The Innovation Journeyman

Continuing the innovation journey

Continuing the innovation journey searching for the framework to deliver the dynamics of innovation by focusing upon achieving a certain innovation fitness.

My  personal innovation journey started way back in 2001 when I got ‘hooked’ on innovation and what it could deliver in it’s impact into a business; for greater engagement within the organization and increased identification through their people, with the potential for learning and improving their capabilities.

Progressively I learnt about innovation, studied it as part of my Master’s degree and began to practice the parts others were prepared to pay me for, either to listen too, or offer advice.

This innovation journey took on a shape that eventually became 100% of my focus within my advisory practices at Agility Innovation Specialists and Hoca Consulting by systematically building my understanding of innovation and providing this knowledge to others through advisory, coaching, writing and mentoring services.

It still is a long continuous journey twelve plus years later.

I’m constantly learning, reading, absorbing and interpreting what I understand and then attempting to provide my thoughts to others, those willing to listen!

I’m comfortable in much, totally restless in so much more out there to explore and work through, so as to achieve potential solutions, through experimentation and prototyping until they become recognized as relevant and applicable.

Investigating, researching and reading all required a significant amount of time, all alongside needing to practice innovation, working to clients’ needs or pushing for their attention to changes taking place within the field of innovation management and what they needed to do about it.

Dynamic capability applied to innovation gained my increased attention

One area that caught my attention, many years back was the notion of “dynamic capability”, the organizations capacity to change its operation and adapt them to the environmental requirements in systematic and fruitful ways. Academic papers by Teece, Pisano and Shuen, by Eisenhardt and Martin and finally for me, Zollo and Winter, all fuelled my thinking at that time.

Winter suggested that organization change happens in two ways; the first is ad-hoc problem driven in our searches or the second is through the action of “stable patterns of activity aimed at creating or changing operating routines in pursuit of enhanced organizational effectiveness” offering the initial definition of dynamic capabilities. I’m up for the second, most organizations still often practice and treat innovation in ad-hoc ways.

What are dynamic capabilities?

These are the skills, processes, routines, organizational structure and disciplines that enable firms to build, employ and orchestrate intangible assets relevant to satisfying customer needs and which cannot be replicated by competitors. Enterprises with strong dynamic capabilities are intensely entrepreneurial, they adapt around business ecosystems, and they shape them through innovation, collaboration, learning and deep involvement.

I was really hooked. This started me on my hardest journey that began in 2008 around my pursuit of building a way to understand what makes up innovation capability and capacities within organizations. I needed to find a way to build, to integrate and configure internal and external competencies to address rapidly changing environments.

Much as Teece, et all, had outlined some years early the notion of this, there continues to lack decent, coherent solutions. Any suggestions I researched were often a little thin on the ground, in practical application but some of the concepts had a richness about them to sustain real interest in my continued pursuit to find a practical, enduring commercial solution to managing the dynamics within innovation. So this became part of my challenge and growing interest.

Moving from intent to cognizance and then application

So I was looking for designing something that gave a sustaining competitive in innovation advantage, that was shaped by the individual organizations specific asset position and where it needed to go and develop to get it to that stated strategic goal they required. This hinged on identifying the value points where resource configurations needed advancing once the gaps could be identified.

This journey has taken me all over the place. I have studied increasingly dynamic capabilities, innovation landscapes, absorptive capacity, where open innovation fits and then increasingly in this more open environment the need for collaboration, for networking, for orchestrating innovation to deliver what is needed, into the markets advancing on existing offerings.

My often interrupted journey was partly by design but also by lacking essential parts.

Since  the 2008 and 2009 period, where I had an incredible burst of energy into this whole area, I found I had to leave it, put it to one side for eighteen months or so. Sometimes you have to stop your searches and reflect a little. Any journey you do need decent resting and reflecting periods.

In 2011 I took up this quest again, yes quest is the right word, as it has both been long and a difficult search. I designed a framework, the innovation fitness landscape model and set up a dedicated web site for managing this at innovation fitness dynamics. This has bubbled along but was not the platform I expected or able to launch in the ways I’d ideally like. Something was still missing.

In this time I’d concluded that to identify the “dynamics” needed for innovation I’d need at least two levels of evaluation – the internal one where it seemed nine descriptors gave the necessary ‘thrusts’ to find the critical internal related aspects and the external one – more as the level of ‘degree’s’ of engagement for evolving the external related need. I was happier with the internal part, not so much with the external one.

I’ve completed some limited testing but by no means feeling I’m yet ready to really push out on this so a short period of digestion and thinking led to another hiatus until a few weeks ago.

So in mid 2013 I have taken up my innovation journey again, relating to innovation dynamics and fitness landscapes. There was a realization I was missing something. The innovation system I had been focusing upon was simply made up for the single organization and although I was consciously working on the external environment and recognizing their degree of importance, I was not  actually reflecting the really big changes going on in innovation today and in the near future, as I should have been. The changes taking place through more open, collaborative innovation. I was writing about it but not taking it fully into this dynamic framework of mine.

My recent ‘trigger’ has been the one word of “Orchestration”

I had not recognized the incredible power of “orchestration” needed in innovation. Of course it was there but it was not as ‘loud and clear’ in my thinking as it should have been. The blind spot had been my focus on pursuing this continual need to organize around innovation within an organization. Although this is as essential today there has been continued and rapid shifts taking place outside the walls and I was not capturing the dynamics of this well enough .

When we begin to want to orchestrate across external innovation networks we not only need to know ourselves extremely well, we also need to know what others can bring and what is missing. Networks are dynamic, the flow of knowledge, of capabilities and competencies all need somehow capturing. Recognizing this shift in my thinking, allowed me to pick up the baton again and begin to conduct all the different fragments and pull them together, into a different result.

I learnt also that innovation needs this growing orchestration, due to this increasing move from firm-centric to network-centric innovation. In my understanding of a orchestrator, he needs to manage the tempo, knowing where and when to cue in the different players (learning) and to inject the intensity into the performance. I was back on my journey recognizing the different passages and movements I’d been on, where all contributing into a final result. “Something” was coming together and I need to work through the new ‘score’ being played out.

We need to learn to identify, assimilate and exploit far more than ever, the value of knowing your innovation fitness, your dynamics and the terrain you wish to traverse in new innovation activity becomes even more critical. To create and to extract does clearly need to understand the what, why, where, when and how it needs to go about this.

The orchestrator needs to orchestrate.

To do this you must orchestrate the capabilities, to purposefully build what is needed to deliver the final result. I have reconfigured my thinking around what will influence the evolution leading from internal innovation capabilities to a whole ‘network’ of these. It still lies in how you purposefully build these capabilities and competencies up. Orchestration is fundamentally dynamic, full of uncertainties but the need is still to connect the parts.

The four dimensions for building capability to innovate are at the individual level, within teams, within the organization and within the dynamic set of networks needed at given times to solve innovation challenges. These capabilities need to possess mobility, appropriability, certain stability and the willingness to learn and build on the existing dynamics. Internal capabilities still need building but we also must work to identify those complementary capabilities across a fluid set of stakeholders to deliver a more complex innovation challenge.

Orchestration has for me become very important to my ongoing work on the dynamic innovation capabilities for recognizing your innovation fitness landscape and the gaps. These become even more of a challenge when different perspectives and competencies enter the mix.

We urgently need to understand the ‘dynamics of innovation’ even more. What is the local maximum, what can we work upon in transition, what we need to bring in for any future co-creation and what needs working upon within specific networks within the innovation capabilities and capacities needed to be applied.

The dynamic view of orchestrating is needed

The orchestrating of open innovation challenges is dynamic and we increasingly need to know the critical factors and their dependencies for delivering a collaborative innovation success. We need to not just know the appropriate resources, we need to work on the skills, processes, routines, organizational structure and disciplines that enable firms to build, employ and orchestrate intangible assets relevant to satisfying customer needs and which cannot be replicated by competitors, that delivers the new innovation needed through collaboration efforts.

My journey continues and I plan to outline in two separate and future posts, my journey approach for organizations to build dynamic innovation capabilities and a deeper outline of the growing importance of orchestration within managing innovation today and the future. Then I need to re-test my innovation fitness landscape framework to see if it does deliver the ‘dynamics’ in capabilities needed to extract better innovation outcomes.

At least I see an end in sight or is it a false ‘peak’ hiding the further journey I have to travel? Let’s see.

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Seeking a new middle management’s innovation perspective

It is often claimed that the middle manager seems to the ones holding back innovation. I tend to subscribe to this as well although I feel the circumstances and ‘blame’ might lie elsewhere, more than likely further up the organization. Irrespective of where the culpability lies we do need to change this perception through altering the current dynamics.

The general argument goes that the middle manager is so pressured to focus on the delivery of short-term results that all their efforts are centred far more on delivering ‘just’ an effective organization, that drives out any excess or leeway, reduces variation, constantly dampening down potential risk and uncertainty that is in direct conflict with what innovation required.

By the middle managers obsession with constantly chasing efficiencies alone, there is little ‘slack’ for innovation and new learning. Their measurement is often based on this efficiency and effectiveness emphasis and not on generating innovation.

Resources are often in conflict when it comes to innovation. They are being stretched far more, pushed hard on being involved in multiple tasks and with the prevailing mentality to keep their focus on generating the immediate short-term results. This not only squashes out opportunity to explore, it is actually squeezing the middle managers ability to build a more flexible, responsive organization. Innovation is in direct ‘tension’ with much that is being undertaken at middle management level.

This does result in working towards a well-tuned and efficient operating system but it seems one that is not capable to allow innovation to move from a collection of ad hoc activities into one that builds progressively that more sustaining innovation structure, establishing a deepening set of capabilities that this requires.

Although organizations claim to be innovative often the very people that we are expecting to manage the ‘dynamics of innovation’ within organizations, the Middle Managers, are seeking the very opposite, doing everything possible to keep the environment as stable and consistent as it can be. They are taking away the ‘vital essences’ that innovation needs – a fluid, agile, open, diverse and flexible environment and putting consistent constraints and barriers in the way in their pursuit of efficiency and predictable effectiveness.

So how can this change? How can we move the needle and tilt it more towards innovation becoming more central without inflicting a more radical overhaul, one that is unlikely to happen in most existing organizations.

Let’s turn the existing core competencies needed for middle managers on their head and offer a new mix of primary, critical and core capabilities that are the measuring point for the MM’s new core competency set that provides for a clearer  innovation focus as essential to master.

1.       Core competences need to be changed – we should flip the requirements

We all recognize that the dedicated middle manager holds the organization together. They are often the glue that connects the organization with the leadership and enable the ‘forces’ to flow, yet do they allow this for innovation?  In traditional Chinese culture qì (also chi or ch’i) is an active principle forming part of any living thing. Qi is frequently translated as “life energy”, “life force”, or the energy flow “and innovation is the same vital need within organizations.

Let’s flip the thinking

Flipping the thinking on capabilities around for the Middle Manager

Flipping the thinking on capabilities around for the Middle Manager

  • ·         Primary becomes the base not the pinnacle. What they do in efficiency and effectiveness remains as their primary capability – you don’t alter this, it is too engrained. This can only change over time and through their inner awareness and recognition that innovation needs to be embedded, alongside the existing ‘fixation’ on efficiency and effectiveness. Don’t try to radically change, make progressive step changes. Efficiency and effectiveness clearly remains the inventory repertoire of solid capabilities so as you set about to build a new platform, based on innovation, it layers and interlocks
  • ·         You target selected critical capabilities to learn and explore. You provide the MM a clarity of the new and emerging critical capabilities they need to build up. These are the capabilities that will provide the greatest impact for competitive advantage, not internal but external in all its orientation.
  • ·         At the top of the pyramid is the core capabilities they need to have. This cluster of capabilities is centred on the critical capabilities to make innovation main stream, to be a daily part of their thinking, their make-up, their intent to ensure happens. These differ according to the role, area of focus and contribution.

2.  We need to focus the middle manager on different learning concepts

Peter Senge and his learning organisation concept is helpful in establishing an innovation learning organization. His five main characteristics are system thinking, personal mastery, mental models, a shared vision and team learning. In summary these are:

Systems thinking – the idea would be to introduce a distinct innovation system thinking approach that needs to be in place within their organization. Overtime it will help measure the performance of the organization as a whole, and of its various components, and the organization shifts in the very ground for middle managers has to manage within.

 Personal mastery – the commitment by an individual to the process of learning is known as personal mastery, so it is therefore important to develop a culture where personal mastery is practised in daily life, based on clear innovation capabilities and capacities needed to be practised.

Mental models – the assumptions held by individuals and organizations are called mental models and these are seemingly, stuck more in the efficiency and effectiveness ones at present. To become a learning organization, these models must be challenged.

Shared vision – the creation and constant development of a shared vision on innovation and its place within the organisations activities, to make it a core and so create that essential common identity and sense of purpose. This sharing and identity gives real focus and energy for learning and exploring what ‘makes up’ innovation.

 Team learning – the accumulation of individual learning constitutes the last aspect, into team learning. The value of the middle manager in bringing people and their contributions together is vital, this is done in innovation efficient and effective ways through increasing experimentation and shared learning to explore and understand the aspects that work and can be honed more.

The emphasis in learning needs a more radical shift in encouraging boundary crossing and openness and seeking out a more networked, relationship environment that draws in increasing external perspectives to compliment the internal knowledge already built up.

3. Then we need to work the innovation learning ‘muscles’ through the three learning loops

Reinforcing loops 1

Reinforcing loops to strengthen the innovation change management  (Peter Senge)

So the middle manager has to begin to think through a new agenda for innovation change and the organization has to ‘fully’ provide the necessary support and structure for them to move towards this (radical) change in their managing within the middle.

The value is the middle becomes our connector for innovation

Middle managers tasks should increasingly become more about performing the role of connectors and facilitators, not the guardians and gatekeepers for the decision makers.  Their work should include the encouragement that everyone is engaged in innovation work, for each person to constantly go back and check against this integrated innovation framework to work out their place to relate to this and become aligned.

The middle manager carries through connection and identification. Making sure everyone has a ‘sight-line’ and identification into their contribution for any organizational innovation framework so they stay well-connected and engaged.

Communication and relationships becomes the key. We need to find that new high ground for middle managers to be seen as the real connectors and enablers and not the current view as more often than not the blockers on innovation.

All we need to do is convince the top they need to provide the Innovation framework for this to work and that can come through the form of the Executive Innovation Work Mat no less.

Are we getting real value out of innovation consultants?

When you stop and think about how innovation has been managed and understood over the years you soon realize how much has changed in this time.  It is very significant, yet there is still much to do. Innovation understanding is changing, certainly for the better and as it shifts our perspectives on where knowledge resides as this is altering.

Today I think we are yet again at yet another crossroads in this innovation understanding and perspective. That is to extract the leading edges required from their innovation activities within organizations. This will require fresh innovation consulting business models to exploit the growing complexity of managing emerging innovation practice to support and extend their understanding.

I’m attempting to get my head around it, let me share some of my thinking here.

There has been a continual shift of where innovation knowledge resides. The external provider, who was the main source of latest insight, hands on practice and leading ideas in the past, I think have been significantly falling behind in recent years, on their contribution and value to organizations.

The advice they are providing is shifting from deep research and repeating practice into investing into offering more the insights of what might constitutes leading edge models to then suggest offerings that generate client value, as a must to understand and have. They have moved from clear ‘leading’ practice proponents to often ‘lagging’ but are exploiting their connections for knowledge insights to offset this.

Innovation knowledge is residing far more in-house of the client

The innovation knowledge needed for completing innovation has transferred more and more within the actual organizations needing to achieve the innovating. Through their constant ‘sets of experience’, working daily within innovation they are building up some essential capabilities and capacities. The external provider has to be able to spot and fill the gaps to offer any value, they are not leading but responding.

With the growing reliance on collaborative tools and the use of technology has meant much more of the complexity of projects has to be managed from within, far too much of the necessary insights and linkages needed cannot come from external resources.

Consultants are being relegated to issues that remain complex but essentially generic, important to organizations but not the vital part of innovation need.  The use of external providers has progressively reduced in high-end value activities into more gap filling ones, as they lack the depth of inside knowledge to pull together the thinking and outcomes needed for delivering the innovation outcomes.

Their value as project specialists has even diminished due to the network need becoming so vital within dispersed organizations and this requires a deepening internal understanding and where the knowledge resides to be extracted.

It seems the role of the consultant has become more marginalised or specialised.

The business model for innovation consulting needs changing. Innovation within consultancies has been seen to be a cheap exercise to support, often not seen as the powerful force for driving the growth and fortunes of the organization as it should have been.

Much of innovations troubles today have been this poor recognition of the need of innovation to ‘reside’ in the boardroom.  It was disconnected from the strategic domain as it was a little ‘abstract’ and intangible, light on established practice.

Today that has changed, innovation needs a much higher focus, it needs to be fully aligned to what an organization wants to do, if it wants to thrive and grow. Innovation is very strategic.

There was also the ‘established practice’ over many years of consulting multiple times across similar issues that were just repeating themselves across many clients that had value that clients were willing to pay for. Often the consultant invested in the costs only once to find the (common) solutions and then set about extracted an increasing yield of return from repeating this multiple times. Today clients see through these practices and are certainly seeking uniqueness to their specific problems. Best practice still extracts from that rather tired model of establishing common practice.

Today innovation needed has to be increasingly unique, for the end results to stand out. This has its implications for anyone providing a service.   The value of best practice might give assurances to the doubters but it is the growing focus on emerging or novel practice that is more valuable to know about.

Also the growing use of open innovation has also enabled more organizations to learn from others and exclude the middle man, by working directly with others tackling similar problems and learning from each other.

Large Consultants are becoming marginalised as they lack the depth of expertise, collaborative inputs that contribute, the notable exception being still in technology application and the expertise and knowledge to link this across global organizations.

The large consulting practices certainly still possess the ‘on-hand’ extra ‘feet-on-the ground’ to augment the repeating work being undertaken within organizations or validating its position. These shift means thinner margins, more chasing to cover growing fixed costs being built up in the broad scoped consulting practice.

Shifting focus on what innovation consultants need to offer.

Consultants working in innovation today, are less ‘innovation factories’ producing the solutions and are often left with more ‘constant’ re-bottling the wine’ to maintain their place. The taste is for consistency not challenging the palate. Consultants can become more advocates for change but this needs a consistency of focus to extract value out of, as the external source of championing change, by providing the knowledge insight.

There is also this rapidly adjusting position into specific ‘knowledge providers’ and validators. Just look at the explosion of thought leadership coming from consulting firms, their ability to hone in and benchmark trends by having access to C-level executives provides a more ‘open’ understanding that internal analysis can ‘pick apart’ and absorb or reject.

Actually in a recent piece of research by www.sourceforconsulting.com they are suggesting the Law of Inverse Audiences for though leadership pieces: the narrower your focus (research or thought piece) the smaller the number of readers but the more interested and engaged those readers are likely to be.

The real insight in this was not so much thinking you know your audience here but the trend that is occurring- to forward this insight onto colleagues as validation or collateral to doubters. Yet the consultant who researched or wrote the piece will most probably never know where it has been used as it’s gone internal. Inside absorption of this external knowledge and what was actually achieved by the consulting firm that undertook this. The old model states “the client will think of us when needed” Will they?

No, the business model for innovation consulting is actually under attack, the position of making money is becoming a whole lot harder unless you shift perspectives and redesign what you can offer so it ‘fits’ far more with the internal needs of clients today.

Are these some of the shifts we are detecting?

An initial work-in-progress list of the shifts in consulting taking place relating to innovation – so what is missing here? This is certainly not exhaustive and not set out to be that, it is attempting to ‘ indicate’ the consistent shifting that has and is taking place in adapting the innovation consulting business model, in search of growth and utilization.

        Old Consulting Models

    New Consulting Needs

Required search for ‘tested’ best practices

Need for emerging and novel practice

Quickly ramp up and replicate work to ‘defray’ costs and extract margin

Starting from scratch, rapid assimilation, pushing to provide increased value and services to get margins

Have established road maps to overlay over multiple projects

Needing to translate unique efforts and contribute to building novel road maps

Established project management and milestone reporting

More ‘ad hoc’ project validation and screening

Sharing established models

Searching for unique models

Building a repository of best practice and replicating these across industry players

Extracting emerging practices to quickly translate and inject into unique approaches

Gather & Extract in a ‘paced’ way

Rapid dispersion and translating the absorbed learning

Defined tried and tested solutions based on established practices

Reacting to adaptive challenges, shaping solutions to search for ‘something’ new

Pushing for broad scope

Forced into narrow scope engagements

We are here to serve as the trusted advisor and wait your call

We need to consistently  search for our meaning and value to have a role to fill

Looser frameworks to extend and explore

Tighter context for value and alignment

Seen as the broad experts

Role of niche provider, resource support appeal

Seen as broader change agents

Needed for managing specific change to handle the continuity and stability challenges in resource thin organizations

Source of original / creative thinker

Source of objective view to quantify risk

Having relevant skills available

Providing general resources

Provider of clear and established methodologies and practices that are accepted norms

Assessing and validating risks for alternative solutions and practices outside the norm.

Initial ‘Go To’ Source of External Knowledge and sole trusted source.

Augmenting Broader Options for External Knowledge from Suppliers, Clients, Journals, Competitors, Universities & Institutions

Provider of Best in Class ‘Classic’ Training and Research and Development Thinking In-house, taking revenue stream

Ad Hoc provider or orchestrator often outsourcing to more specialist providers, sharing revenue stream, more reciprocating.

Stand Alone- all in-house resourced

More Collaborative – bringing in ‘one off’ expertise for specific assignments

Managing challenges in more ‘static and stable’ market conditions.

Coping as much with the constant challenges and challenges of complexity in market conditions

What does the future hold for ‘traditional’ innovation consulting?

Whatever the shifts taking place and I think there are many, the established, more traditional consulting model is not working for innovation. They are being marginalized, left often to catch up with the work going on within their clients. The consultant is not leading; they are following in the practice of innovation. Greater specialization is required and seemingly valued by clients. Knowing what this is becomes the hard part.

There also needs to be further work on what differentiates’ one consultant with another. The client is far more discerning, reacts very negatively to any ‘one size’ fits all approach as innovation activity is unique to each client. The establishment of more Chief Innovation Offices or Vice Presidents for innovation are demanding more from their service providers than ever before. These providers need to be clearly seen as differentiators otherwise that will not get house room.

Shifting sands, covering up old weaknesses

The world of consulting does need to change but many of the client issues still continue to remain the same or in some cases might have even got worse. It becomes  the consultants challenge on more how you can reduce the ‘pressures’ on internal teams or provides real ‘impact’ that supports ‘delivery’ differently than before and can’t be achieved internally alone.

Clients still struggle with a consistent ‘lack of time’ and as we know time is either a friend if you have it or the worst enemy to innovation if you don’t. Just simply chasing for client answers is getting worse rather than better.  Clients are constantly stretched in their utilization of the limited resources they have available to them. They are constantly being distracted away from managing the bigger picture, into side events or having ‘dual’ roles.

There remains this chronic attitude of “I’m not taking any risk or we don’t have a real appetite for experimentation” pervading board rooms. The reality is clients still want tried and tested solutions, yet for me, crazy as this is, they are reluctant to be the experiment lab yet they cry out for the need to be different. How do you ‘square that off’ with what innovation needs to have – a constantly exploring and experimental climate – to find new solutions?

Client budgets seem to be tighter each year, the cost of each innovation undertaken is rising and taking more time and cost as well as the toll for dealing with growing complexity and conflict is demanding. Organizations and the individuals responsible are under growing pressure for innovation to generate real sustaining growth.

Consultants have to manage complexity within today’s dynamics.

Consultants have to work through these dynamics to find their position to offer value and how to figure out what their position is so as to provide the relevant services. This will increasingly call for a far more flexible, agile and focused model than ever before. The pressure on margins, the inability to have more ‘bench strength’ simply waiting around for that client call, the procurement procedures that batter down fees, scope and future options, limit detailed discussions until contracts are awarded makes this harder to work through, yet consultants must.

There are also seemingly more competitors around, in the form of boutique providers of really specialised focus or industry specific expertise, a clutch of independent providers of detailed innovation knowledge and plenty of workshop and training providers, all nibbling away at those finite client budgets that keep eroding the margins and scope for building a reputation for innovation consulting.

Can today’s consulting practice for innovation stand out?

How can they provide real needed and welcomed services to the client? It is getting harder I feel out there for many and the search for different and unique innovation consulting business models is definitely on.

Some are managing this by working on their value position to offer 1) new solutions, 2) adapting solutions that are more evolutionary in their growing understanding, 3) thought leadership that provides new insights and advice to underpin selected competencies and 4) being masters of creative problem solving.

Getting your specialization right

For me I designate these emerging inovation practices as made up of 1) Systems thinkers,2) Structure implementers, 3) Subject Matter experts and those that are 4)Advocacy Catalysts within innovation, or there is a hybrid of all of these, aligned more than likely to a given innovation specialisation.

Whatever the services offered, these still need to be valued by the client (as their clear jobs-to-be-done) and to be positioned and recognized as the service provider who can deliver a higher degree of uniqueness for supporting the specific solutions on these.

I think this is calling for very different innovation consulting business models, more agile, flexible and adapting to unique conditions found within each client.

So if you are an innovation consultant are you mapping your one out or working through the multiple options on your business model canvas yet? I would, as it is not just to survive but to search and find the winning ways to thrive and be recognized as the expert needed.

As for clients, to extract real value from your providers are you clear enough on what you need? Perhaps I can help? I prefer to work in the advocacy space and try to offer subject matter thinking.

Are you a business model innovator?

I think nearly every significant business consulting firm has written about their thoughts on business model innovation. I was reviewing the number of articles I have collected about this and it is becoming mind-boggling how so much advice can be offered and can still make sure it leaves you in deeper conflict and confusion than before.

I’m talking here more about the larger, more established organizations confusions on approaching business model innovation, not the start-ups or the younger businesses. We struggle to get an established well defined approach to approaching business models in these more established organizations. I think there are multiple reasons and I’ve touched on some in past posts.

Is help on the way or are we about to layer on more confusion?

I know there are plans on there way where the combined minds and efforts of Henry Chesbrough, Steve Blank and Alexander Osterwalder are entering the fray even more, in a new educational offering at UC Berkley in late October. I think there is ‘stand-alone’ modules as well in their respective works, especially over at Strategyzer, Alex’s mix of tools, software, academy and on- line resource around the BMI.

Their focus at this Berkley short course will be on developing new sources of growth, by helping companies figure out ways to drive the development of new business models within their company.

They are acknowledging that this isn’t the same thing as a crafting a business model for a brand new start-up, working with a clean sheet of paper.  http://executive.berkeley.edu/programs/corporate-business-model-innovation. Instead, they will examine how to get the most out of the parent company, while avoiding the traps that “help” from the parent company can entail.

The plan is to be introduced to new concepts in business model innovation, open innovation strategies, and applying start-up models in a corporate context. The program will guide participants to reshape their thinking, assumptions and business strategies, to create and restructure teams to inspire innovation.

I have to be honest here; I’m a little nervous that this might just be adding more confusion but let’s wait and see if this does the job. I hope it does not rehash what is already available. A two-day course can be incredibly constraining or equally done well, I mean really well, then it is just the opposite, liberating and defining.

Business Models should be about explicit choices.

Before we get into thinking about new business models, there is a lot of essential links or decoupling to be thought through within large organizations. Do you ever have blank canvases in large organizations? Maybe but the majority of decisions based on new business models might come with some form of organizational baggage.

My blank canvas moments in large organizations always held some constraints. These come in many different guises: there are both clear strategies (or should be) and much conflicting interpretations at each level within organizations, there are significant heritage and legacy issues to evaluate, there is a current set of operating models that might conflict or compliment any new business model design and then we can never ignore the detailed organizational design itself.

Here I’m talking about the make-up of IT, structure options available or achievable, the processes, governance, metrics, cultural, talent available and the organization-wide clarity on its priorities. Many of these actually ‘hold the business to ransom’ and if the CEO or board are not totally comfortable and have not thoroughly discussed it, new business models have a very hard time to work within the constraints known as well as hidden.

Then you have the outside forces at work, the ones that are most probably forcing the re-think or need for a new business model. These are the forces at work, have the context of markets changes or likely too, what are our present or emerging competitors doing differently than we are, what new capabilities and competencies are coming to bear and the whole context thing (macro, trends and technologies).

So the CEO or board are central to BMI’s to get off the ground and this must be the primary focal spot for discussing and educating around the Business Model. The vital message here is designing the pre-work to BM’s is the ‘sweet spot’ to get well designed and recognized, then more into the actual BM constructs and what is needed.

So what motivates change by considering new business models?

IBM conducted a survey some time back of the CEO’s ranking for exploring new business models. These were four ‘stand out’ ones of 1) Cost Reduction, 2) Strategic Flexibility, 3) Focus and Specialization, and 4) Rapidly Exploiting New Market or Product Opportunities. There were two more but these were the big four. These four certainly have huge scope behind when you think about them and can start any business model development discussions.

One way to explore these four ‘stand outs’ regarded by the CEO as the most important

If one takes a concept from a A D Little report on their view on business models I like their idea of their archetypes approach.  A launching point within any business model discussions within large organizations is to apply these ‘archetypes’ to the above four CEO needs.

The five outlined in A D Little’s report were asking open questions to see potential or not:

  • Share the cake differently (novel ways, challenging traditional approaches, partnering)
  • Supplant someone (they suggested the middleman in the report)
  • Shift the cost curve structurally (deploying different asset bases)
  • Redefine the customer experience (exploiting uniqueness and new values)
  • Convert product into service or combine them.

Now I think  possibly working through the four needs of CEO’s and the five archetypes you really can get into exploring new business models in meaningful productive ways. A 4 x 5 matrix perhaps. The emphasis points within these discussions changes and the depth of conversation determines next steps.

Getting the framing right is the best argument for change

CEO’s and boards I believe always listen to well-argued cases where you can pin point failure or lost opportunity or new sources of potential revenue and growth. Getting this framing right in the first place, knowing what and why you believe you need a new business model becomes more valuable, a real catalyst to change and this is the powerful enabler to unite behind.

Surely this going back to getting the ‘need for’ is far more valuable initially to lay in the foundation than working through the principles and typical pros and cons of one design or approach over another. I think we can get caught up with this rush to justify and validate one specific business model or another? Is this the ‘cart before the horse?’ Or just enterprise kicking in?

Sell the compelling reason for making change by identifying a real need, work through if this can or cannot be completed through an existing design, and then throw yourself into all the ‘delights’ of  what makes up the components of business model design.

Are we starting in the right place or diving in by layering on more BM design?

Just a bit of a Monday morning reaction perhaps, but reading the different activity going on within cracking the business model code for adoption within large organizations that seems to be buzzing within the Business Model Community at present. I would suggest there needs to be some great care, otherwise we kills the goose, not fatten it up by building the right thinking and value proposition for what it could really offer large organizations!

Are we stepping back far enough and giving this the ‘helicopter’ treatment before we launch into further solutions, courses and seminars, maybe just fitting the existing frameworks into something  without the real stepping back this might need?

Work to be done is innovation’s invisible hand

Back in 1776 Adam Smith in his book “The Wealth of Nations” discussed the concept of the ‘work to be done.’ This has fascinated me for what we need to do for achieving any new innovation, it is the ‘work to be done’ that generates and pushes boundaries beyond the existing.  This ‘classic’ book has become regarded as the one that described the birth of modern capitalism as well as economics.

Adam Smith also introduced the concept of ‘the Invisible Hand as a core part of his thesis, that man’s natural tendency toward self-interest – in modern terms, looking out for No.1 – results in prosperity, not just for the individual but for society.  ‘The invisible hand’ is essential for free markets and capitalism, through how it generates wealth in competition for scarce resources. By maximizing their own interest as the direct intention, this ‘invisible hand’ also stimulates those around you and in the society you belong. As you seek to leverage your own assets, you are promoting society as a whole. Today this can be more by design, or through an unintended consequence of how knowledge flows.

Arguably the ‘invisible hand’ can today be seen as realizing all our potential, individual and collective, exploiting all available existing assets for benefit and gain. We call these our tangible and intangible assets.  Often overlooked, or under-appreciated are those more intangible assets, that can significantly differentiate, are surely today’s ‘invisible hand?’

The make-up of intangible assets

There are many thoughts around what makes up our intangible assets but these can be summarized as made up of 1) human assets– the knowledge, skills, experiences, our abilities to organize these within our thinking, 2) structured capital as the pool of knowledge made up in our institutions, our rules, norms, knowledge diffusion across broad communities, 3) the social capital that forms today more around our networking that relies on infrastructure, access to knowledge, exchanges and relationships.

It is the ability to combine our tangibles with our intangible capitals that allows us to think and explore all that is around, to discover and exploit the potentials within this ‘work to be done’.

The volatile world we are dealing with today.

Today we seem to live in more volatile times where it becomes more important for us to focus on the work to be done is, not the work done. We have to keep focusing on the future. The ‘work done’ is the accumulated knowledge; the built up ‘stock’ that has contributed and been embodied in the organizations results to date, seen in the past where innovation has contributed in part to this. We have built up ‘know how’ and competencies in the ‘work done’ but this needs improving upon and challenging.

The ‘work to be done’ is where we push forward and explore greater possibilities. Part of this is focused on how we are going to adapt to change, to add more knowledge. For instance, we have operated in the past in far more of a mass production era, where systems could be designed for stable, more homogenized markets, where we could extract the maximum effectiveness and efficiencies. The ‘work done’ was equivalent to the ‘work to be done’ due to this predictability. This is not the case anymore, markets have fragmented, and we set about to design for the individual’s needs or in modular approaches for example.

We are in a ‘race’ to win

Today much has changed; we are faced with rapidly evolving technology diffusion. There is a race among nations and organizations to ‘win’ in global markets. This is causing increasing disruptive forces to come into play, where constant change is becoming more the norm and the emphasis has changed from ‘just’ efficiency and effectiveness but to be constantly adaptive, fluid and have increasing agility.

We focus far more on building in ‘tailored’ service, based on knowing the customers’ needs and understanding, on designing around new business models and in this, the ‘work to be done’ is becoming far more important than the ‘work done.’ It is the realization that it is the contribution of the intangibles assets, our growing intellectual capital, are becoming the real differentiation point to exploit the future potential.

The intangible assets provide the intellectual capital base, these allow us to react to changing demand for the required future value creation so we can effectively compete and sustain ourselves. This constant search for the ‘work to be done’ is fueling what has to be done.

Work to be done is the make-up of learning new skills, develop a greater dexterity and judgement based on what we need to ‘actively’ go out and seek. ‘Work to be done’ is searching for our future growth and well-being and this is derived through our future innovation activities. So much of this is made up of the intangible parts that can combine with what we know, what we have previously achieved, in work done, to provide the new wealth of organizations, as we participate more actively in the knowledge sharing economy of today and the near future.

We can’t remain islands of limited knowledge, we must seek out others to combine and achieve the work to be done. We are arguably in the network era, yet so many are failing to optimize their intangible assets and exploiting different organization dynamics that would greatly benefit their growth, especially when you operate with scarce resource.

Today’s need is for increasing interactions, linkages and seeking new knowledge to stay competitive in global markets.

As we rely increasingly on our growing ‘interactions and linkages’ we need a system to manage this. Absorptive capacity was introduced as an idea and first explored by Wesley Cohen and Daniel Levinthal in a 1990 article (“Absorptive capacity: a new perspective on learning and innovation”) and can provide us the knowledge learning path for building a real “knowledge exchange” process. Innovation ‘feeds off’ knowledge, they are inseparable, like twins, needing each other.

We can learn to exploit innovation, both in learning internally through the process of purposefully searching, doing and using what we gain and externally, by exploring new discoveries, collaborating, exchanging and generally interacting and so gaining fresh expertise, insight and knowledge.

As organizations seek increasingly outside their own walls, the appreciation of how they are managing knowledge, learning and interpreting this, is becoming a critical aspect of a more ‘open’ collaborative innovation to be successful. There is a growing need to absorb, integrate and apply this in new and novel ways for accelerating the innovation performance.  As we seek out more to compete in global markets, the more the knowledge increases in complexity we add more to the ‘work to be done’.

Markets are in constant flux, rapidly changing and we need to manage all the new insights. The more we are relying on knowledge flowing into the organization the more we have to strength our inter-dependence and collaboration efforts to extract the knowledge we are acquiring for it potential value. There is a consistent self-interest in doing this for our prosperity as well as others – the invisible hand.

Are organizations recognizing the value of structuring their knowledge flows?

This is the make-up of much of the work to be done in managing the knowledge flows. We need to recognize the importance of this shift from (physical) ‘work done’ to (intellectual) ‘work to be done’ and reconfigure the changing capabilities and capacities required, so as to grow our future ‘wealth’ of organizations, of nations and within ourselves to learn and respond. We needs to understand that today’s ‘ invisible hand’ is how our intangible assets are increasingly crucial and need to be actively managed, for this essential work to be done.

Forget ‘work done’, that’s in our past, it is already in the (knowledge) bank, we need to focus on the work that needs to be done so we can compete and thrive, there is so much more to understand and learn from as the challenges become more demanding to deliver on our innovation efforts.

There’s so much work to be done.

Our future progress is tied up in offering meaningful work, providing that sense of purpose. Building greater capabilities to quote Saul Kaplan “are the amino acids of innovation.  They are the building blocks that enable value delivery”. We are looking at increasing “the random capability collisions” where new innovation will happen at different intersections that combine knowledge from global markets, other competitors, different cultures and a variety of disciplines.

We need to build new capabilities that are far more market orientated, from co-creation and knowledge acquisition, from sense making, tapping into collective memories across a vast network of understanding. We need to unlearn, we need to reflect. All of these are in the ‘work to be done’ to stay ahead, be relevant and compete in today’s world. A world that is far, far different from the world seen by Adam Smith and what he saw needed doing.

The value in his observations are still valid today, the ‘invisible hand’ is as important today through our successful utilization of our intangible assets as we exploit new knowledge and apply this to innovating our future. One that combines our need with societies, not just based on growth but also on well-being as well. It is knowing the ‘work to be done’ that is so necessary for innovation and much of this remains hidden, waiting to be discovered.