I believe Innovation is becoming overwhelmed by all the changes we are applying into innovation activity and its management.

I would say the IM system is under even greater strain from the shifts coming from the multiple applications of technology, new approaches to design and modelling as well as all the necessary engagement and touchpoints.

Yet we are still expecting this deluge of change occurring to happily move our innovations through that past established, often manual processes, we have presently in place. I think not.  We are deluding ourselves, that all is well.
There are such changes occurring.
There is an increasing need for ecosystems, platforms, the greater use of analytics, big data and reliance on technology are all crowding in on innovation delivery.

The emphasis on thinking through new business models, combining design thinking, lean management, customer development, prototyping, experimenting outside the lab, collaborating with clients, finding different partners, the different exploitation of research techniques, are all breaking out in different forms and combinations, radically altering our approaches to innovation.

Also collaborating and networking are far more essential to innovation exchange, be this in the early idea forming stages but increasing in the development and execution of innovative solutions.

Partnerships are diverse, delivering on the need of the job-to-be-done. Orchestration is increasingly playing its part to manage all the assets and knowledge coming into play. There is a significant amount of change occurring around innovation and its management.

I have suggested in past posts that we all need to think differently, to act differently, to treat  innovation differently:

innovation is based on the thinking around the shift from products to solutions, from transactions to growing far more value-adding ongoing relationships, from a supplier of product services, into highly valued network partnerships, exploring innovation across all options, instead of delivering on discrete elements; this requires managing the whole ecosystem of the innovation design differently.

Can we continue in this “steady as she goes” by simply rearranging in this case the innovation portfolio to adjust to the latest insight, well no. I think we are simply just fiddling with the deckchairs, incremental changes as the innovation ‘ship’ plows on, into more treacherous water, underestimating the hidden icebergs that cannot be appreciated until something happens.

Overload, inadequate resources, systems and structures all lie under the surface but still, we press on regardless.

Innovation is heading for its own Titanic moment.
Are we addressing all the significant changes going around innovation?
It seems incredible to us today that anyone could believe that 70,000 tonnes of steel could be unsinkable.

Yet, when the New York office of the White Star Line was informed that Titanic was in trouble, White Star Line Vice President P.A.S. Franklin announced ” We place absolute confidence in the Titanic. We believe the boat is unsinkable.”

I can hear the CEO of today making a similar comment “We place a lot of confidence in our innovation, it is critical in the way we will grow our business and take us forward, we are well-positioned to grow” I don’t share their (blind) faith.

Looking back, it was the beginning of the twentieth century and people had absolute faith in new science and technology. They believed that science in the twentieth century could and would provide answers to solve all problems.

The sinking of the ‘unsinkable’ Titanic shattered much confidence in science and made people more skeptical about such fantastic claims.

Does innovation sink under the weight of so much expectation

Are we going to sink innovation as the twenty-first century takes our beliefs in technology and science into new areas, without the necessary understanding of how to manage this, when so much of our understandings of how to physically manage this, are lagging?

I feel we can go on foolishly believing innovation will simply cope with all that is coming towards her?

It is perhaps “unthinkable” for most, our innovation will simply cope. Why not, I mean we have the technology and the internet to keep us caught up in the moment. Yet we are falling further behind on the people side of managing innovation and balancing risk and reward. Our processes, systems and structures are inadequate to deliver on the expected innovation promise.

Is the internet and our growing reliance on all our connections required for managing today’s business for innovation insights, services and understanding, we just might not be seeing the size of the ‘hidden’ icebergs?

Unless we change course and plot a new route for managing innovation we might have some very uncomfortable moments where we will simply sink, flounder or await rescue. Who is actually steaming to the rescue of our ‘creaking’ innovation systems?

*first published on LinkedIn

The post Sinking the unthinkable 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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