Jeffrey Phillips and I are launching our fourth collaboration together, this time we are exploring innovation ecosystems and the growing impact they are having in the business world through their ‘conecting and collaborating difference’ that can lead to vastly different final customer experiences.

I just want to reaffirm what he has written on this, originally over on his site.

This is what he wrote:

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The post Innovation, ecosystems, platforms and the promise of more to come first appeared on Building Your Innovation & Ecosystem Intelligence.

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Publishing note:  This blog post was originally written on behalf of Hype and with their permission, I have this added to my own site

The post Sorting through our Innovation Management Tools first appeared on Building Your Innovation & Ecosystem Intelligence.

When you look at all the (broken) parts within innovation it takes some time to figure out how you can piece it all together to make it a better whole  improving on what you had

Innovation and its management is just this place this needs to be pieced together. It often cries out for it.

Most people that work in our business organizations are spending their increasing time in piecing their part of the innovation equation together to make innovation work and trying to improve on the existing conditions to deliver new products and services.

People are spending a greater part of their time have to work on fixing the system and its many faulty parts, let alone finding time to work on any new concept or learn differently. Is it not about time we stepped back and really thought through the design of innovation and its managing? Why is this so hard to do?

The negative cost of rework.

When you don’t understand the parts that make up the complete system, you end up with an awful lot of rework that really should not have been necessary. This rework is different from experimenting and learning, where you gain positive insight that improves the innovation activity you are working on. No, this is the negative stuff, the attempts to ‘keep the show on the road’, to keep the momentum and commitment focused and so often this requires a lot of messy, fiddling and fudging of the parts to keep it functioning.

Why is it we often forget not just the innovation project we are working on, needs goals and a clear picture of where we are going although this is heavily influences by what we are learning and absorbing on the way, yet the innovation system never gets this constant, focused attention?

Have you ever completed a 2,500 piece puzzle?

Try completing a 2,500 piece puzzle without knowing the finished picture (or objective). In the jigsaw puzzle we always have the corners and as we spend time looking at each of the pieces we see the unique way they fit together. It is by this dedicated focus we can piece together the final puzzle. The point is, if we have a clear picture to help up, we can piece it together a whole lot quicker. Innovation management needs that final picture, the one where we can constantly refer too, to put together all the pieces and complete the puzzle. Its strategic and it needs to be provided by the leadership of the organization for each of us to work within.

The problem we often face is deciding on the type of innovation puzzle itself.

Innovation and its management does need to always figure out is what it is trying to achieve early on. If you don’t have this clear strategic picture how can you set about delivery of innovation that fits in? If we don’t have clear alignment of innovation to strategic objectives and goals, we end up with thousands of pieces of innovation effort all designed to fit but not pieced together to make the complete design as they lack this overarching picture.

I was checking out on Wikepedia on the puzzle and you can apply some of the attraction that innovators have with solving their puzzles. The entry within Wikipedia suggests you should treat puzzles a little more seriously. “Solutions to puzzles may require recognizing patterns and creating a particular order. People with a high inductive reasoning aptitude may be better at solving these puzzles than others. Puzzles based on the process of inquiry and discovery to complete may be solved faster by those with good deduction skills.”

Can you see managing innovation in this puzzle analogy?

We need to design innovation and its management in purposeful, well designed ways. Often we never seem to know what types of innovation are really needed, we lack alignment to the strategic goals, so we settle on less risk and more incremental solutions, smaller puzzles we can quickly resolve and get a ‘notional’ pat on the back for but fail to really move the innovation needle for real growth.

The other thought is how we love to treat innovation as a mystery.

 Tim Kastelle wrote a great article on both the puzzle and the mystery called are you solving a puzzle or a mystery. He rightly suggests that the problems that lead to disruptive innovations are often mysteries. This means that we need a different toolkit to solve these problems than we use when we solve puzzles.

Tim’s article is based on reviewing the book by Jeanne Liedtka and Tim Ogilvie pick up on this distinction in their outstanding book Designing for Growth: A Design Thinking Toolkit for Managers.

He provided this “designing for growth” visual, which I think is great, it is not an aside, it can help in this ‘puzzle’ thinking.

Tim goes onto argue in his article: “We are strongly drawn to puzzles because of how clear-cut they are. Unfortunately, many of the big problems that we face are not puzzles, but rather mysteries. Mysteries are messy, and the methods that solve puzzles don’t work for mysteries, and they might actually make them worse”. This is a great insight that I am sure is built on Tim’s own personal experiences constantly tackling both mystery and puzzles on many occasions.

We are messy in mysteries and equally in solving puzzles

How do we set about designing innovation management systems? Tim provides a great starting point “when the parameters are basically known”. We just need to find the right information to develop the innovation parameters that will guide and frame the problem.

So what makes up the parameters within innovation system design?

The sad fact is that most organizations never bother to fully understand the multiple levels that make up the parameters needed in designing an innovation management system. They just seem to just love the rework, all that negative stuff!  Surprising when there is so much talk on the emphasis on driving out inefficiencies. Perhaps innovation falls outside the mainstream comfort zone for applying efficient design?

I just think we can design the innovation system, structures, process and their governance so much better to allow those working with their innovation puzzle a better chance to piece it together as they can understand the end goal, of fitting their innovation into the bigger frame of the organization’s strategic growth goals.

For each of us to achieve that, it needs both the puzzle and mystery to be taken out of the innovation system and this is where leadership plays its part. It is by designing and communicating this in an innovative strategic way, may I suggest through the Executive Innovation Work Mat.

The work mat offers the framework for the design by providing its distinct edges for the pieces to be put together and offering a completed picture to work within, it starts to set the parameters needed.

The post Piecing innovation together first appeared on Building Your Innovation & Ecosystem Intelligence.

I enjoy a lot of what Steve Denning writes and his series in nine parts on “Why Amazon Can’t Make a Kindle in the USA” (start here http://onforb.es/oK1Cxh ) has really hit home on the seriousness we are facing in Western countries over innovation capabilities.

He mentions the “decades of outsourcing manufacturing have left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy”, as noted by Gary Pisano and Willy Shih in a classic article, “Restoring American Competitiveness” (Harvard Business Review, July-August 2009).

The pursuit of profit is killing innovation
Last Friday, 18^th November, he followed this series of articles with a further one on a talk given by Clayton Christensen entitled “How Pursuit of Profits Kills Innovation and the U.S. economy” (http://onforb.es/rZ7l8U )  and that so much of our basic thinking taught in business schools and promulgated by consultants is partly the cause.

So I was faced with a ‘double sit up’ not a double latte, of Denning and Christensen, and that did more to wake me up than the caffeine intake I was having.

The bottom line is that major segments of the US Economy have been lost, in many cases, forever and that equally applies in Europe.

On the other side of the Pond- the EU and its Innovation Union.
Máire Geoghegan-Quinn, Commissioner for Research, Innovation and Science and Vice- President Antonio Tajani, responsible for industry and entrepreneurship have said: “As we emerge from crisis in the teeth of fierce global competition, we face an innovation emergency.

If we do not transform Europe into an Innovation Union, our economies will wither on the vine while ideas and talent go to waste. Innovation is the key to building sustainable growth and fairer and greener societies. A sea change in Europe’s innovation performance is the only way to create lasting and well-paid jobs that withstand the pressures of globalisation. ”

With an ageing population and strong competitive pressures from globalisation, Europe’ s future economic growth and jobs will increasingly have to come from innovation in products, services and business models.

This is why innovation has been placed at the heart of the Europe 2020 strategy for growth and jobs.

The long list of ‘must do’s’ suggested within the EU recommendations all are shouting after the horse has bolted from the barn. In both Europe and the US we are losing our capacity to innovate as we are rapidly losing our knowledge and experience built up and we are facing a ‘knowledge deficit’ exported over many years to developing countries.

This will place these countries even in more a dominating position in years to come.

We may be in a series of financial crisis but the ‘knowledge deficit’ one will be even more damaging to our future prospects.

The real crisis is not the current financial one; it is knowledge application for job creation.
We are simply losing our knowledge to create things close to home we are being ‘forced’ to seek global collaborations as knowledge simply is found and extracted where it is best served. How can we reverse this for many nations needing revitalization as knowledge leads to jobs. For many, we need a massive bailout plan, not for our financial debts but for our growing knowledge deficits.

Any declines, closures and more importantly, as the business firms continue to push to go overseas and chase low cost manufacturing places simply sets off a powerful chain reaction. Expertise is lost, advanced research suffers as more trained people seek meaningful work that relates to their skills and qualification overseas, increasingly in countries outside the US or Europe.

In manufacturing, in significant decline in Europe and the US for many years, those daily interactions between process and engineering leads to new design, fresh thinking to solve problems so knowledge builds up in locations closer to the manufacturing point and then, more businesses are ‘forced’ to locate closer to where the action is. As Pisano and Shih state in their HBR article “

In the long term an economy that lacks an infrastructure for advanced process engineering and manufacturing will lose its ability to innovate.”

The argument is we adopt a more strategic approach to innovation.

This I couldn’t agree more with. Innovation must become more of the overarching policy objective, it needs to go well beyond leveraging our strengths, and it needs to draw back in lost knowledge before it is too late.

We need to reverse the outsourcing policies driven by short term gain and not accounted for in the total ‘cost and benefits’ that society eventually pays.

We need to alter not only the measuring criteria spoken off with Clayton Christensen’s phenomenon of “driven by the pursuit of profit” in the above mentioned article, it lies in calculating a different ‘rate of return’ (IRR) so well put within this article.

This last article from Steve Denning (re Pursuit of Profits) sums it up

“Thus when a firm calculates the rate of return on a proposal to outsource manufacturing overseas, it typically does not include:

• The cost of the knowledge that is being lost, possibly forever.
• The cost of being unable to innovate in future, because critical knowledge has been lost.
• The consequent cost of its current business being destroyed by competitors emerging who can make a better product at lower cost.
• The missed opportunity of profits that could be made from innovations based on that knowledge that is being lost.

The calculation of the IRR based on a narrow view of costs and benefits assumes that the firm’s ongoing business will continue as is, ad infinitum. The narrowly-defined IRR thus misses the costs and benefits of the actions that it is now taking that will systematically destroy the future flow of benefits.

The use of IRR with the full costs and benefits included would come closer to revealing the true economic disaster that is unfolding”

Different mindsets and different solutions are needed for a better Innovation Union.

At a time when the external environment is highly dynamic, businesses that exist today (irrespective of where they locate) may be gone tomorrow. To survive in this world, a different kind of mindset is needed and if I may say- imposed.

The traditional ways we see our business, in isolation of the dynamics going on around us where profit maximization driven by management’s preoccupation on efficiency at often the cost of real innovation. The drive for cutting costs to meet the quarter and thus losing more knowledge that resides within, and then the consistent outsourcing, this relocating chase, is an eventual death-spiral for many economies.

Whole communities that had previously built around ‘knowledge clusters’ suffer and go rapidly into decline and over the long run, simply die and fade away, not relevant any more- gone overseas!

Our continued loss of knowledge, with our continued uneven recognition of the real value of innovation, will continue to feed this death-spiral unless we can somehow reverse these trends.

Moving more knowledge and the associated assets away from the US and Europe might seem sensible for today’s managers and financial backers but this is exporting knowledge and experience and this makes up innovation, it is where improvement, breakthroughs and future competitiveness come from.

We are rapidly losing know-how, it is what is happening that give me greater cause to worry for our long term prospects than the financial crisis. We are losing our competitive positions as any growth in the economy is in investing in knowledge for people to innovate.

How far can we go on this slippery slope as money does quickly follows where knowledge resides, and this is rapidly moving overseas, located increasingly in Asia.

Until we recognize this, we can ‘shout’ long and loud but the (knowledge) horse is fast galloping away from us and we will be left with simply pockets of incremental innovation, while others lead, we will simply follow along in their dust.

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