Alignment of Strategy and Innovation - Building Your Innovation & Ecosystem Intelligence

The Essential Connection Between Strategy and Innovation

@paul4innovating — Tue, 27 Jun 2017 12:19:28 +0000

Most organizations are seeking solutions to the necessary connections between Strategy and Innovation. The connection between the two are often broken.

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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Possibly a Significant Shift in the Innovation Consulting World?

@paul4innovating — Tue, 21 Feb 2017 13:43:56 +0000

It always catches you by surprise when one of the leading players within the innovation space makes a change. In this case, Innosight has been acquired by Huron, a fellow professional services firm, one that has the vast majority of their business in the United States. Huron focuses specifically on Healthcare, Education, and Life Sciences and has been to-date far more operationally driven in its delivery solutions.

Being fairly curious you search for the fit and its meaning to both parties as Innosight has been continually shaping their offering to focus more on the strategic positioning of innovation over the past few years as the market has been undergoing a significant change in client demands and innovation solutions. I wanted to work through all of what this might mean and some more.

The transaction overview is ” Huron will purchase Innosight Holdings, LLC for $100 million upon closing, consisting of $90 million in cash and $10 million in Huron common stock, plus contingent consideration of up to $35 million if specific financial performance targets are met over a four-year period”

This time last year we saw another acquiring of a pure innovation firm

This time last year we saw the takeover of Fahrenheit 212 by Cap Gemini and I wrote about it here under “In the blink of an eye, it gets something bigger.” I had suggested at the time that “David meets and marries a Goliath” and worried over the deal for Fahrenheit’s future.

Recently I went back and took an updated look and from all accounts the relationship is thriving (on the surface) and the Fahrenheit team seems to be well on track to achieve their stated aim of being a global innovation strategy and design firm where their stated objectives are “we challenge the belief that innovation is inherently unreliable and have spent the last decade designing the method, building the model, and assembling the minds to make innovation a predictable driver of growth for our clients’ businesses“.

Part of their magic sauce lies in the Applied Innovation Exchange that had been designed and launched by Cap Gemini some weeks before Fahrenheit 212 was acquired. Still taking a fresh look at the underlying changes of that marriage is for another post, let’s return to Innosight’s move of being acquired by Huron.

Back to Innosight.

I consistently look at different innovation consulting firms and the directions they are taking as it makes sense to gauge the directions that client demand is taking. Innosight is one of those first port of calls for me. They have been undertaking some internal moves in recent years, to reflect the changes and challenges around a ‘pure’ focus on innovation and where it fits within the larger organization, by attempting to move further up into the strategic design and alignment in building greater C-Level engagements, searching for larger project sized contracts.

Innosight has been continually shaping their offering to focus more on the strategic positioning of innovation. They break down their offering into three core parts- 1. Create Growth Strategies that “Strengthen and extend today’s business – while harnessing the disruptive innovations of tomorrow”, 2. Develop Innovation Capabilities of “the talent, culture, and systems to make innovation repeatable and reliable” and 3 Build New Business to “discover opportunities, design new business models, and launch high-impact new ventures.

Understanding the rationale. Working through it.

Innosight is a partnership so it was not so easy to gain the type of understanding you require, relating the aspirations, reality with hard numbers. Well as Huron is on the NASDAQ (HURN) it becomes a little easier in what they need to declare for this acquisition.

I was a little surprised that Innosight had a turnover of $43 million in 2016, I was expecting more from a team of 90 people. Also how the breakdown of revenue by industry specific their business profile was not as I would have expected. Although these clearly change by the demand of the clients and the recognition that the consultant can deliver the work, compared to others, in a very tough competing environment.

According to the first webcast on this acquisition (17/2), Innosight has 31% of their revenue in Life Sciences and 15% in Healthcare in 2016, so on the surface, they have a 46% ‘fit’ to Huron. The big difference coming in the fact that Huron is servicing around 500 health organizations mostly individual hospitals and academic medical centers, with 400 universities and institutions. Innosight has focused far more on Corporations, one notable one being Aetna. Huron has around 2,000 employees and having present revenues (excluding Innosight) of $726m in 2016. Is it such a fit?

What did surprise me on how the Consumer Products part of Innosight’s business had fallen away from what I can see and that might reflect the growing gap still to be found at ‘appealing’ to the C-Level on strategic innovation and the ongoing need for operational delivery of innovation capabilities and competencies.

These insights show Innosight has been adapting and responding to changing innovation needs and market opportunities as they felt they could work the horizontal, across industry, for many of the innovation capabilities and designs, although it is certainly becoming more complex at strategic design level. Yet this across-industry has been going against the ‘competitive’ grain when you are facing large vertical and horizontal consulting practices that claim they offer both a real depth of industry and innovation-specific knowledge. Often I do question these claims, in what I see, with notable exceptions.

I think it is this positioning as a strategic consulting company, competing in an extremely tough environment with the big strategic consulting companies of McKinsey, BCG, Deloitte, Strategy& and a whole host of full consulting and service solutions where EY, KPMG, and others all compete for a slice of the innovation pie is a very tough one for Innosight to gain the momentum they would have liked.

Equally, at the operational and integration end, we see Cap Gemini, Accenture, TCS and many others offering digital and transformation services. No, a very tough market to compete in and I think for Innosight this must have been a constant ongoing struggle.

Rooting for the specialist.

I will instinctively root for the focused business that has innovation at its core and Innosight has been one of these. Their focus on strengthening and relating growth needs coming from innovation and its necessary alignment was a good but perhaps too niche a position to constrain their growth against such global competition.

The disruptive message they offered, although a powerful one, needs a highly receptive audience and most organizations leave their changes until they are often in the middle of a crisis and then they tend to panic and call in the ‘big guns’ of the consulting world.

Finally, in this section, Innosight’s growth route through innovation was a good position. They focused increasingly on alignment and taking a ‘future back’ approach to eventual strategic design, to determine new innovation business models was a good targetted focus and has been, I suspect, the reason for their compounding 20% yearly growth. Yet I can imagine they were not achieving that critical mass and scale I suspect they wanted, to stay independent and became open to an offer. For some to perhaps ‘cash out’ while others stay for varying reasons.

In the announcement of this acquisition Huron made the following overview:

“When combined, Huron and Innosight will use their strategic, operational and technology capabilities to help clients across multiple industries develop pioneering solutions to address disruption and achieve sustained growth.

“No industry is immune to disruption. Faced with increased competition, often from unconventional sources, organizations are forced to rethink their historical strategies to stay ahead of market forces and changing customer preferences,” said James H. Roth, chief executive officer and president of Huron. “Together, we will provide a full spectrum of services – from strategy to execution – that will help organizations think, plan and act differently to confront disruption and accelerate growth.”

Built by leading strategic thinkers and co-founded by renowned strategy consultant Mark Johnson and Harvard Business School professor and author Clayton Christensen, the world’s foremost authority on disruptive innovation, Innosight is a trusted partner to Fortune 500 companies and other leaders looking to strengthen today’s business while creating tomorrow’s growth engines. The firm’s innovation and transformational strategies have proven successful in industries undergoing disruptive change such as aerospace, automotive, energy, financial services, healthcare, insurance, life sciences and retail.

“Companies are under mounting pressure to satisfy a range of competing interests,” said Scott Anthony, managing partner at Innosight, who will become a Huron managing director. “But shifting stakeholder expectations, combined with disruptive change, create significant opportunities for today’s leaders. Huron and Innosight’s combination of capabilities in strategy, operations, technology, and analytics will enable us to offer transformative change to address these opportunities.”

Formed in 2000, Innosight recognized that traditional approaches to strategy and growth were not enough to help companies accelerate transformational change. This became the basis for its “future back” approach to strategy. Organizations that apply Innosight’s approach build leadership alignment on a vision for the future and create portfolios of new innovations and growth businesses that address changing customer needs and outpace their competitors.

Applying the same methodology alongside Huron’s deep industry expertise in healthcare, education and life sciences, the combined firms will help leaders in these critical industries successfully navigate changing market dynamics, regulations and consumer expectations to grow for the long-term”

“No industry is immune to disruption” Here lies the rub.

I think this disruption thought underscores the joint rationale for this acquisition. Heron is facing some massive forces of disruption in their primary business of Health as well as Education. With a Republican party looking really hard on how it will unwind or redirect the Affordable Care Act (ACA) The comprehensive health care reform law enacted in March 2010 (sometimes known as ACA, PPACA, or “Obamacare”) has given much of the past growth to Huron. Today they are seeing declines in this sector while this uncertainty continues. Clients are downsizing in projects while the political and macro conditions are sorted out.

The same is about to possibly ‘hit’ in Huron’s Higher Educational offerings as the new Administration has signaled large questions of necessary change in the general direction of Education- Presently with all the uncertainties of the new Secretary of Education, Betsy DeVos and the directions she takes in what some are assuming is a radical agenda of change, leaves the higher educational institutions in a potential ‘state of flux’.

As this potential set of policy disruptions will need time to get the level of clarification and granularity clients required, it exposes Huron and 70% plus of its business to many uncertainties.

Arguably, it will be well positioned when these policy decisions become clarified but that is potentially arriving over the next two to even four years between being decided and enacted, into policy and clarity for the individual institutions to react too.

This present operating environment for Huron does make for real uncertainty, especially in larger transformational consulting projects but it needs to manage the interim in different ways. So positioning for disruptive change and managing strategic and operation transitions become essential to help manage this period of great industry uncertainty.

Transformational guidance becomes the key mutual focus.

Innosight has been positioning itself increasingly as a growth strategy consulting firm focused on helping organizations design and create the future, instead of being disrupted by it. As a leading authority on disruptive innovation and strategic transformation, these identifications of new growth opportunities, making changes through new ventures and designing the capabilities to accelerate to significant industry and organizational change. will require a lot of guidance to support organizations as they contend with the change transforming their industries and businesses.

For Innosight does it make any changes with its direction? Open questions perhaps?

Innosight had a global footprint, it seems Huron withdrew from its international business expansion back in 2015. Although Innosight has 80% of its business in the US, will it continue to pursue growth outside?. It has an office in Singapore and one in Switzerland and when you are servicing Global fortune 500 equivalents you need this broader presence. Huron has really a 100% business in North America.

Do they compliment and focus only on the US market or will they stay global in ambition, if the C-Level remains as an essential focus, it stays both a necessity for one (Innosight) and an aspiration for the other (Huron). That will have its integrating challenges perhaps or will they combined have and global appeal in the focus sectors Huron currently serves as very US centric?

Equally, although Innosight has been growing its Healthcare and Life Sciences business the blending of very specific work on operational matters by Huron with Innosight’s C-Level future back work and the search for growth, new business models and launching new ventures needs some radical aligning to leverage well, it needs some dedicated work.

Innosight by spanning more the horizontal position, across industries needs some recalibrating possibly with Hurons’ more vertical depth and very deep operational engagement. Possibly not so easy but a challenge to extract and leverage the complementarities in many ways quickly, or it gets likely to becomes ‘bogged’ down in those past entrenched internal positions that are highly vertically focused.

Will this be a prelude to a new operating structure? Maybe it is the time.

Having this aspiration of Hurons in dealing at C-Level becomes a reality with the leadership team that resides in Innosight and the thought leadership that constantly emerges in the form of innovation thinking, books, and academic work.

Will Clayton Christensen, along with Mark Johnson and Scott Anthony give Huron the entry point into the C-Level and Government Corridors? I’m not sure it the core leadership team of Innosight is staying or cashing out?. That has yet to be fully and specifically clarified. How does that move across the 2,000 seemingly highly industry specific plus consultants, I think will be an equal challenge.

When you also look at the present advisory heavyweights of Academia, advising Innosight in the form of Vijay Govindarajan, Rita McGrath, Hal Gregersen, Jeff Dyer, Clark Gilbert as well as Clay Christensen, along with numerous others that work with Innosight to varying degrees, it should have greater ‘growth’ gravitas.

If the advisors to Innosight stay involved then the potential to gain leading academic insight, to help open corporate C-Level doors and clarify much, has a powerful ‘enabling effect’ that Huron will need to relate too. Hopefully, they, (Huron) are not losing this in the acquisition as it harnesses a really powerful brains trust in my opinion at the right point of organization entry.

I was a little surprised that Huron has 120 plus client-serving Managing Directors.

From what I understand is that Scott Anthony, the present MD of Innosight, will become one of these Managing Directors positioned in the Business Advisory service area. I wonder about this, for positioning around so much uncertainty and potential disruption if this is the right place?

Of course, I don’t have details of any of the Innosight teams new positioning but to transition from a partnership to a (highly) structured consulting firm as Huron seems to convey. The question becomes perhaps one of utilizing talent in the best way not ‘just’ fitting into given structures.

Maybe something more radical will emerge

I would argue with so much ahead in many corporate strategic redesigns, as well as coping with industry disruptions, both in the US and global markets, the scarce resource becomes those that can articulate and energize the set of strategic decisions needed, experienced in disruption and planning out new business models becomes the critical one to nurture and transfer.

That is not easy as it calls for a combination of change management skills and strategic grounding at C-Level ‘speak’. Then you gain the operational outcome ‘flowthrough’ from this and the challenge is harnessing those fairly rare resources both across vertical and horizontal challenges with the strategic dialogues delivered at the right level.

This managing of an internal design change can become the critical enabler and criteria to judge how this acquisition works in identifying, leveraging and harnessing the diverse resources across the ‘disrupting’ landscape ahead.

The existing structure at Huron is a classic consultants – seemingly siloed.

In Hurons recent risk assessment (Form 10-K) it stated on its employees ” the managing directors are the key drivers of the business. They work externally to serve clients as advisors and engagement team leaders, originate revenue by developing new and existing client relationships, and enhance our reputation. Internally they create our intellectual capital and develop our people. Our senior directors, directors and managers manage the day-to-day client relationships and oversee the delivery and quality of our work product.”

I would wonder how the dynamics and flow of a partnership differs in where it places its emphasis, time, management and energy. I feel it will require some adjustments for Innosight to relate into a much larger organization set up more vertically in focus and structured in the traditional lines of a larger consulting practice?

Finally Huron’s headquarters are located in Chicago with domestic and international (?) offices including those located in the following major metropolitan areas: Atlanta, Bangalore, Boston, Buffalo (N.Y.), Dallas, Denver, Detroit, Houston, Madison (Wis.), New York, Pensacola (Fla.), Portland (Ore.), Raleigh (N.C.), San Francisco, Toronto and Washington, D.C. Whereas Innosight is located in Boston (80%) of the team, Switzerland, and Singapore. The domestic US market perspective will clearly dominate, will it become all-dominating? Are we going to see a growing global footprint or a retreat into America?

I think the acquisition does come as a surprise.

I had not, in all honesty, heard of Huron but that is not so surprising because I am not so focused on Health Care, Hospitals and Medical Institutions, or the operational matters they have clearly built a strong business upon, specifically in the United States. So I initially wondered on the attraction between the two. Just simply why?

It boils down to a significant cash consideration for the partnership of Innosight to distribute, partly knowing being independent is a long hard slog. It is equally this growing recognition that “no industry is immune to disruption” including consulting, often working on perhaps outdated consulting models. It is also a crisis of revenue need for Huron, a publically quoted organization recognizing the deteriorating state of the US healthcare market.

There is this increasing realization that greater disruptive forces are coming into play, in the form of even more competitors, increased pressures on margins, a struggle to achieve the bigger projects in uncertain time and the debate on where to focus, vertically or horizontally.

A further choice of managing all the forces of change domestically in the biggest consulting market of the USA at a significantly changing time politically, or taking out a global footprint further out becomes a real challenge to manage well and keep shareholders happy. Global footprints come at a far higher higher cost to utilization of assets, facing the growing, diverse and challenging consulting market where big seems to be getting bigger and more diverse, offering such scale and access to deep resource to call upon any time. Some tough decisions have to be made here beyond the aspirational.

In summary

Both Huron and Innosight trade on close client relationships once established, a focus on clear reputation, harnessing either industry experience or subject matter knowledge (disruption theory, innovation, business model change) to then deliver to the client’s explicit needs. in potentially more meaningful and focused ways as highly specialized.

Do they achieve a balanced portfolio of services with this deal? Perhaps no, they certainly fill or plug some essential gaps but the ability to really leverage this is the “real ability to straddle“, not just diverse client needs but the one that for me, makes or breaks this, the internal straddling required to integrate and leverage each of the parts into a cohesive whole. It will be interesting to see how this plays out.

The macro and micro forces are in play across all the consulting industry, it is not immune itself. So many questions are being raised on global uncertainties that will impact both the US & global focus for many. Many political and Government decisions will be forcing change but while this stays unclear, for many this is a growing time of uncertainty. It is the ability to “focus out”, design and determine what are the real disruptive forces each client has to double down upon, will provide options and alternatives to thrive in this age of transformation.

As I said earlier that is a rare ability to harness the strategic patterns and design new innovation business models and this takes a specific skill set, which seems Huron are buying in this acquisition of Innosight. Time will tell on the acquisition success as the internal design of Huron to take advantage of these changing market forces does need further fleshing out. It needs a very different language of (client) design and articulation, I believe.

Hopefully, that clarity comes in the coming days in further investor and webcast calls.

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Balancing Our Innovation Understanding

@paul4innovating — Fri, 01 May 2015 13:11:20 +0000

Recently I have been hearing a lot about different innovation equations that will deliver value on the efforts you put in.

I think the activity behind all of this is actually very encouraging, it shows the current dissatisfaction with what we have and the quest for providing a formula for overcoming this ‘present state’.

I think they are all contributing to a promising future. Yet we need to consider the balance within any innovation understanding or equation to derive its real value.
At least this introduction allows me to work in a few of my own contributions here. If you are interested in them, then click on the link, if not just carry on, simple as that, it is your choice.

Some of my contributions towards innovation understanding

I offered up the innovation pathway curve of understanding that has five learning curves for determining your innovation and the migration path to a different future. This suggests we need to break innovation down into its manageable parts. Innovation does not just have a time axis that the three horizons framework refers too but it has a complexity and scope axis in learning as well.

Then I offered up the “building an innovation framework that has real capabilities at its heart” which argues that a ‘given’ formula of SCA = II + OC + EE + MLC + RNE, ‘suggests’ this formula as the combination of positive relationships between the following interrelated parts, so as to deliver a far superior innovation outcome. I have to admit I can’t let go of this one!

My third offering was a joint collaboration with Jeffrey Philips, over at Ovo. This is summarized in “Critical aspects of the Collaborative Innovation Framework”. This is also covered off in a dedicated site at http://cirf.pbworks.com.

Jeffrey and I picked up the baton again in a further collaboration on part of the innovation equation with an alignment view, we called this “the Executive Innovation Work Mat” and went into a significant open dialogue on this as we both judged it as critical and important to advance innovation.

I completed a whole series on this and its seven parts. This rumbles on and gathers recognition of its value to making innovation change. This was the piece of work dearest to my heart.

I think I have missed a few but it all depends on how you understand “equation”. Back in 2012 (oh it seems so long ago) I wrote a piece called “Two sides of an equation for shaping innovation” and this is where I want to focus upon within this post: “balancing our innovation understanding”

I really think we need to understand the two sides of the innovation balance sheet

When Jeffrey and I were working though the initial thinking behind the Executive Innovation Work Mat I saw these two sides really clearly.

Actually we captured it in the final framing, we clearly saw these two distinct sides to consider yet are so mutually dependent. My balance sheet thinking.

The left side of the innovation work mat or my balance sheet contains the soft side of innovation, far more the intangibles of culture, climate and environment, whereas the right side is more the hard aspects, the tangibles of process, design, governance, structure and function.

The middle is the place to build the common language of understanding, look for communicating, cascading and setting innovation in its rightful context to clarify how and why that ‘we’ set about the innovation activities in this particular way.

So is it two sides or made up of three? Well each of the sides, the intangibles more on the left and the tangibles, more determined on the right, make up the hard and soft factors and these all make up innovation that contributes into the middle, where the ‘innovation energy’ is confirmed.

The balance sheet construct delivers the equity equation you gain as the trade off or innovation catalyst, it needs presenting in different narratives and supportive actions . As you achieve a clarity of you ‘innovation energy’, based on your capabilities and capacities to innovate, you deliver the understanding and growing competencies, the required effort and contribution that can be achieved from the extraction from the two sides of the balance sheet.

That is why communicating, cascading, building a common language and the context is in the middle, central to extracting the best result from the two sides of this work mat.

At the time Jeffrey and I were looking at the informal mechanisms and formal mechanisms that contribute into these two sides of the innovation balance sheet.

Here is a list of the factors we felt were major contributors (far from exhaustive) to the soft side of our balance sheet that is made up of culture, climate and environment as our brainstorming to move us to the criteria that always lie under the top-level innovation balance sheet and then the ones that make up the harder side.

Some of course are inter-changeable or reliant on each other, but it gives a decent understanding of what makes up the balance sheet needs we all must have in place to have a thriving innovation organization.

Informal mechanisms (the contributors to the left side of our innovation balance sheet)

Those that are leading to improving the softer aspects of innovation or our left side of the innovation balance sheet) that would contribute to its build.

• Uncovering good and emerging practices in innovation
• The value of good leadership & distinct culture creating the linkages
• Targets and partner identification for relating and collaborating
• Skill of working together effectively – team building, encouraging diversity
• Integrating external parties to leverage through networks and relationships.
• Framing ambitions and plans of strategic targets and relating those to individuals
• Engaging the outer peripheries to capture insights and needs to drive engagement
• Exchanging expertise and seeking synergy in exchanges
• Story telling/ narratives- relating and explaining, sharing and extending
• More bottom-up engagement in formulation – sharing and informing
• Seeking individual insights, encouraging an open learning environment
• Developing the agility to quickly react to changes, effective and decisive intent
• Work on speed, external orientation and improvisation, flexible and adaptive
• To promote “doing more with the same”, less rework.
• The CEO acts as the central source of encouragement and determination
• Encourage informally at all levels in exchange

The formal mechanisms (the contributors to the right side of the innovation balance sheet)

Those that contribute to the make-up of the harder aspects of innovation or our right side of the innovation balance sheet that build this part.

• Ingraining innovation as a corporate function
• Determining how you lead and manage this, how you develop this out in its parts
• Identify the constraints, articulate the resolutions, recognise the boundaries
• Optimizing the process and structures, constantly reviewing to improve
• Determining the allocation of funds to offer the balance needed to achieve the goals
• Innovation portfolio management designed
• Type of openness to innovation flows to encourage and drive outcomes
• Embedding technology and capacity for rapid experimentation, and discovery
• Rapid ideas, discard failing ones & triple investment on good ideas
• Distance from Customer – determining the importance and setting about the connecting
• Ingrain as a corporate functionality the need to always be conscious of greater alignment
• Determining how you lead and manage through governance and design.
• Identify the constraints and boundaries, pushing and probing
• Optimizing the process and structures on an ongoing basis
• Determining the allocation of funds into the different framing activities
• Innovation portfolio management, striving for value, impact and return
• Type of openness to innovation flows and external engagements needed
• Embedding technology and capacity for rapid results and early wins
• Rapid ideas, discard failing ones & triple investment on good ideas, experiment and explore
• Involvement from both Customer and other stakeholders within your innovation process

These were not an exhaustive list, (well they are in many ways) they were the framing or triggering points to relate to the different aspects that need to be balanced when you consider innovation.

The essential seven parts of innovation understanding

The alignment within the use of the Executive Innovation Work Mat

The whole reason we believed in the work mat construct was the make-up of its seven parts. The left side contains the essential aspects of designing the culture, the climate, the environment and how these contribute into the innovation equation. These are far more intangible, softer but vital to make innovation work as they are more people orientated.

The right side consists of the function, design, process, structures and governance that make up the harder aspects, those that facilitate innovation. These are the enablers that manage innovation.

Each side outlined here contributes to the context, the communication and cascading of innovation throughout the organization.

While the Strategic Alignment links all the innovation activities into the corporate agenda. Its goals, strategies and contributes to the need for investments and achievement timescales.

At the bottom of our work mat we have as our ‘flow through point’ – the motivational indicators and measures to gain and frame the outcomes we want to achieve.

For all this you do need this cascading, this common language and context and this is why it sits in the middle, it is the glue that holds all the work mat parts together, to make it identifiable, to complete our view of the innovation equation we need in place.

Deciding the innovation equation is appreciating the value underpinning the balance sheet.

For me, the equation you decide to follow has to be robust; it has to account for a more holistic view of innovation.

We are moving towards better framing techniques for innovation to advance, it is certainly going to be always be made up of part art and part science, yet by us having a clear balance sheet of understanding to think through, in this work mat thinking, this will offer the underpinning that the innovation equation requires, that is ‘sound’ and ‘solid’ to invest into.

The post Balancing Our Innovation Understanding first appeared on Building Your Innovation & Ecosystem Intelligence.

One really big issue is aligning strategy and innovation, right?

@paul4innovating — Sun, 08 Feb 2015 09:25:50 +0000

Achieving innovation alignment always needs clear framing.

I would argue most problems or disappointment with our innovation efforts can be attributed to a lack of alignment to the organizations strategy and/or its poor governance with our end results.

Here I am suggesting a way to overcome this constant frustration.
Poor strategic alignment can be overcome by working through a comprehensive approach to addressing all areas that impact innovation. One such framework I believe can help, as explained here, through the work mat approach.

I believe this work mat approach does moderate and organize innovation for greater alignment. It allows for the senior management to become engaged and shape the direction as it takes a more holistic approach. The work mat contains governance as a specific part of its framing as this can do far more in driving the conditions to innovate.

The intent with developing this work mat approach has been to clearly set out that much-needed ‘greater’ strategic connection through engagement at a senior level, they drive the outcomes, they provide understanding beyond the vision to make the necessary connections, they fuel the engine and ignite the energy that innovation needs.

The work mat seeks out separate conversations on the different domain areas shown above and then combines them. Senior leadership should be articulating what they expect and want from each of the critical parts and then communicate these throughout the organization. The end result of this thinking through provides for a greater ‘common language’, setting innovation in context.

Structuring this well can achieve much towards reducing the multiple interpretations, and the variety of initiatives often described or justified as innovative but definitely missing the strategic mark.

Alignment of an organizations strategy and innovation approach is essential and this needs to flow from the top, but I feel there has not been a suitable engagement platform to gather around and work through, the work mat is aimed at filling that gap.

Many organizations seem to have alignment problems.

A majority of people within the organization seem to struggle to connect innovation with their own place and contribution and this often both ‘contains and constrains’ innovation, they lack a mindset for it. This reinforces innovation as staying locked within its own silo of dedicated people, broader identification can break down.

Far too much time is spent in communication and breaking down barriers and pockets of resistance. We lack broader alignment as well as strategic innovation alignment. Both need resolving. We need to understand the innovation journey.

This framework mechanism becomes the innovation strategic foundation document that articulates innovation and provides the guiding aspects of innovation for others to work through.

Designing a new strategic innovation framework at the top of organizations can help close the many gaps we see today in innovation, especially in the need to achieve a growing alignment to an organizations strategy. You are embedding innovation into the organization core.

Exploring the thinking behind the work mat framework – making the connections.

In a series of previous articles you can explore the thinking and make up of this work mat approach. I would encourage you to explore these, if you want to delve a little deeper. These cover the strategic innovation framework to set the context of the work mat approach for planning the innovation direction.

I have also suggested using the innovation conversation framework discussed in a recent post for deepening your innovation dialogues. Also covered are the principles to cascade effect for better choices throughout the organization for a greater identification and relationship.

Often we don’t give the necessary thinking time for aligning innovation across the organization, we fail to develop the innovation and strategic alignment conversations the way we should, we are sometimes far too impatient to simply get on with innovation.

The components of the Executive Innovation Work Mat, can promote a common language and set innovation in context, promoting this “cascading effect for better choices” to flow both ways and move closer to a well-aligned organization that marks a successful business. Its intended deliverables:

The Alignment linkage within the use of the Executive Innovation Work Mat.

1. Provide an overarching proposition for aligning innovation within the organization to the strategic needs
2. Offer the critical parts of this framework and the ‘essential bones’ that ‘direct and inform’ for the innovation activities.
3. Suggest this growing recognition that all the component parts making up innovation do need this clear articulating.
4. Offer through the work mat framework presented that this can become the vehicle for meaningful innovation exchanges, it guides and promotes dialogue. It aligns intent with activity
5. The work mat builds the common language to allow the innovation conversations to flow and ‘cascade’

One of the most pressing needs today is a real alignment of strategy and innovation

The use of any good innovation / strategic framework should aim to achieve a number of key objectives, including:
– A greater cohesion and consistency of purpose in your innovation activities
– A framework that raises the visibility of innovation as well as reduces risk and misalignment.
– Provide the mechanism for improving the work flow making innovation more dynamic and interconnected throughout the organization
– Deliver a greater connection & confidence that builds for lasting identification
– The use of frames becomes the organizing point for alignment of activities, measurement, compensation and recognition from its inspiration, clarity and connecting and becomes a real sustaining source of impact.

The work mat delivers a more holistic innovation alignment

Covering innovation in a comprehensive and strategic aligned and connected manner does take away much of the guesswork, disconnects and often the poor leadership buy-in for investments needed to support innovation. Giving our leadership the ownership of the Work Mat does establish innovation far more into the core of organizational design, something that is often missing.

I believe this can be well resolved by adopting this Executive Innovation Work Mat framework as a well-thought-through approach.

Designing innovation needs to have this ‘connected’ understanding and some specialized external facilitation would greatly help the senior leadership to work through this, to help them connect many of the ‘dots’ they have limited opportunity to complete themselves, without their significant investment in time and efforts.

I am happy to discuss this further if you believe it has real value within your innovation needs.

The post One really big issue is aligning strategy and innovation, right? first appeared on Building Your Innovation & Ecosystem Intelligence.

I wonder who is withering on the innovation vine?

@paul4innovating — Sun, 08 Jun 2014 14:41:55 +0000

This week I tuned into the Pipeline virtual conference for product development practitioners and gained an encouraging feeling that innovation is progressing along nicely.

Packed all within a day there was plenty of material ‘fodder’ to feed off of and learn from.
A really good conference but what quickly followed was a strong dose of that withering on the innovation vine.

I read two consulting surveys on innovation

I’ve been suddenly pulled out of my virtual bubble back into the harsh realities of where innovation really is. Just simply how innovation is struggling and that lies far more at the top of our organizations than below, those below who are simply trying to ‘get on with the job’ but with at least one hand (or even two) tied behind their backs.

I have been reading two sets of observations, one from Fahrenheit 212, the other from Innosight and my mood began to change. I’m suddenly back in reality where we have this huge gap between those ‘working’ innovation and those at the top simply not engaging with innovation or still failing to understand it or even failing to connect the dots.

A growing gap at the top in what they need to do to make the connections both inside and outside the organization to manage the changing landscape. One that still suggests we have this consistent failure to align the strategic and innovation activities and provide a more balanced orientation in the mapping to different horizon thinking that is needed. It seems perspectives are totally out of whack.

The Fahrenheit 212 Post on their recent observations left me perplexed.

Firstly Fahrenheit 212 asked 100 chief innovation officers a set of questions around their getting their innovation projects to market. They claim that forty-five percent of respondents said fewer than 10 percent of their projects make it to market.

Fahrenheit claim that was an “eye-opener for understanding the challenges that innovation practitioners have,” where Fahrenheit was suggesting 60 to 70 percent of incremental innovations should be the success rate.

As this view came through the Washington Post under “Corporate attempts at innovation are overwhelmingly dying on the vine” I was not able to view the actual results directly or more of the thinking that went into this and can’t find any further reference on this on their website besides a Facebook entry. I’d like too.

Why? – well surely there are significant differences between projects being managed or piloted at the CINO level than passing through the organization as supportive and incremental? Yet until I can understand the context of these ‘statements’ it is hard to judge this piece of information and its real importance, presently it lies as a “oh yeah”.

As a starting point what is judged as an innovation project from the CINO’s perspective versus the everyday innovation occurring. Are these numbers so “eye opening”?

The whole position and value of the CINO is certainly up for grabs and in a ‘forming’ stage. One really good point made as a quote by Jon Crawford-Phillips, a partner at Fahrenheit 212 was this: “The primary value of the chief innovation officer is the connectivity between the company’s growth strategy and the decisions and focus of the senior leadership team and the translation of that into an innovation agenda”.

Crawford-Phillips was recommending corporations don’t align innovation with their financial interests and suggested establishing this. He comments: “There’s a strategic way in which they allocate resources to core innovation, and there’s clear metrics around the performance of core innovation and a clear understanding of the financial impact of that innovation on the company’s balance sheet.”

I struggle with what I should be getting out of this ‘report’ as Fahrenheit 212’s suggestions because if they are determining clear metrics in core innovation performance and a clear understanding of the financial impact on the balance sheet then it is no surprise innovation practitioners have difficulties in getting initiatives and projects through organizations. Can projects that are in themselves innovative be measured on the same metrics as established known ones?

The comments reported from the survey leave more questions than answers and has this set of observations really helped ‘advance’ innovation? Maybe more will emerge. It seems to fit perhaps with their Money and Magic message.

On the other hand, Innosight and their Strategic Readiness Survey really is the actual eye opener.

Innosight offers an executive briefing on their “Strategic Readiness and Disruptive Change” and this survey throws up some serious worries for me.
The report prompts deeper thinking on how organizations are really having difficulties in transforming themselves with all the disruptive change going on around us all. A real eye opener.

Innosight’s summary provides a good snapshot of the issues:

“Disruptive change is accelerating, driven by the rapid emergence of new technologies, the blurring of lines between industries, and competition from both traditional and non-traditional players. As a result, corporate lifespans are shrinking”.

“How does the shifting landscape affect enterprise strategy and corporate innovation efforts? To see how organizations assess their ability to anticipate and respond to disruptive change, we (Innosight) recently surveyed more than 800 executives across 20 industries. The results shed new light onto the challenges and opportunities that leaders face in crafting strategies to steer their companies in both the near and long term”.
Top-level findings included:

Fully 85% of respondents say their organizations need to transform in response to disruptive change – yet only 49% say that feel very confident or confident that their organizations are prepared for transformation in 3 to 5 years. That number drops to 42% in a time frame of 5 to 10 years.
Large companies face an even greater “strategy confidence gap.” 83% of respondents from companies with over $1 billion in revenue agreed with the need to transform, and only 36% say they are confident to do so in a 5 to 10 year time frame.

The confidence gap suggests that organizations lack both the long-term orientation and the tools to plot long-term strategy. The survey bore this out:

Only 12% of organizations have a formal growth strategy with at least a 5+ year time horizon.
The remaining 88% either have no formal growth strategy or it is shorter term.

This short-term bias has implications for the ability of companies to develop disruptive or transformational innovations—the kind that open new markets and attract new customers—and which typically require a longer-term perspective.”

What a difference a well-structured survey and report can make.

I would recommend taking the time out to read this report. It signals much of what is so wrong at present in the sacrifice of the future, even the eventual existence of the organization in years to come.

This report seems to reflect a broader trend that this frightening “strategic confidence gap” is a huge one, where senior executives are seemingly being increasingly caught up in the short-term demands.

They seem to have scarce time to re-equip themselves, let alone their organization, for the changing landscape and are simply ‘kicking the bottle down the road’ and taking the pay packet that goes with short-term performance. Surely this has to change? Is it so bad?

This report is indicating it is really bad.

I liked the heading to each part of the executive briefing from Innosight as they do summarize the challenges that need to be faced and resolved.

The Confidence Gap: The Desire – But Not the Ability – to Transform
A struggle to Keep Pace : A Sense of Falling Behind the Market
Strategy Shortfall: Growth Plans Focus on Near-Term
Process Shortcomings Undermine Long-term Planning
Technology and Changing Consumer Preferences Expected to Be Most Disruptive
No Lack of Ideas, But Difficulty Getting Through Innovation’s “First Mile”

The last heading is a clear nod to the topic being explored in a new book. Recently Scott Anthony , Innosight’s managing partner, wrote a book “The First Mile: A Launch Manual for Getting Great Ideas into the Market”.

That first mile—where an innovation moves from an idea on paper to the market—is often plagued by failure, in fact, less than one percent of ideas launched by big companies end up having real impact. The ideas aren’t the problem. It’s the process.

Gaining value from consultants’ insights if it enters the public domain

We should get solid value out of research or insights from any consulting research if it is published. So two of our leading innovation consulting companies, Innosight and Fahrenheit 212 approach knowledge sharing in different ways.

Innosight provides a good depth in their report, although it is perhaps light on final takeaways and conclusions, whereas Fahrenheit 212 reported comments are just, well, simply ‘light’ and lacking the depth I would expect from them. At least their survey should link into their own report. This I simply can’t find.

I finally reflected on what makes good thought-leadership from consulting practices

Take a look at this from http://www.sourceforconsulting.com/whitespace/

What makes good thought leadership?

“The clients of consulting firms are inundated with information and analysis from every direction. Unquestionably, the vast majority are binned or deleted instantly”. So what are the factors likely to attract attention, Sourceforconsulting.com suggest the following:

• Differentiation – will the potential reader pick up and begin to read this piece of thought-leadership? (If it is actually available even!)
• Appeal – does the writing style and presentation encourage the reader to keep on reading past the introduction and beyond? Where do they go from this?
• Resilience – will the reader feel confident in what they are being told? Whether a client buys into the idea a consulting firm is trying to put across depends on the evidence.
• Prompting action – ( I kept all the guidance within this section in, as it is relevant to the two reports I have focused upon) Will the reader do something because they have read this report?

Good thought leadership takes the reader beyond the ‘that’s interesting’ stage – it gives them the tools and inspiration to identify issues in their own organization or to begin to address a pressing concern.

We ask whether the next steps for the reader are clear. We also check that the material isn’t a poorly disguised sales pitch which would undermine its credibility and chances of prompting action.

A tale of two both working in innovation consulting.

Two innovation consulting firms offering up their insights and I feel the one from Innosight is simply much further down the thought- leadership path, in its linkage of its practice and report around disruptive change. It ‘calls for’ and ‘prompts’ action.

Perhaps Fahrenheit 212’s report should have been rooted far more in what it does, that is identifying, developing, designing and implementing profitable new products and services and then framing this within their survey remarks, as this is the space they play in and by all accounts play well. It would have made better sense to me.

I think we all need to think about why innovation might be withering on the vine. We all need to ensure the contributions we make, into conferences, summarizing reports, writing blog posts or being engaged in innovation activities, as consultants or practitioners.

We need to ensure that we do not lose sight that innovation is still struggling to make headway in the ways it should, with the appropriate messages getting delivered effectively and sometimes we all often miss that ‘line of sight’ on that.

Any thoughts on the observations from the reports or what they contribute into our thinking around innovation?

The post I wonder who is withering on the innovation vine? first appeared on Building Your Innovation & Ecosystem Intelligence.

Alignment is needed everywhere

@paul4innovating — Sat, 08 Feb 2014 16:10:25 +0000

Alignment of Innovation to Organization’s Strategic Goals

Working in most organizations you spend a disproportional amount of time on looking to achieve alignment. This can range from aligning your meeting schedules to the bigger strategic issues by gaining agreement on the way forward.

I would bet you that working on alignment is certainly one of the main tasks that is sucking up a large part of your working day. Interesting enough the higher up in the organization you go, the more you have to seek alignment. Gaining alignment is actually very hard.

In corporate life we are constantly attempting to also link organizational goals with our own personal goals. To make this alignment, it requires the difficult aspect of achieving common understanding of all the parties for the specific purpose you are requiring, so as to achieve a consistency between ‘agreed’ objectives and the implementation of these across those involved.

In pursuit of alignment

We seek alignment to many things but three are critically important to us as individuals.

Firstly alignments from others to our creative activities, both in those that contribute to the strategic objectives and those personal ones in the work we do.

Secondly, we always need to work on how we set about the way we communicate if we want to achieve anything within a team or our organizations.

Thirdly, alignment becomes essential in how we execute, is it going to be heaven or hell or simply nicely in the middle, well done? We just can’t avoid alignment, yet we seem to do a poor job of this when you ask, why is that? We constantly talk more about misalignment.

Part of this reason we see more misalignment going on around us is the magnitude of this constant change that is swirling around us, coupled with the incessant pressure for new sources of innovation is causing us increasing anxiety to work on the knowing/ doing gaps more and more. Alignment remains one of our best answers to communicate the ‘need to agree and do’.

Achieving alignment, arranging all those planets to be in line, can provide the much needed impact to a whole lot of what we do. Alignment also needs that other magic word of ‘objectives’, that specific need to always set clear objectives between ‘us’ to gain this essential alignment.

Understanding the complex linkages within alignment

To get closer to achieving alignment for innovation, as an example, we need an overarching strategic design, to reduce the ‘disconnects’. Innovation needs constant alignment. One essential need is to provide a well designed strategic plan that will allow the connections and reconnects needed. so as to allow innovation that greater freedom and scope to contribute into the growth organizations leaders are demanding to keep us all ‘still on track’. We need to seek out alignment through clarification, through talking to each other, to working explicitly from the ‘same page.’

Yet good intent is not good enough as I have outlined before “However, even when executives understand the linkage, they may fail to understand how to ensure linkages between corporate strategy and innovation actually does lie with them to be communicated throughout the organization. When executives simply request innovation and delegate the decisions and definitions to business line leaders or executives outside the boardroom they are delegating the growth and future of the organization to others”

We are constantly fighting the failures within organizations for achieving alignment

There are so many failure points. For instance how often do you see those failures to translate the strategy of the leadership’s thinking (often those vaulting high-level ambition ones) into offering the additional leadership guidance to achieve these? This lack of guidelines or framework reduces the potential for alignment, it stops turning ambitions into specific actions that allow these strategic objectives to be translated into specific realities, that others can really identify with.

We fail if we don’t have the abilities to translate and communicate those objectives throughout our organizations to gather around and work towards achieving makes significant difference. Leaders leave strategy far too much in the abstract. They need to consciously work on the design principles and downstream choices. I have offered the “choice / cascade integrated innovation model” to help in this.

We also fail to communicate when conditions in the market place show signs of real change, we stay aligned to old objectives, we don’t dynamically adapt our strategy and thinking. We allow it to remain static, locked into old, out of date thinking, missing the essentials of new knowledge to flow through adaptive learning.

Then we fail when we simply struggle within ourselves, we can’t personally or organizationally adjust quickly enough. We still find great difficulties to really learn how to pivot in larger organizations or in our personal learning, yet this is becoming essential in today’s world, to adopt to rapidly changing conditions. Take a read within Steve Blank’s postings on pivots, maybe as a start here on a critical aspect of managing today.

Then we can fail because we struggle to align organizational capabilities with our strategic and innovation growth objectives. We are constantly battling fatigue, resistance and ownership. We fail to often take the dedicated time and consistent focus to build our capabilities to establish new ways of working, to regain those creative energies.

We then really fail if we can’t convert strategic intent, this ‘strategic enthusiasm,’ into a clear translation of fresh but sustaining investments into those that can help change our organization capabilities to learn and deliver afresh but with renewed vigour . We need to align our desire with clear intent, purpose and objectives.

I’ve written about innovation failures before, it starts at the top, if you need further thinking in this area take an additional read but the critical point here, is recognize and then work actively on all the potential failure points that are stopping your aligning.

Once you recognize these and what they are potentially doing to you, you can address them and remove these blockages to regain the essential alignment necessary.

Overcoming potential failure, alignment might come through more dynamic linking.

To achieve a more dynamic linking we need to find new ways to translate strategic ambition into clearer downstream choices for our innovation activities. I believe we need to offer a more explicit design from the top of our organizations to guide and frame innovation, one that offers an outline of actionable design principles.

The design needs to be specific enough but without prescribing all the details. It is amazing on how much knowledge does reside within our organizations. If it doesn’t, well it is getting easier and easier to go specifically outside the organization where you will find more thoughts to stimulate the potential answers, but I’d tend to place the caveat, as long as you understand the context but these ‘answers’ can show up in so many totally unexpected places, particularly if you wear different inquiry lenses.

We need to translate the organizations innovation ambitions by providing adaptive frameworks to build within. Finally to sustain them there is the leadership need to provide all the necessary ‘capitals’ for building the required capabilities and the capacities to be understood and established, to achieve innovation alignment.

Putting together alignment and objectives needs a specific design

The alignment within the use of the Executive Innovation Work Mat

I’ve argued that the adoption of the Executive Innovation Work Mat does offer a terrific framework for achieving this triple alignment of 1) communicating strategic ambitions and goals, 2) aligning the conditions to allow innovation to be put to meaningful work and then 3) working towards building the necessary design of capabilities and capacities to execute around these plans.

By working through a better understanding of the innovation ‘parts’ that make the whole we can translate our executive intentions by engaging and then communicating through the work mat so innovation can become explicit to all. You come closer to organization and personal alignment. You create the conditions for more explicit outcomes, aligning activities within the overarching frame of a desired culture, environment, governance and processes that flows through specific contexts, better communicating channels and choices.

You move closer to alignment because you are all working within the same overarching innovation framework creating the common language, gaining the appropriate context and all communicating on this- you are moving closer to alignment.

The Executive Innovation Work Mat can be summarized as a place for real beneficial alignment

The framework can create cohesion and consistency of innovation purpose that will reduce many existing barriers and uncertainties around innovation
The framework itself will generate work flows that links, become more dynamic to explore and promote the holistic needs for innovation to work. In innovation skills, capabilities and competencies needed. They become more cohesive, coordinated and focused.
As the framework connects, in its understanding and as its impact grows, we certainly can ‘see and believe’, our confidence builds. Both formal and informal areas are addressed in parallel, growing all-round identification and alignment.
It can reduce present tensions and increase the dynamics within innovation in dialogues, framing and identifying with the organizations innovation goals
You can begin to align compensation and incentives into your abilities to generate the innovation activities that provide the impact the organization is looking for. You can understand and measure innovation impact far more through a well-designed framework

We do need a unified view of innovation design and I believe to ‘arrive’ closer to alignment there is a clear, perhaps a compelling value proposition that a well-designed innovation framework, like the Executive Innovation Work Mat does offer.

I certainly believe this can move you closer to spending less of your day working on the negatives of bad alignment into generating positive innovation outcomes, simply because you do have in place an aligning framework that works on dynamically linking all the parts, one you can gather around.

I can’t promise it might not make you business day any shorter but it might make it a far more positive experience,where you are aligning your contributions and expertise into a specific innovation design, where innovation activities do link into organizations strategic that is needed and achieve this often elusive alignment we all are search for, far more than we want to acknowledge.

I’m more than happy to explain the approaches taken in the Work Mat methodology for Innovation’s overarching design, if interested.

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Framing innovation around four management dimensions

@paul4innovating — Wed, 17 Jul 2013 15:27:50 +0000

Julian Birkinshaw, the London Business School Professor for Strategy and Entrepreneurship wrote in his book “Reinvention Management” about the failure of management. He is a strong advocate of reinventing and broadening out the awareness and need for a more disciplined and up to date practice of management

Working through a kind of contingency theory of management

Julian points out different situations demand different kinds of management. To be effective, a manager needs to adapt to the demands of the situation. Managerial behaviour is mapped on four dimensions: bureaucracy-to-emergence, hierarchy-to-collective wisdom, alignment-to-obliquity, and extrinsic-to-intrinsic motivation.

The principles of emergence, collective wisdom, obliquity and intrinsic are newer ways of thinking about management. I must say I like these as I do his framework as a really good way to think about the approach we need to explore that fits with the strategy and the way we want to develop a business and its environment.

Innovation needs to exploit all the ‘opposing’ principles across the four dimensions

Taking Julian Birkenshaw’s thinking about this framework, my intent here is to offer it up as a more than valuable way to think about where and how innovation links into the management and direction of an organization, and what might ‘block’ it. To recognize the assumptions and beliefs on the ways we can work can help resolve some of these barriers to innovation.

You need to explore across these often opposing dimensions so as to build the business case for innovation that fits closer to the organizations accepted routines or recognize those that need to be challenged for broadening out the potential of innovation.

Recognizing how any innovation fits is partly appreciating these dimensions for the type of work and approaches needed to be managed, otherwise it can lead to growing frustrations.

The first set of principles is about managing across the activities, how they are coordinated.

The opposing ones are bureaucracy where more formalised rules, job roles, procedures and formal guidance tend to dominate. To a large degree the emphasis is on predictability, where initiatives can be stifled and you have less creativity and flexibility. It reduces autonomy. It might through this ‘bureaucratic constraint’ limit innovation to being more incremental as the outcome.

The opposite one is emergence, where there is a greater push for independence, higher autonomy. This will tend to led to potentially higher innovation that can become more radical, distinctive that allows for individual breakthroughs. The ‘feeling’ of independence tend to generate stronger team cultures but can become a little more chaotic and ad hoc to bring together in cohesive end results.

The second set of principles relates to how people are making decisions within the organisation

Many organizations ‘suffer’ from a heavy emphasis on hierarchy where authority and power dominate decisions. The higher you are, the more you are perceived as possessing greater expertise, or thought to have.

There is a recognition that the clear pathway to the top works around clear accountability, handling decision-making and the organization of work in clear, distinct ways, striving for greater predictability.

The downside of this ‘clarity’ is that it does block initiative, stops a lot of upward communication and can easily affect morale, if managers are not really listening, just feeling they are the only ones capable to make the decisions.

The alternative is working towards a greater collective wisdom where people get drawn in to contribute to decision-making and feel it is a collective ‘problem solve’. This allows for the potential for having more knowledgeable people, valuing more their views and where you strive to meet this higher engagement and encourage a clear sense of identity.

There needs to be that constant ‘listening’ across the organization to gain greater insight. The downside is this can take a longer time for decisions to be made and works against you in times of crisis or where time pressures are critical to meet.

You can become more inwardly focused to achieve this ‘collective’ decision necessary and this requires a more demanding set of skills to manage well. Building on collective wisdom makes for greater potential for innovation.

The third set of principles relates to how people set and pursue goals.

The argument of having a clear alignment is that you are consciously working towards common goals set by the organization. The value of this sense of common purpose within teams across functions is that you can pursue a ‘tighter’ strategy that needs that significant coordinated action. Innovation tends to require this.

The problem can often be that this can have is the over-emphasis on key performance indicators, to measure this alignment progress, can become counter-productive. Often as innovation is based far more on many intangibles this search for a constant measuring can become a problem.

This is where I have argued the value of the Executive Innovation Work Mat approach comes in, to actively seek alignment from having to work this out differently, where innovation is needed to more central and clearly aligned.

The opposite is obliquity, the encouragement of deviation from a ‘given’ set direction, by encouraging more individual goals, that can be intuitively working towards broad overall objectives set within the organization.

Again by offering a well-articulated and well-communicated innovation strategy that can be delivered in an organizing framework through this same Innovation Work Mat approach you can loosen certain controls and indicators, then promote the ones that allow greater ownership within the Strategic Innovation framework, that guides more than directs.

The balance has to be struck on coordinating efforts, clarifying issues through governance and engagement throughout the organization, one that is well communicated, actively reducing distance and bridging many disconnects surrounding innovation, that can happen with too much obliquity.

The fourth set of principles deals with how people are motivated within organizations

The higher emphasis on extrinsic motivation or form of reward is often the preferred route for organizations. It focuses on the ‘harder’ aspects, those quantifiable, mostly tangible outcomes that give clear measure of results.

There is though the darker side of extrinsic motivation by threatening the holding of reward unless certain measures are not carried through.

Organizations find extrinsic measures far easier to implement and monitor, yet increasingly we are feeling more dissatisfied and less engaged as they don’t tap into our inner motivations as much, as those that ‘just’ satisfy the general needs.

The tougher aspect is to offer up more intrinsic motivation. This tends to become more individual, it recognizes your specific part in doing a task, activity or project well. Intrinsic motivators are arguable far more satisfying but harder to manage.

Often the debate can hinge on perceptions of the job being done between the parties. Innovation needs to search out these intrinsic connections through recognizing individuals need motivation but these can come from again, providing a well-designed innovation framework to work from. It is of more importance to establish clear innovation goals that are far more ‘touchable’ and pertinent to our own working domain.

We need to work far more on constantly evaluate innovation returns on each person’s contribution within their immediate space, using measures and metrics that are attuned to their personal innovation activities, certainly beyond the ‘simple’ and broad ROI’s set by organizations. Sadly innovation doesn’t get measured this personal way, yet it can be and is needed to be for a more ‘connected’ identification of what can make up collective success.

Applying your thinking to these dimensions and principles for innovation to thrive

The important points to remember here in these different dimensions is that you need to recognize the differences and what it might mean; you need to work through choices about how the work of innovation can be done against how it might end up getting done.

The principles offered here is not just simply a clear one or the other, a right or wrong, it depends on what you want to achieve and the level of engagement you are wanting from innovation. Also how it can be best suited within the organization.

If your current situation tends to be more one sided than the other, then this might limit innovation engagement or choice, it might limit motivation and creativity. In using this four dimension framework you can begin to have a dialogue across the different dimensions. You can begin to discuss and become more active in making conscious change as they potentially might be inhibiting innovation’s contribution.

Clearly any moving from one principle to the other side needs to always link the innovation outputs to strategy and the environment you wish to create and that is a broader collective challenge, of managing change for innovation so as to improve its contribution, by exploiting fully across all the dimensions in thoughtful ways.

The ability to align resources and direct the focus of the organization is the role of senior executives. Innovation success starts with vision, engagement and commitment from these senior executives and then working through all the combining elements that make up innovation, so it can integrated these into a clear innovation framework that clarifies where innovation needs to strategically fit.

I have said it previously here: “Today, we face a different type of performance – one that is not ‘just’ dependable but one that is often unpredictable, one that seems perhaps more suited to innovation that outsmarts others in unique ways. We need to be predictable in performance but we need to deliver unpredictable innovation that wows our customers and the markets to achieve this.”

Achieving on this aspiration requires active, engaged management, working actively across all aspects of the innovation process to achieve this end of the wow!

We do need to constantly ‘work’ across these four dimensions of management practices and process offered by Julian Birkinshaw in his book, for greater innovation understanding. We need to be equally fluid, flexible, aligned and constantly agile.Watch Julian’s view of why Management is being more challenged far more today.

For me, especially where innovation is concerned, is that we need better organizing frameworks to manage within organizations to ‘extract’ the value within our people’s contribution.

This is by providing frameworks and the right environment to allow innovation to work well. In defined ways, well thought-through, with engagement from the top and across all management, that is being constant and fully aware.

The post Framing innovation around four management dimensions first appeared on Building Your Innovation & Ecosystem Intelligence.

Figuring out a different strategic alignment with innovation being central.

@paul4innovating — Thu, 13 Jun 2013 14:04:50 +0000

Strategy as we have previously known it is officially dead. Strategy is stuck! Competitive advantages have become transient. We are facing situations where advantages are copied quickly, technology is just one constant change, and our customers seek other alternatives and things move on faster and faster.

In a new book written by Rita Gunther McGrath, a professor at Columbia Business School in New York and one of the world’s leading experts on strategy, she has been exploring the changes rapidly taking place called “ The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business”

“Strategy (in the past) was all about finding a favourable position in a well-defined industry and then exploiting a long-term competitive advantage. Innovation was about creating new businesses and was seen as something separate from the business’s core set of activities.” “Sustainable competitive is not just ineffective, it’s actually counterproductive” says Professor McGrath.

She rightly states:“Think about it: the presumption of stability creates all the wrong reflexes. It allows for inertia and power to build up along the lines of an existing business model. It allows people to fall into routines and habits of mind. It creates the conditions for turf wars and organizational rigidity. It inhibits innovation.

It tends to foster the denial reaction rather than proactive design of a strategic next step… A preference for equilibrium and stability means that many shifts in the marketplace are met by business leaders denying that these shifts mean anything negative for them.”

Innovation needs to finally emerge in a new form.

Innovation cannot be separated from implementing an effective strategy, actually it is becoming far more central. Yet our leaders are constantly failing to recognize their essential role they must play to allow innovation to realize its place within the goals and needs of the strategy.

They will be in denial by failing to build the innovators organization to manage this new transient advantage. One that is highly flexible, agile, built around a constellation of emerging business principles that builds upon the ethos of imagination, exploration, experimentation, discovery and collaboration (Steve Denning).

A new structure that has as part of it one that promotes independence, diverse thinking and seeking out individual contributions. To achieve this innovation needs to be fully embraced as a clear competency that does need to be professionally built and certainly well-managed; it needs leadership’s total engagement for establishing new principles, practices, attitudes, values and beliefs that become central to the new way forward to deal with this new transient advantage suggested by Professor McGrath.

Today the rhetoric outweighs the reality for innovation and we need change!

Survey after survey of our leadership within organizations talks up innovation

* Over 70% of CEO’s surveyed constantly named innovation as within their top three strategic priorities
* 93% of surveyed executives said the long-term success of their organization’s strategy depends on their ability to innovate
* For almost 90 percent of CEO’s, generating organic growth through innovation has become essential for success in their industry.
* Also over 70% of the top executives identified themselves as the primary driver of innovation

Yet innovation is failing, reality is constantly hitting home in poor results.

* Despite increased business investment in innovation, only 18% of executives believe their company’s innovation efforts deliver a competitive advantage. Source: a new Accenture study (May 2013)
* The “absence of a well-articulated innovation strategy” was identified as the most important constraint hampering organizations from reaching their innovation targets, in a study published by Capgemini Consulting in April 2012
* Almost 60% of firms surveyed admitted that they have no explicit innovation strategy ( a joint Cap Gemini and IESE study)
* Only one-third of the executives report innovation is fully integrated in corporate-level strategies (McKinsey Quarterly, 2012)

Then you go deeper into organizations current position on innovation

The formal management of innovation is largely overlooked and to quote these statistics from an Innovation Leadership Study in March 2012:

*Only 30% of respondents agree they have an effective organization structure for innovation
*45% do not have a well-defined governance structure for innovation
*40% lack clear roles and responsibilities for innovation
*39% state they do not have an effective decision-making process for innovation
*49% are not having a well-defined process to prioritize and allocate time and funding to innovation projects
* 54% of those surveyed indicate they do not have a formal KPI system for promoting innovation

Innovation comes to a screeching halt because it is not totally integrated and fully supported from the top and embedded into the core of organizations. Innovation is failing to deliver on its potential. Can you imagine all that invested time in innovation, on tasks, products, concepts, ideas that fail? There is real waste if innovation is not fully aligned to the strategy.

If these constantly don’t align to corporate strategies, someone somewhere should be concerned, I mean really concerned. Perhaps as “mad as hell” and we are not going to take it any more. Something has to change or many of these organizations will not exist in the future .

The great disconnect at the top of organizations for innovation is in plain sight for all to see.

So we must see there is a huge gap that does exists between what executives want, and what the business believes and is knowing what is actually going on. Innovation for its needs actually lie in the senior executive own hands:

Executives need to demonstrate that they want and need innovation
They must become more engaged and outline (in some detail) their expectations
They must create a framework or structure to ensure it exists

Innovation success starts and stops with senior executives.

They want innovation success but they consistently fail to understand their part within the innovation need-to-succeed. Only senior executives can:

Communicate and develop the innovation vision and work towards actively reducing the barriers it faces within their corporation
They need to bridge the existing culture with one that promotes innovation, where both short-term need and long-term sustainability are equally encourages and worked upon
Influence and encourage the breadth of skills and capabilities needed in innovation to be given the appropriate focus for its organization to successfully innovate
Establish the environment and then create and support the incentives where innovation can flourish effectively.
Work constantly at ensuring the conditions for success is well-communicated and the clear goals and expectations are articulated.
The top executives must understand the investment required for innovation and provide the adequate resources and funding along with clear directions
Actively seek alignment of the innovation activities into the strategic needs they see as critical to work towards
They need to set the innovation strategic agenda and provide a robust and clear integrated innovation framework like the Executive Innovation Work Mat, for example.

The sad, sad truth is that many of our leaders still cannot get comfortable with innovation.

Many of our present leadership of organizations are actually uncomfortable with innovation; they want to keep it on the periphery of their thinking. It disturbs much of what they have worked all their careers upon, honing a highly efficient and effective organisation that minimises the risks, reduces the surprises and works away in a highly predictable and steady way.

They often lack any real depth in innovation experience and training. They are fixated on the short-term, often to the detriment of the longer-term opportunities due to tenure and their incentive metrics.

Today the senior executive loves to get fully involved in the urgent needs of the day, moving constantly from one operational oversight meeting into another, spending decreasing time on the important.

The pressures and demands placed on them to respond, to react, to comment on day-to-day events, are growing in priority to be seen as ‘being on top of these’ but are they losing the longer-term perspectives and detachments needed for designing organizations differently?

To meet rapidly changing challenges and actively working upon new organization designs to give a new fitness and intent? Often these seem rushed and reactive to threats or poor results.

The larger the organization, also the greater the disconnect is happening between themselves and their employees and this is creating increasing growing barriers to understand the pulse of the business or stay tuned to market shifts.

Organizations are losing any competitive advantage as they are failing to see a huge change taking place before their eyes as they remain rigid and fixed, locked in the past. Internally alignment is becoming harder. Advantage is only short-lived, yet our organizations are totally encumbered by out of date designs and structures.

Organizations are being challenged far more today and their relevancy needs radical redesigns and stepping back and designing these is becoming critical. The core of our organizations needs to shift towards more agile, adaptive and innovative designs.

The need for a real alignment of strategy and innovation

Innovation stands in service to strategic goals such as growing market share, differentiation and disrupting adjacent markets, serving the consistent changing and demanding customer needs by spotting these and then exploiting them rapidly and effectively.

Creating clear goals and linking/aligning innovation to those more agile strategies is a vital role for CEO’s and senior executives. Senior executives must establish the manner in which innovation fits within the strategic context established by goals, vision and strategies.They cannot abdicate this role. Change is hard, so is innovation.

However, even when executives understand the linkage, they may fail to understand how to ensure linkages between corporate strategy and innovation actually does lie with them to be communicated throughout the organization.

When executives simply request innovation and delegate the decisions and definitions to business line leaders or executives outside the boardroom they are delegating the growth and future of the organization to others. They are killing the true potential of innovation as it remains unaligned. This cannot continue, we need to bring innovation into the boardroom as core.

If we are in a world of transient advantage as Rita Gunther McGrath suggests, she also clearly states: “Innovation needs to be a continuous, core, well-managed process rather than the episodic and tentative process it is in many companies”.

Identification comes from the top and from our customers

This new innovation core can only be led and fully integrated from the top, aligned fully into the strategies, organizational design and the goals. In rapidly changing market conditions where advantage is transient then we certainly need very different designs within our organizations to respond.

It is absolutely time that innovation comes fully into the board room and driven from the top. Innovation needs to be recognized fully as the key to more prosperity, more growth and added value – achieving that is the mandate of the board and this requires an explicit integrated innovation framework, no less that reflects the changing reality of the era we are in.

Then others can simply get on with the job of responding by delivering the innovation outcomes that are constantly aligned to the needs within the changing landscape and demands placed on all, to read, react and respond differently and this needs total integration from top to bottom through an overarching set of integrated frameworks.

A different alignment is required.

Alignment is just not the internal need any more; it is having clear external alignments as well; in knowing the customers needs and reacting to these faster and with clear competitive intent, aligning with others on different platforms and collaborations.

Having an innovation geared organization that has clear goals, principles, values and attitudes that is working towards a consistent range of organizational possibilities. One that is ready to capitalize on breaking opportunities, aligned to exploit these. Then having in place the capabilities to build rapidly out on these to exploit these through new learning, new insights and growing connections so extending the possibilities even further.

A constant evolving strategy perhaps, one that will give the organization a new more demanding competitive advantage, that is built on anticipating and managing constant change, never standing still, always evolving, being in perpetual transition.

A different ‘sustaining’ capacity built around innovation as the continuous core, constantly evolving, adapting, learning and adjusting. In perpetual innovation motion.

The post Figuring out a different strategic alignment with innovation being central. first appeared on Building Your Innovation & Ecosystem Intelligence.

Traversing different horizons for transformational innovation

@paul4innovating — Fri, 07 Jun 2013 13:26:24 +0000

Irrespective of the organization, we all struggle with transformational innovation. So often we are simply comfortable in our ‘business as usual’. We gear performance to the short-term, we put the emphasis on the current fiscal year, and we support the core business in numerous ways, usually with lots and lots of incremental innovation, so the results are realizable in this year.

We are sometimes comfortable or confident enough to move into adjacent areas, to expand and feed off the core but these are less than transformational in most cases. This space is the one we are the most comfortable to work within, this is the horizon one of the three horizon model approach outlined to manage innovation across a more balanced portfolio of investment.

In summary, the three horizon model for innovation is actually a reasonably simple idea: with Horizon One (h1) being the current business focus, Horizon Two (h2) being more the related emerging business opportunities and Horizon Three (h3) being those that are moving towards a completely new business that can have the potential to disrupt the existing one.

The complexity lies underneath this simple idea, you need to manage these different horizons with completely different mindsets. You need clear well-structured ways to extract the real return from managing a comprehensive innovation portfolio based on knowledge, experience, intelligence but exploring plenty of the unknowns about the future and openness to get you there, as ready as you can be . Its necessary today.

The seeds of destruction lie in horizon one

Within our ‘business as usual’ attitudes lies the seeds of destruction. Today there is a relentless pace; we are facing stagnation in many maturing markets. We place a disproportionately high amount of our resources here to defend what we have and what we know; we actually subvert the future to prolong the life of the existing. We constantly look to make it more efficient and more effective but this is in the majority of cases just incremental in what we do, both in innovation and our activities. These are often simply propping up the past success instead of shifting the resources into the investments of the future.

This is why the three horizon approach has real sustaining value because if we don’t have this longer-term, transformational perspective we are just prolonging the existing until it gets disrupted by others. This is where the working across different horizons for ‘thinking’ through innovation does need different tools and mindsets and these should be based on (h1) see and operate, (h2) adjust your thinking frame and solutions, (h3) more evolutionary. Each has different techniques to explore as I’ve previously outlined in my navigation guide to this approach.

Clayton Christensen has written about this theory of disruption in his book “The Innovator’s Dilemma”. Professor Christensen then went on to write extensively on this and one further book “Seeing What’s Next” co-authored with Scott Anthony and Erik Roth develops this disruptive theory into how the future will unfold and how to make wiser choices on these insights. The three horizon connecting approach is an excellent methodology to use to help in managing these wiser choices.

The hardest part is to traverse across into horizon 2 for new ‘breaking’ innovation

We do need this longer-term perspective and we do need to traverse into the future in clear thinking through steps (or horizons). Our horizon one does begin to decay faster today than ever, it does not fully cover off the strategic fit we want and can begin to lose its dominance over time. We need to manage this transition, not let others manage it for us.

It is how we manage this transition becomes so critical. We need to exploit developing trends that are emerging (h2) and begin to tune into possible options in the future (h3). Within these options will emerge the winners and become the more dominant systems or solutions that we should be moving towards, even from today. Some of these only have faint emerging signals but they need to be brought into the innovation portfolio activity to explore, often in novel ways.

The horizon two is beginning to address some of the current decay arising from the core within the existing activities (or system). Here we have the highest tension.

The Collision Zone (h2) of the Three Horizon Approach

The discussions that centre on often conflicting views of the future, compared to the existing realities and those providing the returns for today’s business. Often we can detect change but we consciously ignore it. This is the place where the disruptor’s are at work, existing or new competitors, working at displacing your products and market positions. They look to be more agile, they might have greater entrepreneurial ways, they are ready to explore emerging practices far more than the established leaders, they look to leverage different business models and are certainly not handicapped with legacy and mindsets stuck in the past. Increasing competition is today’s certainty.

Horizon Two needs a totally different mindset.

You need to see H2 with different metrics, with different perspectives, with more open minds. This is not easy. This needs to become the meeting point or “the space for transition” where you begin to let go of just protecting your core and open up your thinking to experimentation, prototyping, exploring different business models and begin to figure out how these will impact your existing core, to become more agile and adaptive than you are in the existing system or structures

These horizon (h2) concepts being explored really do need ‘ring fencing,’ so you can protect these from all the ‘vested’ claims that your horizon one focus will continually demand to keep, so as to bring in the results in this calendar year. It is a real fight, these ideas or nascent concepts ‘give off’ negative results, they are still a mix of the tangible and intangibles where you can’t get the ‘hard’ fix on the ROI, on their real market value or potential.

Many executives ‘defending’ the core will ‘attack’ or hold back any release of their resources to help these emerging initiatives. It is a ‘hard-nosed’ reality. It needs a very high level and conscious set of decisions coming from the top to determine these new moves. Do not believe that when most executives ‘just’ react and shrug their shoulders regarding h2 as a natural, everyday occurrence, it is far from not. Many have to come ‘kicking and screaming’ to supporting emerging activities. Far too much ‘invested’ interest comes into play. They see this more as a threat not an opportunity. It is not their sand box so why should they ‘play’.

Horizon Two- Where policy and strategy are played out in the Three Horizons

The tensions are not just visible but played out in many subversive ways.

Just take performance metrics, if these are solely structured on the calendar year, are you realistically expecting a dilution of focus as their compensation is totally caught up in this. Horizon two poses a real challenge within any management of our organizations. If it provides current small bases of volume, no real meaningful profit from the investments made it can be a hard sell across the organization.

Projects that focus on the future work mostly are based on ‘best’ assumptions. Sadly it is often executives expect to see the same ‘hard’ metrics being applied as the existing business. We ignore significant differences and this is a huge mistake. So you get these clear sense that many are sceptical or pay lip service to the products of the future as the thinking, judgement and value orientation are at such odds with the existing measures and metrics they apply to run today’s business and how they get judged.

Often we then impose a set of metrics to compensate for this resistance.

This allows for a sudden rush of promising new products entering the market, of chasing and competing for those same resources as the ones focused on the core. The push to validate, explore and experiment might make the situation worse. You introduce waves of inefficiency into your highly tuned supply chain, you detract from selling and competing in tough market conditions and you then hear that comment “we took our eye off the ball”

This new ‘push’ for establishing the rising stars ends up that most of the promising concepts never really cross the finish line of moving from ‘interesting’ to main stream. The core also starts to suffer from these multiple distractions and eventually ‘innovation’ gets a bad rap. Many promising ideas get starved or killed off from emotional reactions.

The demand from supporting horizon two products or emerging concepts demands managements serious attention to getting resource allocation, response and focus into ‘actively’ managing this very real and tangible ‘innovators dilemma’.

Managing the rising stars or future potential one is hard in existing structures.

The concepts that emerge from horizon two will include the rising stars of the organization and will, over time, become even the new core business. These are a mixture of step-outs from today’s core, or extensions that have come from the adjacency work consciously being undertaken or are truly emerging as new activities that need new depth in capabilities and time to build.

These all have the potential to shift the organizations revenue base and challenge today’s cash generators. These need careful ‘portfolio and resource’ allocation. These extend the organization from your existing into new competencies, new markets and new challenges. Just please don’t use the same measures or metrics when you mix H1 and H2, although there is a huge temptation because it is just simply easy.

Horizon two is where you work through your future options

This is where you try out, experiment, explore. This is the transiting point (my space of transition) where you work through different dilemmas and paradoxes to shift the organisation through this horizon two to position it for the longer-term future. This horizon is a real point of disruption to be well-managed as you navigate from shifting resources from today’s core to that third horizon, the predicted future where ideas and proposals are still forming.

Horizon two actually ‘claims’ more time and attention than on the surface it deserves but this is the wrong mindset, it simply needs too. This is not about supporting the ‘existing’, this is working actively on the ‘preferred’ as it is working to reduce current shortcomings, injecting new life and vigour into the present to offer a broader sustaining future.

Horizon two investments should be challenging ‘business as usual’ and should contain many of the catalysts for renewal, for the future growth. It is renewing the ‘fitness for purpose’ through innovation taking you along different pathways to the long-term successors of your business.

Horizon two can be a powerful catalyst.

It can alter the way you are currently doing things, in new business models, in new systems, structures and delivery. It points you to a new, hopefully preferable future, worthwhile to pursue and attractive. It refreshes, it can invigorate and this horizon holds the keys and transition path to realizing that vision laid out in the ideas forming in horizon three.

To battle the increasing pace of obsolescence, we need to not just see and operate in today’s world; we must look towards the future. We must break out of incremental steps alone in our innovation activities, they just don’t simply ‘cut the mustard’ any-more, they are simply not good enough, in our rapidly changing world where increased competition is appearing from anywhere. We need to build out new capabilities, capacities through new innovation competencies.

We not only need to envision our future and the part we want to play within it but need a clear approach to working through the challenges and tensions to achieving a real balance in our innovation portfolio that work towards the same goal of being a material part of the business.

That is managing innovation not just in today’s horizon (h1) but in traversing into the future with more breakthroughs (h2) and transformational innovation (h3) that is organized around the three horizon methodology. Making that essential traverse through horizon two is the toughest part. It needs carefully managing to have any really sustaining pathway to the emerging future.

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Innovation failure starts at the top

@paul4innovating — Fri, 07 Dec 2012 09:43:51 +0000

So who do you think form the group that are the most likely candidates for innovations consistent failure? It may surprise you to know that most fingers point straight to the top of the organization as the main cause for its enduring failure.

I don’t think this is sour grapes of the people working away on innovation daily, that the ‘finger of failure’ is well and truly pointing upwards. There is more of an innovation knowledge gap at board room level or even just below this, than many can imagine, that is the plain reality.

They often simply have no real clue on how innovation really works and what their essential role is in connecting all the different parts necessary to align this into the organizations overarching goals, objectives and strategies.

Let’s simply select the top common causes of innovation failure.

In a recent survey I was reading*, it provided a set of results about the common cause of innovation failure. The survey was asking participants to check all that applied and although there were 30-odd possible reasons the top ten that stand out as head and shoulders above all the others are nearly all down to the simple failure of innovation engagement in its leadership.

Failure lies at the very top on why innovation fails.

I know I keep ‘going on’ about the Executive Innovation Work Mat and its value but let’s look at these top ten contributors for failure that is occurring in organizations just like yours. The Work Mat approach tackles these and lots more but those that are the cause of failure, the leaders in organizations, do need to understand it is them that are the reason for this.

So the top ten causes of innovation failure then tell me the root cause, a lack if innovation leadership.

The top three failures

The three main reasons for failure have been given as 1) unrealistic expectations from top management regarding resources and the time really required in achieving innovation, then 2) the lack of resources allocated in budget, people, infrastructure and 3) far too much focus on products and technology and ignoring the other options within innovation, such as service, business model, platform collaborations etc.

Each of these is without doubt for me a top management failure.

They either don’t have a real clue of the complexity of innovation, starve it of its essential resources or just want to stay well within their comfort zone of existing product and technology understanding.

This reluctance to push innovation, to extend capabilities and provide it with the right capabilities ends up in these continuing failures.

Equally not to explore all the types of innovation available does not make sound business sense. This shows a lack of real involvement, comprehension, understanding and engagement.

The next three failures
In our next three the one that is so constantly described as limiting innovation is 4) that people or teams operate in silo’s instead of broader collaborative approaches, 5) the wrong personnel are in place to make innovation happen and 6) that classic of classics, a poorly defined innovation strategy and the goals to achieve this.

Each of these again is a top management failure. They fail to understand the value of building up the capabilities for broader collaborations; they constrain the very essence that gives their organization its growth by holding back or not pushing for the best people to be engaged within the projects, or just fail to connect their (often) lofty strategic goals with the innovation activity that can deliver on this.

Again, simply failures of top management to address and resolve these issues are the root cause.

Then the last four within the top ten

The last four within the top ten again start with 7) a lack of innovation strategy, and then 8) where the emphasis is placed in far too much on idea generation and not on execution, followed by 9) a lack of involving external partners and lastly 10) poor management of the innovation process.

So again a clear set of management failures. By not having a clear overarching innovation framework in place that links innovation to strategic alignment, which communicates innovations value and its value position and then the failure to put in place all the critical factors of an innovation process to make sure that innovation, has the chance to work.

Surely this top ten list of causes for innovation failure does become fairly worrying to anyone involved in growth, wealth creation and building and wanting to belong to a healthy sustaining business?

Depressing outcomes and on-going failure

For me, I simply can’t understand why our leaders are simply not listening to the constant stream of innovation failure messages that get written daily. Of course, I hear you say “it is simply because they are too busy”. Oh come on, lets stop protecting them.

My argument straight back to this is “if a leader or his team does not focus on the clear ways to grow a business and make this happen and this must come primarily through innovation, then they should not be leading”. They should not be focusing on just making organizations efficient but on being increasingly effective through innovation.

How can they be leaders of organizations, claiming they are keen to grow and expand, if they do not get fully involved in providing the appropriate framework for innovation to thrive? This is a strategic leadership failure.
I can only assume they are simple not understand that they are the primary cause of innovation’s failure within their organization, they are the main culprits in this.

Will this change overnight, of course not?

Somehow or other, those within the innovation communities, both within and outside organizations have a job to do, a message to deliver to the leaders. They need to get across this failure message lies within the board room, not outside it and its needs addressing.

Deliver just one message today, please.

We need to deliver this simple message – “as long as you as the leader of the organization and those immediately around you fail to understand what ‘makes up innovation’ you deserve to fail, and more than likely, fail you will”.

Why not just give the leaders of most organizations an early Christmas reading present– you can download it here– it explains the connected part of the Executive innovation Work Mat that forms the strategic framework for innovation to connect across organizations.

Then we might begin to reduce this list of common failure points significantly. I do hope so, otherwise what’s the point?

* The survey was conducted by Stefan Lindegaard under his post Organizations and Failure: Why Don’t We Learn More? I think he is looking within the organization more, whereas I see failure ‘sitting’ far more at the top of the organization.

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