Shifting Radically the Innovation Business Model

Changing the innovation business model

Shifting Radically the Innovation Business Model

I have been spending some significant time on questioning the current innovation business model, from both the customers (clients) perspective and the innovation consultants’ one.

Now we all know not all things are equal, many companies have invested significantly in improving their innovation capabilities.

Many of these have been heavily reliant on outside help in achieving this position yet all the effort has led to limited returns for many and still a work-in-progress.

Yet far more of our business organizations are continuing to really struggle on their innovation activity for a whole host of reasons that seem never-ending, disappointing in end result and stuck in management quicksand to ever really change.

For me, the process and management of innovation really does need to be definitely questioned.

Perhaps we are in urgent need to change the very dynamics of how we undertake innovation.

In my research I certainly felt also the innovation consultant is struggling. They might be in the wrong place for their service offering. Also countless studies on companies’ innovation performance are indicating the ‘needle’ of improving total innovation performance is stuck or gradually being pushed up with a lot of effort, questionable reward. We are failing to push the needle into dramatically improved innovation performances.

Surely this is the time for a more transformational change in how we conduct our innovation business?

The innovation business failure that lies within our companies continues.

If we take a current example, Jeffrey Phillips, over at Ovo Innovation has conducted a practitioner’s survey, in what the people who are actually “doing” innovation are actually thinking, to compare this with what the leaders at the top are feeling is happening. It seems a significant yawning gap is apparent but not addressed. In summary, on results gathered so far:

“The results so far suggest that while innovation is a key strategic focus, it’s still taking time to filter down to a day-to-day activity, frequently losing out to other priorities. The front end in many companies is poorly defined and much of the innovation work is incremental. Many of you worry about your internal innovation pace and losing out to competitors and new entrants. Innovation failures are frowned upon and few people have a chance to develop new innovation skills. Over two-thirds of those who responded felt that their company was failing to innovate at the same pace as competitors and new entrants, and almost 75% of respondents felt that they’d accomplished less with innovation than was possible within their organization”

I would say a depressing picture but in many ways ‘par for the course’ in what I feel also. Surely the innovation model within our business companies is indicating that it is not working, it is a broken innovating business model. It needs something radically different to occur.

The innovation consultants’ dilemma

The consulting industry is currently caught in the classic Innovator’s Dilemma, written about by Clayton Christensen. Christensen shows how most companies miss out on new waves of innovation. His answer is surprising and almost paradoxical: it is actually the same practices that lead the business to be successful in the first place that eventually can also result in their eventual demise. The consulting firm has become fairly caught up in a specific transactional business model with their clients and that is progressively not working as well as in the past.

The struggle is to find a different, sustaining business model and one of the keys must lie in the relationships between client and consultant. Constantly relying on outside help has considerable danger as the knowledge often does not reside inside and the employment of the consultant gives the needed expertise and experience that often never gets transferred or embedded. This might be great for reoccurring fees but not for all that is required for internal strengthening. It simply pisses the employee off.

Clients have been progressively attempting to change their reliance on outside help by employing the consultants within the organizations. Many large organizations have their own internal consulting teams deployed to offset external needs and bolster the internal capabilities.

I personally find this solution has not worked as well as intended, as they, the internal consulting team, over time, get sucked into issues detracting them from being the internal force of change, desperately trying to influence the leadership but eventually ending up as being allocated specific projects as project overseers or implementers. This reduces their impact and has an erosion of influence over time, they become simply part of the furniture, caught up in the ebb and flow, like everyone else.

So the innovation consultants needs to change – why?

I get the distinct impression the focus of most innovation consultants is still locked into product innovation or improving the process of the pipeline / portfolio, the idea generation and project execution model. It is not evolving into broader services or accounting for the transformations underway at the clients end.

Are the innovation consultants reacting to the massive changes in information asymmetries occurring and proving solutions to these? There is this growing redundancy of idle assets that are struggling to be reconfigured to take on new challenges and new purpose and failing to be agile, flexible and adaptive. The significant shifts deriving from technology change and digital disruption are not yet being translated into new innovation processes, frameworks or methods to extract the value of speed and unique insight and translate that out quickly into new products and services. The exploding position of mobile use and growing engagement opportunities with customers and other vested stakeholders this can offer is yet to be fully embedded into the innovation process.

There is a ‘heady’ mix of change swirling around the clients and are they being resolved with the outside help as much as they can. I’m not talking here of the technology consultant, I am asking is the innovation consultant as up to date on all the changes going on to improve the innovation process?

Equally are innovation consultants engaged across the whole innovation process, or participating in ever-increasing specialized niches of discreet work? Are they as influential on the internal innovation process or just simply providing the necessary resources on a ‘as and when’ need, due to resource constraints at the clients? Are they as ‘tuned-in’ and expert enough to be of value to specialized internal groups, working on their part of the innovation process or equation? Does the innovation consultant have depth in their own bench strength to provide ongoing value to their clients?

Can innovation consulting firms step up to the plate and deliver differently?

So I feel the business model mostly worked in consulting firms is broken. It is not in step with the changes going on. It seems ‘steps behind.’ It still wants to focus on the product, product idea generation, and the product pipeline and product portfolio as the main focus point. I think this is rapidly a focus of being in the past and new business models need to address the service provision far more.

The relationship with clients has been firmly in the transactional approach. They worked on specific problems, reviewed, recommended new designs, sold and delivered these and moves on (and out) of the clients.

Today the real value is not so much in transactional work but building longer-term relationship work. The idea of imposing solutions that fit their own capabilities and activities is missing the mark, I believe, in offering customers distinct, tailored solutions fulfilling their unique needs.

To get to this point, consultants will need a far more networked approach on who they are tapping into, drawing down from an array of outside specialists to deliver the right mix of activities, and expertise. It will lie less in-house, more recognized as specialized, contracted out to work within the solution delivery, seen to resolve the client’s needs. This will require a more ecosystem approach, drawing in those who share in creating, resourcing and designing solutions, that deliver to specific customer needs.

We need to accept that innovation is a complex system; it is not any more delivering ‘boiler-plate’ solutions.

Redesigning the consultants business model

For this to work consultants need to think through their existing business models and construct these far more towards a service provision that delivers more exactly to customer needs.

Any new business model needs to focus on finding the real overarching value that the client wants from the service provider and what they can deliver. I believe it will be less transactional and will enter a richer- relationship partnership, that makes the consultant far more accountable to deliver on this, in all its forms but more ‘vested’ in the outcomes. The key becomes knowing exactly the value proposition.

Also any new consulting model needs to deliver less on outputs and more on real measurable outcomes, the value delivery part. How this needs to be constructed, to make it specific to unique client challenges, yet scalable in different client work taken on, so as to defray the costs and attract the partnership value into the ecosystem of value partners so as to sustain and nurture what it offers, as leading edge and highly value. One that is constantly adding, so it continues to push in how it evolves and keeps attracting the client to participate, with all its connected value, providing a value proposition that delivers innovation in radically different but highly rewarding ways.

To achieve this the real skill becomes the building up of any existing value proposition and reconfiguring it to create a more appealing and valuable value propositions and offering a better value delivery system to deliver on this, through an ecosystem approach.

My plans to evolve this thinking

I have been working on these in my own mind over the recent weeks and I plan to share some of this thinking in the weeks ahead. I have structured my thinking (so far) into six parts. At present I’m still mulling over how to deliver on these as separate posts or some mixing and matching up to bring this all together..

The six parts planned at present are: 1) the further case for building a new innovation service model, 2) the role of the navigator and orchestrator, 3) transformation- what does that really mean and its impact on whom, 4) plotting this out on an innovation road map, 5) structuring the innovation accordingly- between whom and where and finally, 6) technology is leading and we as innovators are lagging, the time to retake this ground for delivering real customer value.

Moving towards a new way of doing things.

It is based on the thinking around the shift from products to solutions, from transactions to growing far more value-adding ongoing relationships, from a supplier of product services into a highly valued network partner, exploring innovation across all options and instead of delivering on discrete elements; it is managing the whole ecosystem of the innovation design differently.

Let’s see where I go in this in the coming weeks, hopefully somewhere of future value, so as to shift our innovation thinking to exploring new solutions to improve on its mediocre current performance. How can the innovation process capitalize on all the changes we are undertaking at present in new ways, so as to adjust to a different world of ushering in greater ‘engagement to deliver on the innovation opportunity’.

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One thought on “Shifting Radically the Innovation Business Model

  1. Pingback: Moving towards a new innovation service model | Paul4innovating's Innovation Views

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