Are our organizations ossifying their innovation?

Innovate or dieThe balance between risk mitigation and being equipped for risk readiness is still an ongoing struggle to balance for most organizations.

There is still a continued reluctance for exploring new radical innovation opportunities and although organizations ‘talk’ growth, they continue to struggle in achieving it through new innovation.

The incremental commitments to innovation still rule the day to move growth along. Until a new sustaining confidence returns to our economies, risk mitigation dominates as markets continue to be more volatile and unreliable in predictive data and executive sentiment remains cautious.

Our organizations are looking for a higher certainty of return and seek sometimes endless validation and justification before they commit, even to small incremental changes. It is no wonder incremental innovation dominates in our innovation decisions; it is where reality sits for many. Are we heading off in a bad innovation direction?

Solidification in organizations seems to be moving towards simplification

As this incremental set of attitudes solidifies within organizations, have you noticed a growing trend of recognizing the processes and systems built up are actually more complex and creating ‘drag’ on performance demands? There is a move to greater simplification that strengthens the incremental mindset. We are perhaps ossifying innovation in our organizations if we elect to take this simplification route.

Risk readiness might be taking a bigger ‘back seat’ than we expect. This has significant implications as organizations continue to lose the ability to be ‘growth ready’ to execute on any sudden change of executive direction if market condition suddenly change. Many are losing the ability to innovate beyond incremental approaches. It might catch them out badly if markets suddenly change and they are faced with a very different set of challenges demanding a more radical set of innovation solutions.

What signals are showing through?

Often we read of the likely demise of innovation but I think it’s ‘nature’ is changing. At the top of our organizations there continues to be this higher dissatisfaction with the value and returns within innovation and this is possibly being addressed in different ways down below in the organization, to compensate and appease.

Risky projects for the majority are not the place to blaze away in their careers; they want the known reward from keeping ‘steady’ the ship and being part of the incremental growth movement, to be seen as good operators working at constantly offsetting any risks, delivering what is wanted to be heard, not the bearer of bad news.

Do you spot this trend within your organization or industry? That growing movement where the ones intent on developing the routines that increasingly are only focused on incremental improvements are in the ascendency? Those driven by pushing hard for operation productivity to the exclusion of a number of traits associated with more radical innovation or potential breakthroughs.

Driving innovation through productivity has a real drum beat

Are you in that place where there is this constant attention to improving practices continuously, to the exclusion of enquiry and only investing in the capacities that supports the delivery of this drive for greater productivity. A place where organizations are constantly seeking out those best practices, by wanting to eliminate variation, believing to simply copy others gives them the answer.

Do you gain that sense of impatience to evolve and develop in your own unique ways, as you attempt to short cut your own development in this blind copying? All around you feel that growing sense that the movement of six (sic) sigma is resurfacing, tapping into this quest for greater productivity and the ‘richer’ innovation potential seems to diminish?

When you have this incremental mindset then you become dedicated to standardization, you focus on real-time performance that can be measured and judged, you promote a more careful evaluation of innovation practices, striving to eliminate variances, you become relentless to reduce the unpredictable activities.

It becomes the prevailing organization mindset, the radical innovator drifts quietly away, disillusioned with where it is all going. Left to the gods of others making market change.

Organizations are more comfortable with improving productivity

There has been so many years of cost cutting, the consultant is also repacking it’s services from the present col-de-sac, largely played out, by housing organizations needs under the appeal for this quest for simplification.

Recently I was reading a report from http://www.sourceforconsulting.com that simplification is the next step in the evolution of productivity. The argument goes productivity is linked to growth and as our organizations are still very determined to do more with less, rather than simply less, the rise of rationalization grows and the demands to tap into this gathers pace.

Mitigating risk is the easier option

It is the attraction of combining this prevailing risk mitigation mindset with the idea of standardising and simplifying, validating through increased data verification and mining, striving for benchmarking and searching for best practices seems to go nicely with placing the innovation bets on increasing the incremental activities, all to the detriment of seeking out more radical innovation. Less risk, steady growth, fits with the short-termism of the board. Reward and remuneration becomes increasingly geared to this.

The vicious circle of meeting the board’s demands for immediate return simply tightens the noose and the longer-term building of capabilities for new innovation continue to slide, pushed off to yet another day, somewhere in the future. Does that really matter to the current board executive or his external board? Managing today’s volatility and uncertainties means risk mitigation is dominating. Let tomorrow be managed by someone else.

Are the majority of our organizations becoming the great sustainers?

A recent article by Gary Pisano on the HBR blogs was arguing for the defence of routine innovation. He suggests the vast majority of profit from innovation comes from the stream of routine, or sustaining, innovations that accumulate for years.

He mentions Intel as a great sustainer, with its value proposition of higher-performing, higher-margin microprocessor chips has not changed. Growth is slowing but Pisano’s argument is Intel has generated cumulative operating income before depreciation of $287.4 billion. That is a lot of cash generation to keep investing or distributing back to the shareholders.

Equally Pisano argues Microsoft that started as a great disruptor but for much of the recent years it has following a sustaining path, defending its position. Of course it has perhaps missed out with this prevailing ‘mindset’ on some really key growth areas, yet it has earned $325 billion over three decades.

The article is equally suggesting Apple is a sustaining, more incremental organization today. It has generated $150 billion is cash flow since 2011. The emphasis is perhaps less on the next big disruption and more on aesthetically pleasing designs and versatility in their devices.

Are we leveraging to existing strengths and not grasping new opportunities?

Gary Pisano’s point is as an organization becomes well established, its innovation strategy needs to understand how to leverage distinctive existing strengths to generate and capture ongoing value.

It is about recognizing and organizing innovation around the repertoire of existing strengths to extend increasing the value from innovation, to play to your existing strengths. Or is it?

Are we not putting off our future by not investing in the future? How can we strike a balance on this and what should that allocation of resources be like? What needs to be brought in to add to the existing repertoire of skills?

Is the innovation message today becoming more deliberate in its design?

I wonder what is around the corner. So is the message today the one of trading off the risks of radical, disruptive innovation for the more incremental, sustaining innovation? Is this the period of evolutionary innovation, less revolutionary?

Of course, we all know that oblivion is potentially ‘just around the corner’ as there are many competitive forces at work looking to disrupt.

For me, it does seem far too many of our organizations today might be far too focused on protecting and defending their existing positions, they are failing to extend beyond a core. Are our organizations working incremental innovation to the detriment of more radical and riskier innovation? Is that unhealthy or simply prudent?

I fear the innovation balance seems not right.

Of course the strategic view of sustaining innovation while you explore and experiment the next big potential wave is the best approach but I tend to feel the dominating mindset of risk mitigation today, is driving many to simply just become incremental innovators only and that has a growing risk attached to it.

You continue to lose the skills, the understanding that more radical innovation is very different in time, in placing your resource allocation and building all the different skills and experience you need and these need to be consistently worked at. They can’t simply be turned off and on when changing market conditions are suddenly confronting you.

If incremental innovation dominates we lose the future

If one type of innovation prevails and begins to dominate, the risks of not providing for a healthy future increases, we are ossifying our innovation. We begin to lose our abilities to be responsive and flexible. We lose our agility to respond to changes in our markets.

What is always needed is to strike a good balance in our innovation portfolio, between the immediate and the future.

We need to not forget that we all must manage in all three innovation horizons to have a (greater) chance of achieving a really sustaining future.

I wonder who is withering on the innovation vine?

Dying on the grape vine 1This week I tuned into the Pipeline virtual conference for product development practitioners and gained an encouraging feeling that innovation is progressing along nicely. Packed all within a day there was plenty of material ‘fodder’ to feed off of and learn from.

A really good conference but what quickly followed was a strong dose of that withering on the innovation vine.

I read two consulting surveys around innovation

I’ve been suddenly pulled out of my virtual bubble back into the harsh realities of where innovation really is. Just simply how innovation is struggling and that lies far more at the top of our organizations than below, those below who are simply trying to ‘get on with the job’ but with at least one hand (or even two) tied behind their backs.

I have been reading two sets of observations, one from Fahrenheit 212, the other from Innosight and my mood began to change. I’m suddenly back in reality where we have this huge gap between those ‘working’ innovation and those at the top simply not engaging with innovation or still failing to understand it or even failing to connect the dots.

That growing gap at the top in what they need to do to make the connections both inside and outside the organization to manage the changing landscape. One that still suggests we have this consistent failure to align the strategic and innovation activities and provide a more balanced orientation in the mapping to different horizon thinking that is needed. It seems perspectives are totally out of whack.

The Fahrenheit 212 Post on their recent observations left me perplexed.

PerplexedFirstly Fahrenheit 212 asked 100 chief innovation officers a set of questions around their getting their innovation projects to market. They claim that forty-five percent of respondents said fewer than 10 percent of their projects make it to market.

Fahrenheit claim that was an “eye-opener for understanding the challenges that innovation practitioners have,” where Fahrenheit was suggesting 60 to 70 percent of incremental innovations should be the success rate.

As this view came through the Washington Post under “Corporate attempts at innovation are overwhelmingly dying on the vine” I was not able to view the actual results directly or more of the thinking that went into this and can’t find any further reference on this on their website besides a Facebook entry. I’d like too.

Why? – well surely there are significant differences between projects being managed or piloted at the CINO level than passing through the organization as supportive and incremental? Yet until I can understand the context of these ‘statements’ it is hard to judge this piece of information and its real importance, presently it lies as a “oh yeah”. As a starting point what is judged as an innovation project from the CINO’s perspective versus the everyday innovation occurring. Are these numbers so “eye opening”?

The whole position and value of the CINO is certainly up for grabs and in a ‘forming’ stage. One really good point made as a quote by Jon Crawford-Phillips, a partner at Fahrenheit 212 was this: “The primary value of the chief innovation officer is the connectivity between the company’s growth strategy and the decisions and focus of the senior leadership team and the translation of that into an innovation agenda”.

Crawford-Phillips was recommending corporations don’t align innovation with their financial interests and suggesting establishing this. He comments: “There’s a strategic way in which they allocate resources to core innovation, and there’s clear metrics around the performance of core innovation and a clear understanding of the financial impact of that innovation on the company’s balance sheet.”

I struggle with what I should be getting out of this ‘report’ as Fahrenheit 212’s suggestions because if they are determining clear metrics in core innovation performance and a clear understanding of the financial impact on the balance sheet then it is no surprise innovation practitioners have difficulties in getting initiatives and projects through organizations. Can projects that are in themselves innovative be measured on the same metrics as established known ones?

The comments reported from the survey leave more questions than answers and has this set of observations really helped ‘advance’ innovation? Maybe more will emerge. It seems to fit perhaps with their Money and Magic message.

On the other hand Innosight and their Strategic Readiness Survey really is the actual eye opener.

Eye opener 1Innosight offer an executive briefing on their “Strategic Readiness and Disruptive Change” and this survey throws up some serious worries for me.

The report prompts deeper thinking on how organizations are really having difficulties in transforming themselves with all the disruptive change going on around us all. A real eye opener.

Innosight’s summary provides a good snapshot of the issues:

“Disruptive change is accelerating, driven by the rapid emergence of new technologies, the blurring of lines between industries, and competition from both traditional and non-traditional players. As a result, corporate lifespans are shrinking”.

“How does the shifting landscape affect enterprise strategy and corporate innovation efforts? To see how organizations assess their ability to anticipate and respond to disruptive change, we (Innosight) recently surveyed more than 800 executives across 20 industries. The results shed new light onto the challenges and opportunities that leaders face in crafting strategies to steer their companies in both the near and long term”.

Top-level findings included:

  • Fully 85% of respondents say their organizations need to transform in response to disruptive change – yet only 49% say that feel very confident or confident that their organizations are prepared for transformation in 3 to 5 years. That number drops to 42% in a time frame of 5 to 10 years.
  • Large companies face an even greater “strategy confidence gap.” 83% of respondents from companies with over $1 billion in revenue agreed with the need to transform, and only 36% say they are confident to do so in a 5 to 10 year time frame.

The confidence gap suggests that organizations lack both the long-term orientation and the tools to plot long-term strategy. The survey bore this out:

  • Only 12% of organizations have a formal growth strategy with at least a 5+ year time horizon.
  • The remaining 88% either have no formal growth strategy or it is shorter term.

This short-term bias has implications for the ability of companies to develop disruptive or transformational innovations—the kind that open new markets and attract new customers—and which typically require a longer-term perspective.”

What a difference a well-structured survey and report can make.

I would recommend taking the time out to read this report. It signals much of what is so wrong at present in the sacrifice of the future, even the eventual existence of the organization in years to come.

This report seems to reflect a broader trend that this frightening “strategic confidence gap” is a huge one, where senior executives are seemingly being increasingly caught up in the short-term demands.

They seem to have scarce time to re-equip themselves, let alone their organization, for the changing landscape and are simply ‘kicking the bottle down the road’ and taking the pay packet that goes with short-term performance. Surely this has to change? Is it so bad?

This report is indicating it is really bad.

I liked the heading to each part of the executive briefing from Innosight as they do summarize the challenges that need to be faced and resolved.

  • The Confidence Gap: The Desire – But Not the Ability – to Transform
  • A struggle to Keep Pace : A Sense of Falling Behind the Market
  • Strategy Shortfall: Growth Plans Focus on Near-Term
  • Process Shortcomings Undermine Long-term Planning
  • Technology and Changing Consumer Preferences Expected to Be Most Disruptive
  • No Lack of Ideas, But Difficulty Getting Through Innovation’s “First Mile”

The last heading is a clear nod to the topic being explored in a new book. Recently Scott Anthony , Innosight’s managing partner, wrote a book “The First Mile: A Launch Manual for Getting Great Ideas into the Market”. That first mile—where an innovation moves from an idea on paper to the market—is often plagued by failure, in fact, less than one percent of ideas launched by big companies end up having real impact. The ideas aren’t the problem. It’s the process.

Gaining value from consultants insights if it enters the public domain

Thought leadership viewWe should get solid value out of research or insights from any consulting research if it is published. So two of our leading innovation consulting companies, Innosight and Fahrenheit 212 approach knowledge sharing in different ways.

Innosight provide a good depth in their report, although it is perhaps light on final takeaways and conclusions, whereas Fahrenheit 212 reported comments are just, well, simply ‘light’ and lacking the depth I would expect from them. At least their survey should link into their own report. This I simply can’t find.

I finally reflected on what makes good thought-leadership from consulting practices
Take a look at this from http://www.sourceforconsulting.com/whitespace/

What makes good thought leadership?

“The clients of consulting firms are inundated with information and analysis from every direction. Unquestionably, the vast majority are binned or deleted instantly”. So what are the factors likely to attract attention,  Sourceforconsulting.com suggest the following:

Differentiation – will the potential reader pick up and begin to read this piece of thought-leadership? (If it is actually available even!)
Appeal – does the writing style and presentation encourage the reader to keep on reading past the introduction and beyond? Where do they go from this?
Resilience – will the reader feel confident in what they are being told? Whether a client buys into the idea a consulting firm is trying to put across depends on the evidence.
Prompting action – ( I kept all the guidance within this section in, as it is relevant to the two reports I have focused upon) Will the reader do something because they have read this report? Good thought leadership takes the reader beyond the ‘that’s interesting’ stage – it gives them the tools and inspiration to identify issues in their own organization or to begin to address a pressing concern. We ask whether the next steps for the reader are clear. We also check that the material isn’t a poorly disguised sales pitch which would undermine its credibility and chances of prompting action.

A tale of two both working innovation consulting.

Two innovation consulting firms offering up their insights and I feel the one from Innosight is simply much further down the thought- leadership path, in its linkage of its practice and report around disruptive change. It ‘calls for’ and ‘prompts’ action.

Perhaps Fahrenheit 212’s report should have been rooted far more in what it does, that is identifying, developing, designing and implementing profitable new products and services and then framing this within their survey remarks, as this is the space they play in and by all accounts play well. It would have made better sense to me.

I think we all need to think about why innovation might be withering on the vine. We all need to ensure the contributions we make, into conferences, summarizing reports, writing blog posts or being engaged in innovation activities, as consultants or practitioners that we do not lose sight that innovation is still struggling to make headway in the ways it should, with the appropriate messages getting delivered effectively and sometimes we all often miss that ‘line of sight’ on that.

Any thoughts on the observations from the reports or what they contribute into our thinking around innovation?

Entering the zone of innovation uncertainty

“The future never stays the same as it is in the present”. 

Today we grapple with more uncertainty than ever before. For many of us this is the time of year when planning out the future becomes more ‘top of mind’. These are moments where we have to stop chasing the daily numbers, pushing the immediate projects that are in the pipeline and turn our attention to laying out our future plans. Sadly we often make a poor ‘stab’ at this thinking through process; we don’t get our thinking into the right mental frames.

The problem for management is anything discussing the future enters the ‘zone of uncertainty’ and this ability to often ‘read the tea leaves’ can very much determine the future health and direction of the organization. Ignore these shifts or signals and you are on the path to your own ‘destruction’.

Three Horizons Future never stays the same

Not only should we search for possibilities that extend and strengthen our existing core offerings but we should search out on a wider basis.

Often we make a complete mess of this planning out of our future.

We have not prepared as we should have done, we take what we are doing and project that forward, adding a few tweaks to give it a more ‘innovative’ feel that continues the incremental path we all so easily like to work in.

Help is at hand if you care to grab it!

The other way is to stop and think about this very differently. For this we need to develop different mindsets, ones that change, ones that can allow us to think in different time horizons.

That is managing innovation not just in today’s operational horizon (h1) but in traversing into the future with more breakthroughs (h2) and transformational innovation (h3) that is organized around the three horizon methodology.

The three horizons ‘asks you’ to apply three totally different mindsets to see constraints, weaknesses and often very limited opportunities differently, often called “weak signals”, it alters your thinking into a far more evolutionary approach. We just do not allow our thinking to open up to this evolutionary approach.

We stay trapped in our existing thinking, due to a lack of time or a lack of encouragement to think differently, to challenge our existing approaches to business. We tend to look more at extending products but we only play a little with business model alternatives and rarely with ideas that stretch our minds or pick up on these “weak signals”. We stay trapped within our existing bodies.

Can we attempt to break free? How about if we broke our thinking down into separate steps?

Different mindsets and discussions are based on (h1) operational: the here and now, (h2) more entrepreneurial: attempting to detect shifts and adjusting in agile ways, (h3) more futuristic: based on values, visions and beliefs. Each needs separating.

a) Firstly we set about to clarify the burning needs relating to your present position and link these to your known strategy and approaches but keep questioning this to keep it fresh and relevant to ever-changing market conditions.

b) Try a technique like concept boarding that can capture the emerging trends so you can begin to put together plausible ideas that may be those emerging winning needs (h3) you begin to articulate and frame these. These start to shape your decisions on where to focus your ‘future’ resources as you search for emerging winners.

c) Then you begin to think through the “space for transition” (h2) to begin to reflect and start working through that constant dilemma of “protecting core or investing in new” debates. You are beginning to shape an ‘emerging’ strategy that really brings your thinking out.

d) The end result is you are beginning to explore fundamental different premises for replacing “business as usual” with exploring nascent ideas. Then you need to seek out the appropriate platform, a strategic planning meeting, to explore these.

e) Often these H3, even some in H2 are weak signals today where many unknowns prevail but allow you to straddle between (h1) improve, (h2) extend and (h3) change. You begin to see these differently; you begin to plan them differently.

What emerges is more uncertainly know you need to map and ‘attack’ this

We are moving across ‘transitional ‘points. We do need this longer-term perspective and we do need to traverse into the future in clear thinking through steps (or horizons). Our horizon one (h1) does begin to decay faster today than ever, it does not fully cover off the strategic fit we want and can begin to lose its dominance over time. We need to manage this transition, not let others, our competitors or new entrants, manage it for us.

It is how we manage this transition becomes so critical. We need to exploit developing trends that are emerging (h2) and begin to tune into possible options in the future (h3).  Within these options will emerge the winners and become the more dominant systems or solutions that we should be moving towards, even from today. Some of these only have faint emerging signals but they need to be brought into the innovation portfolio activity to explore, often in novel ways.

The horizon two is beginning to address some of the current decay arising from the core within the existing activities (or system). Here we have the highest tension.

The discussions that centre on often conflicting views of the future, compared to the existing realities and those providing the returns for today’s business. Often we can detect change but we consciously ignore them. This is the place where the disruptor’s are at work, existing or new competitors, working at displacing your products and market positions

Managing the rising stars or a future transforming one is hard in existing structures.

The concepts that emerge from horizon two will include the rising stars of the organization and will, over time, become even the new core business. These are a mixture of step-outs from today’s core, or extensions that have come from the adjacent work consciously being undertaken or are truly emerging as new activities that need new depth in capabilities and time to build.

Many executives ‘defending’ the core will ‘attack’ or hold back any release of their resources to help these emerging initiatives. It is a ‘hard-nosed’ reality.  It needs a very high level and conscious set of decisions coming from the top to determine these new moves. Do not believe that when most executives ‘just’ react and shrug their shoulders regarding h2 as a natural, everyday occurrence, it is far from not.

Many have to come ‘kicking and screaming’ to supporting emerging activities. Far too much ‘invested’ interest comes into play. They see this more as a threat not an opportunity. It is not their sand box so why should they ‘play’. These positions need drawing out and how you execute on your thinking will help.

Horizon two is where you work through your future options

This is where you try out, experiment, explore. This is the transiting point (my space of transition and zone of uncertainty) where you work through different dilemmas and paradoxes to shift the organisation through this horizon two to position it for the longer-term future. This horizon is a real point of disruption to be well-managed as you navigate from shifting resources from today’s core to that third horizon, the predicted future where ideas and proposals are still forming.

The ‘zone of uncertainty’ needs more of your time

Horizon two actually ‘claims’ more time and attention than on the surface it deserves but this is the wrong thinking approach,  it simply needs too. This is not about supporting the ‘existing’, this is working actively on the ‘preferred’. It is working to reduce current shortcomings, injecting new life and vigour into the present to offer a broader sustaining future.

Horizon two investments should be challenging ‘business as usual’ and should contain many of the catalysts for renewal, for the future growth. It is renewing the ‘fitness for purpose’ through innovation taking you along different pathways to the long-term successors of your business.

You owe it to your planning to think in different mindsets and horizons

The three horizons working through in different mindsets does allow you to pick your fights, explore your emerging options and show others how and where you can possibly win in better ways than just in the ‘present’. You are ‘allowing’ discussion to shape the future business in  a more evolutionary way.

By ‘seeing’ these three horizons differently and setting about managing the different challenges each horizon brings, can help you can break down the complexities within the issues. By simply recognizing and then attacking the ‘uncertainties in horizon two (h2), you do have a much to have a better chance to ‘win’ in more ‘transforming ways’ by anticipating and evolving the delivery of innovation in a more structured way.

Structuring your thinking across different horizons is far better than ‘jumping into your plans’ as more of that “business as usual”, simply repeating the same exercises from previous years that keep you on a safe path but maybe, one that plants even more ‘seeds of destruction’ for your business.

You might have chosen the path of least resistance or work, due to not giving this adequate time but you will certainly be missing the real opportunities to ‘transform’ your existing business. Your choice?

Traversing different horizons for transformative innovation

Irrespective of the organization, we all struggle with transformational innovation. So often we are simply comfortable in our ‘business as usual’. We gear performance to the short-term, we put the emphasis on the current fiscal year, and we support the core business in numerous ways, usually with lots and lots of incremental innovation, so the results are realizable in this year.

We are sometimes comfortable or confident enough to move into adjacent areas, to expand and feed off the core but these are less than transformational in most cases. This space is the one we are the most comfortable to work within, this is the horizon one of the three horizon model approach outlined to manage innovation across a more balanced portfolio of investment.

In summary, the three horizon model for innovation is actually a reasonably simple idea: with Horizon One (h1) being the current business focus, Horizon Two (h2) being more the related emerging business opportunities and Horizon Three (h3) being those that are moving towards a completely new business that can have the potential to disrupt the existing one.

The complexity lies underneath this simple idea, you need to manage these different horizons with completely different mindsets. You need clear well-structured ways to extract the real return from managing a comprehensive innovation portfolio based on knowledge, experience, intelligence but exploring plenty of the unknowns about the future and openness to get you there, as ready as you can be . Its necessary today.

The seeds of destruction lie in horizon one

Within our ‘business as usual’ attitudes lies the seeds of destruction. Today there is a relentless pace; we are facing stagnation in many maturing markets. We place a disproportionately high amount of our resources here to defend what we have and what we know; we actually subvert the future to prolong the life of the existing. We constantly look to make it more efficient and more effective but this is in the majority of cases just incremental in what we do, both in innovation and our activities. These are often simply propping up the past success instead of shifting the resources into the investments of the future.

This is why the three horizon approach has real sustaining value because if we don’t have this longer-term, transformational perspective we are just prolonging the existing until it gets disrupted by others. This is where the working across different horizons for ‘thinking’ through innovation does need different tools and mindsets and these should be based on (h1) see and operate, (h2) adjust your thinking frame and solutions, (h3) more evolutionary. Each has different techniques to explore as I’ve previously outlined in my navigation guide to this approach.

Clayton Christensen has written about this theory of disruption in his book “The Innovator’s Dilemma”. Professor Christensen then went on to write extensively on this and one further book “Seeing What’s Next” co-authored with Scott Anthony and Erik Roth develops this disruptive theory into how the future will unfold and how to make wiser choices on these insights. The three horizon connecting approach is an excellent methodology to use to help in managing these wiser choices.

The hardest part is to traverse across into horizon 2 for new ‘breaking’ innovation

We do need this longer-term perspective and we do need to traverse into the future in clear thinking through steps (or horizons). Our horizon one does begin to decay faster today than ever, it does not fully cover off the strategic fit we want and can begin to lose its dominance over time. We need to manage this transition, not let others manage it for us.

It is how we manage this transition becomes so critical. We need to exploit developing trends that are emerging (h2) and begin to tune into possible options in the future (h3).  Within these options will emerge the winners and become the more dominant systems or solutions that we should be moving towards, even from today. Some of these only have faint emerging signals but they need to be brought into the innovation portfolio activity to explore, often in novel ways.

The horizon two is beginning to address some of the current decay arising from the core within the existing activities (or system). Here we have the highest tension.

The Collision Zone (h2) of the Three Horizon Approach

The Collision Zone (h2) of the Three Horizon Approach

The discussions that centre on often conflicting views of the future, compared to the existing realities and those providing the returns for today’s business. Often we can detect change but we consciously ignore it. This is the place where the disruptor’s are at work, existing or new competitors, working at displacing your products and market positions. They look to be more agile, they might have greater entrepreneurial ways, they are ready to explore emerging practices far more than the established leaders, they look to leverage different business models and are certainly not handicapped with legacy and mindsets stuck in the past. Increasing competition is today’s certainty.

Horizon Two needs a totally different mindset.

You need to see H2 with different metrics, with different perspectives, with more open minds. This is not easy. This needs to become the meeting point or “the space for transition” where you begin to let go of just protecting your core and open up your thinking to experimentation, prototyping, exploring different business models and begin to figure out how these will impact your existing core, to become more agile and adaptive than you are in the existing system or structures

These horizon (h2) concepts being explored  really do need ‘ring fencing,’ so you can protect these from all the ‘vested’ claims that your horizon one focus will continually demand to keep, so as to bring in the results in this calendar year. It is a real fight, these ideas or nascent concepts ‘give off’ negative results, they are still a mix of the tangible and intangibles where you can’t get the ‘hard’ fix on the ROI, on their real market value or potential.

Many executives ‘defending’ the core will ‘attack’ or hold back any release of their resources to help these emerging initiatives. It is a ‘hard-nosed’ reality.  It needs a very high level and conscious set of decisions coming from the top to determine these new moves. Do not believe that when most executives ‘just’ react and shrug their shoulders regarding h2 as a natural, everyday occurrence, it is far from not. Many have to come ‘kicking and screaming’ to supporting emerging activities. Far too much ‘invested’ interest comes into play. They see this more as a threat not an opportunity. It is not their sand box so why should they ‘play’.

The Conflict Sapce of Horizon Two

Horizon Two- Where policy and strategy are played out in the Three Horizons

The tensions are not just visible but played out in many subversive ways.

Just take performance metrics, if these are solely structured on the calendar year, are you realistically expecting a dilution of focus as their compensation is totally caught up  in this. Horizon two poses a real challenge within any management of our organizations. If it provides current small bases of volume, no real meaningful profit from the investments made it can be a hard sell across the organization.

Projects that focus on the future work mostly are based on ‘best’ assumptions. Sadly it is often executives expect to see the same ‘hard’ metrics being applied as the existing business. We ignore significant differences and  this is a huge mistake. So you get these clear sense that many are sceptical or pay lip service to the products of the future as the thinking, judgement and value orientation are at such odds with the existing measures and metrics they apply to run today’s business and how they get judged.

Often we then impose a set of metrics to compensate for this resistance.

This allows for a sudden rush of promising new products entering the market, of chasing and competing for those same resources as the ones focused on the core. The push to validate, explore and experiment might make the situation worse. You introduce waves of inefficiency into your highly tuned supply chain, you detract from selling and competing in tough market conditions and you then hear that comment “we took our eye off the ball”

This new ‘push’ for establishing the rising stars ends up that most of the promising concepts never really cross the finish line of moving from ‘interesting’ to main stream. The core also starts to suffer from these multiple distractions and eventually ‘innovation’ gets a bad rap. Many promising ideas get starved or killed off from emotional reactions.

The demand from supporting horizon two products or emerging concepts demands managements serious attention to getting resource allocation, response and focus into ‘actively’ managing this very real and tangible ‘innovators dilemma’.

Managing the rising stars or future potential one is hard in existing structures.

The concepts that emerge from horizon two will include the rising stars of the organization and will, over time, become even the new core business. These are a mixture of step-outs from today’s core, or extensions that have come from the adjacency work consciously being undertaken or are truly emerging as new activities that need new depth in capabilities and time to build.

These all have the potential to shift the organizations revenue base and challenge today’s cash generators. These need careful ‘portfolio and resource’ allocation. These extend the organization from your existing into new competencies, new markets and new challenges. Just please don’t use the same measures or metrics when you mix H1 and H2, although there is a huge temptation because it is just simply easy.

Horizon two is where you work through your future options

This is where you try out, experiment, explore. This is the transiting point (my space of transition) where you work through different dilemmas and paradoxes to shift the organisation through this horizon two to position it for the longer-term future. This horizon is a real point of disruption to be well-managed as you navigate from shifting resources from today’s core to that third horizon, the predicted future where ideas and proposals are still forming.

Horizon two actually ‘claims’ more time and attention than on the surface it deserves but this is the wrong mindset,  it simply needs too. This is not about supporting the ‘existing’, this is working actively on the ‘preferred’ as it is working to reduce current shortcomings, injecting new life and vigour into the present to offer a broader sustaining future.

Horizon two investments should be challenging ‘business as usual’ and should contain many of the catalysts for renewal, for the future growth. It is renewing the ‘fitness for purpose’ through innovation taking you along different pathways to the long-term successors of your business.

Horizon two can be a powerful catalyst.

 It can alter the way you are currently doing things, in new business models, in new systems, structures and delivery. It points you to a new, hopefully preferable future, worthwhile to pursue and attractive. It refreshes, it can invigorate and this horizon holds the keys and transition path to realizing that vision laid out in the ideas forming in horizon three.

To battle the increasing pace of obsolescence, we need to not just see and operate in today’s world; we must look towards the future. We must break out of incremental steps alone in our innovation activities, they just don’t simply ‘cut the mustard’ any-more, they are simply not good enough, in our rapidly changing world where increased competition is appearing from anywhere. We need to build out new capabilities, capacities through new innovation competencies.

We not only need to envision our future and the part we want to play within it but need a clear approach to working through the challenges and tensions to achieving a real balance in our innovation portfolio that work towards the same goal of being a material part of the business.

That is managing innovation not just in today’s horizon (h1) but in traversing into the future with more breakthroughs (h2) and transformational innovation (h3) that is organized around the three horizon methodology.  Making that essential traverse through horizon two is the toughest part. It needs carefully managing to have any really sustaining pathway to the emerging future.

Casting-around with a wider innovation net.

When we ‘cast around’ we are looking for something; to try it out, to think about it, to search for connecting a vague idea with something more tangible. So let’s go innovation fishing.

The word ‘cast’ is around us in so many ways – anglers cast their line, we are cast adrift, we cast or drop anchor, we cast to put about, to tack, we cast our eyes upon the speaker, we cast light, we cast aspersions, we cast someone in a play, we cast a plan, we cast into a certain mould, are all just some of the many examples of how ‘cast’ is part of our everyday thinking.

In innovation, cast can become a fairly dominating action – we can cast about or around for ideas, to devise a plan, we can equally cast off those ideas or concepts we reject or simply cast out, or finally, we can agree to cast one’s lot into a plan or concept to take forward as a united team.

For me casting around is a most important part of how I work through innovation coaching.

‘Casting around’ in coaching is trying to understand and see the possible ways to get someone from point A to a new point B. This needs to be in a safe environment, so as to tackle any blockages or misunderstandings and were established patterns might need challenging can be discreetly explored so we cast around initially to explore the different triggering points. Also by having a ‘neutral’ environment but having a clarity of why we are coaching permits for a growing receptivity based on specifics. This allows for being more specific in changing and shifting perceptions that can eventually lead to better innovation understandings and outcomes. Casting is actually essential and becomes a significant part of the solidification process within coaching.

Good casting needs a clear routine, method and structure.

So why is casting important to innovation? Casting objects has been around for thousands of years. The better your experience in ‘casting’ the more likelihood you arrive at something that is useful and valuable (and highly appreciated) from the efforts put in.

When we think through building the capabilities for more open innovation, it is the finding and developing good ideas that innovation is all about. To get to this end-result of delivering upon the idea into tangible innovations it is often thanks to having in place the process to find, capture and commercialize and providing the corporate culture that promotes and protects these processes, to allow for trust but to execute rigorously against clear criteria and (emerging) objectives measured against specific goals. This becomes the art of casting open innovation.

It is this art of casting around we can increase discovery, we can capture and act on that discovery or set of connections to generate our future innovation activity. The more we establish a set of patterns, perhaps to have a casting process, the more we can evolve ideas and move them along the innovation process. We gain confidence if we know where we are going but we do need a ‘casting plan’.

What is important when we set about casting we do need that certain ‘something’ that gives the process a good structure and a given clarity. I think as we cast we need to work through five stages of casting :Discovery, Generation, Conversion, Diffusion and Acceptance. We raise our abilities if we cast in a prescribed way.

The virtues of openness are like casting a wider innovation net for better return.

Open innovation gives us all considerable benefits from looking outside our existing organizational boundaries for different concepts and ideas. We can also draw in outside help and partly to confirm those ideas in our growing connections with the final consumer. We need to cast more often today in a world where we have to work at being the smartest.

It is reckoned that an organization that has strong and robust open innovation capabilities are seven times more effective than firms with weak capabilities and is twice as effective as those with moderate capabilities, in terms of generating returns on their overall R&D project investment portfolios (source Booz & Co research)

Innovation needs casting practice in knowing where to ‘fish’.

If we keep practising casting, we will be making longer and longer casts as we gain in open innovation experience. Just like in fishing you gradually loosen up the control until you get confident in where, what and why you want to cast (around).

Remember when you are searching for innovation, no different from fishing,  always reel in enough line after you cast to make enough tension, so you can begin to ‘feel’ the response and gain that feel this is worth ‘reeling in’.

The real key to innovation casting though is back-casting.

Back-casting method

The back-casting method helps define our innovation understanding

As you might know, I have consistently argued about having a clear understanding of where you want to go (a vision and awareness) and in particular why I think the mapping across the three horizons is a more than valuable technique for knowing where and why you are ‘casting’ in specific areas. If you have some clarity on the future, those multiple horizons you need to explore, then your efforts of landing from your ‘casting around’ increase significantly.

You can ‘cast’ simultaneously and more accurately for those multiple needs. Those immediate ‘burning needs’ required for improving on today’s products and then you can open-up possible areas for those future ‘winning needs’. But more importantly this back-casting allows you to ‘look across’ new horizons, explore and take a greater time to ‘feel’ out and explore new areas of discovery to take you then through the five stage loop suggested above.

Having three different mindsets of the ‘here and now,’ more entrepreneurial, and more futuristic, based on this vision and awareness and then back-cast, allows for throwing open the innovation net for catching ‘greater’ possibilities.

No, casting is absolutely critical to innovation.

If we can learn the technique of ‘casting forward’ and ‘casting back’ we are gaining insights into ‘casting around.’ We have a much clearer plan of where and why we are looking for something because it has become more specific. Then we can try it; explore its possibilities, to think about it, to search for the connections that turn a vague idea into something more tangible. Open innovation becomes highly focused and well-cast! It becomes aligned.

Casting correctly can lead to greater promise, perhaps the innovation ‘catch of the decade’.

The Innovation Bunker- Getting Out of Cognitive Traps Part Two

Help seems to come from new quarters – unlocking our minds and breaking free from our cognitive biases.

Part two of the Cognitive Traps we find ourselves in. Part one is here

Breaking Free from our Cognitive ChainsSo how can we break free from what holds us back? As we have these cognitive biases then we have to consciously work on reducing their effect in our judgements, decisions and actions. We need to break out of those cognitive chains that can hold us back and limit our innovation thinking

I think there is so much help at hand

If I take www.innovationgames.com, as one example, of where Luke Hohmann and his team are taking us.  I think there is this important emerging ‘rush’ into games-based tools partly because they can significantly help offset cognitive bias. They allow us to become more engaged in collaborative thinking.

On http://www.innovationgames.com site they offer this as their value statement: “our on-line and in-person games help organizations solve problems across the enterprise by using collaborative play to tap into true innovation”. “Games bring your ideas into Action” in our ability to come together and then actively collaborate, helps you discover market opportunities and uncover customer needs and challenge your thinking in new and stimulating ways. Engagement in imaginative ways allows you to break free of some of your cognitive traps.

Have you explored the different books around games, for example Gamestorming: a playbook for innovators, rule breakers and change makers.  They state “we’re hardwired to play games. We play them for fun. We play them in our social interactions. We play them at work. That last one is tricky. “Games” and “work” don’t seem like a natural pairing. Their coupling in the workplace either implies goofing off (the fun variant) or office politics (the not-so-fun type)”.

The authors of Gamestorming, have a different perspective. “They contend that an embrace and understanding of game mechanics can yield benefits in many work environments, particularly those where old hierarchical models are no longer applicable, like the creatively driven knowledge work of today’s cutting edge industries

I’d suggest that in any industry there is this pressing need to open up the thinking to see ‘things’ in new ways. The challenges are becoming more complex, faster paced and needing far more agile minds. These game storming approach are allowing us to alters our cognitive biases in new ways.

Have you read the article by Jordan Shapiro on “How gamed-based learning can save the humanities” where he discusses example of game-based learning platforms that uses the magic of interactive storytelling–video game design–to bridge the catastrophic gap that undervalues the humanities in education. He goes on to suggest “Metaphors, signs, and symbols are useful. As the building blocks of language, they let us articulate our experiences through a shared system of meaning-making”. Any shared language reduces personal bias.

Take a look at this slideshare “Building a sustainable innovation ecosystem” for exploring translation pathways to new ways of learning in the 21st century. Game-based learning is significant to alter our perceptions and challenge our thinking.

The Blank BM Canvas

Following the success of Alexander Osterwalder’s Business Model Canvas we are all getting more comfortable in building off a ‘blank’ canvas our new business models. Since this canvas there are countless other alternatives that can help us to overcome bias and prompt different thinking around most of the aspects of business design.

Collaborative and visualization tools are equally making a difference

We are seeing the art of storytelling, of taking part in simulation work, making better use of the different visualization techniques and we are opening up in allowing ourselves more time for strategic and concept conversations.

If we take the Heath brothers suggest in their book “Made to Stick” I certainly believe this can help in ‘chipping away’ at cognitive bias. It reduces bias though drawing out, more often than not collectively and giving time to debate. This shifts our personal perspectives and allows us to see things differently as ‘I’ moves to ‘we’ in association and assembled knowledge of the broader community engaged in the conversations and exploring.

Can we use the tool from “Make It Stick” for reducing cognitive traps?

For example in their book “Made to Stick” they (Heath brothers) lay out the critical elements of a sticky idea of Simplicity, Unexpectedness, Concreteness, Credibility, Emotions, Stories. This encouragement makes for more conversations, both within our own minds and in greater participation with others. This idea for structuring conversations will be great offsets to our cognitive bias in my view. It certainly can become a great starting point.

So taking the Heath Brothers suggested acronym of ‘SUCCES to reduce Cognitive Bias

  • Simple — find the core of any nascent concept and allow it to permeate.
  • Look for the Unexpected —let it surprise us so we can see its possibilities
  • Concrete —Grasp it and its potential effects to share this new insight with others
  • Credible — work on the association to give it ‘growing’ believability
  • Emotional — help people see the importance of this to achieving innovation that transforms.
  • Stories and Narratives — for crafting a compelling narrative to change our cognitive biases into new logic and value propositions.

Knowledge diffusion I believe can reduce cognitive bias also

For me the more we can diffuse knowledge, the better, for recognizing its potential new value in enabling innovation to be translated into “exploitive learning”. I’ve previously suggested absorptive capacity as a help in knowledge adapting. I wrote a piece called “Moving towards a more distributed innovation model” can allow your thinking to absorb and have a greater flow.

Envisaging different states for innovation needs clear application.

Scenario thinking is a more than helpful place to go for changing our perspectives. What we have to guard against is that these do not become another cognitive trap where we want scenario thinking as long as it is on ‘our terms’.

I believe if we only ever construct scenarios in one ‘mindset’ we miss so much. As many who have been reading my posts I strongly prescribe the three horizon methodology for approaching innovation. Take a look at mapping innovation across the three horizons to see where this can ‘shift’ our thinking beyond accepted present day thinking norms for innovation to be advanced more effectively.

Langdon Morris wrote in a book called “The Innovation Master Plan” there are four devious mindset traps of 1) fixation on the status quo , 2) short-term thinking dominates at the expense of longer term, 3) too much incremental innovation and 4) ignorance of the real meaning of change, its rate and impact. We need to radically alter these traps. Fixation, biases simply do have innovation consequences.

Seeing across multiple horizons ‘frees’ us from many cognitive traps

I believe we can go well beyond the present value of ‘just’ fitting your existing innovation portfolio and directional management into a one-dimensional framework, viewed in our present ‘here and now’ mindset. You can see opportunities completely differently beyond the existing mindset and activities, if you think in different time horizons. These different thinking positions take innovation from tactical to strategic, then into foresight in your three different mindset evaluations. This three horizon approach challenges your cognitive biases as you really do just have to let go and open your mind right up, to see and that is in different thinking frames.

Perhaps I can go one step further, a final step, by reflecting back.

So in my final post coming up (part three) on the Innovation Bunker – Cognitive Traps I offer a simple framing technique that I think has value. One that we all can relate to it, not so much to each others cognitive biases but on how we can manage innovation and its progress in a ‘common’ approach- It can reduce differences and allow for better results.

We certainly do need to encourage adoption and decrease the rejections in innovation.

The Innovation Bunker – Our Cognitive Traps Part One

I suspect we are all cognitively trapped most of the time. We are all more ‘hard-wired’ than we would care to admit too. That cognitive bias that ‘permits’ us to make constant errors of judgement, ignore often the advice around us and certainly gloss over the knowledge provided or staring us in the face. Innovation does need us to break out of these cognitive biases if we want to really develop something very different, more transformational.

We should all recognize this constrain we all have, it might help our innovation activity. We are often guilty of being overconfident, actually staying nicely in a rut. Just how many times do we offer ill-framed challenges from lazy thinking or fail to offer the proper context into the discussions early enough, to avoid conversations that wasted our times or reduce the recommendations based on inadequate information. We also simply allow poor idealization because we did not prepare enough or we want to immediately link back something new into our realm of experience, screening out emerging alternatives. We do these, all of the time.

Have you ever checked out the number of cognitive biases we have? Do, it is staggering. They are everywhere, in our daily decision-making, in our belief systems and of course our behavioral stances. We have social biases, memory error ones that are just within us. We simply want to make sense of the world and you  take it back to your experiences, your rationalities, those specific conditions so you can replicate it, map it back to something.

We all end up in the worst innovation bunkers

Innovation Bunker the Cognitive Trap

For innovation we often fall into the equivalent of the worst bunker in a round of golf and then what happens next can often make or break your day (like your golfing round). We firstly try to make sense of the situation before deciding on the course of action or do we simply resort to our past experiences as our norm? Often we quickly fall back and rely on past experience, and ‘blast’ away, in our wishful thinking that we are all Tiger Woods, not recognizing the need for a certain detachment and more rational assessment by having the right combination of experience and the tools to do the job. We end up in even worse traps.

Recently for me cognitive thinking has been triggered twice.

Firstly, the first trigger was one comment made by Henry Chesbrough at the recent Business Design summit. He suggested boards of many large organizations are “cognitively trapped” when it comes to opening up to new Business models and different thinking and approaches. Often it seems, that our leaders ignore new ways to do things,  to understand, claiming either no time or the approaches look complicated. They chose to not explore new business models as they are often simply cognitively trapped.

Henry Chesbrough has written about this in his books, one being “Open Business Models: How to Thrive in the New Innovation Landscape” and how the prevailing wisdom is so entrenched, it looks only to fit existing logic and simply filters out any variance or alternative. This dominating logic becomes their trap, in not recognizing the changes taking place before their eyes, dismissing all the growing logic of exploring new business models. They are in the locked-in innovation trap. They ignore what is actually going on around them and then get caught out. How can we change this?

The second was in an article written by Andy Zynga, the CEO of NineSigma International on “The Innovator Who Knew Too Much”. Here he brings out the ‘curse of knowledge’ and cites the book “Made to Stick” by Chip and Dan Heath on this ‘curse of knowledge’ leading to communication failures.  In an article they offer this thought “The problem is that once we know something—say, the melody of a song—we find it hard to imagine not knowing it. Our knowledge has “cursed” us. We have difficulty sharing it with others, because we can’t readily re-create their state of mind.”

I wrote back to Andy: “The curse (of knowledge) goes well beyond that of a particular industry, it is the curse of specialization in a given field, subject, research topic, etc. Cognitive bias sits in the boardroom, throughout organizations holding innovation back. The barrier for open innovation is to not be allowed to challenge this – the increasing difficulty is that determination to structure an appropriate brief, set screening targets that dismiss everything looking “left field” is placing constraints in our thinking, evolution or engagement processes”

So we are both equally cognitively trapped and cursed with existing knowledge. Not a good place to be when it comes to innovation.

Also we seem to “lock-in” our decisions far too early

I’ve offered up before that much of the “fuzzy front end” seems to ignore or downplay so much that could be more than helpful to us in exploring innovation that ‘makes a real difference’. In a past argument of mine I have suggested we need to extend the innovation funnel back before we bring it into the more traditional innovation funnel process. In an article on this “the New Extended Innovation Funnel” I am suggesting we spend far more time in the depth of (alternative) evaluation, well before even the idea stage. It can offer up a different richness of thinking.

We need to start thinking more in ‘concepts’ where we can explore as so many of the different connecting points that we can come across from our increasing open networks that can offer such a variety of trigger points. Today we screen these out as the brief is encouraged to be ‘tightly written’ or the time we have been given is ridiculously limited. If we could only open this up and use the open innovation principles more in ourselves being more receptive in thinking and possibility, we might see different innovations emerging that offer a more ‘transforming’ effect on our innovation activities..

If we could allow our minds to be open to possibilities that whole lot earlier, being less fixated, to explore richer possibilities that might be far more transformational, we might have less incremental moments. We lock in to ideas that ‘simply’ aligned to what we already do they ignore real innovation breakthroughs . We need to open up our thinking to these nascent concepts. Ones that show early signs of where there might be some ‘weak signals’ that should be picked up upon as offering promise if we work on them and make the different connections to make these transforming to our business.

We often allow our fixations, bias and the consequences to make it all intensive on the incremental, this huge bias on the ‘here and now’ for the necessary delivery within the existing time horizons. My very argument for seeing innovation across three horizons is this lack of breakthrough in products, in our thinking, that organizations need and eventually this leads to the innovation deficits that catches so many organizations unaware.

We need to open our minds to possibilities

We need to challenge our cognitive bias far more. Hopefully in that less pressured early concept stage, to allow the ‘forming’ idea to ‘percolate’ before it enters the established and traditional innovation funnel. You know the one, that magical place, where it has to perform in jumping the hurdles, crossing the barriers that we have lovingly set up to make us more efficient and productive in our innovation processes. Sadly those that often give us even more self-inflicted wounds where logical fallacies take hold to win arguments.

Why do I suggest trying to make connections so early on, doesn’t that conflict with cognitive bias and that aspect of our need to make our necessary connections? So as to relate it to our experiences so that we can filter and judge it. No, because we do suffer from this ‘curse of knowledge’, the more we know, the more we make a personal judgement, that can often be so wrong or just outside our existing experiences.

How can we overcome cognitive bias? Tackling this differently.

We need to fight those very cognitive traps as the more it is like something we know the more we will shape it to this. That is the very reason we must open our minds, to allow a new fresh thinking to emerge into something more transformational, more new to the world and challenge our existing thinking.

I believe there are ways we can tackle these traps, solutions are actually all around us if we can make some new connections.

In my next post I’ll attempt to tackle some of my thoughts that might reduce our bias traps and allow us to get out of our innovation bunker in better ways.