There is a sense of urgency that is growing at the corporate level, to master this ability to design different business models and then set about executing them, to combat the multiple ‘disruptive forces’ swirling around in the present and near-term business environment.

Reinventing the Business model is such a big ask in the complexities to overcome, the legacies, the vested interests, the distribution of created wealth (dividends, bonuses, performance) are all ‘locked into’ the existing business. Many of those necessary bolder decisions get caught up in horrible compromise.  Parallel managing is both an art and a science but it always needs clarity.

Addressing the current dilemma within business models

So we have a classic dilemma, we need to manage and extract as much as we can from the existing business but simultaneously begin to reinvent, to design something different.

Caught up in this dilemma, increasingly the large organization is questioning how it can use the Business model canvas in more effective ways. I believe there are many exciting options available.

Business models need a common language, they need to be easily described and here is the fundamental value of the BMC – it can set about supporting a common understanding, it can be used to describe in multiple ways.

Here is my view  

Move the thinking. Move the emphasis. Today the BMC is discussed more as the blank canvas to start new ideas and concepts and its present focus has been in its use for start-ups and entrepreneurs. From these opening sketches, the canvas does a great initial job to describe these ‘emerging’ concepts. We need to change this emphasis point.

The possible new dimensional values of the Business model canvas.

Make the Business model canvas as a multiple describing and communicating tool. We should shift our thinking and open our minds up to its (BMC) greater value within the larger organizations

These are clearly:

• To simply explore new business models as the book, the Business model generation, originally sets out, in the how what and where of doing this through the business model canvas approach. To experiment with all the advice, tools and experiences that have been built up since this book first appeared.

The richer and perhaps broader dimensions that large organizations should explore:

• To ‘map’ changes to existing business models as they evolve or need to pivot differently. Steve Blank has explained this insignificant detail and terms as the BM dashboard that ‘indicates’ the important changes and these become the focal point of necessary discussion, knowing what is changing, to focus the thinking and see what changes need supporting differently.
• Then why not to sketch out competitors positions to explore possible opportunity gaps. This should become one of those consistent ‘habits’ that so many large organizations often have a real blind spot to undertake, they just keep assuming nothing has ‘visibly’ changed. Then they get caught out and surprised when they see their share slipping away as the competitor has made a directional change and this was not spotted and communicated to all parties who ‘need’ to know. The BM Canvas can spot and track competitors.
• Use it as a designing dashboard for innovations that have or could have an impact on existing business models. Whenever you have any major BM change you capture it on your BM Canvas so all above and below in the organization can picture this to see the possible risks this change might bring.
• Use it to compare business model components across each of the countries within the organization, where more often than not different models are being applied to build businesses in multiple ways. This enables all involved to quickly focus on the differences on these operating models and how the market formation is occurring to get quickly into the strategic discussions, implications, and requirements this ‘specific’ approach takes.
• When you are pitching for internal funds having a clear BMC as the visual focal point provides the top picture that others can quickly see and appreciate the why and how – they ‘see’ the value and the $$ potential,. This can offer ‘intelligent inquiry’ not getting bogged down in detail and getting involved in the running of the business but supporting owners or business managers with different experiences and knowledge to compliment theirs, so as to conduct the type of ‘intelligent’ and strategic conversation needed, instead of many that needlessly occur today.
• To have ready alternative scenario’s for volatile business conditions as ‘early warning scenarios’ that have mapped out potential changing conditions showing where, why and how the business model might be adjusted or radically changed. The earlier ‘warning system’ pays in volatile times that we are all facing at present to be more aware and ready for rapidly changing conditions, possibly already ‘worked up’.
• Managing multiple portfolios of business is a complex challenge to spot ‘commonality,’ to detect change, different opportunities or simply recognizing there is a growing ‘drift’ of direction that needs addressing. You can use the BMC as the detection kit, the reoccurring adopted format practice to capture these different portfolios.
• Rapid concept brainstorming to move into prototyping evaluation and market testing. Testing many different variations in small bite-sized bets is rapid prototyping, do this through the effective use of the business model canvas. Testing fast in the actual marketplace new business models and then learning from them to improve the approach is absolutely critical. Get the customer involved and engaged, get your potential partners grouped around the BMC to build and extend out, the internal thinking.
• The business model needs to be constantly tested for its potential in its recurring value, and it needs a canvas to constantly challenge its present position and worth.

There are multiple ways the business model canvas can be explored in exciting new visual ways so as to describe effectively in a common format and capture the wealth of different opportunities.  To invent, to communicate and explore the ‘richness’ within the potential value that is simply laying underneath the different components that make up a business model.

Let’s keep moving the conversation forward on where the business model can work in creative ways within large organizations. Do you have any further ideas?

The post The Age of Large Business Model Reinvention first appeared on Building Your Innovation & Ecosystem Intelligence.

Well in the Business model canvas we have the cost side, the back-end, made up of the activities, resources and partnership aspects and a revenue side, the front end, made up of customer segments, channels and customer relationships. It is the ‘net worth’ of all these blocks that makes up their contribution to the Value Proposition.

It is the nine building blocks when we put them together, tells the complete story, a little like a business model balance sheet. Balancing this out thoughtfully does need that bringing it all together, so as to give others the compelling story and begin to mobilise around and attract the necessary resources.

My question though is this: “is the BMC understated at the back-end today and should we strike a different balance for more established organizations?”

What happens when one side perhaps gets over emphasised?

Very much the orientation of the business model canvas is presently skewed towards the front end – the market facing part and rightly so. You are in search of a new business model, you will never find it in the building. As Steve Blank rightly stated “you have to get out of the building” to validate your assumptions or hypothesis, to search for the value in the real marketplace.

The present BMC creative energy focuses are mostly placed on the front end as  many of the emerging tools, methodologies and creative work seek to explain and explore this in novel ways, helping to work out if you do a have a meaningful business emerging or not. You want to test your ideas or concept as soon as possible. As you learn, you pivot, learning what makes sense to customers, what might not, making continuous adjustments to confirm the business idea.

Now we need the same creative energy application channelled to the back-end to draw out the supporting aspects that underpin the new business model.

Today, the BMC is well accepted for start-up’s, for entrepreneurs but still does struggle to gain the real momentum it deserves and can contribute within larger organizations. Why is this?

The back-end and its lack of real attention just might be holding the BMC back for large organizations. Now we need the back-end to have the same ‘explosive’ forces and focus, as the front end. Let me explain why:

So for me the understated side of the BMC is the back-end.

Here we are looking to ‘plug in’ the key partners, the key activities and the key resources. If you look at any introduction to the BMC you get these as short explanatory introductions to these three parts

Key Partners – what can partners do better than you at lower cost (and thus leverage your business model)

Key Activities – What activities do you need to perform in your business model and how easily?

Key Resources – What resources does your business model require? These are seen as the assets required offering and delivering the other described elements within the BMC.

Perhaps these are just not deep enough in explanations, even for a starting point for a new business model design. These prompters as they initially stand, inadequately address the existing organisations deeper issues in my view.

The ‘drag’ in adoption performance might lie at the back end

The Business model canvas and by extension BM design, struggles with the back-end, this tends to always ‘lag’ as we address ‘breaking opportunity’, especially in established organizations. There is too much invested legacy. This is the ‘drag,’ the anchor weight, that holds bigger businesses back in investing fully in (radical) business model design. We need to open this up, in finding solutions that resolve this back end of the BM canvas.

Originally when Alexander Osterwalder was working through his thesis that ‘spawned’ the BMC, he was talking far more of a multi-layer set of approaches where you had a more defined planning level – the strategic layer, following by the architectural level – the business model layer and then the third level, the implementation level for the process layer. He suggested (at the time) layers ( or you can say stacks) were acting like glue between strategy, business and processes. I think he was right. We need to layer and glue.

We need to ‘layer and glue’ at the back-end

The BMC frame does not need to be changed as resources, partners and activities can be a sufficient ‘catch all’. What we need to actually do is raise often the ‘thorny’ issues, of existing structures, conflicts and possible solutions to overcome these.

This time we don’t get out of the building to learn, we ‘work’ the existing building (or organization) to begin to identify and test aspects of your emerging business model across all the internal ‘touch points’.

We are equally looking to discover and validate in our initial explorations , to pivot and stay agile and aware. To ‘flush out’ roadblocks, internal barriers and search for novel solutions. To keep gaining acceptance and recognition.

Here we are exploring existing infrastructure and looking at what would be needed that would be different to support a new business model. To build anew or extend.

I think it is time to let the infrastructure skeleton out of the cupboard.

We have to acknowledge and talk through the fact that big organizations have involved processes, they operate in complex ecosystems that are difficult to navigate, negotiate change with and seeing where you need to pick certain parts of the value system apart to accommodate the new. Perhaps it is easier to ‘start anew’ or spin out the new business as the antibodies can come rushing in to kill anything life threatening.

The other issue is the reputation risk.

Can you accommodate a small, lean and light weight business in its early stages as it tries to sit alongside the big brothers of existing businesses? Many of the larger organizations have thresholds for revenue size that are telephone numbers to even think of creating something even more ‘demanding,’ a new business model.

You struggle everywhere within established organizations to make the necessary changes to adopt new business models, there is so much vested interest. Yet new business models are desperately needed. So lets address  back-end constraints head on?

We need to tackle complexity far more and early on.

Often the complexity within our organizations; the politics, the whole need to convince established positions & overcome legacies will hold most simply back from exploring business models, on a broad, bolder front. They don’t want to acknowledge the necessary holistic fit of all nine building blocks. They attempt to retrofit what they see into the existing back ends, into their known and existing paradigms.

This limits the potential not just of the visionary power of the BMC but the whole design of any new business model. Often new BM’s are squeezed into the existing:  the push through existing channels, sold to existing customer segments, delivered within the existing supply chain, managed through the same resources and invoiced through the existing systems. We compromise, perhaps, the greater potential by not reflecting deep enough on what new BM’s can give us.

There is nothing wrong with leveraging what you have, exploiting existing resources and structures but as you are drawing on what you know (exists) you can stay blindsided to what it can potentially offer. If you don’t ‘opened up’ your mind and thinking that little bit more you can constrain a new concepts real, sometimes game changing, potential.

We need to ‘ratchet up’ existing visual methods and tools.

This is the exciting place to be, designing new tools and visualisation but let’s focus fully across the whole Business Model Canvas.  We do need to talk more ‘content,’ more purposeful design at the back-end, if the bigger organisation is going to sign up in the way it can, but equally, make it creatively applied.

We need to think how architecture and agility can combine; an opening exploration of operations, systems, applications, and of thinking different ways to be agile thus providing a more transition planning approach to underpin the emerging business model’s design.

Alex talks sometimes about a CAD equivalent for business model design in the future. Perhaps he has something there. We need to design the structure, work through modification, analysis and search for optimisation no different from the front end. This is why we need the Business Model Design Architect as central to this required repositioning, to manage the complete design of any business model’s new blueprint.

My call here is that we need to broaden the  back-end conversation.

Let’s get the conversation going on the back-end and then unleash the multiple designers within this part, not just the huge community of IT related architects already out there working on many of these internal problems. We need creative design, ingenuity and understanding, all combining in new ways.

We need to step up one big huge level within conversations around Business Model design in existing organisations. We need to seek creative, visually stimulating solutions to the complexity that lies within the four walls of organisations. Let’s address the internal complexity and all learn by openly exploring this. We need to get the toolsmiths working on forging the internal BMC foundry, block by block.

To play back to the team designing and orchestrating the BMC, we do need to create better conversation at the back-end of the BMC. We need a new depth in the visual tools needed to capture this side of the canvas.

Otherwise, we don’t stay at beginners level Alex, we stay locked into start-ups and entrepreneurial check lists as the use for the business model canvas and that would be such a pity. Addressing the architecture of the back-end is essential.

We need to address the existing organisation far, far better in the back-end

Until we address this back-end far more, then I think the BMC will stay considerably  constrained, especially for established organisations. It might simply remain a check list, or as Steve Blank chose to depict it as the Business Model dashboard, or it is only a starting block A4 white board to begin to explore new ideas for start-ups and entrepreneurs.

It might not become the real ‘catalyst’ for exploring new business models as I believe it can be in established organizations. That would be a real shame, if the back-end stays a clear liability on the business model balance sheet. The back-end is hugely different within the established organization and the business model canvas needs to tackle this urgently, in a host of highly creative ways that we have seen extensively applied to other parts of the BMC. Lets get a better balance in our thinking.

The post The Understated Back-End of the Business Model Canvas. first appeared on Building Your Innovation & Ecosystem Intelligence.

Those without a legacy or are really agile usually are in pole position to explore new opportunities quickly. Also to start with a blank business canvas is exhilarating. It seems we are in the era of the Entrepreneur or are we?

The entrepreneur has a great chance to pioneer, to quickly expand and seize those opportunities to disrupt those occupants serving a known market. The art of discovering the unmet needs of not just existing consumers but attracting in the ones presently outside the focus markets is such a valuable place to attack.

The constraints within the existing organizations

Designing the new business model seems an awful lot easier than if you were involved within the’ poor old’ established organization locked into its structures, systems, existing markets positions battling with satisfying existing shareholders. Just moving those conflict points along within the organization often seems certainly from the outside, in perpetual conflict. There is a real challenge to see things differently and design differently!

The established organization has to combat this increasing threat from all these “usurpers”. There is a strong call for change in existing organizations but there are often complex ecosystems to overcome and the demands for new structures and approaches to resolving these are increasing.

The ever increasing call for more C-EX’s of something

It seems we are continually called upon to add more chief officers in innovation, in information, in knowledge, etc., etc. to address the constant gaps found within existing organizations inability to adapt, focus and design the business. Specialisation is needed but we seem to increasingly lack the function of pulling this all together.

The Chief Executive seems to be so out on a limb defending, cajoling, managing and simply reacting to constant crises across their shortening tenure; we are losing the bigger picture perspective when it comes to designing the business to shape it towards the future.

We need to manage the cross-cutting concerns in functionality, in constraints, in unlocking the resources successfully. Yes you could argue this is the role of the Chief Operating Officer but they seem far more focused on squeezing every bit of juice they can find from the existing operations. I hated it when the COO came knocking, you knew it was going to hurt. So who is this person then?

This person, I call the Business Architect who designs and develops the business ecosystem.

This person or function has to hold distinct views of the five essential aspects that impact across the organization. They are seeking out the unique ways for the internal competencies, processes and assets to combine and relate in seizing ‘breaking’ new business model design. They must have a comprehensive overview:

1.       They have the business strategy view and then are capable to break these down into the essential parts to tackle and address the strategic needs. They provide the strands for traceability to make sure these components are being actively worked upon

2.       Check and test the business capabilities and flag where gaps are found, assign the resource and focus to bridge these gaps and set about the building of the lasting capabilities needed to meet the business design needs

3.       Seek out and make sure the flow of business knowledge is occurring by applying a clear absorptive capabilities structure that sets about capturing, facilitating, accelerating and diffusing knowledge for it to flow throughout the organization and to its partners.

4.       Possess the best business operational view or be part of the inner team to support operational structures that cut across functional and organizational boundaries. This includes working the boundaries to extend and push any key design parameters, such as open innovation, platform innovation, collaborative ventures that extend and build on the existing entity.

5.       Have a clear view on the operation– perhaps not the responsible oversight but is able to capture, explain and link roles, capabilities and map these to the challenges being tackled today but designing those that need to be taken forward to build the future in more adaptive designs.

These five aspects have been discussed in numerous Business Architecture papers before and are suggested to provide the integrated view of the organization.

The absolute difference, for me, is not having these buried within the IT department but given the critical centre piece role of being the Chief Business Model Design Architect across the organization with an essential seat within the C-level team. They are responsible for the value configuration, building the necessary capabilities and focusing on the key activities and resources that are needed to implement change for different business models. They are a real change maker.

So we need strong business model design architecture today.

This person and his team design the business logic. It sets about to understand and describe the building blocks of business model design. It is the master of the Business model canvas, it understand the importance of the parts, their interlocking nature and can describe the rationale of how the organization creates, captures and delivers value for today’s business and is constantly exploring the future alternatives and having these designed into the future considerations.

The Business Model Architect designs the different blueprints. They work out offering through all the means necessary the common understanding, facilitate the roadblocks and design constraints so as to align the strategic objectives with the demands placed on the design of the organization. They work the team, they cut across boundaries, they set about ‘creating’ the organizational framework and deliver the “how we do it”, they are the business design translators.

They seek to design constantly what is needed, they look to instigate and demand changing capabilities to increase flexibility, to optimize and to adapt what is in place with what is needed to deliver the opportunities identified for giving new growth.  They map, model and design. They make design more dynamic to adapt to change.

Maybe they are tasked with offsetting  the entrepreneur out there, presently determined to disrupt their business. It is time for exploring all the value points of being the ‘incumbent’ and it needs this holistic business architecture approach.

They have and own the Architecture mandate for the organization for designing the architecture framework necessary for the business model and its design, not just for today but for the future.

The challenge is to provide them with all the tools and immense ingenuity available to them if they can harness it correctly, which I believe they can. ‘Locked’ within the organization is plenty of latent energy wanting to find new ways of working, new designs, structures and processes.

The design of new business models needs a clear focal point within established organizations. The very catalyst is that you need the Architect to orchestrate and completely manage this design process.

The post The (Re)birth of the Architect for the Business Model Design first appeared on Building Your Innovation & Ecosystem Intelligence.

There seems a lot at present going on around the Business Model and formulating its design. Following on from the Business Design Summit held in Berlin in April of this year there seems to be a gathering of momentum surrounding the Business model.

There is an awful lot of designing going on, actually it is hard to juggle with it all, even for me that has a 100% focus on innovation.

The Business Design Summit had as its primary question: “Are the Business Tools you are using relevant for today’s world?”

It went on to ask “If you want to teach people a new way of thinking, don’t bother trying to teach them, instead, give them a tool, the use of which will lead to new ways of thinking”. “Your business ideas deserve better than PowerPoint and Excel”

The momentum is specifically aimed at Business innovation design tools and how to manipulate them and this is giving rise to the ‘school’ of tool-smiths. I wrote about the Business model canvas as set to explode in 2012 and events this year are certainly ‘exploding’ in multiple ways. Let me give some examples:

The Business Model has become even more critical to create and relate too. Rita Gunther McGrath has just released her book “The End of Competitive Advantage- how to keep your strategy as fast as your business”, published by Harvard Business Review Press. Her whole premise is that today “Strategy is Stuck as most leaders are using frameworks that were designed for a different era of business”.

Rita believes “we require a new set of practices based on the transient competitive advantage”.  We are in a time of fast evaporating competitive advantage and we can’t spend months crafting a single strategy, we need to keep exploring and reiterating different initiatives that are more focused, leaner, more defined, more transient in their nature.

This needs more fluid, greater visualization and more customer-centric approaches and modular strategic design approaches.

So what if?

What if you prototyped business models like architects sketch buildings this is one of the main appeals of the business model canvas, outlined in the book: Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, written by Alexander Osterwalder and Yves Pigneur, You can simply do that, sketch out new business ideas or quickly visualize existing businesses and the ‘multiple’ canvases can be used in teams as a sharing tool to structure the thinking.

What if you had a clear method to uncover what customers want to get done? How about a tool and methodology that will help you to Identify and prioritize the jobs-to-be-done? Knowing these is clearly of high value and can lead to rapidly achieving growth segments that tap into this.

Jobs-to-be-done is very fertile ground many are exploring including Clayton Christensen, Tony Ulwick and Strategyn, Mark Johnson and Innosight and plenty more. One of the best books outlining a well thought through approach to this JtbD is in Lance Bettencourts book “Service Innovation: how to go from customer needs to breakthrough services”

What if we learnt to talk  always around the Value Proposition, not that difficult part of explaining ‘our’ (boring) business strategy? Recently we have been seeing the emergence of a Value Proposition Canvas from Yves Pigneur, Alex Osterwalder and Alan Smith. This will ‘emerge’ in a book “the Value Proposition Design” due to be published sometime soon. The VP canvas dovetails into the BM canvas. It takes the JtbD concept to achieve a greater fit between the value you intent to create and the expectations your customers have.

Part of the Business model canvas proposition is extending tools to build better models and through www.strategyzer.com this web site (at present) is dedicated to working away at different tools and becoming the official Alpha web-app from the makers of Business Model Generation developing software solutions.

Also expect to see further development through the Business Model Foundry and the Strategyzer Academy that will explore and educate upon all the emerging tools and techniques being ‘crafted’ away at present. I’d recommend joining the Business model hub by the way, another from this growing business enterprise, centred on the Business Model Canvas.

Juggling, juggling and juggling.

Have you thought about “Pruning the product tree?” Luke Hohmann and his company The Innovation Games Company are providing a range of serious but fun games that can produce concepts that shift your thinking. On his ‘pruning the product tree’ the focus is not on ‘cutting’ but ‘shaping’ to arrive at products that your customers desire more and so you eventually  create a ‘new canopy’ of innovating options. They are developing a whole range of innovation games

Within organizations there needs to be greater, richer conversations – those strategic conversations that are more creative, collaborative and working more though adaptive challenges arising more constantly than ever.  Lisa Kay Soloman, who teaches Design Strategy at the California College of Arts is co-authoring a book due out next year “Moment of Impact: how to design strategic conversations that accelerate change”, published by Simon & Schuster.

Have you checked out Dave Gray, founder and CEO of Limini. Dave has authored two books Gamestorming, a practical handbook for innovators and change agents and a second book, the Connected Company, offering a strategic blueprint and roadmap for businesses who want to innovate. He is exploring a “culture map” approach to help teams understand their cultures as well.

I could go on, as there is an awful lot of fresh thinking emerging.  Just take the ‘body of work’ that Steve Blank is producing centred around a methodology for focusing around the customer, take time out to get into his manual “The Startup Owner’s Manual” written with Bob Dorf.  More and more entrepreneurs have discovered Eric Ries and his thoughts on applying continuous innovation in lean ways to create radically successful businesses which are outlined in his book “The Lean Startup”.

One could look towards “Design Thinking” with Tim Brown (CEO Ideo) traditionally leading this charge but take a look at a book written by Jeanne Liedtka and Tim Ogilvie “Designing for Growth: A design thinking toolkit for managers” where they lead you through the ability to turn abstract ideas into practical applications and cover the mind-set, techniques, and vocabulary of design thinking, so helping us to unpack the mysterious connection between design and growth

So we have an awful lot of juggling taking place

Those who have not yet picked up on Gary Hamel’s quest for change through the reinvention of management and his moonshots for management should find the time- it sets the Business scene and future agenda. Then you have Steve Denning who writes about radical management over at Forbes and I’d certainly recommend reading his recent article “The Management Revolution That’s Already Happening” where he is suggesting that today’s organizations represent a failure so deep and pervasive that there are hardly words to describe it.

 A veritable revolution in management and its design is under way.

 Steve Denning argues we are fleshing out a “new management canon” – a huge paradigm shift. He believes we are in a creative economy that generates dramatic reductions in cost, size, and time, and improvements in convenience, of products and services with new systems of infrastructure, new ways of socializing, new meaning as to how time is spent, and new ways of living these possibilities

Those of you not yet ‘plugged in’ then I’d begin, the sooner the better, as there is a whole new way of thinking going on and any movement of this potential magnitude needs supporting and exploring, especially if you share in the belief that much is out of kilter within the business world. There is a ‘certain business revolution in the air’.

Something in the Air by Thunderclap Newman
“Call out the instigators
Because there’s something in the air
We’ve got to get together sooner or later
Because the revolution’s here, and you know it’s right
And you know that it’s right

We have got to get it together
We have got to get it together now”

The post Juggling Innovation around Business Model Design first appeared on Building Your Innovation & Ecosystem Intelligence.

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.

“Use the hard times to concentrate on and strengthen your competitive advantage. If you are confused about this concept, hard times will clarify it.
Competitive advantage has two branches, both growing from the same root. You have a competitive advantage when you take business away from another company at a profit and when your cash costs of doing business are low enough that you survive in hard times.”

This challenged my thinking of competitive advantage but then again hard times certainly do question all our thinking. I always felt it was the uniqueness within, in what you offered, that separates you from your competition. This alters that perspective.
It seems this piece of advice boils down to the hard dollar gained by showing advantage within the marketplace- where it really counts, in fighting for every sale by being able to make a profit or simply cover your costs to simply keep going.

Isn’t innovation simply stripped away here-lost, forgotten, ignored, abandoned? Just thrown overboard along with any branding and this seems so stark or am I missing something here?

What happens when markets come back?

Maybe you have survived and you pick up the pieces. Do you agree this is where competitive advantage lies?

Perhaps this is ‘creative destruction’ and ‘innovation productivity’ in its rawest form? See my recent article on ‘seeking innovation productivity through creative destruction’ on this.
Any thoughts?

The post Hard times need a plan, based on what-survival? first appeared on Building Your Innovation & Ecosystem Intelligence.