Establishing a new mentality for innovation

Visual two heads….different mindsets, different thinking about innovation but working together, a duality of thinking and managing innovation going forward. We must learn to explore and exploit at the same time, both in parallel and where needed, in separate ways, or entities.

If we ‘subject’ all of our innovation thinking to go through the same process we lose so much. How can you treat incremental innovation in the same way as radical or breakthrough innovation? You need to apply a completely different thinking and approach to the type of innovation you are thinking through. You must be prepared to abandon established thinking if it is not resolving the problems you are facing.

Beginning any journey is never easy, you stumble a little until you find a certain rhythm

I wanted to start somewhere and it is breaking our existing mentality of how we manage innovation as the first critical point to challenge. Due to this has become a much longer post than I would like and I apologize for that but I wanted to get the mentality issue well ‘aired’ and I needed to cover off a number of bases to frame this.

Funnily enough as I was thinking how to begin I came across two short verses from the Bible, both from Matthew 9.16 & 9.17. and wanting to start here on why we should be Shining a powerful innovation light into the Corporate Boardrooms. It might be a strange place to start for many, yet it somehow allows me to begin my journey.

“No one puts new wine into old wineskins. For the wine would burst the wineskins, and the wine and the skins would both be lost. New wine calls for new wineskins.” – I believe we need to find a new framing position for innovation as the disruptive forces and challenges we face today are growing and call for new ways of managing.

“No one sews a patch of unshrunk cloth on an old garment. Otherwise, the new piece will pull away from the old, making the tear worse.” – We have been renovating our innovation process until it becomes unrecognizable by all the patches we have been applying and is it really providing the results we want?

Innovation today disappoints

We are not achieving the impact from all our innovation endeavors that we should. There is a time to radically redesign our innovation. We need to shift our thinking as innovation is providing disappointing returns and we are in urgent need to find a new re-framing position of the organization’s innovation engagement.

Innovation needs to become far more responsive and dynamic, to respond with imagination and intent of purpose. To achieve this innovation requires a greater organizational engagement than ever before. It needs mobilizing differently, in radically different ways; so as to capture different opportunities in more agile, adaptive and shaping ways

If we do need to re-present innovation to our corporate boards to engage in more, we need to offer them a compelling set of arguments on why innovation needs a fundamental rethink, a renewed focus on building the capabilities, competences and capacities that are possible if you engage in a comprehensive innovation management.

Shifting the innovation mindset, resolving a present day dilemma

I’ve written about this need for fluidity and taken this part to frame this post

“Stability and fluidity – how can both work alongside each other? They are opposites yet we need both to thrive in today’s world. Many theorists have suggested, of having in place the ‘ambidextrous organization.’ This would need organizations to design their organizations in their structures, people and processes to either be focused on ‘being efficient’ or being ‘change orientated’. An increased level of duality. The mindset of exploiting or exploring but can we have both, I certainly think so, it mostly depends on what we are about to do to get this mental picture of which frame of thinking should dominate but not be exclusive.

I have been drawn to this ‘dual’ system of ambidextrous as it helps resolve one of the consistent stumbling blocks for innovation to ‘take hold’ and evolve. Innovation is constantly fluid, needing to be adaptive as we learn and adjust to new learning and this is constantly requiring a very change orientated approach. Often innovation comes up against a rigid system and for many “just seems not to fit”

Innovation struggles as it often remains outside the prevailing system. Innovation constantly challenges against the dominant mindset within organizations, who like the idea of innovation but are mostly measured to drive efficiency and effectiveness, keeping highly focused on the short-term performance as their role, reward, advancement and key to ongoing career success, so innovation ‘sits outside’ their domain of focus”

Something needs to change if innovation is really important.

We innovators need a new model of change, for at least eight important reasons I can initially think of:

1. As innovators we aren’t simply responding to external change, we are creating change, both for customers and for our companies and markets. (inside, proactive change vs external, reactive).
2. External change is far more unpredictable, in global markets new threats emerge from anywhere, at any time and often delivered in totally unexpected ways, through new business models that totally cut through and disrupt the existing positions, they can render the existing obsolete in seemingly rapid time, irrespective of the efforts to respond as they have discovered the unmet need to deliver solutions to it.
3. The pace and nature of change isn’t slowing, but is accelerating and will continue to accelerate. (increasing pace, frequency and amplitude of change). Organizations need to pick up the pace, learn to accept a greater risk, experimentation and rapid adjustment on the new knowledge flowing in to build the final outcome to the needs of the market / customer.
4. Sudden evolving markets makes everything needing to be ‘super’ responsive by existing players, to the sudden realization they have missed opportunities, Many existing organizations cannot cope and alter with this demand for agility, flexibility and responsiveness. They need to (re)learn this and build it into their systems and often this realization comes too late. Some industries have been undertaking a responsive approach, for example in their supply chain thinking. Think Zara, the Spanish clothing retailer and how it changed the game.
5. As often demonstrated, most innovation has the potential to be business model innovation, which will require change. (As more innovation becomes focused on business model innovation, this will create even more change).
6. We recognize that change is no longer an occasional threat but a constant companion (shift from the idea of change as a threat to developing an ongoing change capacity as a competitive advantage).
7. The idea that companies can achieve a protected steady state where change won’t affect them doesn’t seem to apply anymore (long periods of stasis, or standing still are no longer possible. Must be able to change/evolve constantly).
8. We need to think of change as a capability that we constantly deploy, rather than a threat we typically avoid. (Need to develop change as a capability, to build skills, reduce barriers).

We need to ask of ourselves if we recognize our need to change

How can we establish Innovation as the vital link to a process of change and strategic direction options, that lifts the debates of managing today’s business by linking it into the future and then turning this thinking into a series of plausible and coherent set of activities?

How can we focus the energy around the boardroom table on to this linking the future work to the shape and the organization’s needs, making the growing innovation debate as strategic as it can be?

Four articles that help shape the change in mindset making it far more of a dual one.

For a start I would recommend you read the four articles I have summarized in my own way below,  to provide a greater depth of understanding in some of our starting points of changing the existing mindset within the boardroom. Here is my brief summaries of these, partly re-affirming but extending thinking to ’embrace’ these:

Two articles are from Scott Anthony or his Innosight team or in collaborations.

Firstly, Two Routes to Resilience

“Sooner or later, your company will probably need to transform itself in response to market shifts, ground breaking technologies, or disruptive start-ups”. Read about this here

“First, major transformations need to be two different efforts happening in parallel. “Transformation A” should re-position the core business, adapting its current business model to the altered marketplace. “Transformation B” should create a separate, disruptive business to develop the innovations that will become the source of future growth.

Second, the key to making both transformations work is to establish a new organizational process we call a “capabilities exchange,” through which the parallel efforts can share select resources without changing the mission or operations of either”

Dividing the effort in two allows leaders to develop a new strategy for the core that doesn’t need to make up for all the business lost to disruption”

Secondly, What Do You Really Mean by Business “Transformation”?

“When executives say transformation what do they really mean? Often, the word confuses three fundamentally different categories of effort”. Read the article here

“The first is operational, or doing what you are currently doing, better, faster, or cheaper. Many companies that are “going digital” fit in this category — they are using new technologies to solve old problems.

The next category of usage focuses on the operational model. Also called core transformation, this involves doing what you are currently doing in a fundamentally different way.

The final usage, and the one that has the most promise and peril, is strategic. This is transformation with a capital “T” because it involves changing the very essence of a company. Liquid to gas, lead to gold”

Defining what leaders mean when they drop the word transformation matters, because these different classes of efforts need to be measured and managed in vastly different ways.”

Two further articles are from Ralph-Christian Ohr

Ralph writes under his blog http://integrative-innovation.net/

The first is “A Model for Integrative Innovation Management”

In his view sustainable successful innovation management systems in organizations are required to be based on a couple of essential premises – all of which can be considered necessary conditions. Read his article here

Innovation management follows a balanced portfolio approach. The entire innovation portfolio is divided into exploitation-oriented and exploration-oriented innovation initiatives, where following characterizations hold:

Exploitation-oriented initiatives are related to running core business by executing and enhancing existing business models or technological capabilities. The primary direction of impact is value capturing (commercialization). Examples: Product, service or process innovation, portfolio extension, innovation of selected business model components (e.g. channel or operations), market research.

Exploration-oriented initiatives are related to developing future business by searching for novel, and often disruptive, business models or technological capabilities. The primary direction of impact is value creation (configuration). Examples: Business model development, platform/ecosystem innovation, basic technology research & development, startup engagement, innovation intelligence.

Ralph and I share the belief that the three horizons is a distinct playground for innovation initiatives

Exploration- and exploitation-oriented innovation initiatives can be assigned to three strategic horizons. As outlined below, the horizons address different proximity to the core business with regard to business model or technological capabilities – and therefore indirectly time scale. The horizons’ strategic objectives can be put in a nutshell:

H1 – Core: Optimization of existing business models and technologies, addressing of existing markets

H2 – Growth: Acceleration and scaling of new business models and technologies, adaptation of existing business models

H3 – Future: Discovery and validation of new business models and technologies, shaping of future markets

A lot of my own work goes into developing the understanding, usage and practice of working with the three horizon methodology. Ralph and I share a lot on this as core to a way forward. Here is my White Paper and short presentation opener to this 3H thinking to capture, translate and combine the innovation for today and leading towards the future.

Ralph’s second article is equally making the Case for Dual Innovation

This is revisiting the need for a higher level of organizational ambidexterity to be built into the organization. So often something is dismissed without it being fully worked through. Ralph puts up the case for revisiting “dual innovation” equally suggested within the Innosight articles. Read his article here.

“In the past, systematic dual innovation management approaches have often been discounted due to falling short of expectations or lacking prevalence across the sum of companies. Both reasons, however, don’t necessarily imply the basic concept is inappropriate or even wrong”

“Adequate buy-in on part of executive/senior management and proper implementation of these approaches are mandatory prerequisites in order to make them live up to their potential and – as a consequence – increasingly trusted and applied. The above studies clearly reveal: Organizational ambidexterity proves to be a necessary condition for outstanding corporate innovation capability. Company boards may ignore it at their peril.”

The need is for us to get thinking in ‘dual’ minds for ‘greater’ innovation delivery.

Exploitation  <=> core transformation, i.e. doing what you are currently doing in a fundamentally different way

Exploration <=> strategic transformation, i.e. changing the very essence of a company

The thinking in dual ways is a really important part of bringing innovation thinking into the boardroom, framing this through a three horizon approach that can provide a common language, a different thinking mindset and build future discussions in appropriate time horizons and impact assessments. Also take a read of “Mapping innovation across the three horizons” to link this powerful concept into any board rooms thinking over the present and future for placing different innovation activities.

Dogma, mindsets and conflicts often dominate our boardrooms

I wrote about Lingering dogma, fixed mindsets and conflicting needs and wrote at the end “I can’t promise it can stop all the unhealthy debates around innovation in the boardroom by adopting the Three Horizon framework. What it might change is the perspective of where to focus the expertise and energy to make innovation far more the strategic bedrock, that organizations are looking to achieve, the link towards a healthier future. It’s not personal any more, its considering options in a future-orientated way for their business, to find better ways to thrive not just survive”

In summary, as the first post of why innovation must reside in the boardroom

The first thinking ‘out loud’ ( a long one I must admit) of moving innovating thinking far more into the corporate boardroom comes from the need to establish a “thinking mindset” within our boardrooms, a duality of mindset. One where they ‘collectively’ within the boardroom needs to think in dual ways, exploring and exploiting, to establish distinct types of transformation efforts, and innovation initiatives, combined with the use and application of embracing the three horizons, this becomes the first group of thinking for “shining innovation into the corporate boardrooms”.

Footnote: Where I seem to be heading is in my intent of making innovation itself a transformational journey, perhaps even a “renaissance” as we all are facing and needing to tackle all the disruptive forces around us.

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