Valuing digitization alongside innovation

We all see around us increasing disruption caused by digitalization. The powerful effects of digitalization are opening up different business opportunities, the chance to design different business models and get far closer to the ultimate need, to understand the customers wishes from the products and services they are wanting to buy.

We are seeing a very distinctive advantage in embracing digitalization into innovation. The potential of combining digitalization and innovation insights offers significantly more potential for sustaining growth and building a greater connection into the needs of our customers.

Much of our innovation work today is caught up in out-of-date information, poor and inadequate data, restricted research and limited market understanding. Our innovation insights are badly lagging, with the effect being the solutions offered are not ‘tuned’ into the present and anticipated needs, as they often lack dynamic data. We need to digitize our innovation activities fully.

We need to ditch much of our existing innovation processes and practices, reliant on manual systems and so often trapped in silos of knowledge. Digitalizing innovation processes can potentially liberate us from ‘second-guessing’ customer needs and connect us into real-time understanding. This being ‘digitally connected’ can provide the catalyst to a greater level of innovative solutions that are far more aligned to customer and market needs.

Why does the combination of digitalization and innovation have such a transforming effect?

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Recognizing it is all about Value Creation

I am reading a lot about the concept of value creation recently, it answers everything but tells us so often nothing about how it is made up or it is truly present. It seems to have that same ‘heady vaulted position’ as innovation in that we all talk far more about the ‘promise’ of it, we want it but still are not prepared to put the real effort into it to make it happen.

So let me try and explain my thoughts on value creation. So what is behind value creation? What drives it? What will tell us this is an organization where value creation seems to well invest in, nurtured, built and protected?

So what is value creation?

Value creation is highly dynamic, it is going on all the time and can increase, decrease or transform, in different ways, when you exploit your different capitals that will be in constant change and adjusting to reflect your organization’s business activities and eventual outputs. This is when you can begin to see the value created by the use of deploying all the capitals to build new growth and what I call “stock” that along with “flow”. I loved this explaination of the two.

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Building the Coordinates into your Innovation World

Most of us are very aware that Innovation can be fairly complex in what needs to be pulled together to take an idea or concept into a finished product.. We are also aware innovation often ‘flies’ in contradiction to the normal organization’s ways and wishes, especially the emphasis on working in structured, efficient and productive ways. Innovation can often be rather chaotic and discovery driven, it often is seen as counter-productive to the orderly state our organizations wish to achieve.

Yet it is that randomness, that serendipity, that sudden discovery that needs a different way of thinking and organizing innovation. It can still be well-structured and effective but it needs the opportunity to allow in accidental discovery, by-chance conversation, fortuitous moments that just seem to happen and occur as you are “open” to them. You need to have both structure and unstructured aspects to allow innovation to happen, evolve and eventually shape towards an outcome that changes the current status quo. Innovation should always challenge and question this status quo.

One of the useful ideas of using an external resource is to put additional coordinates into your innovation world, they see contradictions in a different way. They can assist in working through the conflicting signals, so as to help align innovation in helpful and thoughtful ways. Certainly, the innovator’s role is not an easy one inside the structured world of larger business entities.

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Innovation Capital Lies Within Organizational Learning

We need to know how to unlock the real value of innovation both personally and within the organization, we work for. If we do not fully understand where the innovation capital comes from, how new capital and stock can be provided, innovation will remain tentative, always stuttering along.

Innovation will lack that essential organization innovation rhythm, and it will stay disconnected for many and will be frustrating your own evolution in understanding if it does not become an organizational learning need.

I’d like to offer a fresh view on building your own innovation capital. Continue reading

A light-bulb moment in Innovation Learning

Over the past few weeks, or is it months or is it even years, I have been constantly thinking through how we are learning in our innovation understanding. I have been struggling over this for a long time, looking to create a more compelling narrative and have only realized part of my ongoing difficulties was that I was coming at this the wrong way.

Firstly a narrative should be open-ended, there is no finite resolution yet to innovation understanding and secondly, it is for the intended audience to determine and relate, not the person presenting the narrative. For me, one light bulb went on.

The second light bulb moment came earlier this week. I was reading an article by Josh Bersin, called “the disruption of digital learning: ten things we have learned”. Josh is the founder of Bersin by Deloitte and this article was on one of his LinkedIn Pulse views. It actually stopped me in my tracks, it made me really think and recognize some of my recent shifts in my innovation focus was making real sense. The article alarmed me but it also ‘re-armed’ me. Continue reading

Building Differentiating Capabilities for Innovation

pulling-the-levers-on-all-the-innovation-variablesWe so often get caught up in the building of our capabilities. In some ways, I keep attempting to “peel the innovation onion” in explaining the need to focus on building the capabilities in different ways but to be honest, it needs these various approaches to an ever-changing environment.

A different intensity of innovation onion perhaps? Why, well we have the business of today, the emerging business of tomorrow and the future business that will provide a radically different set of capability building needs?

The struggle to date is that innovation remains hard to manage well; we strive to systematize it and then attempt to replicate any success we then have, so as to achieve more, yet more often than not. we do not take into account all the variables that came together for that particular winning outcome. Often this does not work on a repetitive basis as the variables that make up innovation can be different for each innovation event or activity but we can learn under a growing ‘range of’ differentiating capabilities.

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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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