on what is claimed as their versions of “common innovation” theme for processes, systems, idea management etc., and often ‘mutton simply dressed up as lamb’.

I see an awful lot of clients experimenting and learning internally and due to this becoming extremely selective for the use of any outside advice. For many of the innovation consulting firm this means they are often far too busy catching up, lagging in their own emerging practice and due to this ‘lag’ have lost any thought leadership position in many things relating to innovation. To overcome this you need to be engaged, to be able to piece together fragments of information to gain the insights that independence can offer.

This requires dedicated experience and constant involvement in broader innovation understanding not in the way it is going of specialization, who let slip the critical insights as it is ignored as it did not apply to their narrow area of knowledge. Sadly general well experienced innovation practitioners are thin on the ground. You do need to search hard for these but they are available. Also large consulting practices can’t afford to have more than a few experts scanning this innovation terrain.

Exceptions and Client Needs

Of course we have notable exceptions; the value in what Bains, McKinsey, Booz and PWC has is often in their access to C-level people and their ability to provide reports on best practice to help in benchmarking industries and practices around organizations current thinking of innovation. The conclusions though are often are not translated into practical solutions, they remain research findings. These help all of us involved in understanding emergent innovation practice to relate and absorb the findings but these on there on are not enough of the answers clients are looking for from external service providers. They want to connect the thinking to improving practice.

Clients often lack real deep insight or draw out the implications from these emerging practices, they want to work more alongside others in experimental practice spaces to truly figure out how to respond to them or understand the implications to their own business. It is only part of the innovation knowledge puzzle for the client. They need to constantly look elsewhere to piece this together, if at all they can, as so often the reporting looses much of its value as it is not translated into suggested solutions if the consulting industry fails to provide these services or knowledge laboratories.

Clients are forced to seek out for themselves, through informal groups or ones organized by industry necessity to piece together their understanding, a little like a patchwork quilt. Where is the previously respected “trusted” adviser, the consultant within this, often sidelined or desperately trying to muscle into the discussions for their own gain? The value of taking and translating all these disparate reports into new suggested models of practice seems not to be important.

Why are consulting firms not working methodically through the “collective” summary of these reports and then distilling them into emerging ideas as a development engine? It does seem this “connection” to much knowledge is not being valued and pulled together and the ability of having these dissected and  interpreted,  is lacking by most consultants, even the ones providing the reports, so clients are left to interpret it themselves. This can’t help the client/ consulting equation and many mistakes can be made in wrong interpretation as environments and circumstances are usually unique. This is where external advice can score significantly in explaining differences and providing appropriate solutions that still merge in the emerging practices but to fit that specific client’s situation.

The absence of the large consultancy in innovation forums – why?

Why is it that the larger consulting practice is often absent from forums, conferences and internet live exchanges? Also due to their increased absence, others are gratefully filling this space but perhaps not as well. I’m not talking about the software solution providers here; I’m talking about the strategic consulting heavyweights. This has some advantage for the ones filling the space but without the large consulting companies driving innovation insight as they do have the global insight and resources; most innovation consultancies hang onto existing, tried and tested methods using existing tools and techniques and don’t push the boundaries. They are often not in the position to do this. So the reality is, Innovation is not evolving as well as it should do, as it presently does not have this ‘bigger muscle’ to drive and push for change often generated by the big consulting houses. They presently seem to be highly selective on their innovation focus and that is more constraining to all and not helping advance the practice of innovation management like it could be.

Global consulting practices are being driven more by the numbers, by the ability to utilize and leverage pieces of work to obtain a return. It is less in consistent, ever-present engagement in all avenues of social dialogue, consulting has become more of a “roll up your sleeves” and pitch in to help. This lack of reflective consulting between where the collective presence of consultants, clients and employees engaged in innovation can regularly meet to explore more of the “what if?” is not helping consulting firms, or clients in interpreting the sets of front line signals and turning these into consulting opportunities on shifting many current established practices, processes or methods. We are losing innovation opportunities as we fail to translate these ‘signals’ and advancement in leading practice.

The move of clients building their own internal innovation capabilities

Lastly in this critique, clients are increasing building up their own internal-in-house innovation consulting capabilities, not just in execution but in design work. This denies consulting the necessary working practice, or playing time to experiment, to explore, to learn and translate this to the benefit of many.

These shifts, along with others that make up an increasingly long list are eroding the position of the innovation consultants. I think there is a time for a sea-change to take place.

So let’s firstly summarize the bigger challenges in innovation consulting:

  1. Clients are facing an increasing fragmenting industry of many niche consulting players. This is becoming more the ‘boutique’ service providers who have limited scale and global practice but is really matching the clients’ ideal profile of global span and support? It is a constraint that requires clients to continue to build internal capability with its different but perhaps similar cost profile.
  2. The inability to provide broad innovation experience or capabilities. This is another negative working against many consulting firms. Many of the partners have been out of their respective industry for a number of years and fail to appreciate the real ‘heartbeat’ that someone closer to it can detect, they have been removed from day-to-day activities far too long and often the pace of change is hard to keep up with. They are increasingly reliant on others to form opinion and does that replace their experience that got them to where they are?
  3. Forward thinking innovation centers within consulting are rare. There is so little contribute into the fresh knowledge stock, always needed by consultants to present their constantly updated “case of relevancy”. Often research is simply a re-hash of older material. A new solution has to be found to strengthen the innovation knowledge stock.
  4. Sophistication & specialization is highly sought after but expensive to keep around. Having this expertise sitting on the bench within one consulting company is regarded more as a cost liability and not as a valuable asset.
  5. Strategic understanding in fast changing, complex markets and organizations is extremely hard for outsiders (consultants) to grasp in the detail required. To be able to contribute into clients that are facing complex problems and to navigate these ‘fast flowing rapids’ needs a real sense of the pulse. All these are within the challenges to be resolved within the consulting industry.
  6. Limited experiments are currently being undertaken in the innovation consulting practices. The focus is far more relating to taking best practices and applying them to as many clients as possible. Critical thinking in innovation is hard to justify. Experimental innovation is something clients are very unwilling to pay for yet they actually should be crying out for this, so as to gain competitive edges from these insights. This is a huge challenge to overcome. Trust and reputation as thinkers in innovation helps but there is equally a reversing on offering the same advice to all, willing to pay. Some client/ consulting advice should be mutually exclusive.
  7. Partners need to change their remuneration models that drive the consulting business. They focus in industry specific domains in general yet clients are seeking beyond their own borders increasingly to gain fresh insights and competitive advantage. Are innovation consulting companies leveraging across industries enough? A traditional breakdown, of which consulting company is best known for, and used to solve specific problems, continues to reinforce expertise and limit broader advice. This is not serving the clients well, although it is ‘claimed’ consultancies reach across industries for insight and possible application. This does need greater cross-fertilization focus as it is potentially very valuable. This lack of active search across industry is a vicious circle that needs breaking into more, so as to expand capability and capacity and offer broader innovation practice techniques and options for clients to explore.

All these are within the challenges yet to be resolved within the innovation consulting industry.

A bolder, more open collaborative model is required.

  1. Consultant companies should become the host and be the potential ‘orchestrator’ built through platforms for the ‘best’ to gather and collaborate.
  2. Clients are learning how to collaborate, to network, to leverage and tap into outside domains, I think consultants must make this fundamental shift- embrace the old (consulting) enemy, their competitors, and seek the places of complimentary knowledge that when combined can offers clients the very best, not the reworked second best.
  3. There are growing sources of advice alternative- clients are recognizing this and seeking it out. The growth of niche consultancies, the use of academics, and the ability to reach out and pay for the top expert in their field excludes the specialized consulting firms more often than not. Thought leadership is not residing ‘within’ but outside and consulting needs to find more imaginative ways to pull in this expertise to add the value clients want in diversity and understanding.
  4. Clients are increasingly willing to bring together diverse advice. The consulting company that provides a platform/ conduit for a community of experience extracted from a rich diversity of backgrounds to work together on bigger than usual challenges I feel would be appealing to clients. These collaborations do not have an in-built expensive overhead to support or a forced umbrella identity.
  5. The appeal of bringing together experts that can come together and work on specific complex problems and then disperse has great value. It is through these expert interactions it can offer a different approach than we are seeing today. These ‘event’s’ or challenge outcomes can then be broken down into the ‘discrete’ parts necessary to drive solutions and can be parceled out to increasingly specialized firms that work on the part within the value solution that contributes to resolving the complex problem.
  6. The need today is to have real access to great quality thinking and this does not reside within the walls of one consulting firm, however large in employees (often repeating the same thing).

A possible resolution or is it salvation for innovation consulting.

The resolution or (salvation) of consulting is to build transparent networks of expertise, brought together on platforms provided by the nominated host or consultant, so clients see and value the access to broader, best available expertise that is working through their own, often unique challenges, not being felt as ‘cookie cutting’ recipients.

Complexity, uniqueness and expertise need to be addressed in more customized ways and that challenges the existing global consulting model of maximizing repeatability.

A new model needs to combine the following on a given client platform, hosted an orchestrated by the lead Consulting Firm based on a reflection of today’s ability to pull in the best advisory and thought leadership to solve unique client challenges:

  1. Establishing clearly the Business Model coherence & the Challenge clarification/ analysis and ensure this is communicated across all the collaborators working on this solution platform.
  2. Providing the Platform Management through collaborative software that allows all the best parties to collaborate their ‘given’ piece and the lead consultant coordinates and extracts the best value from these parts.
  3. Open to all collaborators the strategic intention and the modularity construct so they see their contributions and part to play.
  4. Process analysis and mapping techniques that are common and freely available to all to use- a standard of tools and techniques that all participants are familiar with too leverage any exchanges or concepts between the participating parties.
  5. End to end customer and supplier interaction points, well thought-through and managed by the lead consulting party to extract the best insight, foresights and their value in unique combinations.
  6. Co-creation, co-production and collaboration being actively encouraged, integrated and visible to all to build this value even further.
  7. Provide common shared tools, standards, IP, protocols and know-how protection/ transfer and validation governance.
  8. Ability to experiment, test hypothesis, pilot and rapidly expand within the platform collaboration to advance and validate thinking and constantly search for the up scaling needed.

Henry Chesbrough wrote recently in his “Open Services innovation” book about the commodity trap, this applies equally to the consulting industry, it is certainly not immune. There are new disruptive forces in play, these are placing limits on the existing innovation consulting model as a healthy business model. Perhaps it is near to its end, and consultants need to change their thinking and then the approaches fairly radically to stay relevant and thrive

Orchestrating a more open diversity of knowledge on collaborative platforms needs a significant change in consulting, that you could argue applies to all consulting practice. Clients demand more value and for consultants to regain their position as providers of expert knowledge they need to become the ’orchestrators’ to add value and deliver propositions that tackle clients increasing complexity in more open ways, otherwise they will face an increasing marginalized role.

(revised and updated on 19.03.2012 and re-posted)

Managing roadblocks within open innovation

I always find thoughtful lists as extremely helpful to prompt my thinking on different issues. It often helps to unblock my own thinking. This one is for open innovation.

One such list I compiled from mainly two sources on roadblocks to open innovation. The main source was Dr Brian Glassman. He wrote a paper “Open Innovation’s Common Issues & Potential Roadblocks with Dr Abram Walton. (http://www.innovationtools.com/PDF/OI_issues_and_roadblocks.pdf) and different thoughts that I found as well worked through. The other source to make up this list was from P&G’s experiences gleened from different sources. Together I feel they make for a solid list of roadblocks or issues to think through. Let me share these:

Firstly the core need or use of open innovation

  1. Generating ideas for new products and services
  2. Solve technical problems that are vexing or to complicated or expensive to solve internally
  3. Co-development of difficult problems, services, products, technologies

Issues & Potential Roadblocks

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