Setting yourself apart through Innovation

the-path-to-successBreaking News: “Over the past 15 years, a portfolio of stocks based on the Innovation Leaders analysis has repeatedly outperformed all major indexes. Average return has been 14.5% CAGR and in 2016, growth was 18.9% – significantly higher than S&P500, NASDAQ and FTSE 100.

Year after year, this analysis has proven that those firms identified as being the most effective innovators consistently outperform their peers and the market.”

Now is that surprising?

It should not be but sadly for the vast majority of companies that do not treat innovation as seriously as they should, as the growth enabler, it keeps them in a constantly lagging position. It tells a very powerful message, one of investing in innovation seriously and in sustaining levels, you can grow well above others.

Points from this research

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We need the engagement platform for translating big data learning

Knowledge BuildingBig Data is knocking very loudly on our door, how are you going to let it in and manage it?

How can we liberate that creative energy we have within our organizations, how can we achieve higher engagement?

How can we learn, share and transform the knowledge that is all around us, simply flooding in? How can we translate the data flowing in with the knowledge insights and innovation outcomes expected? How are we going to unleash the creativity that goes with new knowledge?

We need to actively encourage connected minds for value creating opportunities and knowledge sharing for innovation to flow right across all the organization. All the raw data needs connected and engaged minds.

“For this we need to think about installing a modern engagement platforms that has knowledge and learning as its beating heart”

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Is all investment about the future?

Buy back questionI was reading an article by Doug Collins on the “three wishes for the innovation practitioner for 2015” where he points out “2014 was the year for share buybacks and dividends“.

An article from Bloomberg reports that companies in the Standard & Poor’s 500 Index are “poised to spend $914 billion on share buybacks and dividends this year, or about 95 percent of earnings.”

95% of earnings – Doug rightly says “wow” and offers a thoughtful set of observations

“Every organization that enjoys free cash flow makes a decision on where to allocate that resource. If the opportunity available to the organization meets or exceeds the hurdle rate—the desired, expected rate of return—then, in theory, they invest in that opportunity. If not, then no: the organization returns the cash to the investors. Of course, earnings come after investments the organization makes in innovation—research & development expenses, for example. Many do invest a lot in R&D”

He then remarks “And yet…..and yet” ….

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Lay out the path, get out of the way but please give me ambition.

European Commission and FlagToday we see a new commission elected in Europe. As a European you always want this to be a new beginning, a new hope, perhaps a new start for Europe. Jean-Claude Junker has become the new president of the European commission and along with his new Commission team have been setting out their priorities for regaining momentum for Europe.

I was re-reading Mr Junker’s policy agenda based on “Jobs, Growth, Fairness and Democratic Change” and you realise not just the complexity and challenge all this entails, bringing 28 countries along still, it seems, a pathway that still talks “a single union.”

It prompted this post.

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Absorptive Capacity, Knowledge Management and Innovation

Source : Haas Leadership Initiative

Let’s start with some defining statements. Innovation is totally dependent on becoming aware of external ideas and the knowledge that is needed and then translated for it to become new innovation.

We can ‘fall over these ideas’ or we can find ideas or concepts through explicit search. Then to translate these and turn them into something new and different we need to have established some sort of diffusion and dissemination processes.

Having this established as a sustaining system provides an essential source to building organizations capabilities and competencies.

The more we work external knowledge the more we potentially enhance and multiply its value from a single idea into the potentials for multiple innovations. Having a systematic framework can be dramatic for generating new knowledge and gathering ideas for new innovation potential.

Throughout this post I’ll link into previous posts that you might like to explore but this is not necessary.

The issue is how we set about adopting and adapting new knowledge.

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Seeking engagement through innovation to galvanize growth

We need to become really worried over our potential to re-galvanize growth across many of our economies. There is this growing feeling that in Europe, perhaps even the United States, we are in for a prolonged drawn out ‘slump’ with the possibilities of a Japanese-style lost decade.

Crash austerity programmes are compounding deeper economic problems and we need to find ways to create more demand, yet it does seem our current approaches are placing increasing constraints on solving this growth need. Of course, the public debt to GDP for many countries is alarming but if you can’t fix the problems with achieving growth, you just get further into debt. It seems as the predicted ‘inflows’ continue to fall below the forecasted ones you are forced into borrowing more to even support the existing environment. This adds further struggles to hold onto some of the essential services we require to function and we seem to continue downwards in a collapsing spiral.

We are suffering from those evil twins, a lack of fresh investments and bold innovation, which are failing, by not doing the essential job of promoting growth, of leading demand, of creating the new wealth we desperately need.   The scale of our needs requires a different type of engagement, up and down our society; we need a new set of norms otherwise we will continue to witness some extremely painful adjustments across large parts of society.

Engagement means different things to different people

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Shoring up the fragile innovation system, call GE

Well, the World Economic forum’s annual meeting is beckoning later this month. During the period of 25th to 29th January the WEF attempts to engage business, political, academic and other leaders of society to shape global, regional and industry agendas.( http://www.weforum.org/)

Just released on 18th January is the GE Global Innovation Barometer with its results of its second annual review on innovation. Here is the source site to check out and explore your own needs : http://www.ge.com/innovationbarometer/

The aim of the release is to use this and have this available for the meeting in Davos as well as shape GE’s innovation agenda going forward. For the Davos meeting lets hope our leaders have the time and inclination to review its content. No doubt GE will be there and if  Beth Comstock is going as the senior vice president and chief marketing officer of GE I’m sure she will be leading the “innovation does matter” charge.

Beth is emphasising a number of vital points that are arising from this survey. Let me provide a few, her rallying cry for business leaders is to understand where and how their innovation strategies are being challenged and to drive towards new solutions.

The report raises all the uncertainties found in today’s market place are challenging business’ ability to innovate. There is a growing restriction on accessing external funding or a conservative attitude and appetite for risk. Some would argue this ‘hording’ of cash, of not investing at this time does push us into more of a deeper hole so how can this be resolved. Enter the political group to provide a more confident environment for investment so let’s trust some resolution of resolve and consensus emerges out of this meeting of minds.

The top line summary taken from this GE barometer taken in October/ November 2011

  • • 9 of 10 executives report economic crisis negatively impacts their ability to innovate
  • • View innovation as primary driver of economic growth, jobs, quality of life
  • • Pro-innovation markets produce better economic results
  • • New model for innovation in the 21st century validated
  • • USA, Japan, Germany, China still perceived as most innovative

The continued belief, confirmed by the majority of business leaders interviewed is that innovation continues as the main driver of prosperity, competitiveness and job creation, and but also points out how challenging and uncertain the present economic and political environments we are in, may hinder companies’ ability to deliver meaningful innovation.

My one comment here on this– Leaders please ‘walk the talk’ on innovation.

A partnership paradox

I found more than interesting in the release by GE that a disconnect has surfaced between the importance of partnerships and the need to pursue them in the near term. There is a clear confirmation (86% of those surveyed) that partenerships are an important component of the new model of innovation but only 21% believe finding partners is an immediate priority to innovate more on a day-to-day basis

My comment here: That is a real disconnect between the present belief and momentum supposedly going on in open innovation and the possible activity taking place in the trenches and what the top knows about. That gap if it is there I think needs urgently addressing to get everyone on the same collaborative page.  Might actually “put the cat amongst the pigeons” for many.

Creating conditions for meaningful innovation

There is a reminder that one-size does not fit all. At the global level innovation continues to move towards an open, more collaborative model, innovation at the local level presents a complex landscape of challenges and opportunities that broad strokes can’t resolve. These constraints or nuances need to be dealt with at the market level as perceptions on innovations ‘place’ are radically different. This is where the barometer has some good insights for those applying global innovation across different market situations.

My comment here: Adopting a more flexible approach to innovation might have increasing value, especially in these more uncertain times where discontinuities will increase more than decrease.

Embracing the new innovation approach

The report reflects on the needed shift for innovation to thrive in the 21st century. That is embracing a new paradigm, one that engenders this collaboration need between several partners, values the creative power of smaller organizations and individuals, and tailors solutions to meet local needs. Business leaders around the world agree that great innovations in the 21st century will be about shared value — addressing both human needs and the bottom line – versus delivering profit alone.

  • • More than ever, 88 percent of executives agreed that the way companies will innovate in the 21st century is totally different than ever before.
  • • 77 percent of executives acknowledged that individuals and small- to mid-sized enterprises have the ability to be as innovative as large companies.
  • • 73 percent agreed that innovation will be driven by people’s creativity over scientific research.

My comment here: Again, I have to question this, not the notion or intent but the real understanding.  I would argue innovation still has not got the appropriate attention and critical understanding at leadership level for the vast majority. To believe they are taking us through a new paradigm is a tough one, I would suggest they are being dragged ‘kicking and screaming’ into the 21st century, hanging on to tried and tested 20th century practices.

My second comment here: The danger for executives in larger organizations does lie in the second point- individuals and small-to-mid-sized enterprises do have the ability to match and often exceed them in innovation. In individuals and small units or the smaller pockets of like minded communities does lie the potential of creativity and large organizations are struggling to get their heads around this dilemma.

Convergence and Divergence- narrow the gap.

So I hope the combined forces of Beth Comstock, GE and its global innovation barometer discussed in Davos provides a platform for strengthening innovation’s message at the leadership level.  I would certainly feel within GE it is shifting the focus in their own innovation challenges and as they absorb the outcomes of this barometer I look forward to seeing more innovating coming from them.

Come on GE lead the way and show that continued willingness to take risks and engage across and with society. It is better than the alternatives that many leaders are taking- to reduce innovation where they will eventually pay that price. Get the innovation message across Beth please. The Global Economy needs innovation more than ever to move forward.