Comparing Operating Models to change to Business Ecosystems
Forget how you operate in traditional business models if you are considering the value and benefits of applying Ecosystem thinking and designs. You really have to think radically differently.
There are significant differences in how we (can) operate and appreciate the distinctive aspects between our traditional management approach and applying Ecosystem thinking and design. Initial assessments are highly valuable before you embark on participating in Ecosystem collaborations.
There are several emerging frameworks that provide for both universal and distinct application stages. There is always a need to emphasis “contextual nuances” and those “triggering points” but those are further critical aspects to explain for gaining a deeper understanding of Business Ecosystem distinctiveness in future posts.
My aim is to encourage business thinking around Collaborative Ecosystem Management for the future. Considering and then undertaking Business Ecosystems has a very different organizational impact and significant changes to be considered to be built and then put into place.
One exercise I recently undertook was to compare traditional to ecosystem distinctiveness. I offer here ten key distinctive areas for comparison. Let me share these:
There are many aspects to evaluate. Here I provide a handy comparison of existing and necessary changes likely to be made for Ecosystem management. Take a look at many of the principle differences.
I have put these into ease-of-reference set of tables.
Dynamism and Knowledge are essential to your future
In today’s business landscape, where change is the only constant, businesses that can adapt quickly and effectively will be the ones that thrive through active dynamism. Dynamic ecosystems provide a framework for businesses to do just that
To make an Innovation or Business Ecosystem dynamic, interconnected, and capable of engaging a diverse group that drives innovation and business tasked with creating real impact and value, any business ecosystem should include the following key elements:
Dynamics and Knowledge are essential to your future
Dynamism and knowledge insights are crucial to unlocking and stimulating new ideas or thinking. It is all about actively shaping thoughts or insights to navigate the changing terrain.
We do need to actively navigate the rapidly changing business landscape in multiple ways it is not just about reacting to external forces. It’s about proactively shaping the direction and actively participating in the evolution of your industry, your positioning and your own insights.
In today’s rapidly changing business landscape, the ability to build a strong case, stay informed, and think critically is the key to unlocking success and driving innovation.
The Nine Stages that are needed for developing an understanding of your innovation capabilities, so as to make them more dynamic and as a result to be at the top of your innovation game.
This “step process” I believe gets you to the point of understanding what innovation capabilities are a better ‘fit’ for the purpose, to deliver on your innovation needs on a consistent, repeatable and evolving basis.
Building innovation capabilities take time; they are complex, highly structured and multi-dimensional. Any structured approach to tackling innovation takes time and considerable commitment. Any learning involves sensing, seizing and then transforming.
We are searching for what makes up the present system and what needs to be part of the future to create a ‘best’ innovation capability environment that is sustainable into the longer-term. Those that can be continually ‘orchestrated’ and constantly adapted to meet the strategic need. Continue reading “Understanding your innovation capabilities to make them more dynamic”
To deliver innovation, sustaining innovation, it needs to be built on dynamic skills, then you have to learn how you can orchestrate the capabilities you have, with those you have to bring in.
Building on those that give the necessary dynamic result you are looking for; to purposefully build what is needed to deliver the required result.
I have reconfigured my thinking around what will influence the evolution leading from building ‘just’ internal innovation capabilities to a whole ‘network effect’ from these.
This work just gets more exciting as it evolves.
It relies on how you purposefully build and construct these capabilities and competencies. The orchestration is fundamentally dynamic, full of uncertainties but the need is still to connect the parts to deliver the right result. We need to orchestrate, to build and then conduct and deliver the right results, to the innovation goals we seek.
Innovation often fails to align with the strategic needs. This is often not the fault of the innovator happily working away with no specific guidelines, apart from the general remit of “we need to be more innovative”, it lies in the boardroom not communicating the board’s needs clearly enough down the organization.
Building up our capacity to innovation does need to understand and reflect the organization’s business activities but it is grasping the value creation aspects that will deliver the necessary capital-efficient and profitable growth.
Even the basic questions often remain unclear, those of are we looking to grow revenue, reduce costs, reduce working capital or improve our fixed capital? I expect the CFO would say “all of them” but each does have implications on the understanding of the fit and eventual role of innovation. Then where does risk fit into the strategic equation for innovation, it lacks often the clarity it needs.
Deciding that capabilities can be better leveraged requires a separation of exploit and explore.
The aligning of strategic direction (and importance) with any capability needs is in the understanding of what activities are diverging with core and those converging, then figuring out the future core. It is the two dynamics of exploitation and exploration we should be leveraging for our innovation and future growth
Today we need to exploit and explore and our capabilities need to be built fit for one of these two purposes. Exploiting is today’s business need, to leverage and improve the existing business and equally, in parallel, explore for tomorrow’s new business growth.
Then we also need to diverge and converge
The diverging ones need to have a real emphasis on improving performance, how they are managed for cash or to eventually sell or dispose of along with those converging on the new ‘known’ core of the business to grow and expand. So by recognizing these and that is not easy in itself, you are beginning to know and identify the capabilities you need to have in place to fix today and make it as healthy as possible, alongside those new capabilities that will create a new winning set of growth and value propositions.
We certainly need bolder investments in knowledge around the make-up of innovation capabilities
I certainly believe there is a real call for fresh and bolder investments in knowledge, in infrastructure that focuses on activities that spur new approaches that lead to innovation. These are not just the traditional ones based on managing today’s core but on finding those innovations that provide new value, the new generation activity that is occurring from recognizing how we can build, yes build for further exploitation (extending the life) and exploration (new understanding) and manage each as separate risk evaluation exercises with different metrics of progress.
We also need a deeper innovation grounding of internal workings and alignment
What I feel we need is a deeper grounding in what is actually going on inside organizations within their innovation activities and how these align with the needs of strategy and what is clearly missing. We start here as it gives us all this clarity and coherence, missing in much of our existing understanding.
We have the real opportunity today, in finding new ways of combining the four emerging forces of knowledge, technology, entrepreneurship, and innovation, which will drive the growth models of tomorrow. It is these that are forming the new innovations ‘black box.’
It is mastering this new ‘black box’ of actual innovation activities, exploring and exploiting the necessary innovation capabilities that are required to be ‘going on’ in organizations to achieve a closer coherence we need to radically improve the innovation performance.
I have plenty of ideas, frames and methods built up to help you make innovation fit and be more coherent in its contribution. Why not find out?
My definition of what makes up innovation capital:
“Innovation capital is the sum of all that promotes the development and changes required for achieving innovation outcomes, within one organization or its broader networked environment, for marketplace advantage”
“These are made up of the resources, processes, knowledge, and capabilities, that are constantly evolving and highly dynamic to build greater innovating capacity.”
“These build upon the capabilities of ‘sensing, seizing and transforming’ to build new capital that focuses more upon the dynamics within innovation, that provide the true value creation in successful outcomes in the final product, services or executing within business models”
We need to value both “stocks and flows” in equal attention to build innovation capital
The ‘stock’ of innovation capital can render different productive value outcomes, is a bundle of the firm’s resources/assets and holds the renewal capabilities and they possess attributes that make it a “strategic asset”
Innovation capital is made up of many different assets that are often context specific, and interconnected and this makes it hard to build without taking a broader, more holistic approach to developing your capabilities, capacities, and competencies to innovate. You ‘map’ and align these to fit your strategic goals and aspirations.
If someone came to you and asked the question: “tell me what makes up your financial capital?” I expect you could answer this fairly comfortably. It might need a little added help from your finance department but you could produce and show significant details that we are all ‘schooled’ to understand and generally have accepted, as under common definitions and standard practice.
Our businesses are measured constantly on their financials, we produce a constant flow of reporting documents that provide useful insight and allow for a more informed judgement by present and future investors on the health of the company.
We are ‘wedded’ to our financials and ignore the real value within our organizations of all the other critical capitals that generate and strengthen the business, yet these are the MOST valuable to leverage.
Organizations have been focused for far too long around the importance of financial capital. It determines and drives organizations destinies. We are caught in a constant focus upon our achieving a return on our (financial) capital as our measuring criteria. Organizations strive for improving their ROCE, RONA, IRR, EVA and a host of other financial measures.
As Clayton Christensen has been arguing the agenda of organizations begins and ends with the “search for numbers”. I think there is a time for changing this, we need to search for the knowledge that makes-up eventually the numbers.
There has been a distant voice for some time putting forward the need to appreciate and value the other capitals sitting within organizations. Much of the discussions have been housed under the term “intellectual capital” which denotes the sum of knowledge made up and contributed by our human assets, our organizational structures and our relationships that are developed.
These are the ‘capitals’ that transform into economic value through organization action. It is the financial capital that simply finances this.
Much of my focus within my work is to move organizations towards recognizing and expanding their innovation capital or stock.
The hard part for many organizations is that many of the key elements of innovation capital consist of many intangibles as well as tangibles and this needs deeper understanding and appreciation. These intangibles are in most cases non-technological and embodied in the organizational routines and thinking of the employees.
It is focusing on building the stock of this innovation capital as well as making the flow more dynamic, ever evolving, adapting and changing to the different conditions being presented to the company.
Some of the critical elements that need to be considered can be described as follows:
