Innovations ‘rates of exchange’ require better understanding

Innovation happens across time. We often constrain our innovation because we ‘shoe horn’ any conceptual thinking into a given time, usually the yearly budgetary plan seems to exercise a large influence in this constraining. We should make the case that different types of  innovation operate and evolve over different time horizons.

I call this the innovation rates of exchange.

A little of the theory: Coherence between organizational context and coordination of outcomes is subject always to those natural tensions of planning, resource allocation and the time imposed. Often decisions have a real tension built into them and they ‘shear’ against the real forces in play. Like our tectonic plates ‘shear’ and cause earthquakes, the ‘shear’ effect has a disruptive influence on innovation outcomes.

Often the time horizon of possible desired innovation often has these real conflicts. The actual realities and needs of the organization we lower the innovation impact in final delivery. We fall back on incremental solutions as the organization does not have the patience, appetite or desire to see through the potential fully.

So that puts the theory out there.

It is such a pity the different time horizons for different types of innovation are not simply treated differently in most organizations thinking and planning. We need to ‘account’ for innovation differently. This is where my suggestions around the three horizons can partly help, these I have extensively outlined in previous blogs to see the value of different mindsets for different horizon thinking.

Different types of innovation needs to be treated differently- certainly more than other parts of the business in the planning cycle.

Sometimes innovation cannot fit neatly within timing budgets, being assigned yearly targets and having tidy plans for allocating resources and expecting results. Innovation is simply messy; it does not often fit the norm of budgetary planning. There is a need to treat different levels of innovation differently. Incremental, Disruptive and Radical all have distinct characteristics that often don’t fit the norm in organizational mindsets to allow them to be worked through at their ‘right’ pace, we force them far to often.

We have three emerging horizons that need different treatment for innovation.

1.Those innovations meeting given goals– these should be within specified period covered by a yearly plan and cover mostly incremental innovation.

2. Objectives that are more disruptive in nature-these are often attained later, after a lot of experimenting until a clear approach emerges. These need to be progressed within the period but have a likely longer horizon, in this case our horizon two within the three horizon framework but usually more than one planning cycle of 12 months. Sometimes they can take two to three years to emerge.

3. Ideals that offer Future Radical Promise– unattainable within the usual time period, more longer term, but the progress is certainly possible during and after the period planned as they move from a weak signal or an aspiration point, by probing and investigating over an extended period of time. As this flow of understanding gets translated into something more tangible, as the future simply ‘firms up’, it falls more naturally into what fits more in the longer term horizon perspective but still needs allocating resource within the planning cycle. Breaking down these into milestone achievements that fit more within traditional planning cycles would make sense.

Our existing planning does needs to account for all three, they cannot be simply fitted into one set of plans, all having clear metrics and financials. In many cases it simply ignores the differences completely and forces short cuts, dilution of a great, potentially radical idea , so it becomes ‘boiled down’ into a series of part disrupting but more often incremental innovations.

The search for breakthroughs

Not accounting for those vital differences simply reducing the chances of more radical breakthroughs, the very thing the C-Level is often crying out for. We need to think our ‘numbers’ and planning differently for innovation, pure and simple, otherwise you end up with innovations competitors can easily copy, and quickly and you chase each other to the point of ever increasing commoditization.

Innovation has its own rhythm

We need a change in planning out innovation, it does not ‘beat to normal time’, and it does certainly have its own unique rhythm.

Any coherency of innovations purpose, of what you want to achieve, and applying this in a rigid accountancy planned way does not work, unless you treat innovation differently in planning cycles and recognize these clear different horizons.

Innovation operates through a different set of behaviors and also in its delivery commitment and purpose from ‘business as usual’, it is challenging and searching for “business not so usual‘ that provides new value. This requires different mindsets at the C-level to manage this dual thinking. They need to manage expectations of when the potential value being extracted is worth and be patient for achieving a far more impactful return on investment. Breakthroughs happen but usually with a lot of hard work and sense of commitment, even when you have set backs.

Different innovation requires different thinking and planning. It is these different ‘rates of exchange’ in understanding that need more understanding and perhaps by using the three time horizons framework it might give innovation a more appropriate context to plan them differently than present and permit more disruptive and radical breakthroughs to occur.

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One thought on “Innovations ‘rates of exchange’ require better understanding

  1. Pingback: Innovation is like a tropical rainforest | Paul4innovating's Blog

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