Innovators – are you thinking about Ecosystems?

Business Ecosystem Trends

Business Ecosystem Trends by Deloitte

Thinking about ecosystems certainly allows us to go out of our normal scope of internally generating new products. It opens up a host of possibilities, that can add significantly towards a new service design, new capabilities and solving more complex problems.

In opening up to managing within ecosystems you begin to see your ability to contribute and tackle societal problems within a collaborative system.

You can see new opportunities that can allow you to enter new markets that would have been impossible as an individual organization.

You begin to see the power, scale and strength of having the collective collaborative ability to extend beyond more traditional thinking design. You go beyond the utilization of leveraging existing infrastructure, building on others specialization and leveraging through technology powerful new concepts to tackle increasing complex innovation design.

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Technology leads, innovation exploitation is lagging

Technology and PeopleThere is a growing, perhaps even an overwhelming business case, for transforming the innovation management structure. The new combination is the new connections through people and things (IoT) that we can achieve a new innovation potential.

We will obtain increasing more powerful insights that have the real potential of being turned into new innovation outcomes, through the connected businesses we are presently needing to  build. This can generate new value and business propositions.

Today the virtual world of digital is moving much faster than the physical ‘enacted world,’ of turning insights into actual innovation activities, through the innovation pipeline. Our innovation systems are lagging significantly behind. We need to radically redesign them and bring them up to date, fit for managing innovation in the 21st century.

The whole discovery to final execution, is for most organizations still a very fragmented, often disconnected system. It is highly reliant on manual systems with people often disconnected from the real innovation engagement making decisions on inadequate data or insights.

We are failing to leverage all we have gained from our innovation understanding over the years. We have this ongoing inability to adapt, to connect the innovation system through the use of technology and growing value networks, so as to provide the integration, the dedicated resource and accountability to deliver successful innovation outcomes that our customers require.  Successful outcomes that are certainly possible, from a well-designed innovation management system brought up to date, adaptive, flexible and responsive, if we apply the time and effort to conceive and construct it.

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Our inabilities to adapt needs changing.

TransformationErosion is everywhere, it just seems inevitable, we somehow get caught up in the process of time and our organizations seem to ‘freeze’ before our eyes, then simply age.

They become fixed, rigid and locked into their established ways, not adapting to the changes occurring around them. We often give up and leave, moving on to better places and challenges.

We seemingly are reluctant to undergo any transformation, experimentation or adjustment in our organizations until it becomes a matter of survival, then its often far too late.

Then it becomes a mad scramble to transform ourselves, often with damaging consequences of deteriorating performance, battling more competition that are sensing our weakness, never capable of returning to those previous highs.

We simply  hate adapting or adjusting, certainly on a constant basis, we resist any form of ‘greater’ transformation – why?

If we can’t adapt to changing times, we simply struggle to survive, that is the growing reality operating in today’s environment. Simply put companies ‘die’ due to their inability to adapt to change and transformation projects fail because the message somehow fails to register and never gets completed to the original objectives. According to a survey by McKinsey in 2011, 72% of our transformation programs fail to deliver on their original targets. Also one out of every two of our top organizations in the Fortune 500 will be gone, history, dust, taken over in ten years, according to the OECD.

Unless we create a strategy to transform, how can we re-imagine our innovation processes?

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The innovating power of ecosystems and platforms

Ecosystem 1Our whole understanding of innovation is changing; there are numerous shifts occurring.

We are moving towards a new management of innovation where ‘greater’ collaboration is fueling new business models built on platforms, formed around ecosystems of communities with vested interest, contributing and extracting value.

Today and in the future, the value is created outside the individual company and not within. It is a far more working as a constellation, drawing from an evolving network effect seeking out combined solutions from this design.

In this third post of an extended series on my thoughts on “moving towards a new way of managing innovation” that explores the potential for changing the management of innovation, this  looks at the significant value of platforms and ecosystems.

We need to find a new way of doing things differently around innovation and its management.

This is based on a relationship-based, networked designed concept built for collective activities. Relationships where shared value leads to a value creation that no one single organization can provide. This requires open collaboration and an environment seeking mutual promise from individual input, contribution and extraction, delivering an integrated set of services and solutions being constructed on the platform from a sharing of knowledge, for delivering into evolving value propositions, all benefiting from, both collectively and individually

I am proposing in this series a view that innovation management needs to radically adjust and will be based on the thinking around the shift from products to solutions, from transactions to growing far more value-adding ongoing relationships, from a supplier of product services into highly valued network partnerships, exploring innovation across all options, instead of delivering on discrete elements; this requires managing the whole ecosystem of the innovation design differently through technology where platforms dominate.

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Moving towards a new innovation service model

Moving towards a new business model BalloonsThe realization that innovation goes way beyond product innovation is a massive hurdle for many of our existing organizations to overcome, certainly in what they are offering today as solutions.

We are also witnessing such significant erosion of long-standing practices, established boundaries between suppliers and customers, you get this feeling that everything is blurring.

This is part two of an extended series on my thoughts on “moving towards a new way of managing innovation” that explores the potential for changing the management of innovation.

How can the innovation process capitalize on all the changes we are undertaking at present in new ways, in broader engagements and collaborations, to deliver more effectively on the promise within our innovation potential?

Well I would suggest we do need to refocus

There is a very strong case we need to rethink the whole management of our innovation activity, as innovation is failing to deliver on its potential promise in the current ways we are attempting to undertake it, highly constrained and under-resourced.

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Shifting Radically the Innovation Business Model

Changing the innovation business model

Shifting Radically the Innovation Business Model

I have been spending some significant time on questioning the current innovation business model, from both the customers (clients) perspective and the innovation consultants’ one.

Now we all know not all things are equal, many companies have invested significantly in improving their innovation capabilities.

Many of these have been heavily reliant on outside help in achieving this position yet all the effort has led to limited returns for many and still a work-in-progress.

Yet far more of our business organizations are continuing to really struggle on their innovation activity for a whole host of reasons that seem never-ending, disappointing in end result and stuck in management quicksand to ever really change.

For me, the process and management of innovation really does need to be definitely questioned.

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Are we getting real value out of innovation consultants?

When you stop and think about how innovation has been managed and understood over the years you soon realize how much has changed in this time.  It is very significant, yet there is still much to do. Innovation understanding is changing, certainly for the better and as it shifts our perspectives on where knowledge resides as this is altering.

Today I think we are yet again at yet another crossroads in this innovation understanding and perspective. That is to extract the leading edges required from their innovation activities within organizations. This will require fresh innovation consulting business models to exploit the growing complexity of managing emerging innovation practice to support and extend their understanding.

I’m attempting to get my head around it, let me share some of my thinking here.

There has been a continual shift of where innovation knowledge resides. The external provider, who was the main source of latest insight, hands on practice and leading ideas in the past, I think have been significantly falling behind in recent years, on their contribution and value to organizations.

The advice they are providing is shifting from deep research and repeating practice into investing into offering more the insights of what might constitutes leading edge models to then suggest offerings that generate client value, as a must to understand and have. They have moved from clear ‘leading’ practice proponents to often ‘lagging’ but are exploiting their connections for knowledge insights to offset this.

Innovation knowledge is residing far more in-house of the client

The innovation knowledge needed for completing innovation has transferred more and more within the actual organizations needing to achieve the innovating. Through their constant ‘sets of experience’, working daily within innovation they are building up some essential capabilities and capacities. The external provider has to be able to spot and fill the gaps to offer any value, they are not leading but responding.

With the growing reliance on collaborative tools and the use of technology has meant much more of the complexity of projects has to be managed from within, far too much of the necessary insights and linkages needed cannot come from external resources.

Consultants are being relegated to issues that remain complex but essentially generic, important to organizations but not the vital part of innovation need.  The use of external providers has progressively reduced in high-end value activities into more gap filling ones, as they lack the depth of inside knowledge to pull together the thinking and outcomes needed for delivering the innovation outcomes.

Their value as project specialists has even diminished due to the network need becoming so vital within dispersed organizations and this requires a deepening internal understanding and where the knowledge resides to be extracted.

It seems the role of the consultant has become more marginalised or specialised.

The business model for innovation consulting needs changing. Innovation within consultancies has been seen to be a cheap exercise to support, often not seen as the powerful force for driving the growth and fortunes of the organization as it should have been.

Much of innovations troubles today have been this poor recognition of the need of innovation to ‘reside’ in the boardroom.  It was disconnected from the strategic domain as it was a little ‘abstract’ and intangible, light on established practice.

Today that has changed, innovation needs a much higher focus, it needs to be fully aligned to what an organization wants to do, if it wants to thrive and grow. Innovation is very strategic.

There was also the ‘established practice’ over many years of consulting multiple times across similar issues that were just repeating themselves across many clients that had value that clients were willing to pay for. Often the consultant invested in the costs only once to find the (common) solutions and then set about extracted an increasing yield of return from repeating this multiple times. Today clients see through these practices and are certainly seeking uniqueness to their specific problems. Best practice still extracts from that rather tired model of establishing common practice.

Today innovation needed has to be increasingly unique, for the end results to stand out. This has its implications for anyone providing a service.   The value of best practice might give assurances to the doubters but it is the growing focus on emerging or novel practice that is more valuable to know about.

Also the growing use of open innovation has also enabled more organizations to learn from others and exclude the middle man, by working directly with others tackling similar problems and learning from each other.

Large Consultants are becoming marginalised as they lack the depth of expertise, collaborative inputs that contribute, the notable exception being still in technology application and the expertise and knowledge to link this across global organizations.

The large consulting practices certainly still possess the ‘on-hand’ extra ‘feet-on-the ground’ to augment the repeating work being undertaken within organizations or validating its position. These shift means thinner margins, more chasing to cover growing fixed costs being built up in the broad scoped consulting practice.

Shifting focus on what innovation consultants need to offer.

Consultants working in innovation today, are less ‘innovation factories’ producing the solutions and are often left with more ‘constant’ re-bottling the wine’ to maintain their place. The taste is for consistency not challenging the palate. Consultants can become more advocates for change but this needs a consistency of focus to extract value out of, as the external source of championing change, by providing the knowledge insight.

There is also this rapidly adjusting position into specific ‘knowledge providers’ and validators. Just look at the explosion of thought leadership coming from consulting firms, their ability to hone in and benchmark trends by having access to C-level executives provides a more ‘open’ understanding that internal analysis can ‘pick apart’ and absorb or reject.

Actually in a recent piece of research by www.sourceforconsulting.com they are suggesting the Law of Inverse Audiences for though leadership pieces: the narrower your focus (research or thought piece) the smaller the number of readers but the more interested and engaged those readers are likely to be.

The real insight in this was not so much thinking you know your audience here but the trend that is occurring- to forward this insight onto colleagues as validation or collateral to doubters. Yet the consultant who researched or wrote the piece will most probably never know where it has been used as it’s gone internal. Inside absorption of this external knowledge and what was actually achieved by the consulting firm that undertook this. The old model states “the client will think of us when needed” Will they?

No, the business model for innovation consulting is actually under attack, the position of making money is becoming a whole lot harder unless you shift perspectives and redesign what you can offer so it ‘fits’ far more with the internal needs of clients today.

Are these some of the shifts we are detecting?

An initial work-in-progress list of the shifts in consulting taking place relating to innovation – so what is missing here? This is certainly not exhaustive and not set out to be that, it is attempting to ‘ indicate’ the consistent shifting that has and is taking place in adapting the innovation consulting business model, in search of growth and utilization.

        Old Consulting Models

    New Consulting Needs

Required search for ‘tested’ best practices

Need for emerging and novel practice

Quickly ramp up and replicate work to ‘defray’ costs and extract margin

Starting from scratch, rapid assimilation, pushing to provide increased value and services to get margins

Have established road maps to overlay over multiple projects

Needing to translate unique efforts and contribute to building novel road maps

Established project management and milestone reporting

More ‘ad hoc’ project validation and screening

Sharing established models

Searching for unique models

Building a repository of best practice and replicating these across industry players

Extracting emerging practices to quickly translate and inject into unique approaches

Gather & Extract in a ‘paced’ way

Rapid dispersion and translating the absorbed learning

Defined tried and tested solutions based on established practices

Reacting to adaptive challenges, shaping solutions to search for ‘something’ new

Pushing for broad scope

Forced into narrow scope engagements

We are here to serve as the trusted advisor and wait your call

We need to consistently  search for our meaning and value to have a role to fill

Looser frameworks to extend and explore

Tighter context for value and alignment

Seen as the broad experts

Role of niche provider, resource support appeal

Seen as broader change agents

Needed for managing specific change to handle the continuity and stability challenges in resource thin organizations

Source of original / creative thinker

Source of objective view to quantify risk

Having relevant skills available

Providing general resources

Provider of clear and established methodologies and practices that are accepted norms

Assessing and validating risks for alternative solutions and practices outside the norm.

Initial ‘Go To’ Source of External Knowledge and sole trusted source.

Augmenting Broader Options for External Knowledge from Suppliers, Clients, Journals, Competitors, Universities & Institutions

Provider of Best in Class ‘Classic’ Training and Research and Development Thinking In-house, taking revenue stream

Ad Hoc provider or orchestrator often outsourcing to more specialist providers, sharing revenue stream, more reciprocating.

Stand Alone- all in-house resourced

More Collaborative – bringing in ‘one off’ expertise for specific assignments

Managing challenges in more ‘static and stable’ market conditions.

Coping as much with the constant challenges and challenges of complexity in market conditions

What does the future hold for ‘traditional’ innovation consulting?

Whatever the shifts taking place and I think there are many, the established, more traditional consulting model is not working for innovation. They are being marginalized, left often to catch up with the work going on within their clients. The consultant is not leading; they are following in the practice of innovation. Greater specialization is required and seemingly valued by clients. Knowing what this is becomes the hard part.

There also needs to be further work on what differentiates’ one consultant with another. The client is far more discerning, reacts very negatively to any ‘one size’ fits all approach as innovation activity is unique to each client. The establishment of more Chief Innovation Offices or Vice Presidents for innovation are demanding more from their service providers than ever before. These providers need to be clearly seen as differentiators otherwise that will not get house room.

Shifting sands, covering up old weaknesses

The world of consulting does need to change but many of the client issues still continue to remain the same or in some cases might have even got worse. It becomes  the consultants challenge on more how you can reduce the ‘pressures’ on internal teams or provides real ‘impact’ that supports ‘delivery’ differently than before and can’t be achieved internally alone.

Clients still struggle with a consistent ‘lack of time’ and as we know time is either a friend if you have it or the worst enemy to innovation if you don’t. Just simply chasing for client answers is getting worse rather than better.  Clients are constantly stretched in their utilization of the limited resources they have available to them. They are constantly being distracted away from managing the bigger picture, into side events or having ‘dual’ roles.

There remains this chronic attitude of “I’m not taking any risk or we don’t have a real appetite for experimentation” pervading board rooms. The reality is clients still want tried and tested solutions, yet for me, crazy as this is, they are reluctant to be the experiment lab yet they cry out for the need to be different. How do you ‘square that off’ with what innovation needs to have – a constantly exploring and experimental climate – to find new solutions?

Client budgets seem to be tighter each year, the cost of each innovation undertaken is rising and taking more time and cost as well as the toll for dealing with growing complexity and conflict is demanding. Organizations and the individuals responsible are under growing pressure for innovation to generate real sustaining growth.

Consultants have to manage complexity within today’s dynamics.

Consultants have to work through these dynamics to find their position to offer value and how to figure out what their position is so as to provide the relevant services. This will increasingly call for a far more flexible, agile and focused model than ever before. The pressure on margins, the inability to have more ‘bench strength’ simply waiting around for that client call, the procurement procedures that batter down fees, scope and future options, limit detailed discussions until contracts are awarded makes this harder to work through, yet consultants must.

There are also seemingly more competitors around, in the form of boutique providers of really specialised focus or industry specific expertise, a clutch of independent providers of detailed innovation knowledge and plenty of workshop and training providers, all nibbling away at those finite client budgets that keep eroding the margins and scope for building a reputation for innovation consulting.

Can today’s consulting practice for innovation stand out?

How can they provide real needed and welcomed services to the client? It is getting harder I feel out there for many and the search for different and unique innovation consulting business models is definitely on.

Some are managing this by working on their value position to offer 1) new solutions, 2) adapting solutions that are more evolutionary in their growing understanding, 3) thought leadership that provides new insights and advice to underpin selected competencies and 4) being masters of creative problem solving.

Getting your specialization right

For me I designate these emerging inovation practices as made up of 1) Systems thinkers,2) Structure implementers, 3) Subject Matter experts and those that are 4)Advocacy Catalysts within innovation, or there is a hybrid of all of these, aligned more than likely to a given innovation specialisation.

Whatever the services offered, these still need to be valued by the client (as their clear jobs-to-be-done) and to be positioned and recognized as the service provider who can deliver a higher degree of uniqueness for supporting the specific solutions on these.

I think this is calling for very different innovation consulting business models, more agile, flexible and adapting to unique conditions found within each client.

So if you are an innovation consultant are you mapping your one out or working through the multiple options on your business model canvas yet? I would, as it is not just to survive but to search and find the winning ways to thrive and be recognized as the expert needed.

As for clients, to extract real value from your providers are you clear enough on what you need? Perhaps I can help? I prefer to work in the advocacy space and try to offer subject matter thinking.