The Nine Stages that are needed for developing an understanding of your innovation capabilities, so as to make them more dynamic and as a result to be at the top of your innovation game.

This “step process” I believe gets you to the point of understanding what innovation capabilities are a better ‘fit’ for the purpose, to deliver on your innovation needs on a consistent, repeatable and evolving basis.

Building innovation capabilities take time; they are complex, highly structured and multi-dimensional. Any structured approach to tackling innovation takes time and considerable commitment. Any learning involves sensing, seizing and then transforming.

We are searching for what makes up the present system and what needs to be part of the future to create a ‘best’ innovation capability environment that is sustainable into the longer-term. Those that can be continually ‘orchestrated’ and constantly adapted to meet the strategic need.

We are striving towards a true ‘innovation coherency premium’ in design, knowing what makes up your core dynamic components. The outcomes are to know where to invest, what to dampen down and what aspects can evolve naturally and be ‘taken along’ as you focus upon the ones that are more dynamic and relevant to your innovation needs.

1. Getting Started – Understanding the Needs & Imperatives of Innovation Fitness

• Why we must travel this critical path for Innovation.
• The meaning of dynamic capabilities and innovation fitness landscapes
• Merging the theory with practical reality to produce new outcomes and positive results.
• Focusing on resources and performance – why is this important
• The problem is knowing what we have and what we really need and seeing the differences

2. The Fuel of Innovation Performance – the dynamics of innovation

• A sharper, clearer focus on innovation resources to meet the strategic need
• What is known about resources to sustain, enhance performance
• Knowing and aligning  your strategic criteria – for sound innovation approaches
• Getting innovation within the right context of your business
• Moving your resources in the right direction takes courage and decisive leadership

3. Getting even more specific – quantification and qualification

• Recognizing the building of scale, change rates and dynamics that happen over time and why we need to constantly build our innovation capabilities.
• Developing the resources to meet the need – structured, focused, clarified by bringing out the necessary discussion.
• An illustrative scenario for a directional innovation fitness landscape map
• Recognizing resources can come beyond the firm and then bringing these in successfully, in gradual steps. Managing within a more open environment.
• Achieving  mutual dependencies to support; recognizing the hindering ones
• Being aware of  the impact of different scenarios in the management of innovation allows for designing a flexible response capability

4. Building the Innovation Fitness Machine – reinforcing feedback, identifying needs

• Recognizing the current status, spotting emerging patterns, seeing spaces and gaps and identifying solutions.
• Beginning the ‘adaptive walk’ to get to higher fitness points needed to compete.
• Clarifying the complementary resources, looking to embed new routines quickly and set up follow through approaches.
• Introducing natural tensions into the system to trigger ‘step change’
• Resource dependence climate, culture, diversity, intensity, and uniqueness
• Reinforcing feedback – watching for dangers, managing the machine capacity, removing the brakes selectively
• Shifting your resources need not deplete or force other people to compete for them – working through the tensions within teams and silos.
• Matching resource dynamics with the innovation value chain & life cycle stages helps maintain momentum
• Simulation modeling the ‘what ifs’ and ‘why’

5. The Strategic Architecture – designing the system to perform as needed

• The step process for designing and executing the architecture design
• Diagnosing performance challenges and road blocks – resolving, moving on
• Lining up the solutions is not a linear process and needs careful management
• Addressing the effects of intangibles in the Strategic Architecture.

6. The Hard Face of Soft(er) factors – the hidden power of intangible resources

• Clarifying the impact of the intangibles and recognizing the time, climate and conditions are significant contributors to innovation activities.
• The different rivalry types: internal and external, inter department, inter projects and working through resolutions to these.
• Reflecting feelings and expectations, addressing all the different needs
• Measuring the tougher parts of intellectual capital
• The real value of your intangible resources
• Recognizing the value of hidden innovation and spotting its occurrence

7. Entering into Competitive Battle – the Dynamics of Rivalry, the Uniqueness of You

• Recognizing, developing, capturing, transforming, avoiding and outmaneuvering
• Your point of choosing what, where, how and when to compete.
• Building capabilities that are unique to you and hard to replicate
• Building sustainability into the innovation equation as ongoing
• Extending the turf, exploiting the situation, pushing beyond, seeking partners.

8. Building and Testing Capabilities to Perform

• Measuring capabilities through different fitness levels and scale.
• Learning to build capabilities as ‘ongoing’ and evolving for changing needs
• Re-Structuring the process for dealing with the dynamics of change
• Knowing the points of impact on performance to enable recognition and reality
• Managing innovation performance progressively across the spectrum of business need through testing and extending capability learning.
• Building from personal to the team, to organizational learning, in measured steps
• Recognizing the role of leadership, achieving strategic alignment and working on broadening out innovation competence at different organizational levels.

9. Keeping the innovation fitness wheels turning, keeping your eyes on the road

• Resolution of conflicting goals, control, and structure
• Dissecting conflicting positions, resolving the impasse
• Knowing the limits of human engagement
• Goals, controls, and measurements can dominate and strangle
• Keeping the measurements simple and clear
• Managing innovation as a critical strategic resource
• Merging the results into a greater alignment to Strategy and Approaches

The end result is looking to generate your fitness landscape

The post Understanding your innovation capabilities to make them more dynamic first appeared on Building Your Innovation & Ecosystem Intelligence.

How can we bring increasing agility into our innovation work, that requires both stable and dynamic moments to deliver better outcomes?

Where do we focus, what do we recognize as organization practices, that can begin to transform the organization and re-equip it for a different future?

Agility for me is vital, it allows us to increasingly be adaptive in an uncertain world.

As innovation continues to be central to growth far more in the future it is our ability to adapt and adjust to all the uncertainties and this requires the ability to be agile.

A report provided by McKinsey “How to create an agile organization” has been part of a broader ‘agile’ series from them but this one specifically gave me my necessary anchor point, to move forward with my own design thinking for agility and innovation.

McKinsey does point out in this report you do need all eighteen practices to be fully alert to agile, but it is these dynamic ones that hold the real promise in my mind. These are the ones we all should move towards as our projected aim to achieve.

So let me summarize these nine dynamic practices

I have taken the nine dynamic practices outline meaning from this McKinsey report and added my own thoughts and reflections within these summaries.

1. Information Transparency

Today we need to take away all the filtering going on in organizations. Those who fill positions to control and attempt to influence the data. If we can’t unlock the knowledge within the organization, we fail to connect the people working within the organization to its products and related customer needs. Transparency makes the sharing of the knowledge increasingly relevant to connecting up the ‘whole’. There needs to be a very powerful concept of un-filtering, to allow the flow of understanding. It is highly dynamic and powerful in all it can release if encouraged and supported.

2. Rapid iteration and experimentation

The whole emphasis today is on rapid and fast cycles of learning. That testing, learning and adjusting from mistakes and building on these become really valuable progress points. Prototyping is getting so much better, it is creeping into the everyday culture when we innovate, or should. The MVP concept is so right to get features that are potentially better, out there, to test and learn from.

3. Continuous Learning

The moment we stop personally learning, we are the real losers. We need to find ways to ”cut out time” to explore and look for new ways to learn to improve ourselves and what we do within organizations. We need to push for new ways of working and to learn ‘more freely’ from other’s knowledge, in open exchanges and ways to collaborate. We progress by learning from failures and relating to them.

4. Flexible resource allocation.

We need to be adaptive, fluid in any organization and team design. The ability to feel in a position to ‘ramp up or shut down’ initiatives empowers us. We need to want to constantly change teams, seek out joining new ventures. To be always wanting to be redeployed, not because we are hanging on but because any new deployment means new horizons and opportunities. Seek change out, embrace this flexible world and show you are a key resource to help mold and shape it.

5. Open physical and virtual environment.

I often struggle with open planned offices, they provide an environment that distracts and not promote. If you can achieve a way that people communicate and collaborate with each other then great but when you are in a globally dispersed organization it is how you openly ‘react’ in your daily work. For me the virtual environment holds the real future and with so many organizations denying social tools the key to make it ‘purposefully designed’ is to make the activities clearly visible to all that need to know, to constantly show where your intervention and impact has made a difference in building context, content, structure or sharing knowledge. We need to find much better ways to make this a really dynamic, exciting, and rewarding part of agility within organizations

6. Sensing and seizing opportunities.

The value of being proactive, to watch out for signals, to then act upon them, to make your insights valuable to change perceptions, to alter customer bias, to engage with the external environment to shape, influence and contribute into new initiatives makes ‘sensing and seizing’ so important to drive innovation as the catalyst of change.

7. Technology, systems, and tools.

The constant demands being placed on us, to learn and adapt to new technology, systems, and tools as it keeps changing is mega-hard to keep pace with. New organization design in architecture, infrastructure, practices, and ways is tough to integrate the old and the new. How we respond to these is highly dependent on the articulated needs of the business. We can only be ‘responsive’ if we relate to the changing needs. The ability to have a more modular architecture, updates coming in a shorter interval of times can help in a continued updating. It is when the process determines rigid design you can’t change. To ‘react and respond’ you need to keep looking at moving towards technology frontiers. Exploring and exploiting contributes to a better holistic desired business outcome.

8. Role mobility

The movement needs to be constant. When we design we need to always account for achieving a certain fluidity. We need to constantly match our present skills with organizational needs. As we develop a more open talent marketplace we need to have this increasing mobility. Communicating roles, tasks and project outlines need to be demanded, then we have the understanding to change and then deliver to these ‘askes’ of us. These need to constantly match with our own goals, the alignment is the enabler to make this happen.

9. Active partnerships and ecosystems.

Relationships are our trading value. As we build out networks we need to trade. We trade in knowledge, in contribution, in working alongside others to co-develop. We seek out partnering, to invest our intellectual capital with theirs. We look to build the organization’s ecosystem through these engagements, to contribute to new products, services and solutions to look to bring them always to fruition. Our ‘need’ for activity and engagement builds a thriving, more dynamic environment.

In summary.

If we can embrace change by seeking out ways to re-equip ourselves, we encourage our organization to become more dynamic by these actions. We do get stuck in a certain mindset and set of behaviors. We become beholden to them, they eventually ‘freeze’ our progress, we stop learning and experimenting. We need to push for formal mechanisms of change, we need to seek out our own. We need to take hold of our actions, be clear on our organization’s vision and how we believe we can contribute.

As individuals, as members of fluid teams and as an organization we need to be mutually reinforcing. For me, fluidity is equally the growing need of organization’s today.  It is in recognizing that the dynamic practices found for building agility into ourselves and the organization do lie in these nine practices, they give us this level of fluidity. Take them on board, practice them constantly and over time your agility becomes your transformation. It becomes the ‘norm’ and allows for constant adaption.

The post Achieving agility within your innovation work first appeared on Building Your Innovation & Ecosystem Intelligence.

Building on those that give the necessary dynamic result you are looking for; to purposefully build what is needed to deliver the required result.

I have reconfigured my thinking around what will influence the evolution leading from building ‘just’ internal innovation capabilities to a whole ‘network effect’ from these.

This work just gets more exciting as it evolves.

It relies on how you purposefully build and construct these capabilities and competencies. The orchestration is fundamentally dynamic, full of uncertainties but the need is still to connect the parts to deliver the right result. We need to orchestrate, to build and then conduct and deliver the right results, to the innovation goals we seek.

I was recently reading (again) some work that was undertaken to frame the need for asset orchestration, in different research by Sirmon et al during 2007 and 2008, that focused on the different actions of the manager, or asset orchestrator. They suggest there are three primary stages of structuring, bundling and leveraging resources for the purpose of creating new value for customers and gaining competitive advantages, however, temporary in today’s world. It is why this needs to be dynamic, ever-evolving, to keep orchestrating your assets continually.

These three primary stages can be broken down

The outcomes of the research suggest there are three primary stages of structuring, bundling and leveraging resources for the purpose of creating new value for customers and gaining competitive advantages, however, temporary in today’s world. It is why this needs to be dynamic, ever-evolving, to keep orchestrating your assets continually. These three primary stages can be broken down:

It is why this needs to be dynamic, ever-evolving, to keep orchestrating your assets continually. These three primary stages can be broken down and applied to our need to build a real innovation fitness into our innovation capabilities:

• Structuring involves acquiring, accumulating and divesting resources to form the organization’s resource portfolio.

• Bundling of integrating resources to form capabilities, that can stabilize or provide incremental improvements to existing capabilities, or that enrich and extend existing current capabilities and thirdly, pioneer, which creates new capabilities.

• Leveraging involves a sequence of processes to exploit the organization’s capabilities to take advantage of specific market opportunities. This includes mobilizing, offering a clear plan or vision of needed capabilities, coordinating for ways to integrate these necessary capabilities and finally, deploying to achieve a resource advantage (or gain) that promotes market opportunities and instill more entrepreneurial strategies to exploit new resource configurations

We are all facing these needs for greater asset synchronization or orchestration.

We need to learn also that innovation needs this growing orchestration, due to this increasing move from firm-centric to network-centric innovation. In my understanding of an orchestrator, they need to manage the tempo, knowing where and when to cue in the different players (learning) and to inject the intensity into the performance.

We are dealing with managing the tempo, interpreting the different passages and movements as interactions become distinct, providing fresh value to build upon.

We need to learn to identify, assimilate and exploit far more than ever, the value of knowing your innovation fitness, your dynamics and the terrain you wish to traverse in new innovation activity becomes even more critical. To create and to extract does clearly need to understand the what, why, where, when and how it needs to go about this.

Explore this site to learn more on building the dynamics into your innovation capabilities as I continue to work on building this into a solid methodology and solution-set.

The post The Orchestrator needs to orchestrate your innovation capabilities. first appeared on Building Your Innovation & Ecosystem Intelligence.

Innovation often fails to align with 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 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 but it is grasping the value creation aspects that will deliver the necessary capital-efficient and profitable growth.

Even the basic questions often remain unclear, those of are we looking to grow revenue, reduce costs, reduce working capital or improve our fixed capital? I expect the CFO would say “all of them” but each does have implications on the understanding of the fit and eventual role of innovation. Then where does risk fit into the strategic equation for innovation, it lacks often the clarity it needs.

Deciding that capabilities can be better leveraged requires a separation of exploit and explore.

The aligning of strategic direction (and importance) with any capability needs is in the understanding of what activities are diverging with core and those converging, then figuring out the future core. It is the two dynamics of exploitation and exploration we should be leveraging for our innovation and future growth

Today we need to exploit and explore and our capabilities need to be built fit for one of these two purposes. Exploiting is today’s business need, to leverage and improve the existing business and equally, in parallel, explore for tomorrow’s new business growth.

Then we also need to diverge and converge

The diverging ones need to have a real emphasis on improving performance, how they are managed for cash or to eventually sell or dispose of along with those converging on the new ‘known’ core of the business to grow and expand. So by recognizing these and that is not easy in itself, you are beginning to know and identify the capabilities you need to have in place to fix today and make it as healthy as possible, alongside those new capabilities that will create a new winning set of growth and value propositions.

We certainly need bolder investments in knowledge around the make-up of innovation capabilities

I certainly believe there is a real call for fresh and bolder investments in knowledge, in infrastructure that focuses on activities that spur new approaches that lead to innovation. These are not just the traditional ones based on managing today’s core but on finding those innovations that provide new value, the new generation activity that is occurring from recognizing how we can build, yes build for further exploitation (extending the life) and exploration (new understanding) and manage each as separate risk evaluation exercises with different metrics of progress.

We also need a deeper innovation grounding of internal workings and alignment

What I feel we need is a deeper grounding in what is actually going on inside organizations within their innovation activities and how these align with the needs of strategy and what is clearly missing. We start here as it gives us all this clarity and coherence, missing in much of our existing understanding.

We have the real opportunity today, in finding new ways of combining the four emerging forces of knowledge, technology, entrepreneurship, and innovation, which will drive the growth models of tomorrow. It is these that are forming the new innovations ‘black box.’

It is mastering this new ‘black box’ of actual innovation activities, exploring and exploiting the necessary innovation capabilities that are required to be ‘going on’ in organizations to achieve a closer coherence we need to radically improve the innovation performance.

I have plenty of ideas, frames and methods built up to help you make innovation fit and be more coherent in its contribution. Why not find out?

The post Moving towards Innovations Capability Coherence first appeared on Building Your Innovation & Ecosystem Intelligence.

Are we in a more Darwinian world perhaps?

I’d suggest that today innovation is caught up in the survival race, where the bolder ones are more innovation fit and pulling further ahead. We need many more organizations to get out of this survival trap and exploiting innovation in bolder ways, become fitter in their innovating purpose.

So much of what we do actually is ‘static’ work, activities that are simply repeating what we have done time and time again, gaining us little new knowledge and offering poor value creating worth. These activities on their own keep us happily ‘treading water’ and does the job of locking us comfortably into the ‘efficient and effectiveness clan mindset that most business organizations like to be ^keep us all constantly working within.

The harsh reality is this is becoming a very crowded, increasing uncomfortable place to be, as we reduce our capabilities to take a risk, too invest, to take those decisions that create more radical innovation. If we don’t offer value creation, we become increasingly unattractive and not regarded as essential, simply disposable. The more we play ‘safe’ the more we run the risk of being disrupted. We are failing to leverage much of the liberating power within innovation. Is our business world today is it so predictable?  No, it is well and truly ‘dynamic’ and evolving.

There is an awful lot of creative destruction going on and I’ve also written previously about the Innovation Era: Creative Destruction or Destructive Creation where the replacement rate is constantly speeding up, we are facing more uncertainty and incoherence than ever.

We need to place the emphasis back on the “creative” innovation part and not the ‘destructive’ nature we have been moving towards recently. To achieve this we need to understand innovation far better than we currently do. This is partly where my exploring the dynamics of innovation through fitness landscapes comes in.

What we do need to do is constantly evolve our innovation capabilities to perform in more dynamic and flexible ways. We need to acquire that consistent aim of achieving a more adaptable and adjusting approach to innovation in all its parts. We need to meet the changing circumstances and challenges we are all facing to regain the real growth needed from our economies and organizations, making what we do at the same time, more sustainable. Delivering better innovation outcomes is central to this task.

Knowing your innovation ‘stock’ and ‘capital’ potential

So what do we need to do?

We need to know our ‘innovation stock’, a large part of our wealth generating capital and where it can be best put to use. We are valuing the knowledge perspective far more and with this, we are increasingly recognizing the importance of the intellectual capital that makes up the organization.

We certainly need to re-think many of the old world value delivery systems to assess organizations and make much more of a concerted effort to make innovation that renders different, unique value outcomes, that keep pushing the boundaries of strategic advantage within any business.

We need to ‘master’ our understanding of the skills, processes, routines, organizational structure, and disciplines that enable firms to build, employ and orchestrate innovation as this is increasingly needed for participating in more complex open collaboration efforts. To achieve this, we first need to know ourselves and our capacity to innovate, both the strengths and weaknesses.

Each organization does need to know its innovation fitness to thrive in the future

We are searching for what makes up the present system and what needs to be part of the future to create a ‘best’ innovation capability environment that is sustainable into the longer-term. We need to find those capabilities that can be continually ‘orchestrated’ so they can be constantly adapted to meet the strategic need.

We are striving towards a true ‘innovation coherency premium’ in design, knowing what makes up your core dynamic components and how to bring them together for greater value-generating productive use. The outcomes of knowing where to invest, what to dampen down and what aspects can evolve naturally and be ‘taken along’ as you focus upon the ones that are more dynamic and relevant to your innovation needs are critical to understand and manage.

No journey is without pitfalls.

Finding the dynamic capabilities of innovation that ‘fit’ with the strategic needs of each organization will be different based on their own respective challenges and position. We need to stop simply copying others and create our own ‘dynamics’ to strengthen our own unique advantage points for sustaining our future. Do you want to become innovation fit?

The post Knowing where your innovation fitness comes from first appeared on Building Your Innovation & Ecosystem Intelligence.

In contrast, dynamic capabilities are those higher level competencies that determine a firm’s ability to integrate, build, and reconfigure both the resources and competencies to possibly shape, have the power to transform and then be deployed to meet rapidly changing business environments to take advantage of these changing conditions.

Recognizing the importance of Dynamic Capabilities

Dynamic capabilities are about selecting the right things to do and getting them done, while ordinary capabilities are about doing things right. The former implicates dynamic efficiency, the latter static efficiency.

Dynamic capabilities require an organizational form that leverages the knowledge and capabilities of managers throughout the organization. In business firms with strong dynamic capabilities, the key tasks of managers, especially those in the top management team, are entrepreneurial. It’s not just a planning role; it’s also strategic. It involves planning along with engagement and enactment, it encourages agility.

Appreciating and leveraging those ordinary capabilities is equally essential

The stronger these ordinary capabilities can be ‘honed’ then organizations can go beyond performing basic business functions well and can excel in these. While most capabilities, including some dynamic capabilities, are underpinned by organizational routines, many of the activities of top managers are non-routine by nature.

The key entrepreneurial capabilities needed for asset orchestration and realignment of the enterprise often reside in the skills and knowledge of top managers, managing the routines and assets and respond dynamically when changes are happening to adapt and respond

Ordinary capabilities involve operations, administration, and managing the governance. They are rooted more firmly in routines that are dynamic capabilities. A routine is a repeated action sequence, which may have its roots in algorithms and heuristics about how the enterprise is to get things done. Organizational routines transcend the individuals involved.

Finding the right complementary blend of capabilities is a real challenge to achieve

The capabilities perspective views the enterprise as clusters of complementary assets that must be combined and coordinated to create value. The utilization of such assets, therefore, requires managerial action. Managers in the dynamic capabilities framework perform that role. They orchestrate and call into being, the assets that are vital to firm performance.

They determine the speed at which and the degree to which, the firm’s particular resources can be aligned and realigned to match the requirements and opportunities of the business environment in order to generate sustained positive returns.

The alignment of resources both inside and outside the firm includes assessing when and how the enterprise ought to form alliances and joint ventures with other organizations.

Understanding all your required capabilities needed is essential

Valuing and knowing both your ordinary repeatable capabilities, to enhance and improve existing performance and discovering those that are more dynamic in nature, to change performance more significantly are both critical to identify, build and support in both consistent and thoughtful ways. The key is knowing what is critical and then how to focus and invest in those that drive and sustain performance.

Investing in a mapping of your innovation fitness landscape can significantly contribute to this understanding and advance organizational performance in the critical areas that offer it present and future value.

Extracts have been drawn from the paper and built upon: “The Functions of Middle and Top Management in the Dynamic Capabilities Framework” by Sunyoung Lee and David J. Teece

The post Recognizing the different capabilities to develop and grow first appeared on Building Your Innovation & Ecosystem Intelligence.

“Innovation capital is the sum of all that promotes the development and changes required for achieving innovation outcomes, within one organization or its broader networked environment, for marketplace advantage”

“These are made up of the resources, processes, knowledge, and capabilities, that are constantly evolving and highly dynamic to build greater innovating capacity.”

“These build upon the capabilities of ‘sensing, seizing and transforming’ to build new capital that focuses more upon the dynamics within innovation, that provide the true value creation in successful outcomes in the final product, services or executing within business models”

We need to value both “stocks and flows” in equal attention to build innovation capital

The ‘stock’ of innovation capital can render different productive value outcomes, is a bundle of the firm’s resources/assets and holds the renewal capabilities and they possess attributes that make it a “strategic asset”

Innovation capital is made up of many different assets that are often context specific, and interconnected and this makes it hard to build without taking a broader, more holistic approach to developing your capabilities, capacities, and competencies to innovate. You ‘map’ and align these to fit your strategic goals and aspirations.

We have a pressing need to clarify a new ‘valuing model’ for building innovation capital and each organization has a unique bundle of the firm’s resources and assets. It is the ability to integrate, reconfigure, renew and recreate these resources and turn these into new, more dynamic capabilities that build on a continuous basis the innovation capital.

This is one of my most important focus points to assist and aid organizations in their understanding “what makes up their unique innovation capital” and what needs to be added to deepen and strengthen this capital stock.

Building our stock then leads to the flow that then leads to building more stock. We need both stocks and flow

Most of our capitals are learning capitals

The more we strengthen our knowledge and value our people the more we can generate new knowledge, build greater narratives, deepen discussions, make better connections and build our interactions out across growing communities. The more we discover, the more knowledge we gain and this leads up to determine a potentially better decision-making that should, in theory, give greater confidence that our invested financial capital is in ‘good hands’. Our knowledge learning, the more dynamic, the more we search, absorb, called absorptive capacity and then diffuse, the more valuable it becomes.

The power lies in the linkages we can forge, in the acquisition, in assimilation and then into the eventual transformation that allows known knowledge to become new wealth-generating innovation.

My stated value position is…

I provide different framing techniques for helping to grow this necessary innovation capital and build the stock of the capabilities and capacities to enable and increase the dynamic flow of innovation activities.

The post Defining Innovation Capital first appeared on Building Your Innovation & Ecosystem Intelligence.

The challenges of managing in today’s worlds are tough, very tough and demanding. It is so volatile, potentially disruptive and full of risk. Organizations are simply struggling to shed their clothes in the 20^th century and find a way to smoothly manage to become more adaptable and agile in form. They are adjusting to offer consistent responses to instability in the most effective ways, to keep adapting to the consistent market challenges, and in so doing profiting from meeting that latest challenge or disruptive opportunity.

The problem is you simply can’t manage this smoothly, it will be highly disruptive as the organization re-equips themselves and learns, often in the hardest way possible, through failure, through experimentation, through risk-taking. Innovation is increasingly seen as the pathway forward in capturing growth and grabbing any advantage, even if these are increasingly transient. Yet as we look towards building our innovation capabilities we need to work in totally different ways and see ‘things’ in new ways.

Innovation in itself is also a force of instability and we need to find ways to embrace much of its uncertainties by understanding its dynamics. We need to have a major shift in our organizational thinking, needed to find the appropriate new balance within those dual ‘tensions’ of ‘stability’ through efficiency, with its opposite, ‘change’ driven by innovation. It is these dynamic forces within the world we work that need us to respond by building that capacity for managing those ‘dynamic’ innovation capabilities, that today’s markets are requiring and organizations are needing to master.

The emphasis needs to point more to building dynamic innovation capabilities

Dynamic capabilities emphasize management capabilities and the inimitable (unique) combinations of resources that are constantly at work across all functions to make them distinctive and valuable.

Distinguishing innovation capabilities that are relevant are based on the type of knowledge they contain. Functional capabilities allow development of technical, practical knowledge. Integrative capabilities allow firms to absorb knowledge from external sources and this is where absorptive capacity and its structure comes into our required thinking. Innovation requires us to constantly learn, develop, mold and manage multiple situations and challenges. This requires the integration of critical capabilities to successfully stimulate innovation for effective and improving performance.

Many of the identified resources in capabilities have some level of complementary, improving one triggers improvement in another. Equally ignoring one can impact negatively on others. So each component, on their own, have limited effect, it is the combined effect that generates the improving performance. Equally, the needs do change over time and you have to constantly ‘refresh, challenge and stimulate’ these, otherwise, you can have core rigidly set in.

Integrating back or making anew

To this end, I have produced a conceptual model of what I believe is the ‘make up’ for providing an ongoing innovation performance engine – the innovation fitness landscape and the dynamics of core capabilities. I felt it needed a dedicated website and this is where you have ended up to be the ‘go to’ source of reference. It is a work-in-progress so please recognize this when you find the time to explore it. The incentive to do this ‘exploring’ is quite simple, you are dealing in increasingly complex environments and you need to know your capabilities and capacities to innovate. If you don’t you will simply get lost and perhaps forgotten. Innovation offers relevancy and a path towards a sustainable future but it needs fresh approaches. I believe I can offer some insights to help.

The need for all of us is recognize and embrace the need to build an organization-wide innovation capability that should pervade all aspects of the organization’s existence, forming its new core innovation value.

The post The world is working within increased complexity, are you? first appeared on Building Your Innovation & Ecosystem Intelligence.

Organizations have been focused for far too long around the importance of financial capital. It determines and drives organizations destinies. We are caught in a constant focus upon our achieving a return on our (financial) capital as our measuring criteria. Organizations strive for improving their ROCE, RONA, IRR,  EVA and a host of other financial measures.

As Clayton Christensen has been arguing the agenda of organizations begins and ends with the “search for numbers”. I think there is a time for changing this, we need to search for the knowledge that makes-up eventually the numbers.

There has been a distant voice for some time putting forward the need to appreciate and value the other capitals sitting within organizations. Much of the discussions have been housed under the term “intellectual capital” which denotes the sum of knowledge made up and contributed by our human assets, our organizational structures and our relationships that are developed.

These are the ‘capitals’ that transform into economic value through organization action. It is the financial capital that simply finances this.

Financial capital dominates any discussions

Yet financial capital and all its associated aspects rules, no, it utterly dominates. It totally fails to tell us in numbers alone where and what creates the value, it simply reports it.

It is this financial capital through our profit and loss, our balance sheets hides the value, or spreads it out in ways no one really understands its make-up.

Certainly those attempting to judge an organization just have to rely on a ‘history of numbers’ and some ‘selective’ market view to make investment judgements.

Equally those often running our organizations have a restricted view of where their real capital lies, as they focus on the numbers and then work down.

Today,we are  in a rapidly changing world and we need to understand it differently

The reliance of financial capital being the absolute measure is being challenged thankfully. Our business world is facing considerable disruptions from the accepted past practices, performance has become more volatile, more dynamic, more reliant on understanding that knowledge is where the value lies.

“Business as usual” is thankfully in a steep but protracted decline, the necessity today is to be constantly evolving and learning and that comes from knowledge acquisition, assimilation and then transforming and exploiting this into new value. We need to find new models for evaluating our real value and capital stock.

These ‘absorptive capacities’ are where we need to manage our knowledge flows better to translate and direct our understanding of new, value creating capital. We need to report on these far more as they offer the ‘residing’ and new stock that gives us new innovation potential and fresh value.

Learning capital needs to emerge and dominate future discussions

We need to give increasing incentives for organizations to learn. We need to judge the quality of this learning, not listen to ‘bland’ statements often presented. We need to know where this knowledge is targeted in narrative, discussions, spillovers and interactions.

What is being exploited, what is being determined in the decision-making process to give greater confidence that our invested financial capital is “in good hands”.

Keeping reliant on just discussing the financials within organizations we know is not enough. We have to force better discussions on the make-up of the other capitals, as these are still poor, left to individual interpretation and variable and we need to change this.

We are increasing opening up

As organizations become more open (open innovation for instance) the strength of linkages, of knowledge exchange, the translation of these activities is becoming really valuable to understand and focus upon more.

Through many of our activities we actually ‘borrow’ and it is then the ‘dynamic linking’ that we bring into the process, gives up the increased potential of innovation. It is the ease of learning, the ability to acquire and apply knowledge that creates the potential for innovation.

How many organizations really articulate their knowledge capital in acquisition, assimilation and transformation? Do we know how ‘path dependent’ they are- are they lagging in the market, are they simply opportunistic, are they locked-in far too much in potential downside risks.

Do they suffer from cognitive failure, do they lack the appropriate competencies to meet the constant challenges occurring around them. How much of this can you really extract from cold, hard numbers? Not a great deal.

Recognizing where our true value resides

The real problem we have is the lack of appreciation of what makes up our value, the real underlying wealth creating value, the one that truly ‘generates’. The tangible part is easier to appreciate (plant, land, material etc.) but is becoming a significantly declining part of the total sum of value of our organizations- sometimes it is only making up 30 percent..

It is our difficulties of understanding the intangibles as it is a very challenging task. Yet this has huge implications on the ‘health’ of the organizations we continue to invest in. Most organizations resort to “inferring” the value. This needs to change. The value today is in the interactions between the different components that make up our intangibles, out intellectual capital.

We are in need to identify what ‘drives’ organizations and that is our knowledge stock

For gaining and sustaining real advantage, and showing why it has the potential for creating new wealth we need to understand our capital stock.

This needs to be far more forwards looking; it needs to be more open and more transparent and it needs to ‘flow through’ the organization to find the potential to find new value from innovation. The call is growing increasingly for a new valuation model.

Static knowledge where we view financial numbers, never take our knowledge beyond what we are reading, failing to connect it and advance it is just not good enough, we do need to understand the underlying dynamic capabilities that make-up the organization. We need to access, absorb and translate our knowledge stock, allow it to flow and be developed into greater value-adding stock and innovation outcomes.

The post Struggling with counting ALL the sums of our capital first appeared on Building Your Innovation & Ecosystem Intelligence.

Much of my focus within my work is to move organizations towards recognizing and expanding their innovation capital or stock.

The hard part for many organizations is that many of the key elements of innovation capital consist of many intangibles as well as tangibles and this needs deeper understanding and appreciation. These intangibles are in most cases non-technological and embodied in the organizational routines and thinking of the employees.

It is focusing on building the stock of this innovation capital as well as making the flow more dynamic, ever evolving, adapting and changing to the different conditions being presented to the company.

Some of the critical elements that need to be considered can be described as follows:

• Innovation strategy that relates to strategic choices a firm makes regarding its innovation
• The selection of the type of innovation that fits best the firm’s objectives and the allocation of resources to different types of innovations.
• Innovation culture that is the mixture of the innovation-related attitudes, experiences, beliefs and values of the employees
• The integrating function of environment, culture and climates that stimulates innovation activities.
• Innovation structure that are formed to make up the innovation process, its governance and supporting intent
• The approach within the organization and the way the employees engaged in the innovation and how they are grouped and measured
• Knowledge (technological and non-technological) possessed by the employees engaged in the innovation process as much of the knowledge is tacit to varying degrees.
• The stock of knowledge can be increased by internal and external learning of an organization

It is the abilities of our internal learning as ongoing provides the creation for new knowledge within the enterprise.

Stocks and flows need equal attention to build innovation capital

The ‘stock’ of innovation capital can render different productive value outcomes, is a bundle of the firm’s resources/assets and holds the renewal capabilities and they possesses attributes that make it a “strategic asset”

Innovation capital are made up of assets that are often context specific and interconnected and this makes it hard to build without a broad holistic approach

We have a pressing need to clarify a new ‘valuing model’ for building innovation capital and each organization has a unique bundle of the firms resources and assets. It is the ability to integrate, reconfigure, renew and recreate these resources and turn these into new, more dynamic capabilities.

This is one of my most important focus points to assist and aid organizations in their understanding “what makes up their unique innovation capital” and what needs to be added to deepen and strengthen this capital stock.

I provide different framing techniques for helping to grow this necessary innovation capital and the capacity to enable and increase the dynamic flow of innovation activities.

The post Understanding that innovation capital becomes your new core first appeared on Building Your Innovation & Ecosystem Intelligence.