Constructing Innovation as Value Management

Innovation and ValueInnovation needs to create value, both short-term and progressively over time. It fuels the growth and fires the imagination.

Yet our innovation activities are constantly coming up short for the leaders within our organizations, who continue to remain disappointed in its final outcome to stimulate and drive the growth they want to see.

It is actually the classic “chicken and egg”. Aristotle (384–322 BC) was puzzled by the idea that there could be a first bird or egg and concluded that both the bird and egg must have always existed. Leaders need to lead and are they the chicken, they are the resource for how can the people charged with innovation can lay the ‘golden eggs’ needed, if they are incapable of laying? Or should the innovation egg come first for our leaders to become more confident and build further, believing in innovation far more?

There should be no dilemma we can’t treat innovation lightly anymore, it needs to develop its uniqueness for each of our organizations to evolve. We need both the egg and the chicken to be ‘producing’.

What I’m driving towards here is that innovation is evolving is my 1st point

It is impossible to reach a certain desired outcome because a necessary precondition is not satisfied.

We have got caught up in the word “innovation” and not given it the depth of thought it requires to deliver on its expectant promise. There is a need to change this.

Firstly, we all need to realize that innovation is going through significant change. The chicken that lays the egg is changing; it is evolving right before our eyes.

There is this increasing need to understand and incorporate ecosystems, platforms, and the greater use of analytics, big data and reliance on technology into our innovation thinking.

There is increasing emphasis on thinking through new business models, combining design thinking, lean management, customer development, prototyping, experimenting outside the lab, collaborating with clients, finding different partners, the different exploitation of research techniques are all breaking out in different forms and combinations.

All these are crowding in and adding more into our innovation activity. Leaders of our organizations need to understand this evolving is specific to them not just surviving but thriving. It is the case  that the chicken needs to lay eggs, the egg needs the chicken.

To shift innovation we need to think this is our value creation point.

We derive our value management from much of the innovation we are creating but we seemingly can’t get the required attention of the leadership to innovation to attract across the resources and determine the risk profile to achieve the value needed. We are back to the ‘chicken and the egg’ again.

So we need to change how we view innovation. We need to make it THE value creation point.

I’ve written previously three blogs that I feel are very relevant here. I will not bore you with extracting points or quoting from them. I’d like you to go to them and actually (re)read them.

The first is “Where innovation value resides”. The second is “So what drives value creation”” and the third is Exploring the value of your innovation capital”.

Making a case for redefining innovation into the value focal point

I want to move on, actually we all need to move on in innovation and its management, so to make the case of redefining innovation, making it central to the value management we require within our organizations, so here is a thought or two.

To help me here I want to acknowledge the work going on over at the IIRC with their <IR> reporting. Integrated reporting will progressively change the way organizations will be reporting in the future. The pressure is on, for a more integrated thinking to be conveyed to stakeholders, linking stronger, wider governance that takes a far more whole business perspective into account and report on it.

This integrating requires a significant linkage across the organization and greater understanding of where the true value lies. This is innovation’s opportunity to become ‘front and center’ the absolute essential core to build.

I do not want to step out of syncing here; I want innovation to be ‘in sync’. Value management is discovering, realizing and optimizing to achieve a greater performance. That is the same stages we go through in innovation and its management. Some of us might call them differently but we seek out to discover, we realize our ideas and concepts and we set about within this a growing optimization.

Building up our competences is in four needed parts.

Like <IR> we need to break down our innovation into four parts that need really critical attention.

The first is the vision for better innovation, the second is the clarity that innovation not only is required for the short-term performance but is critical to have IM creating value over time.

The third part is determining what is needed for value creation and communicating and reinforcing this in time, attention and resources. The forth part is turning our creativity, our ideas into the value management required to grow the organization and sustain it into the future. Lets tackle each part.

The vision thing

Our leadership really does a poor job of providing a compelling innovation vision. They might give it a bye-line in the broader corporate strategy, they might extend this out but are they making the innovation vision, mission, goals and objectives clear enough. I think not.

Can they articulate the drivers of innovation in how they see the market going? Can they describe in sufficient detail the objectives and contribution of innovation, can they set about purposefully shaping the structures? Do they clarify the terms and conditions, establish the common language innovation requires?

Can they describe the relationship between all the interconnected parts, as suggested in the Executive Innovation Work Mat approach or similar? Finally can they really offer a determined view on innovations place within their needs to grow the organization?

The creating value over time

To do this they need to present the benefits of where, what and how they see innovation needing to contribute into the organizations plans and cascade this message out. They need to articulate why innovation is in the interest of the organization and begin to clarify the longer-term value creation that comes from this integrated innovation thinking.

Can they help guide how value is created, explain how value creation can differ and allow for different perspectives to bubble up and shape each person’s perspective.

How will they define and encourage a growing understanding of each of the innovation capitals? How these each can link, constantly be recombined in different ways to create the value through their unique properties that require constant attention to nurturing each of these capitals, making them all contribute to learning and value-generating capitals that build a growing competence and capability to innovate.

Integrated thinking evolves over time. As the leadership explains its role, determines and allocates the roles within the organization, not just delegate all of it down to others, the result comes from change management. This is about openly discussing and recognizing different barriers and purposefully setting about breaking these down and establishing a more system thinking approach, in managing all the connectivity this requires.

Communicating the value creation coming from innovation

Innovation creates a lot of tension points. It requires good governance, not a heavy-handed one, that is rule-bound or individually determined, but one that is well-framed and reflects this integrated thinking.

Governance of innovation is vital. It requires clear guiding principles, it has to have a future orientation, it needs to establish boundaries but establish the ways to step over these in controlled ways.

Innovation is full of day-to-day interactions, it is through these we gain insight; we can advance or determine what is next for that specific innovation concept. The engagement process becomes important to allow it to move up and down the organization to deliver on the interactions the necessary decision. Innovation needs a collating point, so as material aspects can be ‘flagged’ and resolved.

It is the setting about of exploiting and exploring innovation we can build a common cause and clarity of our mindset to undertake the task, building a clearer sense of purpose and over time a clear vocabulary of learning. We can learn to determine risk and opportunity the more we engage, not hide from it. Risk management of innovation needs a stronger focus and determined view on what is acceptable, what needs more work and what is not possible,

We need to think more on outcomes and less on outputs. We need to encourage exploring the different types of innovation we are capable of exploiting. We simply need to disclose more openly both up and down the organization.

Finally the turning of innovation into value management.

If we can identify the conditions to innovate that can lead to (likely) better outcomes, identify the barriers and work towards reducing them by describing and driving towards their reduction and explain the challenges in open, realistic and inclusive ways, then within the role of senior managers it can determine the innovation sense of mission, of their ‘collective purpose.

This should become a constantly updated ‘living, breathing innovation capacity’ determining the health, conditions and environment of the innovation ecosystem.

It is the recognition that this more integrated thinking allows for the conditions to seek out increasing value, managed in a purposeful way.

So what are the possible benefits for all this additional and ongoing work?

We can look towards an increased understanding of all that connects to make innovation the value creator required. We gain a better cohesive whole of understanding of how the organization sets about and creates value.

Integrated thinking applied to our whole innovation system will (eventually) rise decision-making, allowing confidence and knowledge to flow. It begins to put into place the balance between short-term exploitation and longer-term exploration by supporting both, it signals where risk lies and what is tolerated or encouraged.

It will definitely raise engagement, it will encourage a greater collaborative thinking. It strengths the connections between vision, goals, targets, missions and objectives and the organization, being clearer on going about its business and recognizing the importance of innovations value contribution.

In conclusion

The case to think of innovation in a more integrated way has been stated many times. Innovation as we seem to know can create real, often substantial value, capable of adding significantly to the growth of organizations. It is the growth enabler.

We need to unlock innovations prospective tangible value from its many intangible capitals that form unique and constantly evolving relationships.We need to evolve our innovation thinking, we need a more integrated approach.

The more we are explicit and articulate our value creation, giving it clarity and context, the more we are treating innovation as the central point of driving our value creation management. Organizations need innovation, it is, or certainly should be unique, strategic and working at the core. Innovation has transforming power.

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One thought on “Constructing Innovation as Value Management

  1. Pingback: Building the Core Competencies for Innovation | Paul4innovating's Innovation Views

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