Leaders are feeling the effects of Innovation Vertigo says GE

GE have just released their latest Global Innovation Barometer survey and they are strongly detecting “Innovation Vertigo” from the survey conducted through more than 3,000 senior business executives in 25 countries.

This ‘dizziness’ for many is being caused by a growing unease with the continuing changing dynamics of today’s business landscape and uncertainty over the path forward. This is forcing leaders to think differently about how they will achieve growth. The good news though is it does seems that many are beginning to embrace this complexity by exploring new and sometimes unexpected opportunities to innovate.

According to Beth Comstock, the senior vice president and chief marketing officer of GE, “leaders are betting big on more unconventional approaches to innovation to unlock growth”. It seems GE are trying to stay ahead of the pack in unlocking innovation by exploring different markets, partnership structures and business models. Big data is accelerating up the inside as we have seen both GE and P&G, placing increasing emphasis on this, as a potential source of innovation insight they feel is presently missing.

The most important point comes back to these tensions or vertigo being felt, that is showing through in this report, between the desire for globalization and protectionist temptations that organizations sometimes tend to favor. It seems as our leaders are being pushed outside their comfort zones they are having this uneasiness with the pace of change and confusion over the best path forward.

I’d hazard a guess  on what they feel as ‘vertigo’ does go beyond the usual symptoms of light-headedness and dizziness and is possibly far more: that of a chronic lack of solutions beginning to creep into their  psyche as their worlds are spinning out of their control, to stay managing in the ways they have been. Perhaps welcome to our world Mr Leader.

As many of them will be gathering in Davos, Switzerland between 23rd to 27th January 2013 (http://tinyurl.com/afde4w5) I think the higher than usual altitude, will not help their brains or nervous systems as the whole economic system is still out of balance, so having “Innovation Vertigo” is part of a bigger malaise I would expect.

Still, here are the top line summary points of the report

The protectionist debate

There seems a growing undercurrent of wanting protectionism but making sure it works in their favour. This could be trying to get Governments to prioritize promotion of domestic innovation rather than imported but many others continue to feel markets need to be opened even more to promote the imported innovation and attract the (domestic) investment that goes with this, or should.

A growing number of leaders see growing challenges for innovation within local economies, believing that the increased competition and accelerated pace of technological advancement has a negative impact. So this is a growing set of policy paradoxes, leaders want clearer decisions through local governments to determine this and bring it under control.

The wish to go beyond just product innovation

There is also a growing recognition that incremental innovation is simply just not enough as organizations are suffering from this lack of growth momentum, causing much of the “vertigo”. Business model innovation is becoming more and more the solution with a growing view that a new business model may offer businesses a less risky and resource-intense path to reach customers over the current ‘traditional’ methods.

I read an awful lot into this but top of mind does come the word ‘naivety’ and a chose this word due to its definition: “being naive is often lacking developed powers of reasoning and criticism.”  They might look far more at the “within” and come down from their often lofty heights and recognize they are the ones that inhibit and constrain the existing structures to perform in so many ways, far too many to start to outline here.

I welcome new business models of course, I teach the methodologies associated with them, so they are needed but are these organizations equipped to design, construct and execute new business models?  Also what happens to all the resource-intense ones, do they continue, only to wither and die as new ones are pushed by their own leaders?  No, this might be fanciful but it needs a far more robust debate and thinking through.  Of course focusing on the right forces for growth mentioned to master innovation is the real need for innovating successfully, business needs to master customer and market insights, talent and technology development.

Grasping new business models alone does not change that inherent weakness seen today in existing organizations. Theory and desire might be one thing, reality and sunken investment might be another –  maybe more vertigo then?

Collaborations continue to feature

According to the report, it is the belief that collaboration between businesses is emerging as a means to surpass competitors, enabling faster access to new technologies and markets particularly in emerging markets. Yet despite global acknowledgement of partnership’s power, concerns over revenue sharing, IP protection, trust and talent poaching pose barriers to action. Germany, China, Brazil and Sweden seem to have the most experience at partnerships.

It does seem collaborative innovation has plenty of global appeal as a key to business success, and momentum are accelerating in developing markets and seemingly slowing down in developed ones. The reasons for collaborations are given as access to new technologies, access to new markets; improve existing product and service and speed up time to market. The downsides are a lack of trust and policy protection underpins much of the anxiety over business collaboration and the continuing “old chestnut” of IP protection, which all fit with developing country lag issues on legislation protection.

Government as stewards of the innovation environment

This one also gets me intrigued – stewards – umm. We are in such a “fog” from lack of dynamic leadership at government level, partly due to the complexity and tangled knots we have got ourselves into but also the underwhelming mandate delivered at the ballot box leaves the politics of politics in stalemate. I always get the sneaky feeling business leaders keep pushing government to lead and make policy and then scream and shout, another vertigo moment, if they don’t like the decisions that go with this.

Of course policy environments affecting innovation are caught up in this and the usual call to safeguard business interests adds to the tensions. Business worries over the lack of talent, of loss of knowledge, in IP issues and fear bureaucracy (besides their own) and over regulation (beside their own again) but often we can’t see our business leaders heading the charge to hang onto talent already in place, reduce the knowledge we all have by insisting on many brain-numbing daily activities, called specialisation and filling in information called for by the “system” etc.

Our business leaders want to see “a stronger entrepreneurial culture in the education system through stronger linkages between students and business savvy individuals” but sitting on their hands and wallets until this comes through any changed education system does not solve our immediate and next ten years of problems –  does it? I suspect more vertigo moments for them.

Lastly, guess what, talent is not in the right place

Leaders want to have access to the creativity and technical prowess within their workforce but the lack of preparedness and access to this ‘talent’ is holding them back in “unlocking innovation”. I find it hard here to not become a little cynical on this. Matching jobs and people is hard, no doubt and lining up the right skills to meet the economic needs required today is correct but if all the millions of messages of caution in the past about investing in people, in nurturing what you have, holding onto what you have in experienced people, instead of simply letting them go, many on early retirement packages or just leaving out of continued frustration, I do have a hard time on their concerns. They made the bed……..

Perhaps another symptom of “Innovation Vertigo” is “Innovation knee-jerking”, turning it off and on for the short-term needs and abandoning the notion of continuous, sustained investment in the skills, along with developing the experience base through challenging environments and leading edge investments. Well at least if new business models come into serious ‘play’ then the skills, experience base and challenging environments will all equally be in ‘play’ but not in the controlled ways they would want to see but at the edges of much discomfort for some white knuckle rides.

Thanks GE for providing this, it is certainly helpful to see inside leaders minds.

I enjoy the GE Global Innovation Barometers they often do raise the blood pressure and that of course is a certain tell, tell sign that I might be suffering “Innovation Vertigo” as well. Can I go to Davos as well, please? I do live in the country but more at  solid ground(ed) level, I’d like to be a little light-headed above the clouds.

The report is at http://www.ge.com/sites/default/files/Innovation_Overview.pdf

or with different views here: http://www.ideaslaboratory.com/projects/innovation-barometer-2013/

Establish a different global thinking for your innovation.

When you read through a paper on transformative innovation by the Corporate Executive Board (CEB) at www.executiveboard.com that offers in its conclusion: “Innovation teams have been reorganized, de-layered, downsized, and (increasingly) dispersed, weakening the underlying structure of many companies ’innovation efforts” you do stop and reflect.

Then you read in one of the latest McKinsey Quarterly’s articles about “the global company’s challenge” (http://tinyurl.com/8yvwsrv) suggesting many issues are needed to be faced within large global organizations, you get even more of a confirmation that all is not well for innovation.

Innovation’s future seems to need some wholesale changes to take place and those innovation leaders are facing multiple dilemmas and choices that can’t be ignored for much longer.

The issue is “are the leaders of these organizations up to the challenges?”

According to McKinsey, through a fairly extensive survey overall, global organizations are struggling to adapt in many areas. A year ago, McKinsey uncovered a “globalization penalty”: high-performing global companies consistently scored lower than more locally focused ones on several dimensions of organizational health. For example, the former were less effective at establishing a shared vision, encouraging innovation, executing “on the ground,” and building relationships with governments and business partners.

Also another section of the CEB report states clearly that “the past decade of economic uncertainty made executive teams risk averse—focusing on incremental innovation to improve existing products and ensure more predictable, near-term revenue. In effect, these firms have been trading larger, higher-impact (and riskier) ideas for a greater number of smaller, more manageable (and less risky) ideas, causing incremental and next generation initiatives to dominate most innovation portfolios.  Incremental innovation still accounts for more than 80% of funded innovation initiatives

The CEB report further goes on “With weakened ideation networks, stretched management, and ineffective global working relationships, many companies are hard-pressed to restock their innovation pipeline with breakthrough ideas. Without re-establishing the necessary organizational capabilities, companies are unlikely to shift their innovation portfolio fast enough to compete and win in new markets”.

It does offer the following glimmer of hope “while daunting, the challenges are not insurmountable” but let’s think more radically in resolving these barriers.

I think we should stop the innovation bus and re-evaluate where large organizations are really going.

In both reports they indicate fundamental underlying weaknesses that are not being fully addressed that seems to me is a major constraint on innovation. Unless those on the ever-moving faster wheel don’t pause and reflect they are just going to run harder and harder for diminishing returns and growing frustration, then they are facing the road to nowhere.

I think it is time to get off the existing tread mill and really begin to think through a major re-engineering of innovation.

Four tensions need addressing but differently for each organization

In many ways I like the McKinsey suggested four tensions they put forward as needing to be addressed in their article to be overcome; in managing strategy, people, costs, and risk on a global scale. The importance of each of these four tensions will vary from company to company, depending on its particular operating model, history, and global footprint. My approach to these:

  • Firstly manage within the global innovation team differently than today. We need to bring back strategic confidence and put a different stretch into the structure that builds on trust, on exchanging, on collaborating and building a deeper ,a  more globally spread experience level that is both dispersed, yet still globally orchestrated and one that is simply not imposed and driven centrally.
  • Make people more the central asset to your accelerating innovation. Place more trust in them. Not by simply dumping more work upon them and asking them to fill in more forms for a central repository on their progress. Or equally demanding a constant feeding back, often in one way conversations but in permitting the unleashing of  the talent that does reside within and across organizations, so often buried, by giving it a higher level of trust and self-determination. This would mean a much more focused coordinating platform that exchanges on a mutual respect and value for each person’s contribution and value generating contribution. Balancing local insight, adapting global brands and tailoring the final offering to tap into local opportunities needs a different approach than we are seeing today. Stop imposing, start listening and adapting and adjusting more to what is needed in local markets not ‘driven’ from some distant point of reference that needs significant compromise to meet different market demands .
  • The huge advantage global organizations should have is simply being eroded more and more. Not just by the local more nimble competitor but more importantly by the way organizations seem to be structured in recent years. The advantage of shared infrastructures that large organizations are supposedly meant to have, does seems to me, all but eroded. You see the duplication in the system as often staggering. The myths of shared services can be often illusionary, as well as more and more complexity is layered in the system to offset and counter potential risk. The growing cost of compliance, seeking global standards and coordinating these needs constant re-evaluation, cross validation and assessment is pushing out products by turning them into just safe innovation. Often we are seeing even longer delivery-to-market time horizons with all these internal exchanges .  There is a real pressing need to release this layering-on effect and find new and different ways to speed up and become more adept and agile.
  • Reducing risk often seems the first overriding priority in many large matured organizations. Take all the risk out of innovation and all you end up with the incremental approaches we are seeing today, all too often touted as innovation breakthroughs, what rubbish. Can this change, I think it must do, as real growth demands different solutions than what is being offered today, otherwise we will just simply ‘bounce along’ in slow growth across many industries. How to manage a more diverse business portfolio in global organizations needs a different hedging policy to rebalance the risk premium with more of an adventurous exploration of innovation bets. Re-balancing infrastructures and deciding where to locate skills to support both a global business but with a greater diversity of innovation within local operations and regions is a tough challenge. Managing mind-sets and embedded thinking calls for a more radical overhaul if more breakthrough thinking is called for.

Each of these four tension points needs to be re-balanced, to be re-engineered. Innovation needs some radical re-thinking, a more ruthless review of what is working, what is holding it back.

To achieve this I feel a complete re-engineering approach to innovation is called for. Large organizations are strangling great innovation ideas at birth and slowly to death through a heavily compromised pipeline These are being replaced with lacklustre concepts that are often boring their customers and compelling them to question the value and look more and more elsewhere, for solutions that fit their needs and pockets.

Otherwise global scale will simply not matter if organizations can’t leverage the people on the ground, so as to link more specifically to the customer needs in different regions and markets and provide them with what they want.

The urgent need is to improve the organizations abilities to connect locally and adapt globally, not the other way around. Yes, you can call that reverse re-engineering in the way you are managing innovation.

A Christmas Story on Innovation

Jim turned from staring through his microscope, rubbing his eyes, and looked out the window. It was dark and the snow was really coming down. The lamppost had turned that funny yellow colour, as more and more snow was falling in the car park and building those little domes of snow on top of everything. It was the Friday before Christmas, the last day in the office for three days.

Jim was looking forward to getting home tonight, so he could share some time with the family after having been on a frantic trip to four different cities, on three continents, in seven days, to meet with his different team members. This was quickly put together to coordinate the project they were all working upon, comparing notes, setting some goals for the coming weeks.

Pre-Christmas travel

He was tired but also troubled, apart from all those delays at airports, different hotels and long days and growing jet lag this was not the main reason for his headache. He had been working on finding a solution for a molecule that would make a significant contribution to his company’s product pipeline, and they certainly needed this ‘breakthrough’ as 2012 will be a ‘watershed’ year in his industry.

Jim, like many others in research and across his company were worried, really worried. According to what he reads billions of dollars and many of the larger blockbuster were falling over the “patent cliff” as it has been dubbed and he was wonders what they means for him. He has heard rumours, swirling around, a little like the snow outside, that yet another re-organization is in the works. More uncertainly to face and it will do his case no good if he can’t crack this particular problem, the reason he went ‘racing’ around the world to visit the other research centres in Rio, Brazil, Shanghai in China, Jurong in Singapore and Basel in Switzerland.

Stars in the Universe always twinkle.

Jin loves his work, he tells many of his friends willing to listen to his same old story: “molecules are so small that there are more molecules in your body than there are stars in the universe!” His kids love that one as he then grabs them and tickles them so they ‘squeal’ with delight. Also he never tires to tell anyone who cares to listen or ask what he does. Those that knows Jim always expect him to make this comment or a similar one when the extended family gathers around the Christmas table, to keep everyone aware of his contribution on this world. He often gets ‘ribbed’ on the number of molecules he seems to be adding himself and Jim shakes his head, dismissing them all as “ignorant peasants” or something more specific and then laughs out loud along with everyone else.

What’s so special in Jim’s mind about molecules is always their unique shape that allows it to interact with other molecules. The interactions between molecules made up of black carbon atoms, white hydrogen, red oxygen and nitrogen atoms are always buzzing around in his head when he peers into that microscope. Jim enjoys his work, even he would happily stand up and state he is proud of his contribution but at this moment of time he certainly needs to find this solution to his current vexing problem, as the deadline set to solve this has been ‘laid down’ from on high and that always has some darker sides to any ‘edict’ like that. Hence this was partly why he went on this last minute dash around the team, to find a solution to their problem.

The darker side of acceleration taps on his shoulder

The bigger problem is, it is simply getting tougher, is the constant message he is getting down from the top within his company, not only to come up with new drugs, as he well knows, but also to convince insurers and the government to pay for them — unless they make meaningfulimprovements in health, at a reasonablecost. Everyone has to lift up their game, accelerate the work and offset some of those worrying times ahead if possible, well at least try to make a contribution that is acknowledged and hopefully appreciated by others.

Santa comes early

Suddenly he hears that familiar sound of an incoming email, he turns around to take a look as it gives him a chance for some distraction. Normally he would not be feeling this about any last minute emails before he heads off home for the Christmas break.

The email was from Lo Ping, in the research centre in Shanghai. Quickly reading it he suddenly brightens up. Lo has found a possible breakthrough to the problem. It seems after Jim’s visit and explanation, Lo Ping decided to reach out to their collaborators around the Asian region and pose the question to them. One of the research institutes in Thailand they work with, thinks they might have an answer, something they were working on for another company but in another unrelated industry, so they can find a way to explore this in some form of open innovation collaboration. Jim knew Lo Ping would not bother him unless she was fairly sure this would likely be the answer he and his team have been working hard to solve. Open innovation has been a great help for him to bring other ‘like minded’ people into the discovery process.

A world that never sleeps, even at Christmas

Lo Ping with her usual humour writes “here’s the deal Jim, knowing you will be sitting with your feet up over the next few days while some of the rest of us work, I will fly to Thailand, investigate, work on the testing to see if this does make the breakthroughs and then do some more work in my labs before you get back in three days- how about that?” Jim smiled, knowing Lo Ping and her team they will deliver as promised. The Shanghai lab is a twenty four times seven one, meaning it is working 24 hours a day, every day. Comparing that with the one here that Jim works in, in the US it only works, at a pinch, 9 to 10 hours, five days a week and that often causes at head office many comments on productivity, cost efficiencies etc, etc. These constant global comparisons just add more pressure.

He quickly emails back to Lo Ping- “sure, go for it and thanks, I owe you one”. Within seconds a further email comes back from Lo Ping suggesting: “well just remember Chinese New Year is on 23rd & 24th January this year and if you could shift that review meeting to a little later as a return favour, it will allow me to release some of my team to have time with their families- agreed?” Jim laughs, he knows Lo Ping and her way of conveying the needs of her team, also means her. He emails back “sure, providing you have those results on my desk in three days”. Only a ‘smiley’ is the reply.

Let the collaborative process work- “let it flow, let it flow, let it flow”

Wow, that is a great relief thinks Jim, if we can find the breakthrough, make a collaborative deal with the Thai lab to share in the benefits we might quickly get back on track. Some quick emails off to the team, then to legal in Singapore to be on the alert to join in the negotiations, a copy to the central open innovation legal person in New York so that it will get the legal wheels grinding along as well. He thinks he needs to pull in that favour following his buying of the meal in Singapore last week for the team, including the lawyer. Sometimes those face to face, social meetings pay incredible dividends and he knows Satvinder Sirajay is very dependable and wants to help especially after they found out over dinner they had daughters playing football for their schools. Knowing each other in this connected world does help.

Reminders and recognition

He recalls listening to Don Tapscott a few weeks ago, talking of the Age of Network Intelligence where the five principles now apply. These are ‘collaboration, transparency, sharing, interdependency and integrity’ and Jim just felt he had ‘touched’ each of these within this set of events. So these guru’s do know what they are talking about after all, he thinks.

That suddenly prompts him to remember to pick up those two books he had ordered from Amazon to read over this Christmas break. One he needed to read to prepare for his innovation session to his research colleagues straight after Christmas- “Best Practices Are Stupid- 40 ways to out-innovate the competition” by Steve Shapiro and the other to help him find ways around one or two rather stubborn middle managers that seem to be blocking his initiatives from ‘seeing the light of day’ at the senior level. Yes he even liked the title on that one “Relentless Innovation- what works, what doesn’t” by Jeffrey Phillips.

He certainly was thinking to himself where he works, it is “relentless innovation” with the worldwide research centres working 365 days of the year. As he closed up on his working day he came up with his title for his next (fantasy) book “restless innovators.”

Back to earth and chores for the evening

Suddenly the blackberry beeped, a SMS from his wife gently reminding him to “not forget to pass by the local butcher for the turkey and pick up the Christmas tree next door, the one she had already ‘marked out’ and paid for and don’t forget you promised to decorate it with the kids.”

His smile suddenly changes though as he hits that cold blast of air, quickly pulling up his coat collar to stop the snow from trickling down his neck but it didn’t matter he was happy. Happy to share Christmas with his family, happy his problem seemingly was about to be solved somewhere else in the world while he took some time off and happy about that decision to go around the different research centres to lay out the problems. He felt this gave them all a personal identification and shared understanding of what was needed from them as a global research team, working on innovating the next breakthrough for their company.

A little cold shudder but that was for another day

The only shudder he felt was the need to face up to the merger issues that were announced. Still that was for after Christmas when he arrives back to hopefully find the team working away in Asia has found the solution and that positive message he could then gives the ‘powers that be’ the good news. Hopefully it will remind them of the many reasons why they were such a powerful collaborative team, essential to the future of sustaining their position in the market.

Crazy, connected but collaborative

“Yep”, thought Jim- this is certainly a crazy, connected world but today it was simply a great collaborative feeling one gets on working on solving a problem. One, that in his mind, would lead to a potential innovating product that will save lives. Not bad as a great feeling as Jim heads home to the family and celebrating Christmas and all of what it means in our lives.

Enjoy your Christmas and happy innovating in 2012! Stay optimistic.

The beginning of a new era for innovation, truly global.

Braden Kelley wrote an article entitled “Is the era of Innovation Over?” ( http://bit.ly/h9FCr6) which I would like to build upon.

Braden is the author of “Stoking Your Innovation Bonfire” from John Wiley & Sons and is also the editor of Blogging Innovation (http://bit.ly/d2c9aW ).

Braden picked up on an article lamenting the seemingly poor state of Canada’s innovation efforts (http://bit.ly/fdLeI5 ) with the view that “Innovation is literally hitting a wall”. Braden has also commented about the recent US approach to resolving their innovation approach and believes it is limited in its understanding and appreciation of innovation.

Here in Europe we are certainly going through the same crisis of confidence with innovation, it is not producing the wealth and growth expected and needed to fuel our economies. The EU commissioner for innovation, Máire Geoghegan- Quinn, the EU’s first innovation commissioner, has started to created a lot of positive energy around some exciting new initiatives but are they enough? My answer is simply no.

For a very thoughtful article on the EU and innovation (http://bit.ly/hCZWdO ) published in www.innovationmanagement.se by Ann Mettler, Executive Director of think tank The Lisbon Council and here she gives her take on policy and innovation.

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