Following on from my last post of “Place your future bets- invest in Innovation Capital” which outlined the significant contribution innovation capital plays in our economic growth, let me offer some further thoughts on its value to really capture and understand, so we can measure it within our organizations.
We have the three components; of physical capital, knowledge capital and human capital that are the innovation-related assets, these make-up Innovation Capital.
I have been arguing that innovation capital draws from the core of intellectual capital and its suggested (and broadly recognized) components of human, structural and relational capitals or social capital. I have previously discussed this converging up, as the ‘nesting effect’
Innovation capital needs assessing and measuring so we can understand the relationship between this innovation capitals (and its present and future potential) and organization performance. We need to know the innovation capital ‘stock’.
Why, well ‘stock’ can be ‘static’ and we need to make this more ‘dynamic’ so innovation can ‘flow’ from this constant renewing of our capitals and be transformed into new value.
Recognizing the value of our innovation-related assets is where the ‘smart money’ should go. To gain growth and to improve productivity is through innovation. We need to translate knowledge into new values.
When you pause and consider the make-up of Innovation Capital you realize it makes such an economic contribution and in a report from McKinsey & Co, they have set about identifying this to produce the above summary, covering 16 countries, to understand the real value of this Innovation Capital.
These numbers are big and still don’t fully capture everything associated with innovation as much remains ‘hidden’ or ‘attached’ to other activities as well.
We need to shift our thinking on what makes up Innovation Capital
Innovation cannot exist without all the capitals that contribute to its make-up. Yet we simply fail to appreciate all the capitals that innovation requires. It is a real pity as they are truly nested.
Equally many innovators are simply not prepared to put in the necessary work to achieve this understanding and the organization’s innovation looses out, stuck in perpetual incremental mode, lacking in anything really new or radical.
All the capitals ‘fire’ innovation. They make innovation combustible.
More often than not when we talk within business of capital we tend to default to the financial kind. Of course providing the financial capital into innovation is vital; it provides the potential ‘burn’ but what is often understated and certainly under-appreciated is the other capitals. These have been ‘tagged’ under intellectual capital or are often ‘lumped’ into our intangible assets.
What we need is to recognize the real “nesting effect” all our capitals.
Back in 1776 Adam Smith in his book “The Wealth of Nations” discussed the concept of the ‘work to be done.’ This has fascinated me for what we need to do for achieving any new innovation, it is the ‘work to be done’ that generates and pushes boundaries beyond the existing. This ‘classic’ book has become regarded as the one that described the birth of modern capitalism as well as economics.
Adam Smith also introduced the concept of ‘the Invisible Hand’as a core part of his thesis, that man’s natural tendency toward self-interest – in modern terms, looking out for No.1 – results in prosperity, not just for the individual but for society. ‘The invisible hand’ is essential for free markets and capitalism, through how it generates wealth in competition for scarce resources. By maximizing their own interest as the direct intention, this ‘invisible hand’ also stimulates those around you and in the society you belong. As you seek to leverage your own assets, you are promoting society as a whole. Today this can be more by design, or through an unintended consequence of how knowledge flows.
Arguably the ‘invisible hand’ can today be seen as realizing all our potential, individual and collective, exploiting all available existing assets for benefit and gain. We call these our tangible and intangible assets. Often overlooked, or under-appreciated are those more intangible assets, that can significantly differentiate, are surely today’s ‘invisible hand?’ Continue reading →
To achieve success you not only have to have a repeatable process but you have to ensure what is learnt ‘sticks’ so it can be used again and again.
The company we associate the most with when it comes to ‘sticky’ is 3M for its famous invention of ‘sticky notes’. They are used everywhere. As an aside, I recently I came across an even better product where you can ‘write and slide’ your sticky notes so they adhere to any surface and are particularly great for brainstorming or presentation concepts where you want to keep moving them around (sliding them) as your ideas grow and evolve.
These are new on the market developed by a young innovative Finnish company www.stattys.com. These great products allow us to keep something in place to ‘form’ our thinking around, they give us opportunity to share around and explore .
Besides ‘sticky’ we need something I’ll call motivational glue. A glue that binds between knowledge and learning to become a series of building blocks for innovation. These motivates us to keep thinking, pushing and developing our ideas into final products or services.