In a recent post over on a dedicated website for discussing ecosystems and platforms, I was discussing the differences between Amazon and Alibaba. I quote “I’d say Amazon are “asset heavy” whereas Alibaba remains “asset light”.
They might be operating at the two ends of the current internet trading spectrum and are coming from different market maturity positions but it is the asset management that is becoming critical for delivering the profit or dragging performance.
Now Amazon is far from “asset heavy” when you compare them to the Industrial companies like GE but asset orchestration is seemingly getting far greater management time for all companies it seems. The lighter you are, the more likely you are to be more flexible and adaptive to respond to more disruptive challenges being faced by industries that are undergoing the shift to being more “digitally enabled”. Alibaba is very much a good asset orchestrator.
Do we know what are the dependencies and requirements for building and sustaining your organizations innovation success? How do you sustain innovation, is it more through the structuring of everyday work, by creating a particular set of social rules and resources that foster specific routines? Or something different?
We work really hard at maintaining these re-occurring processes, never willing to extend and push them in different and new ways. We have actually become very static in our approaches and learning, we are not learning anew. We often simply end up with incremental innovation that might just ‘nudge’ the growth needle but does little more than sustain us in the present and can be ‘contained’ in a tidy process that makes many, including the ‘bean counters,’ very happy until someone changes the game.
Then we need to think differently but this is usually far too late.. As demand is more volatile today we need to experiment, explore, learn and adjust. What becomes more important is the ‘work to be done’, and how we go about tackling this and not the ‘work done’ where we often simply ‘default too. Surprisingly Adam Smith identified this important difference in work way back in 1776.
Innovation often fails to align to the strategic needs. This is often not the fault of the innovator, happily working away with no specific guidelines, apart from the general remit of “we need to be more innovative”, it lies in the boardroom that is not communicating the board’s needs clearly enough down the organization.
Building up our capacity to innovation does need to understand and reflect the organization’s business activities, as innovators need to grasp the value creation aspects that will deliver the necessary capital-efficient and profitable growth, and then ‘go in pursuit’ to achieve their contribution into these goals.
Even the basic questions often remain unclear, those of how are we looking to grow revenue, save costs, reduce working capital or improve our fixed capital? Managing our innovation activities can help in all of these. Actually if you ask I expect the CFO would say “all of them” but each does have implications on understanding of the fit and eventual role of innovation’s contribution.
disruptive innovation pathway options
Option pathways are those viable alternatives available when you are suddenly confronted with the need to change. By being proactive, anticipating and structuring the options ahead you can be more prepared for disruption, you can respond with more thoughtful reactions. Have you ever considered option pathways?
Having available options so you can react to sudden changes, as more sketched out scenario’s that are representing possible variables, the better prepared you might be to respond thoughtfully.
Preparation for blunting or neutralizing possible attacks, vulnerabilities and changing business conditions is more than helpful, because you have made some investments in different possible options and far more ready to respond in thoughtful ways and not simply in those knee-jerk reactions, simply needing to respond. Considered response, with significant parts already thought through can safe significantly on ill-considered ones.
The Value of the Three Horizons of Seeing Beyond
Following on from my suggested Common Language approach to the Three Horizons, I would like to outline here its significant value, within any innovation management thinking.
Clarifying our options requires multiple thinking horizons – seeing beyond for all possibilities by listening to the different voices
For me, the three horizons have great value to bring together and map all the different thinking and possible innovation options over changing horizons.
You can frame innovation in alternative ways by using this approach. Innovation has multiple evolution points and working with this framework allows you to significantly improve all of your innovation contributions.
It goes well beyond the present value of ‘just’ fitting your existing innovation portfolio and directional management into a typical one dimensional view of just working in the present.
Forming a common view of the Three Horizon for Innovation
As you may know I have been writing significantly around the Three Horizons in relationship to innovation.
Initially drawing on the foundation within the McKinsey initial papers, updated here under their enduring ideas, and in particular based on by its original authors of the book “The Alchemy of Growth” by Mehrdad Baghai, Steve Coley, David White and Stephen Coley
Then I discovered the work of the International Futures Forum, based in Scotland, where a group of members have extended the 3H significantly, well beyond McK’s initial work from my perspective, into a broader, more robust methodology tackling complex problems.
It was this IFF work that excited me, it opened up my thinking to find better ways to deepen the innovation connections and framing that could be suggested in the use of this three horizon frame in exploring and expanding different techniques and approaches.
Connecting the innovation thinking dots
We often constrain our innovation because we ‘shoe horn’ any conceptual thinking into a given time, usually the yearly budgetary plan, so it dominates the actions decided and can exercise a large influence in this constraining of ideas to realization.
We should make the case that different types of innovation operate and evolve over different time horizons and need thinking through differently.
We have three emerging horizons that need different treatment for innovation.