Often it is within the strategies that should be outlined, lies the potential new spaces to play for innovation’s design. Yet how often do we fail to connect the innovation’s we design and execute specifically aligned to the strategic need?

We somehow seem to stay locked in the ‘here and now’ constantly repeating and refining the known and established within our domain of responsibility. Is this because innovation is not at the core of the business as it should be? Often we are inherently resisting to exploring change as it becomes risky and far more demanding. A good strategy, well outlined should encourage innovation and gain engagement but it can equally determine how we break down our imposed boundaries by its strategic intent, to encourage exploring and extending on what we know into the what we need to know. Strategic intent informs innovation.

If you have a clear strategic understanding of the needs of the business you are getting more of the understanding of where-to-play and how-to-win in your innovation activities and market investment. It is making these strategic connections that is giving innovators a better chance to deliver back concepts that offer alignment to this strategic need. Investing in this understanding and alignment should never be understated. The time invested, allows for the innovation investments to do their part in supporting the business and feeding it with the growth options required, or highlighting where the possible gaps might be, for additional investment or M&A activity, to accelerate this and bring-in fresh innovating momentum.

We need to close down the issue that Innovation is full of open interpretation by purposeful design

How often have we heard “innovation is important for our future success” but when this is probed deeper there is a huge dissatisfaction on its performance or contribution at all levels within organizations, why is that? Where does the problem lie? I am sure we all have multiple suggestions, some perhaps radical in the extreme but most are confirming this growing frustration with innovation’s performance yet not fully pointing to the underlying cause. This suggests that there are multiple failure points within the management of innovation.

One absolute critical one that needs resolution is achieving alignment and engagement of innovation understanding throughout the organization. It is one of the biggest challenges to resolve, it takes hard coordinating work to sort out of numerous amount of problems that need rectifying.

Frustrations abound up and down the Organization.

Clearly one critical part of this present frustration is a seemingly lack of alignment between the organizations strategic goals and its mission and how innovation is expected to contribute, so as to fuel the growth and deliver many of the essential parts of the strategic need. Often it is left far too open or unclear for individual interpretation. It is often when we have uncertainly, opportunism steps in and attempts to fill the space. Innovation needs a much stronger alignment to strategy, they need connecting far better. One suggestion here is the adoption of the choice cascade model, discussed later as part of the suggested solution.

One of the basic troubles increasingly today is we are not in the world of stable markets, we are seeing increasing competitive intensity and challenges to market definitions that are radically altering how we proceed. Technology has become both the enabler and the disruptor to this. We are ‘reacting’ far more in knee-jerk ways to resolve a sudden crisis and look increasingly towards fast innovation solutions to fill the gap. Some of these solutions create ‘knock.-on’ effects and create a mismatch between solving an interim problem and causing disruption to the longer-term direction.  They also can distract resources away from more critical solutions to solve underlying growth issues within the organization.

This is why I also highly recommend the three horizon framework as part of this discipline of managing the ‘needs of today’ with the strategy of having a thoughtful portfolio of options for the future that requires this different horizon thinking.

Of course much in the future has no boundaries we can determine and evaluate against and this gives high levels of uncertainty but it can be reduced, by being driven by a clearer clarity of purpose or intent. It is this ‘clarity of purpose’ that innovation needs to ‘track, mirror and explore’. If we keep ‘reacting’ constantly to the present we might never arrive at the future.

The strategic purpose ‘informs’ and I think we all have this growing recognition that today’s business model will not remain viable for long periods, as we operate increasingly in fluid and volitile conditions, that require constant adjustment and response. This means our innovation resources must align far more to the direction seen or looks reasonably plausible and ‘shape and form’ around this. Foresight should be governed by beliefs about the future and innovation should be driven in this direction but always with a word of caution, that we equally have to always recognize that the future is a moving target. It is beholden on innovation to explore and exploit this, to pursue an evolutionary path towards understanding and validation.

Taking action in designing your innovation alignment

“Strategy informs”. Knowing where to place your innovation thinking becomes critical; it is knowing where the leadership places its importance, its ‘bets to win’. This might be in having the need for a richer user engagement experience, a more robust futurist product portfolio to test, learn and explore potential options. It can be where it plans to invest it’s technology options to leverage knowledge.

We have to keep asking those essential questions that link strategy and innovation in understanding. It becomes important to know if the growth is going to come through acquisition of capabilities and competencies that fill critical gaps. What are those ‘perceived’ gaps? Can they be filled by shifting the innovation competencies, capabilities or capacities? If you are not ‘informed’ by strategy, you are simply ‘second guessing’ and here is where alignment breaks down by not having this understanding. Often the designers of strategy omit the essential details of “how we believe we will get there” and what are the primary resource levers to commit into this.

You need to know what type of company ‘we are’ today and does it need to change: are you integrators, leader, laggards, or best in class, pioneers, or fast copiers. This recognition equially ‘inform’ much of the innovation activity. What types of business model are you working towards, where is the scope to expand and explore from the innovation perspective? What processes and structures would then need to be in place to compliment and align to the strategic aspirations or positioning stated?

These answers become the foundation that aligns strategy direction with innovation activity.

These can only come from formulating strategic thinking between the strategy of the organization (its goals, mission and visions) and innovation, for it to be directed in its efforts to contribute to these aims and growth aspirations.

Then the other, often the unspoken silent part, of any strategic thinking that needs to be drawn out, actually revolves around the ‘creative destruction’ being faced, externally and internally. It indicates the prevalence of change and opens the dialogue up on how innovation will respond to this. Often boards remain in denial or lack the essential relevant understanding of the changes occurring and do not address change or transformation as strongly as they should in any strategic design. Innovation then has a really hard time to respond.

This is the way I recommend to set about this alignment to build an Innovation Master Plan.

It is structured and designed and externally facilitated. Facilitation becomes critical as the external provider can ‘draw out’ all the different views, often highly diverging, where predudices and opinions abound, around innovation. Opinions differ so much, you need to work through divergence to then seek the convergence. It is only when you get a ‘collective view’ you can begin to get that greater alignment of strategic and innovation activities

Here is how I suggest you might set about alignment….

Firstly I have written explicitly on the Executive Innovation Work Mat, making the compelling case and one outline of the framework offering a further alignment view,  as I believe this Work Mat approach becomes a critical framework to communicate the fit of innovation and strategy.  It becomes the “living” innovation document to refer too, engagement with (and improve). I co-devolped this executive innovation work mat with Jeffrey Phillips from Ovo Innovation.

We need to work through The Critical Value Propositions of the Three Horizon Methodology (link to download paper) to clarify our portfolio of options, in the present and in the future.

Within that Innovation Work Mat approach it is designed to allow engagement from the top to communicate and cascade down the organizations, to allow for the growing understanding of how and where innovation fits and what is provided to support this. I believe the “cascading effect” becomes critical to success and often missed out in any innovation thinking This design of the Work Mat allows for a greater connected design of innovation.

Innovation needs alignment- Resources to refer too.

Available is a short presentation on this innovation alignment approach to the choice cascade view, as used in the Executive Innovation Work Mat Framework. Here is a download to its cascading effect approach: Cascading Choices for Greater Alignment (a PDF file)

Exploring the Executive Innovation Work Mat I have equally set up a dedicated section on the Work Mat  under “insights and thinking” as “booklets” in its design and value on each of its components. So can you explore the three horizons here and relate to it further, as essential for managing innovation in multiple ways.

Workshops on the Executive Innovation Work Mat can be delivered as outlined in this suggestion one: (Intervention Approach Work Mat 2017). Each Workshop always has some level of unique design, as each organization is on its own journey of innovation understanding. The framework and its seven components is built accordingly to bring it together as an integrated ‘whole’.

By contacting the writer you can discuss this further as it is designed to bring strategic choice and innovation together in a more cohesive way. It aligns, communicates and engages but it is how we set about this, will determine its potential for achieving greater success and ‘connected’ understanding.

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The post The Essential Connection Between Strategy and Innovation first appeared on Building Your Innovation & Ecosystem Intelligence.

An increased focus on innovation as a consistent discipline requires significant reflection on what needs changing, what impact this change will have and how do we proceed to implement it. This requires senior management attention because of the significant organisational impact.

The leadership within an organisation provide the linkage into the strategy, provide the framework and set this in the context of the vision and goals needed to be achieved. You, as the innovator, seek out the synergies between strategy and innovation, between innovation and capabilities, between culture, the environment, the process, structure and routines and how it all should be governed.

The compelling value is in having an integrated innovation framework

Having an integrated innovation framework can be summarised:

• The framework or work mat moderates innovation and goes much towards reducing the multiple interpretations and the variety of initiatives often described or justified as innovative but all too often significantly missing the strategic mark.

• There is an overwhelming argument that most people within the organisation and those you are partnering with, would appreciate a greater understanding of the core concepts, principles and direction that their innovation activity should take. To understand what is valued, essential to defend, promote and improve. To clarify what is highly strategic, well describe and articulated to ‘form’ around, helps innovation to perform its required task of delivering new growth that aligns with the strategic needs.

• By having this work mat approach you can frame a formal set of mechanisms and principles for innovation to rise in quality. For instance, in articulating that the selection of high potential concepts are highly valued and prized, and will certainly get ring-fenced and be given special attention, does radically alter the innovation work-to-be-done within any organisation.

• By having this strategic and systematic approach does give a clear ‘signal’ that ‘we’ need to be more of an innovation-orientated organisation. A framework that is offering the signposts and path-finding points in vision, in proving the mechanisms for a whole innovation system transformation, in documentation and by engaging in constant discussions about innovation and its alignment to strategy, you move from ‘aspiration’ into gaining that ‘attraction power’ to identification. You offer a fresh dynamic stock for innovation to feed on.

• The approach of the Executive Innovation Work Mat is to turn it into a living, evolving and dynamic framework, one that ‘cascades up and down the organisation’ so it becomes the reference point, the strategic source that builds the common language of understanding, offers the communicating mechanism and determines the context.

Delivering an integrated framework would be for many, a strategy that is innovative in itself.

The frames intent, its very nature, is that it promotes excitement, growing identification and the chance to debate innovation in a broader, more comprehensive framework. By taking this integrated innovation approach it offers clarification, for those wanting to be involved in the growth and future of the organisation, so they gain a greater identification and sense of involvement. This ‘flow’ and exploring provides a constant input and draws out in the dialogue it promotes, the specific clarification to help all to recognise, associate and contribute in improving innovation activities that align far more.

An integrated approach can significantly provide the support to the people involved in innovating to help build their ability to execute in a cohesive way the innovation activity that contributes to the strategic innovation goals. It provides the framing opportunity for that elusive alignment that is often missing in today’s organisations for innovation to truly align to the corporate goals, aspirations and strategic intent.

• The Work Mat methodology was jointly developed by Jeffrey Phillips at Ovo Innovation and myself, through Agility Innovation Specialists and it provides a powerful solution to alignment and identification between an organisations strategy, its innovation activity and how it integrates and relates for everyone involved.

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The post Making a compelling business case for an integrated innovation framework first appeared on Building Your Innovation & Ecosystem Intelligence.

All too often strategy is not influencing the behaviours and outcomes around innovation, it is simply allowing them to be left to chance.

Innovation is being ‘pushed down’ the organisation for others to interpret and offer their answers. They execute to their own understanding and often the innovations end up as not strategically aligned.

That is plainly wrong, not knowing the strategic objectives it is one of the principle causes of innovation failure and requires fixing.

This poor strategic understanding creates a lack of alignment and directing innovation. If an organisation lacks top leadership engagement it becomes, for many, the reason why they seem to just simply ‘limp’ along in their innovation activity, delivering ‘simply’ incremental outcomes. The more radical innovations can never emerge if these do not have the close alignment to the Corporate vision or objectives and leadership engagement..

It is often ironic that those in leadership positions start expressing their disappointment over final innovation results, yet often the answer simply lies more often than not in their own hands to resolve. Top leadership in organisations need to shape innovation and be more involved in its strategic design.

We need to resolve this innovation leadership gap of misunderstanding. We need to explain what their essential place is and provide the strategic frame to allow it to be understood. Then the contribution for innovation might be ‘allowed’ to deliver far more on its potential as it achieves that greater strategic alignment.

Innovation requires a critical senior executive focus?

As innovation becomes a more consistent requirement rather than an occasional exercise, it must align to strategic goals and become part of the planning and execution cycle.  An increased focus on innovation as a consistent discipline requires significant reflection on what needs changing, what impact this change will have and how do we proceed to implement it. This requires senior management attention because of the significant organisational impact.

This refocus of strategy and implementation takes time and may require rethinking or reworking some existing strategies, plans, structure or culture, or may require the development of new structures and skills.  Our recommended approach will trigger the necessary engagement in this essential set of strategic decisions that cannot be delegated down the organization.

Innovation needs a well-considered framework

Like any other important corporate initiative, innovation requires a carefully considered framework, otherwise, the efforts required to deliver innovation will suffer, resulting in sporadic, unsatisfactory outcomes. Is incremental innovation the best you can hope for? Innovation, in all its forms, incremental, distinctive, radical or transformational needs the full support and engagement of senior management and requires defined strategic goals, structural frameworks and an engaged corporate culture.

While the tactical work of innovation is accomplished by innovation teams throughout the organisation, your executive team needs to clearly establish the climate and the frameworks that will enable your innovators. This requires a clear articulation of strategy and the implementation of a framework that provides the essential building blocks for the organisation to work within.

You provide the linkage into the strategy, provide the framework and set this in the context of the vision and goals needed to be achieved.

You seek out the synergies between strategy and innovation, between innovation and capabilities, between culture, the environment, the process, structure and routines and how it all should be governed.

Today many organisations presently find themselves locked in the innovation incremental trap. Real growth needs a more radical approach from innovation. Incremental innovation often gives a very limited degree of security as others quickly copy or push this just a little bit further, so you end up chasing instead of making those leaps that give clear competitive space where that ‘advantage’ can become a sustaining one.

Delivering an integrated framework would be for many, a strategy that is innovative in itself.

The frames intent, its very nature, is that it promotes excitement, growing identification and the chance to debate innovation in a broader, more comprehensive framework. By taking this integrated innovation approach it offers clarification, for those wanting to be involved in the growth and future of the organisation to gain identification, provide input and draw out the specific clarification to help them contribute.

An integrated approach can significantly provide the support to the people involved in innovating to help build their ability to execute in a cohesive way the innovation activity that contributes to the strategic innovation goals. It provides the framing opportunity for that elusive alignment that is often missing in today’s organisations

There is considerable value in exploring and determining your organization’s integrated innovation framework and this can come through a greater encouragement to wrestle with innovation’s parts and frame this through the Executive Innovation Work Mat.

**Recently I wrote an extensive series of postings on the Executive Innovation Work Mat for the Hype Innovation Blog, just put in the search box “Work Mat” and take a read.

The post I keep arguing we all need to seek out innovation alignment first appeared on Building Your Innovation & Ecosystem Intelligence.

In a three-part series, part one outlined the implicit need to align innovation to the corporate strategy, and through this we can determine ‘acceptable risk’.

In part two I offered numerous reasons why we should recognize and treat innovation risk differently to allow it to perform closer to its promise of driving growth and achieving real advantage.

This post here is the third and last part, part three, where I lay out different mechanisms and framing of risk and innovation. These need to be evolved to fit your own risk appetite, not one size fits all. I hope it helps.

Risks are certainly shifting. In a recent piece of work by Deliottes called “Risk sensing:the (evolving) state of the art, the risks of most concern are changing each year. Interestingly, the pace of innovation stands among the top three risks in 2015 and tops along with regulatory risk, the list was foreseen in 2018. With technology disruption, business model disruption and growing competition, social and customer engagement challenge the ability to manage innovation is growing as a concern and in risk management.

We need to formulate a more robust risk innovation framework.

Risk management for innovation needs to evolve to keep pace with the changing demands and pace of change we are undergoing in business challenges. Risk is becoming an evolving capability.

Mark Johnson of Innosight wrote a great article some time back that still holds true today, in its observations, on how poorly the relationship between risk management and innovation is understood. To quote the specific parts

1. Risk management isn’t the antithesis of innovation; it’s the essence.

How an organization conceives of risk management will in large part decide how effectively innovation is pursued.

2. Risk management isn’t the brake on innovation; it’s the accelerator.

Risk management, treated as a learning process, not only propels innovation forward but can also speed it up.

3. Real discipline in innovation risk management means a more relaxed approach to the financials.

In genuinely new-business innovation projects, it is critical to release the leaders of the effort from the norms and metrics of the core business.

Mark made some clear observations and statements on viewing risk management as a core competency.

As Clark G.Gilbert and Mark’s colleague Matthew J.Eyring argued in Harvard Business Review, the core competency of the most effective and successful innovators is risk management. To repeat: Risk management is their core competency. For these innovators, whether in new ventures or in a corporate setting, the ability to identify, prioritize, and systematically eliminate risks is what drives innovation forward.

They approach risk management not as a safety procedure but as a learning process. They know that no new-business model is perfect from its inception. So they test its various components and their combinations—its customer value proposition, profit formula, key resources, and key processes—in controlled experiments in tightly circumscribed markets, learning as they go and making adjustments.

It is (clearly) more prudent and ultimately more productive to get the value proposition right and judge it in terms of how fast it converts assumptions to certain knowledge. While experimentation speeds the time to viable business innovation, it does not necessarily lead immediately to the kind of large-scale growth or increased market share that are usually the barometers of performance in the core business.

The relevant financial measure during this stage is whether the new business can be made profitable in its foothold market. Profitability confirms the strength of your fundamentals, allowing you the patience to scale up in a measured way. That is the real financial discipline in innovation risk management: the unswerving ability to resist applying the wrong kind of financial metrics at the wrong time and so unwittingly choke off growth potential before it can reach full fruition.

He concludes ” one of the biggest risks in innovation is to see risk management as a framework to be superimposed on new-business creation rather than as an inseparable part of the process itself.

Lets look at the mechanics of risk management for innovation.

There is no reason it cannot relate to existing risk frameworks. We can adapt to the accepted practices of risk management but innovation risk needs to have its own risk management framework

For this I went in search of a broad discussion in understanding risk and its management. I found a series of articles written by Peadar Duiffy, as founder and chairman of Risk Management International (RMI) on risks in relationship to insurance and this series can be found through http://insurancethoughtleadership.com/risk-and-strategy-how-to-find-the-links. These I found to be especially useful to ‘translate’ into the make up of a risk management framework.

I’ve adapted these on how they might work or be used as a guiding group to build risk management and innovation in some depth. I think it works but you might advance these from your own perspectives.

Firstly lets establish some observations:

1. Directors and senior managers need a globally accepted guide on the attributes of an effective risk appetite framework to manage innovation, independent of their corporate risk guidelines but they dovetail into them..
2. Emphasis is shifting globally from risk management to building resilience and as we learn and explore about managing risk in innovation and each innovation can have different variances we need to ensure the risk optimization is achieved when risk and strategy are aligned with corporate objectives. Achieving this comes through the use of the three horizons framework for aligning where innovation fits and its (risk) horizon and place, pushing to encourage a greater scope of innovation, of building a validation, proofing and testing mentality.
3. “Strategic risks” are those that are most consequential within the innovation activities that have a potential impact to the organization’s ability to execute its strategies and achieve its business objectives. Having a clarity of strategic risk, those must be material to have impact on the organization. These are the risk exposures that can ultimately affect shareholder value or the viability of the organization growth. Strategic risk management is focused on those most consequential and significant risks to shareholder value, an area that requires  the time and attention of executive management and the board of directors. More radical innovations, disrupting positions or new business models would form part of this risk assessment.

Then we need to strengthening the strategic planning process

1. Increasing rigor, formality and consistency in the strategic planning office which derives its authority from the board and  the CEO’s office, needs engagement within the risk management of innovation. It at least needs ongoing awareness of the direction and impact any more radical innovation might have, to evaluate its impact.
2. Aligning strategy, risk and audit board subcommittees (through cross-representation) in a manner that largely feeds into the board risk oversight, reporting and monitoring on innovation that might have material impact.

Embedding risk management and innovation competence within the structures developed.

1. Explicitly articulating corporate and organizational objectives in relationship to innovations contribution and need.
2. Testing the alignment of group, corporate and organizational objectives through development and review of risk appetite statements that bring the innovation efforts together. Who is responsible for what.
3. Establishing an effective risk appetite framework, which includes:
4. Statement of purpose and values of the organization towards innovation’s position of value and growth contribution
5. Explicitly stated board risk assurance requirements; factors to consider and these would include:

• Mapping objectives to a risk appetite continuum, articulated and discussed
• Qualitatively expressed risk appetite statements to help in reassurance (reputation etc),
• Quantitatively expressed risk criteria related to both risk tolerance and risk limits
• Acknowledging these evolve but in a measured process that is dynamic and evolving from learning.

Understanding and improve progressively the organizational level of risk maturity

RMI had developed a five-level Risk Maturity Index, which provides a road map to risk optimization,  it has merit for innovation to also follow. The index scores risk maturity capability requirements, etc. In summary, it describes:

• Level 5: “Value-Driven” — Optimizing value through aligning risk and strategy with corporate objectives,
• Level 4: “Clearly Managed” — Gaining value through aligning risk and strategy in pursuit of corporate objectives,
• Level 3: “Providing Insight” — Gaining insights into how to better align risk and strategy in pursuit of corporate objectives that evolve as innovators and the board gain growing confidence they are on a similar track,
• Level 2: “Gaining Awareness” — Developing awareness  into how to align risk and strategy in pursuit of corporate objectives relating to innovation and its development
• Level 1: “Basic Learning” — Seeking awareness of the links of risk and strategy in pursuit of corporate objectives relating to innovation.

Establishing clear governance, setting policy and monitoring performance: In the context of the relationship between risk and strategy,good governance means accounting for the type of risk culture that encourages and manages innovation.

• “Risk culture” is a term describing the values, belief, knowledge and understanding about risk shared by a group of people within a common innovation purpose, in particular the employees of an organization or of teams or groups within an organization to relate too
• Risk culture, as an aspect of culture, can be practically described thus:
  • Culture: The way we do things around here!
  • Risk culture: The freedom we have to challenge around here!
  • Risk culture is capable of being demonstrably and credibly evidenced and discussed.

First we need to explore: do boards express clearly and comprehensively the extent of their willingness to take risk to meet their strategic and business objectives in encouraging the innovation activities?  Second, do they explicitly articulate risks that have the potential to threaten their operations, business model and reputation?

How are risk appetite, risk tolerance and risk limits related to one another? 

The RMI Risk Maturity Index correlates and again, serves well for innovation and risk:

1. Level of alignment of risks to strategy, objectives and execution of the innovation portfolio,
2. Risk role affirmations at each maturity level (shown above),
3. Risk culture affirmations (practices confirmed by internal and external attestors), who periodically check
4. Risk defense affirmations (practices confirmed by internal and external attestors), in discussions
5. Board and organizational processes that bring innovation continuously into the boardroom, in clear line of sight.
6. Value realized at three levels: a) the customer, b) the organization and c) stakeholders.

As a particular Risk Assessment Strategy (RAS) is devolved down through an organization, its content will change based on the intended recipients as well as their relationship to innovation For example, a RAS at:

• Group executive level will be high level and inclined toward expressing appetite for risks to objectives that deliver value and increase performance, that show potential and promise. The RAS will clarify the innovation objectives, risks tolerance levels, escalation procedures, expected returns across a broader range of measures and how the  control(s) to manage risk and innovation apply, looking for:
• Middle management level will articulate levels of tolerance that, if breached, will require escalation and “circuit breaking” reports, with priority given to immediate interventions and a review of internal controls but having a dynamic process of knowledge, learning, risks and opportunities to convey these to the board, if necessary or in a regular reporting format
• Business unit level and the team within these responsible for innovation, will have a more detailed and expanded RAS explanation, inclined toward expressing risk limits and internal controls that enable greater innovation understanding, spelling out risk tolerance, appetite and linking this into the articulated innovation strategy

The various components among the numerous risk maturity models tend to overlap considerably. Here’s one generic set of attributes of maturity:

• Risk is managed to specifically defined appetite and tolerances that relate to innovation need and strategy.
• There is management support for the defined risk culture and direct ties to the corporate culture
• A disciplined risk process is aligned with other functional areas to integrate innovation
• There is a process for uncovering the unknown or poorly understood risks of innovation and an evolving path to clarify, test, explore so a continued learning process is in place to build innovation capabilities & capacity.
• Risk is effectively analyzed and measured both quantitatively and qualitatively, both in hard terms and the softer potential seen at that point of time, to be determined and validated for improving quantification.
• There is collaboration on a resilient and sustainable enterprise, building on the knowledge and learning gained, shared and ‘factored into’ the risk management framework to keep it dynamic and evolving.

In summary

Innovation has many unknowns, but it is the learning and evolving that can give growing confidence. Constructing a risk innovation framework that grows as confidence is ‘found’ and a process to alert and inform gives the ability to constantly quantify these unknowns, constantly searching to find ways to measure and provide returns.

We need to relate risk and innovation in clearer ways, to give a greater confidence and encouragement to pushing for the new.

***Again, I certainly have to acknowledge, that I found the series of articles written by Peadar Duiffy, as founder and chairman of Risk Management International (RMI) on risks in relationship to insurance. as really valuable in framing innovation and risk as outlined here.

The post Developing a new framework for risk and innovation. first appeared on Building Your Innovation & Ecosystem Intelligence.

We should aim for a really healthy construct that does help all involved or associated with innovation and managing risk, that gives a better chance of pushing beyond the incremental innovation that avoids most risk and disappoints those seeking real growth.

In this post two, within a three-part series, I build the argument on why we need to treat innovation differently within any risk assessment. Part one focused on linking risk into an innovation strategy that needed to align with the corporate one.

Each organization finds its own level of risk appetite. Regretfully innovation, often by default, gets swept up in this generalization of “risk management” that is corporately driven and the serious message of “risk” dampens exploration. There is a real need to make a clear argument that innovation should be treated differently. It can still come under the broad risk umbrella but judging innovation risk is utterly different from organizational strategic risk.

Innovation is a learning process not to be confused with a safety procedure, both can be effectively managed and different in their treatment. No new business model or innovation new to the market, or even service enhancement, is perfect from its inception, it improves with learning on what is valuable and needed, what can be ‘dampened’ down, switched off or reduced through market exposure.

Equally, we have learnt innovation evolves due to this learning process and how ‘it’ interacts with customer needs. We make an effort to get it as right as possible, as close to the launch, but there are often so many unknowns that only through exposure to the market and the customers do we learn to adapt, adjust, modify and improve the offering. This ‘adaptive’ process scares the board as it has implications on reputation, on the brand and on its abilities to get innovation right. This iterative process is felt should be left only inside the organization as some feel it conveys vulnerability and failing. How wrong this is.

So we tend to go to default. Risk mitigation kicks in. We strive to minimize the risks, reduce the learning and opt for a more incremental approach.

As Accenture in one of the few reports discussing risk and innovation, “The art of managing innovation risk” state:

“Few decision makers want to take responsibility for a failed experiment, so extreme caution usually prevails when new ideas are assessed. Opportunities tend to be defined narrowly.

Moreover, the tools commonly used to support the process exacerbate the problem. Based on retrospective analytics—Net Present Value (NPV) models, for instance, are built on market projections that are calculated using past trends—they tend to skew innovation decisions toward optimizing existing product lines rather than pursuing new ones.

As a result, promising ideas are often smothered. And while many of the innovation initiatives that do gain approval are low risk, they offer only low returns—incremental improvements that usually do little more than maintain market share”.

They go on to suggest with product lifecycles across industries shortening, successful innovation often hinges on speed. And that, in turn, requires a risk management process that can shorten learning cycles, recognize failures early and make timely course corrections—a process that facilitates a company wide dialogue around which risks are acceptable and how much risk is appropriate, based on potential returns”

They are quiet rightly suggesting “with risks well-managed, companies can then use rapid experimentation and the techniques of agile development—an iterative process closely linked to customers and markets—to boost their chances of coming up with a truly profitable innovation portfolio.”

Yet tell me how many our organizations have a clear, robust risk management framework for innovation? Is innovation even fully aligned into the corporate strategy?

Our obsession begins and ends with the search for numbers.

Clayton Christensen has argued that organisations’ agenda begins and ends with the “search for numbers”. 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 and innovation gets totally caught up in this mistaken measurement, it stifles ‘great’ innovation to emerge and provide truly differentiating advantage. Why do organisations stay locked into far too much “me too” innovation?

At a time when capital is not scarce, it is abundant and cheap, we still see a lack of bolder investment in game-changing innovation. Organizations are hoarding capital or passing it back to the shareholder. Both admirable but they don’t build the future, they only keep you in the present. When financial capital is the final arbitrator it totally fails to tell us in numbers alone where and what creates the value, it simply reports the end result, it is always backward looking, never conveying the future unless capital investment is being made.

Today our balance sheets hides or can’t report the loss of opportunity value, if only innovation had been treated differently. We are caught in a time that most of our business organizations are in a period of risk-aversion where the innovation ‘bets’ are more incremental, more short-term pushing for greater utilization of existing assets. The longer-term health of organizations seems to be kicked down the road for later generations to tackle, if they are still in existence!

We need to that prompt more on risk and innovation, reflecting why and how it should be treated in different ways and this might encourage a greater top management engagement. We need to encourage a shift and seek out the dimensions, criteria and thinking that can be applied to encourage more risk-taking, more radical and breakthrough innovation.

Can we walk a different innovation risk path?

The understanding of risk will always have associated with some fear, discomfort and resistance and for many can be an uncomfortable place to go. The whole ‘act’ of letting go is never easy. It is the ability to manage risk that reduces the fear. It is through experimentation we gain our best learning, we actually are forward learning as we are accelerating our knowledge.

Surely the more we attempt something different, proving or disproving it, does make for exciting work? We move towards a leading edge perspective, we evolve more towards a pioneer, an experimenter and this can be contained and managed within a radically different risk management framework. We all can be encouraged to raise our risk appetite with establishing clear guidelines and parameters, so we all become more motivated and engaged, excited about a different future, curious to explore, wanting and  encouraging an environment to experiment but this ‘signal’ and risk appetite guidelines must come from the top. If it is left unsaid, radical innovation will never naturally happen, what a pity.

We need to recognize that allowing greater risk and investigation encourages us to see change differently, to offset the growing disruptive aspects swirling around us. Recognizing we are mostly operating  in markets with slower growth, higher volatility and potential for disruption needs pushing risk in innovation. Risk needs to be proactive not reactive.

Equally the sentiment reinforced by this demand for clear, demonstrative ROI measurements from innovation tends to send the clear message that we cannot disrupt our core, yet others are working purposefully at doing this, knowing your weakness is not taking risk and wanting to disturb the present equilibrium..Risk comes from not knowing and experimenting outside the core. When you are not restless, someone else certainly will be, seeing opportunity.

Achieving a growing certainty of return needs to be paramount in our minds as innovators.

We need to manage the ‘certainty of return’ by making the knowledge that comes from many incremental steps, of experiment to validate an idea, that eventually builds into a new innovation, that needs managing differently. That can come from steady ‘readiness-based decisions’ that prototypes or pilots that are put into the hands of the consumer or customer to explore around, will advance our knowledge, each time clarify the potential value and ‘seen’ worth of this concept over the existing ones in the market place or require us to re-evaluate our assumptions.

We need to develop those risk-mitigation steps to constantly increase confidence. We need to find a real space for uncertainty, for a risk-tolerance so as to allow the shaping ideas, exploring and learning in taking controlled risks, encouraging experimentation, providing tolerance (of failure or expecting stronger debate), exploring the unknowns, all should be an integral part of innovation in any new risk management framework.

Stage-gates is also not the innovation panacea to manage innovation.

I would argue we should stop regarding the Stage-Gate as the panacea for managing all of the innovation needs. Stage-Gate handles the incremental product cycle fairly well, but when you are on a more open innovation platform collaboration or more radical design, it struggles to be flexible, agile and fit the different challenges presented by the collaborating parties. We need something significantly different to handle the other types of innovation, those more radical, distinctive and breakthrough.

True innovation goes through much of an iterative process

We need to adopt a more flexible and adaptive process, one where learning, looping back, iterating constantly, that promotes and encourages an experimenting environment for innovation that is more new to the world. As we iterate, we learn, as we learn we can improve our understanding of its growing value.

This needs to be in a more dynamic ‘management of the portfolio’ concept, from concept to commercialization process.

A place where risk-mitigation needs to be built-in all the way, to search for and then build new knowledge as it ‘reveals’ itself. In innovation, it is never apparent, you have to ‘tease ‘ it out on its value and contribution, in providing concepts, pilots and prototypes. Everything simply cannot be available when you often just don’t know, you take small steps often to feel your way and build that knowledge up. This comes from engaging with your customers, in the market place not your own premises.

How about approving some pilot projects and providing resources to have unfettered six-month periods with no rules and no reviews? At the end of this agreed period ‘something’ that shows promising value and clear advancement on the past position that has been seen and tested with customers gives confidence, reduces the risk fear. Then you embed the learning and further scale it, if it shows the promise and shows a ‘interesting business case’ for more investment.

It encourages increasing the risk of spending funds, dedicating resources that lock up assets but by setting these in clear time frames and with a definitive result that the outcomes not just advances knowledge but it can show that the concept does takes you closer to its future value.

Progressive in building risk management for innovation

Over time progressively learning increases our risk-tolerances, we become progressively more creative in this risk-taking orientation to seek out and push for more innovation.

Equally allow those who are willing to take risk, as their more natural position that head room to explore, to push boundaries that often reveals different innovation. By sitting down and outlining the risk acceptable within evolving guidelines, those that are not ‘well-set in stone’ but will evolve and loosen as we learn. We should expect them to be broken on a few occasions but work with this if it was an informed risk, learn on why, talk with those that overstepped the limits, to see what was right and what everyone can learn from this.

Equally, leaders need to stay totally engaged and constantly talking about what innovators are doing where-ever you can, through face-to-face discussions, dedicated meetings where risk assessments being clearly known to be up there on the agenda, to be evaluated and determined for the next steps. Also being prepared to step back to bring the risks that seem uncomfortable back into alignment with the risk tolerance levels, allowing the engaging in the ‘healthy debate on why this innovation might be different and needs different criteria. Innovation needs to be a dialogue and risk management can become its friend not its inhibitor.

Through this more enlightened approach to risk and innovation we do allow-in that greater desire for the capacity to be innovating and how we all want things we are working on to improve, to give us a greater meaning within our lives. More purpose, more satisfaction, greater identification. More value, greater growth and impact.

Fostering risk tolerance designed specifically for innovation does need treating differently, to grow and thrive. You can push innovation beyond the ordinary, back into the extraordinary and that enables innovation to deliver far more on its true purpose. There is a strong case to be explicit on the risk profile for innovation to be different.

Part three of this series looks more at the mechanics for improving risk maturity for innovation.

The post Treating Innovation Risk Differently, Dealing with Uncertainty first appeared on Building Your Innovation & Ecosystem Intelligence.

I feel we spend less time on managing risk within our innovation initiatives.

We so often simply measure risk on established risk/return lines of known existing business criteria, treating it as part of our existing ongoing business, and that is plainly wrong.

Risk assessment within our innovation activities needs a different, far more distinct framing that reflects the nature of the unknowns we are working with, in my opinion.

Our organizations need to relate to the differences far more, to allow this ‘innovation risk assessment’ to play an increasing role in ‘advancing’ innovation and its understanding at the boardroom level to relate to and take a different risk-related profile position that many take today.

So in a three-part series, I want to set risk in a better strategic and operational framework but to begin with, until we address the alignment issue between a firm’s strategy and the linkage of the innovation activities, innovation fails to make the essential boardroom connections and risks always surface, as they have no referencing framework to revert too.

To start this series, I decided to quote Gary Pisano, someone I have admired in his work and thinking for many years. The part I have extracted here sets the frame for having an innovation strategy aligned to the strategic objectives, it is then through this we can focus more specifically on where risk needs to be, the focus of this series of posts. I just didn’t feel the need to add more here, I absolutely identify with his thoughts, so let him deliver the right words.

You Need an Innovation Strategy for it to really be seen as a critical resource of an organization.

Gary Pisano had an excellent article, “You Need an Innovation Strategy” on HBR. He comments:

“I have found that firms rarely articulate strategies to align their innovation efforts with their business strategies”.

The post The Pressing Need to Link Risk into an Innovation Strategy- part one first appeared on Building Your Innovation & Ecosystem Intelligence.

Research shows a lack of engagement around innovation by non-managers, also there are claims through studies that 7 out of 10 of employees do not understand how they can make a worthwhile contribution.

The cynicism around innovation has turned it into nothing more than a buzzword for many, not taken with the seriousness that it really deserves for sustaining growth within organizations and achieving broader engagement to make this happen.

Innovation is treated as more the opportunity taken when it fits and works, often toned down when it does not. There is often a total lack of sustaining strategic commitment to innovation.It is just not integrated into the core of the organization.

Even at the top there is a growing gap of translating and aligning innovation that many of the middle to senior managers struggle with articulating where innovation and strategy fit within the wider corporate goals. Innovation lacks a clear identifying mechanism for all to ‘pull towards’. To “connect” all within the organization with the intent, purpose, conditions and goals of innovation we need to align all the factors associated with innovation.

Some three years back I worked in collaboration with Jeffrey Philips of Ovo Innovation to build an integrated innovation framework, that is designed as a strategic part of the corporate boards’ need to deliver and cascade down the organization. The first intent was to bridge this innovation leadership gap, it needed to gain the leaderships attention that they needed to address this; they were the very people allowing a gap of critical understanding to how innovation fitted into the organizations plans.

I am repeating part of our thinking at that time here and I have specifically pulled out the importance of the leadership’s involvement as this should be where the integrated innovation framework should be designed, formulated and debated.

We called this integrated framework the Executive Innovation Work Mat

The concept of a Work Mat is to ‘wrestle’ over it, to debate and then deliver a formal workout methodology that provides the essential framing desired to be understood throughout the organization to align the innovation activities as much as possible to the strategic direction and goals. It provides the basis for a well-articulated innovation framework for the organization to work from.

Explaining the Executive Innovation Work Mat briefly

The Executive Innovation Work Mat approach has seven domains that need specifically describing by the leadership of an organization for innovation alignment.

These are to achieve a clear Strategic Alignment (domain one) as well as develop the context, the communication techniques and encourage an emerging common language (domain two).

Then we discuss the need for having the appropriate Structure, Processes and Functional design (domain three) and the importance of Governance (domain four).

The next two domains are Culture (domain 5) and the Environment (domain 6) and why these need to be worked through.

Finally we have the domain where People align with the motivations and measures (domain 7) for relating and delivering the appropriate innovation to align around this integrated innovation framework.

The intent is to reduce the gaps between innovation and the goals of the organization

It continues to amaze me, no, actually it is depressing, that although our business leaders constantly confirm that innovation is in their top three priorities, they stay stubbornly disengaged in facilitating this across their organizations, especially the larger ones, it is delegated down and that is a huge mistake.

It is our senior leaders within organizations that have the ability to:
• link innovation to strategy, and
• create focus, engagement and passion for innovation, and
• direct funds and resources to good innovation programs, and
• speed good ideas to market as new business models, products and services, and
• ensure the processes and relevant metrics exist so innovation is sustainable and integrated.

In mid-sized and large companies, leadership and engagement from CEOs and senior executives are vital to achieve innovation success and a common sense of identity. We hear leaders want innovation to happen, that what is more consistently, more purposefully and with better result but don’t understand their enabling role in making this happen.

The absence of a well-articulated innovation strategy is by far the most important constraint for companies to reach their innovation targets.

If an organization has no explicit innovation strategy and fails to align this across the organization, then is it so unexpected that innovation continues to disappoint us, failing to deliver into the goals that consistently are developed and circulated across the organization?

Until we resolve this major gap in innovation alignment we hold innovation back

The consequences of the gap are significant:

• Poor execution of innovation goals;
• Failure to achieve strategic goals;
• Limited organizational design to sustain innovation;
• The growth of disbelief or cynicism when innovation isn’t pursued.

Senior Executives fail to fill this vital role for articulating the innovation journey

Often it is the case senior executives fail when they:

• are unaware their vision needs to be framed into a compelling message;
• don’t understand the importance of their role in communicating and motivating;
• miss articulating the value, importance and benefits to both the company and the individual;
• don’t resolve the ‘hearts and minds’ in engagement that innovation requires;
• are unable to set out an overall framework for innovation and define its value creation;
• delegate the role to others who don’t have the power to execute and compromise too readily;
• are constrained in their role due to time pressures and/or competing initiatives;
• fail to shape, inspire or clarify the necessary linkages and synergies across the company.

Understanding the importance of innovation, and the barriers that innovation will encounter, helps define key activities an innovation senior executive must undertake, and what he or she must do to fill the role effectively. This leads to an important question: if innovation is strategically important, and if engaged senior executives are critical to innovation success,

Innovation can be especially challenging because it is so unfamiliar, often intangible, so potentially disruptive, full of possible risk and uncertainty and yet so important. It’s very nature, challenging all that is predictable, planned and complying to effective, repeatable and efficient processes and methods requires this top management’s attention.

Innovation requires change that can impact the status quo and disrupt the firm’s ability to maintain a constant focus on efficiency and effectiveness to achieve short-term financial goals. It can be an internal disruptor requiring different thinking, metrics and risk-evaluations. It is often hard to switch internal mindsets from ‘exploiting to exploring’

Only an engaged, committed senior executive can create a sustained innovation capability or discipline, yet many lack deep experience, awareness of the evolving tools and techniques and the real importance of their role within innovation.

Filling the innovation leadership gap is critical

For innovation to succeed broadly in any company, executives must sponsor and embrace innovation as a core discipline, built with a deep and evolving set of competencies, not as an ad hoc set of initiatives.

Senior executives must become fully involved; they must lead innovation through their own well-articulated vision of how innovation aligns. This informs people within the organization to understand why innovation is important, where they can fit in their contribution and what benefits it holds for each contributor, for the organization and for the customer and provides the potential for longer-term sustainability and the ability to open up the innovation dialogue to allow it to flow and gain increasing identification and organization alignment.

******

A series around the Innovation Executive Work Mat was recently featured by Hype Innovation discussing the Critical Aspects of an Innovation Vision, Explaining the Integrated Innovation Framework, Valuing and Introducing the Executive Innovation Work Mat and finally Building a Compelling Business Case for the Integrated Innovation Framework.

The post Closing the innovation leadership gap first appeared on Building Your Innovation & Ecosystem Intelligence.

Part three– Technology will drive innovation change.

We are in need of a different sustaining capacity, one build around innovation as its continuous core; constantly evolving, adapting, learning and adjusting, in perpetual motion.

We are heading for transformational change

Digital technology and the cloud are offering us a radically different conduit to achieve a new engagement process within our organizations. Innovation is going to be very much caught up in this transformational change.
Technology and data will be innovation’s catalyst for change.

Digital technology is prompting us to find new methods and manners to shape our environments, these will alter much of what we do around innovation, in radically different ways.

We will be able to amplify far more of what is going on in real-time, we can capture and explore all the interactions to understand their potential value, we can discover greater individual needs, exchange and extrapolate better, simulate and experiment, all at a growing scale and speed.

The predictable, well-established ways of the past within our innovation processes will be inadequate to cope. We will require solutions moving towards this very different, constantly adjusting future; one of experimentation and exploitation, delivering solutions that meet changing market needs.

One that requires a greater alignment in the practices of innovation, constantly adapting, being fluid, flexible, nimble, agile and responsive. A far different, more dynamic environment too capitalize on this new way of working within our innovation activities.

Designing engagement platforms
Not only will we need a new innovation management system, we will need to build this on multiple engagement platforms. Our growing pressure is to find solutions that offer a cohesive and business-focused approach to the new socially enabled enterprise.

The need is to design these engagement platforms where we seek collaboration and sharing at scale, tapping into a multiple array of communities and advocates that have valuable data for organizations, so they can analyze and interpret this. In return the innovation outcome delivered back are value propositions that meet those needs and understanding.

This ‘marriage’ of digital and technology with the physical output of innovations will make it new growth core. Our need is to think through its process, structures and design, as it may have a real conflict if we don’t change our present thinking around the management of innovation.

Innovation sits outside the organizational ‘norm’ today

Innovation challenges much of what organizations believe they want: those repeatable systems, so that our organizations performance is well-oiled, highly structured and maximizing value by striving to be efficient and effective. Innovation often is in conflict with this.

Innovation requires increasing agility, and flexibility and allowing creativity to flourish. Innovation often stays outside the mainstream system structures, sometimes to it’s and the organization’s detriment, as it often does not fit the ‘norm’. This is today’s innovation problem

Innovation needs to be fluid, open, responsive; sometimes reliant on the instinct, hunch or powerful insight that is never ‘predictable’ but suddenly emerges from a collision of events, or random thoughts that lead to a new insight, a game-changing one. It is really hard to turn this ‘randomness’ or serendipity into a system but certainly not impossible.

We need to renew the organizational engagement.

Many, if not most of our existing systems, will need a radical redesign. Much has to change, be uprooted and completely revisited to begin to design a new digital and physical integration into the system.

Today, digital and physical work at really different speeds. How will they see different patterns and opportunities and try to fit these into a clear view of the world that ends in new innovation?  Can the innovation pipeline cope with even more business opportunities? The human mindset will need to re-orient to receive new digital information in ‘informing’ ways.

Innovation throughput will need different approaches than at present. The innovation pipeline today is very manual, it needs human intervention, in decisions, in inputs, in what is communicated, what is approved or dropped. Innovation gets often weighed down by much unnecessary human intervention.

We will need to transform much within our systems but more importantly to orientate our skills to receive, translate and diffuse new knowledge, in significantly different ways.

How can we connect, enable and deliver better innovative outcomes?
External insights and Intelligence will not become Enterprise knowledge that flows. without real, deep integration.

Receiving the knowledge alone will not turn these into higher scale, richer, more innovation business outcomes, that have real growth value, unless we realize this pending and massive ‘mismatch’ between digital flowing in and the physical process attempting to cope with this to respond with tangible outcomes.

Market trends are changing faster and becoming shorter, so opportunity windows are narrowing. Risks of missing out are constantly increasing for those who are not focusing intently on that critical ‘time to market’ and not constantly streaming their innovation system, looking to automate it where ever they can.

What happens when all this digital knowledge and insights start hitting our desks, having to work through an ongoing manual or semi-manual system, when we are seeking to capitalize on a ‘breaking’ opportunity? It will be a real choke point that will become a crisis – a real burning platform to be resolved.

We need to begin to really think through this as a complete redesign for innovation to cope.

It cannot be a simple ‘bolt-on’ job, it needs a radical redesign. We should grab this ‘moment of time’ to think what a new innovation system will need to achieve, fit for the post-digital age, how it should look, feel and operate like.

Organizations will be in their search for understanding what needs to change within their innovation systems, as soon as they realize that today’s design can’t cope.

What is needed depends on how organizations ‘embrace’ digital. It will need a real depth of understanding and working through.

The pressure for a new business core is building- what will change?
Combining technology and innovation will seriously challenge all of us differently:

• Our mental capacity and physical adroitness will continue to multiply through digital technologies and the need to be far more agile in responding.
• Yet equally our whole domain expertise we know today will eventually be stripped away and replaced by something else based on ‘collective’ knowledge.
• Somehow we will need systems that help us manage the physical world of innovation with the constantly changing and informing digital world that each of us will need to be ‘pulling’ together in different ways.
• We will need to blend intelligence and experience that we need to share  will need new ways of networking and exchanging around these ideas and insights into tangible values that fit with the organizations goals.
• As data flows in we will need to rationalize the risk decision-making in real-time, adjusting risk with opportunities on a constantly changing basis, as our intelligence and knowledge flow update us with more informed understandings..
• We can look to insights as possibly better predictions of success by lessening the risk factors of no knowledge being replaced by emerging knowledge based on the latest insights.
• We will be able to explore the ‘worlds’ trending on those topics relevant to our needs, knowledge and innovation thinking and bring these into our physical environment to adjust our development process.
• We will consistently discover the unexpected and the surprising and we need to be ready to adjust our thinking and capitalize on this quickly before others come across it. We need high levels of agility and responsiveness.
• Through constant validation we can consistently confirm or question the business case, we can test hypotheses and experimentation in real-time, in multiple scenarios and options.
• Having data, and creating a history you can equally be more backwards looking to judge success and failure to learn from these to intelligently improve going forward.

There are a host of significant changes about to occur, to build more of the dynamics of innovation into our management in radically different ways.

These will bring about radical changes in the ways of working innovation, so as to align and extract digital knowledge and ‘fuse’ this into the design process of the physical for final tangible outcomes.

The combinations of social, big data analytics, computing anywhere at any time, the cloud, collaborative platforms, and connecting the virtual world with the physical worlds will change how processes and whole industries will work.

It is how we blend the new business model of service with ‘adaptive’ technology, processes and people, both inside and outside our organizations will fuel success or speed up decline.

What surely is clear is that innovation simply cannot remain on the periphery, it simply has to become the new core of our organizations.

Today’s innovation engine is not fit for today’s or even tomorrow’s purpose. A time to change it

We are dealing with a completely different set of mind-sets, skills, procedures, governance, processes and responsibilities as we adjust to digital, social and technology advancements.

To gain from the digital evolution taking place we need a robust, comprehensive and radical overhaul of much of what is going on within our organizations in relationship to innovation and its management.

We need to not just adapt our processes and structures, but radically challenge them to grab this opportunity to change our innovation processes, so we can provide a more agile and fluid environment.

We should be thinking through our needs of the what, where and how we set about constructing this now.

A radical newly designed Enterprise-wide innovation process, that ‘sits’ in the cloud seems to hold the key, in my opinion, to embracing and adapting constantly to all we have been learning about how innovation works.

Then it is thinking about what technology, digital, networks, relationships and social streaming can bring that when combined and fully integrated within this redesign, is more reliant on technology and is enabled in the cloud. Do you agree?

****My Additional Note: Recently I provided some opening thoughts into a debate on what is missing for our future, here is a link into a part of the deck provided to prompt that part of the discussion.

*** revised on 28th March from the original post.

The post Moving innovation into our core – Part three first appeared on Building Your Innovation & Ecosystem Intelligence.

Part two, recognizing the broken process we currently have that stops innovation from becoming a core.

The innovation process and the structures build into our organization certainly need to be changed.

I outline here different barriers that require a change to bring innovation more into the core of a business.

Today, we are needing to build greater agility and responsiveness into our innovative design to counter a more rapidly changing market, sensing changing conditions and ‘seize’ breaking opportunities. .

A new combination of speed, flexibility, networking and focusing on adapting and fusing the skills and capabilities needed, will require changes in our innovation work.

Our current structures and processes for innovation are holding us back and will continue to not deliver the expected results needed today or the future, giving real growth and sustainability. We do need a far more radical approach to a solution for managing innovation inside our organizations.

The poor collective leadership of innovation, functional design, slow decisions and innovation not being focused enough,  along with a lack of appropriate skills or decision empowerment, are some of the inhibitors around innovation today.

We need to develop more agile and flexible processes that work more on outcomes that ‘seize’ the opportunity seen in the marketplace, emerging from greater (big data) insight, seen as strategically aligned and ensuring processes that shorten the ‘reaction’ to delivery time.

Firstly we have the strategic – innovation breakdown

The primary reasons for the breakdown in the strategic planning process that fails to connect strategy with operations are:

• A disconnect exists between corporate strategic plans, which typically define the company’s targets for growth, and their day-to-day execution activities.
• The annual operating plans are quickly out of date due to constant changes in the market, product, technology and competitive situations.
• The connection between corporate plans and the innovation strategy for new product development and product innovation strategy doesn’t exist in most companies – this is one critical gap.
• The operational side of the organization frequently doesn’t understand the strategy or how its execution connects to business goals.

We forget to alter our ‘thinking’ across different opportunity horizons, to direct resources around those innovations that address 1) the burning needs to improve on the existing here and now, with those that can build into the 2) next and different winning positions and finally, those that 3) explore fundamental different premises that can (radically) alter your innovation landscape. Mapping across all three is often missing, we stay trapped in the ‘here and now’ mindset far too much.

To achieve consistent, sustainable long-term growth and profitability in your company, you must have systems and processes in place to close this gap and connect your corporate plans with innovation strategy and operational activities.

“Our planning sucks, how can we be more responsive”

There is the fashionable argument that you abandon annual plans and you seek fresh planning ways to create an organization ready to react to critical changes in the marketplace. That is great for the little fella, all nimble and lean but for the larger complex organization, they struggle.

Each of the different organizational parts has different reaction and response times, are governed in totally different ways. Plans are essential as the instrument of strategic design but how can these become more reflective and responsive, this is a real thorny problem to crack.

A recent report by Strategy& suggests being more agile requires a clear focus on two attributes of ‘strategic responsiveness’ and ‘organizational flexibility being built into the design of the larger organizations so they can move far quicker as conditions change.

A combination of ‘sensing new risk and opportunities to craft quick responses and also being able to “shift execution rapidly”, applying fast retooling and rework, applying this progressively over weeks and months.

For innovation to fit within these challenges much of the current process and structures need to be changed.

Any ‘rapid action’ requires very different skills and infrastructure to support it.  Organizations will need to encourage a higher level of experimentation, with even more of a constant focus on reducing all the unnecessary complexity.

Reducing all the different concepts going through the pipeline with more corporate-wide support to drive these through the system to meet these critical new opportunities that meet changing market needs or strategic goals. To do this alignment becomes essential.

Pulling together the broken pieces and silos of knowledge will need different approaches

The operational areas in an organization have their own functional execution systems which are often not connected to planning and innovation systems and processes. They remain separated as there is no real depth in the integrating process, this needs addressing.

High degrees of resistance and communication breakdowns need real solutions.

I’ve written extensively on this lack of alignment (for example) and certainly believe there are far better ways to move forward in thoughtful, constructive ways that begin the movement to establish a clearer innovation management system.

Also we focus too much on cascading down organizations, I would argue the cascading effect of flowing back up, from the ‘grass roots’ needs a far more robust system, it provides for a deeper choice of better, connected decisions. It is this ‘cascading’ both up and down on where we often lack the real alignment and fail to incorporate it within our future plans.

Leadership constantly laments about ‘poor innovation’

Many organizations are failing to build and nurture any design toward the ‘innovation ecosystem.’ We are also not formulating and communicating where innovation links into strategy, we are not connecting all the different parts. Innovation stays often poorly articulated, lacking an understanding of what makes up a holistically designed innovation ecosystem.

Often innovation ‘appeals’ because we can build compelling stores. Organizations are poor at building a compelling narrative and lack the skills and communication methods that will engage us.  Innovation understanding is often left to others to interpret what it means to them to figure out their part, with a hope that their decisions will fit somehow.

Because there is often a lack of internal clarity, there is also a poor connection to the external environment where opportunities are never recognized for their internal value to develop. Leadership lacks much in addressing these issues.

We constantly fail  in building lasting client value

Equally, where the customer remains dissatisfied with the present offering, as one not meeting their explicit needs and where they often have to continue to compromise, they are ripe for change.

Often the very leadership of organizations has a less than adequate ‘grasp’ of all the necessary levers for clients’ innovation ‘need’ to not design this in a sustaining, repeatable process with constant customer engagement they keep this ad hoc, project-specific, they miss ongoing value building opportunities.

Innovation stays resolutely one-off, targeted and specialized and disconnected from planning out a series of solutions built through a well thought through a road map of evolving value that builds for the longer-term lasting client engagement. There are notable exceptions here, mostly based on technology solutions, constantly evolving, adding increased benefits over time.

There is such a disconnect going on in ‘talking and walking’ innovation.

The organization ‘demands’ innovation, the leadership presents innovation at every opportunity, often more as a ‘fig leaf’ for the embarrassment that eventually arrives, as innovation in the marketplace. We need to set up a real connection between rhetoric and real value, delivering substance, not just ‘promise’ or intent.

The leader needs to engage become the source or energy point to make valuable innovation really happen, no one else can. It cannot be simply delegated away.

Who wants a leader that simply delegates growth, new wealth creation and your future to others? The need to both ‘walk and talk’ innovation consistently not just in annual meetings or board reports but in their daily engagement and detailed understanding of what makes innovation happen..

We also need to become far more comfortable with our own emerging practices.
I just always feel uncomfortable with the reliance placed on copying others’ best practices. It is inherently wrong for your organization if it believes in its unique design and the offerings it can deliver upon.

If you want to simply copy then seek out best practices and enjoy your ‘race to the bottom’.  By all means, there are good practice solutions to learn from but if you are dependent on others’ best practices you need to kick the habit fast.

Your specific organizations needs its unique design to seed and cultivate innovation, otherwise, you fall into a  trap many constantly fall into. We need to work on our emerging practice as we learn through our own endeavours, far more than copying others. We need to capture these in our systems and processes as our stories and practices.

The constant switching on and off of our innovation activities.

Organizations constantly do this by switching on and off, believing by pressing the innovation button, it springs back into life and delivers on-demand.

We just can’t simply switch innovation ‘on or off’ to meet short-term needs, it is certainly not faddish, it provides future wealth and sustainability and needs sustaining and nurturing consistently.

We need a system that not just monitors the innovating health of the organization but its variances are as vigorously discussed as any operational variance.

Switch innovation ‘on and off at your eventual peril, as you will eventually short-circuit the organization and the source of your future will simply drain away. People leave when they see no future or are fed-up with all the constant change We need to make innovation our core to drive future organization performance and keep it burning bright for all to see and ‘fuel’ into to make it sustain.

An Enterprise-wide innovation process that provides transparency and visibility.

If the leadership of the organization fail to formally integrate innovation into the core of any strategic – management agenda, so that is ‘constantly running through’ the decision-making process of innovation, it will remain disappointing and frustrating in its impact and results.

With the increased disruptive competition and rapidly changing conditions in markets, technology and demands placed on organizations, innovation need to be more central in the design and its management.

The leadership need to close the gap between aspiration and execution of innovation, make it more central in their thinking and activities, delivering the explicit message for everyone up and down the organization to feel more confident that innovation is a core focus and needs development. Make it highly visible and central.

Our leaders need to explicitly lead and manage innovation

Leaders not only need to demand change to come from managing innovation, they need to create this case for change and must ‘make it happen’ by demanding all the connecting parts be understood, designed and delivered, in a more sustaining innovation process.

They need to see a solution that provides an Enterprise-wide innovation process built upon making all the connections for innovations complete understanding, not on selected parts.

One that can deliver organizational-wide visibility and transparency, designed for achieving the greater strategic responsiveness needed from the top and able to give back the organizational flexibility, and flexibility in adjusting resource commitments to meet changing needs.

A redesign that is not linear but adaptive and dynamically evolving, based on changing intelligence and knowledge, to bring greater agility and faster decision commitment into its design, something that our present systems do not have designed into them.

****My Additional Note: Recently I provided some opening thoughts into a debate on what is missing for our future, here is a link into a part of the deck provided to prompt that part of the discussion.**

The post Moving Innovation into our Core – Part Two first appeared on Building Your Innovation & Ecosystem Intelligence.

Arguably this lack of being a core as the central need of providing sustainable growth holds the deeper understanding of innovation back.

A core that could offer up the sustaining value and contribution innovation can make, to the growth and future well-being of organizations and having available the level of resources and commitments it needs. Today innovation seems to be falling short in delivering on its promise. Why?

A three-part series on rethinking the management of the innovation system.

Part one, building the business case of needed change in how we manage innovation.

This part is about those constant top-level concerns that needs finally to be addressed, if innovation ever can become core
So we all hear the constant ‘disappointment’ surrounding innovation. There are consistent concerns of a “lack of resources”, the “top management is not giving innovation enough attention” or “innovation lacks a clear alignment to the strategic direction”.

There are constant complaints around innovation and its lack of ‘impact’ on final delivery from different disappointed stakeholders. To give innovation a better ‘fighting’ chance we need to rethink how we manage it and we have to make it more central to our organization’s thinking, decision making and management in those systems and processes that give it this chance.

Today innovation tends to operate in discreet, often stand-alone applications, where the systems for innovation stay often clustered in specialized groups working on their part. This is partly by design but also by the restrictions we place on ourselves in organizational design or solutions being offered.

We have no solid, robust innovation management system in place that is Enterprise-wide to handle all that ‘makes up’ innovation, we all really do fail to deliver transforming innovation, apart from some notable exceptions based upon emerging technology applications, platforms and integrated designs.

We lack the dedicated organizational process to manage innovation

Innovation lacks an Enterprise-wide Innovation Process as this has not been tackled through any ERP system as yet, apart from some selected parts. Is innovation management too tough to capture as a total system? Can innovation be ‘captured’ fully and turned into a robust process?

I believe so, but it will take a different, more radical form to deliver enterprise-wide innovation that is adaptive, agile and fluid in much of its management.

The flows we need to imagine will be far more constant in change, more dynamic in what occurs and its impact and not that ‘static’ or well-defined inputs that much of the current ERP system requires. It will take a significant re-thinking.

Whenever the activities around innovation are required to be reviewed, much of this ‘selective/collective intelligence’ has to be constantly reworked, to allow it to be disseminated to a broader audience for their response and new input.

What we have today is relatively inefficient and certainly not well-connected to make a system dynamic and agile in its evolution, to parallel the often talked about ‘messy’ innovation system of today.

Innovation has changed significantly over the past ten to twenty years
Innovation has moved from ‘just’ being within the domain of research and development, so as to then be passed over to marketing to implement, it has grown in its complexity with the movement to become far more open and complex in the necessary ‘touch points’ it needs to cover.

A significant range of interested parties have become involved and needed to be drawn into the process of innovation and its development.

Open innovation has been changing the way we see and work with innovation. Ideas are constantly entering the organization as raw concepts or simply ‘weak signals,’ or intelligence, then translated into areas of investigation and then translated into potential opportunities to investigate and explore.

Idea Management is part of an integration puzzle.

Idea Management started as simply a ‘stand-alone’ system but has evolved over the years to continually improve and become the front end intelligent tool to increase engagement and quality of innovation activities.

Within this, it has continued to push out to map the strategic innovation areas and set the hunting grounds for innovation.

The best solutions strive to encourage and create a balanced roadmap of ideas, look at ways to improve cost savings, and encourage dialogues and exchanges. The push to speed up the discovery, development and implementation of ideas is driving much of the idea management software solutions. These systems are improving the ability to offer different levels of governance and reporting, to keep moving towards effective and efficient decision making.

The ability to push the software and the technologies so as to provide the appropriate platform for engaging the creative energies within organizations is a key battleground at present.

Continuous social features are being ‘released’ to improve the quality of ideas by encouraging idea development and bottom-up support with community graduation, narrowing the focus on the most promising and well-developed ideas.

There has been a visible improvement in the workflow set of concepts that aims to simplify the idea development path, and makes progress more transparent. There is this encouraging management engagement through community platforms. All good and very positive.

The core of any idea management system is to drive campaigns, collect and develop ideas and provide the ability and structures to evaluate these and move them through into a pipeline and portfolio management system to be managed accordingly. This has evolved significantly in recent years.

The enterprise portfolio systems are certainly attempting to manage the growing complexity

The providers of portfolio and pipeline management systems have been exploiting the choices of the portfolio management needed, be this managing investment, projects, resources, applications, products, and services.

They are designing them to be an end-to-end solution that constantly are planning the resources needed to achieve a better potential for integrating, deciding and executing around choices, driven by a focus on ‘finding and calculating the ‘hard numbers for the return on investments.

These platforms are providing the opportunity to have enterprise-wide visibility into the allocation and use of resources to deliver against this evolving demand.

Whereas capturing all ideas is at the heart of Idea Management, it is managing resources within the Portfolio.

The present push is towards a more holistic view across investments, the assets, resources and services required that work from capture, through the planning cycle and through to execution and looking to achieve a more flexible integration. Analytics and visualization, along with greater updating of performance management and time-to-realization are being provided.

Yet I feel we still lack all the integration that the parts being offered can provide, for achieving greater line-of-sight and alignment into organizations’ goals. Also in managing the competencies, capabilities and capacities that need to combine and deliver on the potential discoveries made or identified.

Any next ‘big step’ by existing software vendors will require significant new rounds of investment and innovative thinking, is this a step too far for many and does this hold back the evolution we really need?

Social media is being ‘plugged in’ for greater innovation

Both idea management and portfolio software solutions have been working hard to integrate into leading business applications, including IBM Connections, Yammer, SharePoint, and Jive and become a host in the cloud or on-premise.

The need to increasingly connect to all the social media tools to attempt the capture of ideas and manage resources and portfolio decisions is requiring far more ‘real-time’ engagement that is needed to bring into any final decisions on ideas or portfolio management decisions.

Stand-alone or adjoining systems are not providing the full answer we are needing today.

These ‘stand-alone’ systems aim is working hard at trying to create sustainable engagement, encouraging ever-increasingly scale in handling increasingly larger volumes of dialogues, information and data, as well as span global enterprise deployments.

Many software solution providers are working towards focusing on capturing ideas that are Customer need-driven and utilize far more of the cloud-based potential.

By focusing on determining the Ideas and possible solutions to then work through the needed resource, identify gaps and then deliver a Work Management set of solutions, to move ideas through to eventual execution but we still have numerous ‘disconnects’ across the innovation process.

Yet we are still lacking a complete mindset for managing innovation
Historically this split between idea management software and the enterprise portfolio systems might have previously made sense but I think it is possibly holding the integration of innovation back for today and the future.

We need to make a greater connection between what is available, what is possible and what a broad innovation management understanding requires to finally deliver ‘the’ innovation solution and technology is advancing the possibilities here.

I worry over this ‘fixation’ on this front end of idea management as we are in a ‘race’ to provide and improve in a marketplace of 50 plus providers of idea management software. Equally the fragmenting within the messages and value within the portfolio and pipeline providers is possibly a cause for ‘holding back’ by a number of possible clients.

Solutions that don’t seem to align with the organization stay outside and forever stand-alone, not yielding the potential value for all concerned.

Those that can ‘see beyond’ just managing in this one or selected spaces of innovation around idea management or portfolio planning, would radically alter the innovation management game.

Providers may make claims they are achieving this complete innovation management system but I am not yet convinced by what I see. We need a more holistic and integrated approach.

We need to go to the next step – providers of a holistic Enterprise-wide Innovation Process 

We still are falling short in managing the total innovation process. The present software solutions, even if they capture radical ideas seem to ‘boil these down’ and ‘dilute these’ as they have to meet the criteria set within the portfolio management system and stage-gating decision process so as to actually work in delivering clear often predetermined outcomes .

The end result so often it seems is re-affirming the incremental cycle of repeating, predictable, known decisions, based on hard numbers alone and known facts, so as to be able to achieve some ‘given’ set of outcomes, both sold in the value of the software solution and believed as wanted by the management.

So many of our innovations we should be dealing with deals are so often in the unknown, unpredictable, in their uniqueness and today our systems simply can’t cope with these. We still struggle in dealing with a more radical innovation need, where unpredictable consequences can occur both in defining the right inputs, forecasting the process or outcome predictability.

Our present software systems are falling short to manage this fluidness and need for constant agility and adapting.

This is where we need to find a better solution, to find a way, a system and its process, that keeps moving innovation towards the broader strategic core, having a consistent ‘line of top management sight.’ As well as achieving consistent commitment to managing innovation far more dynamically, and in agile and fluid ways,

Even in this uncertainty, we all face today, the full scope of innovation activity has much uncertainty and risk built into it that our present software solutions are finding difficult to manage or capture.

It conflicts as they continue to build linear or parallel systems and not systems that adapt and respond as needed, ones that constantly ‘loopback, re-feeding the understanding to drive greater, broader, ever-increasing innovation performance.

Part two follows in the next post

****My Additional Note: Recently I provided some opening thoughts into a debate on what is missing for our future, here is a link to a part of the deck provided to prompt that part of the discussion.**

The post Moving innovation into our Core- Part One first appeared on Building Your Innovation & Ecosystem Intelligence.