An article from Bloomberg reports that companies in the Standard & Poor’s 500 Index are “poised to spend $914 billion on share buybacks and dividends this year, or about 95 percent of earnings.”
95% of earnings – Doug rightly says “wow” and offers a thoughtful set of observations

“Every organization that enjoys free cash flow makes a decision on where to allocate that resource. If the opportunity available to the organization meets or exceeds the hurdle rate—the desired, expected rate of return—then, in theory, they invest in that opportunity. If not, then no: the organization returns the cash to the investors. Of course, earnings come after investments the organization makes in innovation—research & development expenses, for example. Many do invest a lot in R&D”

He then remarks “And yet…..and yet” ….

“This offers the implicit message from the firm to the investment community: “we do not have a better use for this cash (i.e., the ideas we might pursue do not seem as promising and as compelling as we would like).”

“We know that we cannot cut, or cost save, our way to growth. By extension, we know that we cannot grow a business for the long-term by returning all profits to the investors. Doing so suggests a lack of vision—a lack of acuity into what the customer wants and what the market demands”.

Then you begin to read through the Bloomberg article

“Companies in the Standard & Poor’s 500 Index really love their shareholders. Maybe too much!  Money returned to stock owners exceeded profits in the first quarter and may again in the third”

The Bloomberg article goes on “Buybacks have helped fuel one of the strongest rallies of the past 50 years as stocks with the most repurchases gained more than 300 percent since March 2009. Now, with returns slowing, investors say executives risk snuffing out the bull market unless they start ploughing money into their businesses”

Some further quotes from the Bloomberg article
“You can only go so far with financial engineering before you actually have to have a business with real growth,”

“Buybacks are something corporations can take control of and at low borrowing costs, they’re a viable option,”

“If management can’t unearth future opportunities for growth, as a shareholder, I lose confidence.”

“Buybacks have become sort of the low-risk medicine in the C suite,”.

“The reality is capital expenditure comes with risk, a significant amount of risk, especially in a slow-growth world. Buybacks offer a lot of flexibility.”

So you do have to ask the really hard question: where is the future REAL growth going to come from?

So why are our companies not ploughing additional money back into their business, partly it serves the interest of top management who are often compensated on EPS. Businesses today remain utterly reluctant to buy new equipment, build factories or hire more workers, while management regards the recovery as uneven, it has regarded the buyback strategy as the best bet. How totally wrong!

Clearly the view that your own stock is under-priced, you believe your strategy is the right one and you are certainly not going to sit on hordes of cash, it is perhaps value-destroying to “our” shareholders. Yeah right including mine!

This is where the whole compensation of management has gone off the rails. If tenure at the top is shortening- as it is- then pushing your stock price performance helps for a two to three-year period helps you as the manager.

Yet it really is simply “kicking the future down the road” for others to deal with, if it is not too late. It is very unlikely these buybacks will help the performance of the company over a decade but then again most management has ‘cashed in their chips by then.

Simply too much cash and buy-backs are stopping innovation and new growth

Now of course if this ‘bull market’ does come to the end of its run this year as many are predicting then the ‘game’ of improving financial ratio’s gets so much harder. Buybacks do reduce the assets on the balance sheet (cash is an asset), the return on assets (ROA) increases and if the shares bought back are ‘retired’ the return on equity (ROE) equally goes up.

Today our markets and the investors view higher ROA and ROE as the greater positive over the need to invest in the promise of a better future.

Yet change is stirring, new business models are revolutionizing industries, crazy ideas will be creating new markets and this call of the unknown holds an interesting promise of future ‘higher’ returns. The Darwinian effect is raising its head and innovation holds one big key to evolving differently to manage in these changing times.

Are these prop-up ratios providing short-term relief, holding strategies to what would otherwise be an ailing stock from poor investment in innovation or new assets or helping them get out of excessive dilution? These signal a company struggling.

The reluctance to raise capital investment has left companies with the oldest plants and equipment in almost 60 years. The average age of fixed assets reached 22 years in 2013, the highest level since 1956, according to annual data compiled by the Commerce Department.

Do you recall the Capitalists Dilemma?

I am sure many of you can recall the article in the HBR “The Capitalist’s Dilemma” by Clayton M. Christensen and Derek van Bever from the June 2014 Issue.

This is where they outline the three types of innovation 1) Performance-improving innovations replace old products with new and better models 2) Efficiency innovations help companies make and sell mature, established products or services to the same customers at lower prices and 3) Market-creating innovations, our third category; transforming more complicated or costly products so radically that they create a new class of consumers or a new market.

We are today often failing to create the market-creating innovations. Market-creating innovations need capital to grow—sometimes a lot of capital and risk and this is deemed unhealthy in today’s more uncertain environment but you are ‘creating’ lots of cash by running lean.

Buybacks are safer, the risks lower and top management projects their confidence that this is better for shareholder wealth. Shareholders take the money but over time I would certainly argue lose confidence in a lasting future and constantly switch shares to chase the cash! So shares get propped up even more and the circle starts again and the future gets sacrificed just that little bit more.

The Capital Dilemma article was suggesting the need for a New Orthodoxy of New Finance.

It does recommend the emancipating of management. “Many managers yearn to focus on the long-term but don’t think it’s an option. Because investors’ median holding period for shares is now about 10 months, executives feel pressure to maximize short-term returns. Many worries that if they don’t meet the numbers, they will be replaced by someone who will. The job of a manager is thus reduced to sourcing, assembling, and shipping the numbers that deliver short-term gains”

Re-evaluating differently

While we value innovation alongside non-innovation in the same way the demands for returns on investment place unfair demands on internal innovation projects. Investing in the future is so much harder and while there is this lack of confidence in new innovation, alongside this lack of external pressure for different judgements, we are looked into that diminishing short-term viewpoint dominating our boardrooms.

Hopefully, if this present bull market does end, innovation, the source for new growth, alongside greater mergers and acquisitions (M&A) suddenly gets its ‘growing’ voice back in the boardrooms. Suddenly corporate behaviour moves from financial prudence and cash becomes released for accelerating real expansion.

We have lacked the right type of investment in the future

I just wonder if those at the top really understand that it is not just cash that will ‘create’ innovation when they require it when they have that sudden need to chase for real growth if the stock markets suddenly turn against them? This acceleration and sources of new growth come from driving new innovation.

If they have not been sustaining investments in their resources; their assets and their people and we know these have been far more diluted through this pursuit of lean management, dispersing most of the gains with the cash piles achieved, then the company is in real trouble.

They might soon realize that real innovation and the skills needed have been running on ’empty’ or just the past fumes of low-octane incremental fuel, with little sustaining power, apart from this propping up the short-term.

This sudden realization might create a sheer sense of scrabbling. A scrabble just to regain those forgotten skills and bring real lasting health back into our companies where people are valued again for what they can bring.

It would be nice to see a pursuit of growth back on the agenda, through pushing all the buttons needed surrounding innovation, and to see top management really earning their place, unearthing future opportunities for real growth, something shareholders will be increasingly looking to see.

Risk and opportunity are the ‘yin and yang’ for innovation and when you are looking to really grow to give really valuable shareholder return then top management is going to have to re-learn much.

“Recognizing the power of ‘yin and yang for innovation’ can give you the order of things and how and why they relate to each other. Complementary and conflicting opposites do contribute to a greater innovation understanding but they do need consistent attention to manage”

It is critically important to have this ‘flow and balance’ and allow it to constantly evolve.

Let’s get back to investments that are about the future and that need a healthier appetite for innovation investments.

The post Is all investment about the future? first appeared on Building Your Innovation & Ecosystem Intelligence.

You can read more about its background here and you are welcome to participate.

Why innovation does need a common reference point?
When you don’t have a common approach to something, in this case the management of innovation, you can have considerable pockets of inefficiency and a high level of ineffectiveness to deal with.

Your organizational energies become fragmented as you constantly deal with differences, gap issues & misunderstandings that result in much hidden costs and ‘spent, unproductive’ capital. Resources are not focusing on advancing innovation; they are often spent on fixing what you have. By not having a clear common approach that everyone understands you fail to establish a common language.

By not adopting a common set of innovation reference points you can remain often unproductive, consistently readapting, re-working and plugging gaps that could be better invested in managing the many aspects of complexity you always find in a better thought-through innovation management structure, one that focuses on advancing your activity.

Simply Jeffrey and I believe that the innovation space needs a common starting point – a collaborative reference model.  Certainly many other large and successful industries have common standards – the IBM PC, for instance, or common accounting protocols in financial services or a host of others that have significantly advanced that industry or service.

With these shared and transparent frameworks, clients can gain knowledge, have a growing confidence and understanding by recognizing the value of having something in common and the opportunity to leverage from this.

Organizations focus should be on advancing innovation activity not constantly adjusting and adapting to different ‘standards’ or approaches.
Today innovation management advisory firms are mostly small, loosely organized, some highly specialised, that have a flourishing complexity of activity but often spend inordinate time reinventing many aspects of innovation management that are not necessary and serve little value for the client.

While client’s requirements for structuring innovation are often claimed as unique and distinctive, they are in many cases, actually not. What they really want is to acquire a common, repeatable, scalable innovation structure that allows them to manage their distinct innovations on a consistent basis.

The understanding of the innovation process is basically common. Until this point of difference between what a client wants, a common, scalable process and the providers wanting to offer their own versions, innovation in general will face numerous disadvantages in not advancing, as it is not formed around a basic set of common standards.

Why argue for a common approach?

The benefits of using and developing a common approach are numerous. They provide confidence, reliability and comparability in the market place.

They also help to build and place the focus, cohesion and critical mass into building more efficiency and value into the process of innovation.

Common approaches can accelerate the advancement through clearer applications of technology and leading practice, and focus on the ability to reduce the transaction costs along the whole innovation value chain.

Using a common language for information sharing, or developing more common thinking, can still allow individuals to gain a competitive advantage in the appropriate place, in their innovations advancement.

Developing further from a common framework can alert customers to the features of a product, service, technology or process improvement, to consider for adoption. It further optimizes and builds from this common point.

Having a common approach can actually offer the choice of connecting to an increased number of partners for building connectivity/compatibility between different collaborators.

It becomes a multiplier from this ‘common’ application, it lifts the standards.

Adopting a common innovation framework has numerous advantages
Clients in partnership with advisors can build from this basic common platform of understanding by the more effective use of applying people with the right skills and capabilities to focus and accelerate the job-on-hand: the need-to-deliver innovation consistently to final clients needs.

If consultants, advisors and practitioners can demonstrate that their solutions are based on a common framework they they set about the creation of their differentiation, based on their unique skills and points of value-add, not hiding behind the need to fire fight and plug gaps, or sometimes add to the mystery that unclear aspects of innovation management or incomplete advice can generate. It degrades efforts in our view.

So what are the advantages? What value do common approaches bring to an industry?

This lack of a common model creates uncertainty for potential corporate innovators, who must decide which innovation method or approach seems the most appropriate or valid. In the absence of a common starting point or framework every solution considered seems equally reasonable until you arrive at a point where it is not doing the job you had wanted.

A lack of a common approach creates different levels of uncertainty because there are many competing methods and tools that all seem reasonable, often with vested interests in the models proposed but it is the supporters of these different approaches who benefit from the advocacy of their approach, not the management of innovation.

We believe that creating a common innovation model or framework will have a significant number of benefits, for innovation practitioners, for companies and for innovators.

It can become the common reference point to build from. It can be used repeatedly to refresh and validate changes in thinking and can allow us all to move on from focusing on the process of innovation to the leveraging of the innovation process- a huge step in our opinion.

Specific advantages that a common approach to innovation can provide

• Transformation of ideas to a marketable concept

The acceptance of recognized concepts and emergent thinking gets ‘pulled through’ to market by their incorporation into this common approach at an increasing rate. The use of appropriate measurement allows the concepts to be defined and quantified so that the suggested common approach is widely understood and accepted. It accelerates by increased adoption.

• Networking and access to experts

Access to recognized experts through association to prescribing to a commons approach can be extremely beneficial to an organization, in the development of their own innovative approach, as they will gain a better appreciation of the state-of-the-art in other organizations, across industries and compare more with their competitors.

You also gain in growing benefits from the collective expertise of the community that subscribes to this and in their combined knowledge or expertise, in that it brings a multiplicity of partners together that might not have had the same opportunity in a fragmented market.

Smaller and medium-sized enterprises (SMEs) in particular can enhance their status and can gain a marketing advantage in growing specialization, expertise and knowledge advancement.

• Competitive advantage

Developing a new common approach for the innovation process in fresh thinking is a way to apply pressure on competitors, whilst gaining a competitive advantage.

It enables an organization to ‘raise the stakes’ and alert consumers to the latest feature, insight or knowledge advantage. Common solutions actually ‘push’ the industry to improve its game, raise its standards and increase value to clients.

Due to the potential of reducing costs associated by taking a common approach, the use of commonality also allows for growing price competitiveness in the market- not a bad thing.

Using standardized approaches reduces the amount of research needed at that early stage so the investment can be made more in its advancement. It directs activity to more forward-looking advancement of innovation management.

It can also reduce much of the present duplication and legacy issues from past efforts that are often resident in uncertain situations.

Finally, in the part,  it increases the purchasing power of the interested parties to evaluate far more on this common platform accreditation, with growing confidence on common criteria, alongside the value-adding points of differentiation to meet the work that needs to be done through new innovation.

• Network effects

Today the network effects in adopting a common approach typically increases with the number of users sharing and feeding off of each other in learning, knowledge and experience.

This more ‘open’ sharing effect accelerates collaborations, connections and knowledge disbursement.

Network effect markets will become increasingly attractive targets for companies who can position their own proprietary technology (technology that is protected through IPRs) as the technical standard in that market, to improve upon the common approach to help in its management and execution.

Having a common approach provides an essential building block for collaborative platforms for different parties to work together in more ‘open’ innovation environments for their mutual goals that is increasingly being recognised today as less likely to be achieved by working in isolation.

• Quality and reputation

Organizations today are demanding better quality, depth and expertise in what they adopt. Adoption is more likely if it is backed up by accepted common approaches that are recognised by the broader community.

Alternatives will increasingly become harder to accept with their growing disadvantages of not being party to the potential of sharing around the commonalities recognized as standard, within this more commonly adopted approach to innovation management practice.

• Growing international and global recognition

Involvement accelerates across global organizations by adopting these set of common approaches to innovation. By subscribing to international common approaches standards and practices throughout the organization’s global innovation activity, will give a common language, clarity and greater line of sight.

Operating on a common approach agreement gains in the longer term for collaborative ventures all working through the same common approach or platform. It aligns to better efficiencies and potential leverage in different ways.

• Variance is significantly reduced.

The number of different approaches to solutions is reduced by adopting a more common set of solutions, due to increased optimization of the process. This is known as variety reduction. Variety reduction leads to economies of scale that can lower production costs and therefore investments.

Variety reduction would help along the whole innovation value chain. It can lower core adoption costs allowing organizations to concentrate on the features that are most important to their innovation needs, thereby leading to a sharper focus on what is critical for their specific innovation delivery.

It promotes greater creativity by providers of solutions by focusing on the positives and building from this more focused approach to demonstrate competitive advantage.

So to summarize

When relevant common approaches do not exist then organizations remain uncertain and weary, they limit their investments resulting in inadequate application and understanding of innovations true value.

Investment made without a consistent approach have high levels of inefficiency cost built in and the market remains unhealthy as there is this consistent under investing occurring due to ongoing uncertainty.

When relevant common approaches can be established organization confidence increases significantly, risk is more quantified, there is a growing understanding of the common approach by a broader audience and increased funding is more available for forward-looking investment.

The health of the innovation market benefits from this potential cycle of increased investment. It builds upon a stronger platform not lots of fragmented pieces.

Benefits and key takeaways:

We believe that creating a common innovation model or framework will have a number of significant benefits, for innovation practitioners, for companies and for innovators, actually for the whole innovation community that believes in innovation as the most significant enabler to growth and renewal.

It can become the common reference point to build from. It can be used repeatedly to refresh and validate changes in thinking.

Paul Hobcraft of Agility Innovation who can be contacted at paul@agilityinnovation.com or Jeffrey Phillips of OVO Innovation who can be contacted at jphillips@ovoinnovation.com for discussing this concept further through the suggested models provided as a starting point.

Principle Source of Reference and Guidance for structuring the specific advantages: Standards and Intellectual Property Rights: A Practical Guide for Innovative Business by Matthew Clark, published in 2004.
Paul Hobcraft, Agility Innovation Consultants, 8th May 2011.

The post My arguments for a common collaborative framework for innovation management first appeared on Building Your Innovation & Ecosystem Intelligence.

#Innochat is a lively, informative and inspiring one-hour(ish) discussion on Thursdays at noon (Eastern US time). Usually the best way to follow along is to head over to TweetChat – sign in with your Twitter credentials and follow along and participate. Take a look at www.innochat.com and join in.

Jeffrey Philips @ovoinnovation and myself @paul4innovating have been suggesting that we need to organize more around a common approach to innovation and has recently published this we decided to put this forward within this discussion hour to learn more from many established innovation thinkers.

The fact that Twitter decided to go ‘whaling’, stalling and generally misbehaving to create some bottleneck in exchanges, did seem to generate a lot of ‘chat’ and a great diversity of opinion.

The first question was: “Is innovation a cottage industry? If so, is that because of a lack of a standard approach” warmed everybody up that was for sure. The definition supplied by @ovoinnovation was “small players, different approaches that are not scalable, with no shared solutions”.

There were plenty of thoughts on this, with a summary of some of the more interesting ones shown here:

• “Too much competition to have one model”
• “Companies should have their own frameworks as companies would be similar in their approach”
• “Diverse activities without common threads or themes”
• “Does innovation adhere to common frameworks?”
• “Cottage industry sounds like lots of hand weavers”
• “Hand weavers being replaced by factories”
• “Cottage implies less professional”
• “There is lots of adopting and applying (to innovation)”
• Cottage maybe, not all take on the ongoing formalized approach to innovation”
• “Innovation contains artisans”
• “There are lots of adopting and applying”
• “Common starting point but (perhaps) different ending points”
• “Main reason why Innovation is so important to services companies is because it’s easy to commoditise, and easier still to copy”
• “Custom-tailored frameworks are needed”
• “We still don’t have a common language”
• “Not even a common language for strategic plans”

For me coming out of this ‘opening’ exchange was some real concerns.

My thinking that came out of this was “protect the known’s, reject the unknowns”. It struck me what an awful lot of reinventing of the wheel or in this case the innovation process, still does seemingly takes place.

Is this either productive or value-adding for the clients who are looking for sound advice? It suites many providing advice to do this, as you come back to one of the very salient points made yesterday: “easy to commoditize, and easier still to copy”, so you offer a custom-tailored evaluation process and provide a variant, wrap it in some mystery to offer, in all truth a custom-designed solution.

So why not go with one from the very beginning to frame discussions, to establish a common framework and then explore options to advance on this? Instead it seems ‘we’ move on, look for the next one, repeating what is already actually established as common.

I think we should move on from this and advance by providing a common, generally accepted innovation framework, as the starting point.

Yes, from what I read, nothing convinced me that we are NOT still in a cottage industry for innovation and surely that has to change?

Frameworks or Standards

Another part of the discussion was around frameworks or standards.
The conclusion was we lacked a framework and it is problematic. Adopting standards remains to be seen, as this can have many constraining factors.

Lots of exchanges were around the use of the word ‘framework’ and there seemed to be a consensus of the better use of ‘guidelines’ would be helpful.

Well, at least it is right perhaps at the start of anything to suggest guidelines maybe. The other observation was “structures must be extremely loose, any framework very light”

Did the discussion advance the topic?

From my perspective it did. Within one hour a fast and furious exchange the issue of lacking a common innovation framework was raised as a real constraining issue, it got a number of people certainly interested to become more involved.

So I’m hopeful as we push the argument about having a more organising framework or guidelines for innovation we might achieve the level of advancement we do require within innovation thinking.

One tweet “Innovation within parameters” summed it up nicely. Some advancements would help by framing innovation more on a common platform or around a set of guidelines.

We certainly gathered more involvement and interest within the innovation community and will continue to argue for the establishment of some common approach.

Frameworks provide confidence, reliability and comparability, by working from something common surely? All we have to do is find a common starting point and that seems that it is not going to be easy, by all accounts of the exchanges that took place yesterday.

Still, we will push on, as the advantages certainly outweigh the concerns of protecting the ‘knowns’ and ‘easy to copy’ and differentiation can be found and better demonstrated further down the innovation value chain.

The post Questions raised on a collaborative innovation framework first appeared on Building Your Innovation & Ecosystem Intelligence.

If we do not adopt and gain a clear understanding of (basic) innovation, its structure, process and differences in approaches we need, we will certainly struggle to move beyond the basics to the ‘promise’ of advancement that innovation should be offering.

I would like to offer some of the factors that I feel will be shaping innovation’s future; many are presently taking place but in pockets of expertise and experimentation, that we have to investigate more to understand the implications further.

What is holding innovation back?

Firstly we do need to provide some ‘bunker busting’ of the different silos of resistance:

1. The internal functions that are presently closed off from each other
2. The different management layers fail to communicate and talk to each other
3. The inability to combine ‘multiple aspirations’ of suppliers, internal experts, clients and end customers on a common platform
4. The continued weakness and recognition by middle managers of innovations value and worth.
5. The need to break up those clusters of knowledge built by increased specialization, so the expertise can be more openly shared.
6. Bridging the field, middle management and top executives understanding to narrow internal differences of interpretation.

Somehow we do need to break these pockets of resistance down to allow innovation to move on.

Spotting some of the trends that are emerging to challenge us even more.

• Innovation is not the preserve of the (selected) few but the domain of the community.
• The growing need to move on from the reliance of symbolic projects to justify innovations’ existence.
• Recognizing innovation is traversing functions, entities and boundaries faster than ever.
• Open Innovation is moving out of the R&D Lab and moving very fast across an organization for a more Open Enterprise approach
• Collaboration is formed at the hip with Co-creation.
• The design comes increasingly to the fore
• The shift to ‘open’ workbooks that offer specific step-by-step guides, the latest thinking to be shared and freely contributed to.
• Platforms and ecosystems are emerging to manage complex innovation challenges
• The power of social innovation, bottom of the pyramid thinking is ‘hot’
• Reverse innovation and its ability to be rescaled to adapt across different markets is equally a valuable source of growth within organizations. Scaling becomes important.
• We need to “reconnect to dominant economic activities of the larger society”, and add a ‘higher’ purpose to our innovation activity. Scoping is equally important.
• There is a growing hope we are in the final death throes of the organization, of moving even further away from the linear process that has dominated much of the 20th-century thinking.

What are the implications of not advancing in innovation understanding?

1. Innovation used to be about product, technology and R&D but it is now about the value and anything that carries value; it is about creativity and entrepreneurship and it is even more tied to a clear vision so it does become a vital part of the culture of the company.
2. We are going to have to learn to collaborate across the entire value chain but this is complex and often time-consuming. It will challenge everyone but it can be very rewarding…in faster and more relevant innovations but only if this coordination can be leveraged effectively.
3. Defining value at the customer point and not within an organization in the R&D lab, as has been the past practice, is a significant shift. The increased focus on the consumers unmet, unarticulated or required needs by making customers central in the web of co-creators and co-creation activities that need to be orchestrated within organizations and their partners.
4. We have seen some really dramatic shifts in research techniques to know more of what ‘pulls’ and ‘connects’ with consumers – and where more open innovation helps in delivering on this understanding. Equally, customers are looking to become more engaged and involved in their products and services. Managing the dynamics and implications of this mental shift will be hard for many.
5. The shift in emphasis to the customer and their unmet needs makes a really compelling case for increased trend spotting, scouting, aligning and recognizing behavioural changes so as to make insights a real core of your business. Understanding the true source of those ideas is a very different skill set than developing ideas simply that are emerging from within an organization.
6. The value of different Business Models to apply within any assessments of innovation is showing increased willingness to develop more ‘spinouts, to encourage the concepts to flourish.  Even in large organisations they are showing more commitment to separating out promising concepts to allow these newly identified opportunities to bear fruit and be more focused, so as to deliver the ‘identified’ result.
7. The growing willingness to explore Business Model Generation as a deliberate policy  is altering the competitive landscape even more in the chase for growth. Establishing the right approach and business proposition design is becoming a must have skill in evaluation and execution.
8. The constant ‘quest for growth’ will need an even deeper connection between Marketing and Innovation as they will continue to be two ‘twins’ as the strongest drivers of margin and revenue growth.
9. The recognition that adopting someone else’s best practice is not the ideal way to go, it has been the ‘lazy man’s’ solution needs even more challenging. Defining your specific emergent or good practices that fit your culture and context are clearly better. Your context, your culture, your resources are uniquely different and other peoples ‘best practice’ is not the right starting point.
10. The art of spending wisely between experimentation, trial and error internally, and receiving knowledge from external expertise for understanding innovation needs to be brought into a better balance. Presently it is not, as external expertise has failed to provide decent thought leadership and internal innovation expertise has not been dedicated as it should have been on implementing the levers of innovation and achieving alignment within the organization. Greater depth of expertise needs to be injected into the equation to gain a deeper understanding of innovation management.
11. Building a more robust ‘innovation activity system’ into managing innovation that goes beyond just simply pipelines and portfolio’s, needs thinking through. It requires a more open logic model to be articulated and built around.  Many people are contributing more insight today to allow for more early ‘open’ thinking. The pipeline needs a higher level of flexibility and diversity of end result options, and this needs to move beyond just product moving through the innovation system.
12. There is an increased need to reposition your firm as a “fast discoverer” using rapid intelligence to built into this innovation activity system.
13. External parties are seeking more involvement in a ‘joint’ innovation processes and development, they are increasingly reliant on each other to become a critical contributors or component provider to resolve more complex problems. There is a growing understanding these mutual dependencies are important to be managed better than at present.
14. There is an increasing need to manage a diverse group of collaborators across a common process which might not want, or need the same end result but do need each other, to ‘combine’ for a given concept to be realized. This new complexity of managing different end results will be a significant challenge to identify and manage these differences across a common platform approach.

Some of the possible obstacles we need to resolve

• The constant urge to keep trying to force change and disruption on the client with new products and services they find difficult to adopt in their “steady state” life or recognize as really necessary.
• There is a movement that disrupting is the ‘only’ appropriate innovation solution to change existing markets or segments. If this momentum is allowed to flourish and take hold the outcome for many firms will be fraught with many dangers. Managing disruptive innovation really does need deep reflection and clarification of the risks before anyone embarks on this approach.
• The consistent difficulty of failing to create a listening culture around intellectual mobility and social platforms still lies within organizations to discover, transmit and transform ideas into a competitive advantage. Managing this new source of intelligence is proving difficult for many to understand.
• The balance and current distinctions between older techniques of more structured repositories, file orientated management, document-based with the newer ones of browser-based, Web 2.0 approach that is more online often free-flowing, simultaneous wiki-like collaborations that many will have to become accustomed too is a tough area to balance.
• The issues of achieving a strong strategic alignment by the innovation folks need to be better understood and managed within organizations.
• The right timeframe for innovation is what:  next quarter, next year, in three years, in what period? When is a corporation going to learn innovation does not conform to the annual financial calendar, it needs to account for this difference to allow innovations to move with its natural discovery to the delivery cycle, not being shoehorned into an unnatural calendar that limits the original concept and compromises the potential result that could have been delivered for perhaps more game-changing innovation if it was to be allowed the ‘right’ time.
• The question still remains on when innovation will be totally embedded in the psyche of the corner office and whether the C-level focus innovation really requires to move from emerging to established as a dedicated function.
• The transformation of new concepts into concrete results that can be well measured is still a challenge to achieve. Innovation needs to show it can clearly make the growth contribution so often talked about but often difficult to quantify.
• We do need to show the real value innovation brings in new wealth creation and growth for countries, organizations and society to advance innovation standing.

Innovation can be remarkable if we can embrace it fully

What is remarkable about innovation? It is highly dynamic.  It’s a task that anyone could do, given the time, education, clarity of purpose and the understanding of their contribution.

Today, only a few people actually are allowed to work on innovation activities, yet the outcomes are ones that everyone wants and we do need to find ways to allow innovation to be part of each person’s daily jobs.

Having a sense of purpose to improve or change something through innovation is a powerful enabler.

Getting from where we are today, seemingly bogged down in many of the legacies of past innovation understanding, the reluctance not to adopt a basic common approach to innovation as a minimum is going to continue to limit all the ‘promise’ that is surrounding innovation.

Recognising some of the above trends and the implications that are coming rapidly towards is like an express train that will speed pass as we are not yet fit to travel.

We do need to rethink innovation fast or it will never achieve its real potential and we will be left simply standing at the station as the train rushes past.

The post The shaping of innovation- future directions first appeared on Building Your Innovation & Ecosystem Intelligence.

They have opened up a wiki for anyone to join with the intention of building on these frameworks. This is at http://cirf.pbworks.com.

This effort is seeking contributions, we want your engagement. It is deliberately open to be used, to be improved upon and to form a platform for standard thinking through for innovation providing it works under the creative commons license it has.

For far too long innovation has been left to chance. We are interested in explaining the many facets that make up a successful innovation endeavour but it can be extremely tough to capture and explain the complexity of innovation. Innovation is dynamic and throwing open this set of models allows for it to be constantly improved for all to benefit.

Four Critical Slides

Here are just four of the critical slides from the different decks you can view at slideshare as well as on the two leading innovation sites of  InnovationManagement.se, with the opening article on this discussion at: http://bit.ly/ee8ID7nd.

We have also suggested these presentation outlines can be best viewed in this ‘given’ order:

Innovation Business Architecture

Innovation Reference Framework

Examination of Innovation Types

The four critical slides to provide you an overview are:

These are the multiple layers and should be followed in a systematic way. You work from the outside in for building on each to get a more connected result from working through these.

Good innovation needs to map back to the Strategy. The corporate strategy and what will enable innovation within the organization need to be considered.

Also what this slide shows you is the real value of having what we call as anchoring points, the orientation of what you are needed to map back too with your innovation efforts.

This slide shows the five critical areas that support and sustain innovation. There are ‘musts’ to have and each of these five aspects need carefully thought through.

Lastly, often totally under-appreciated is each type of innovation is different, in lots of ways. You need to consider an approach that aligns to the strategy and you need to appreciate the attributes, skills and understanding of the different innovation types to know what you need to have in place or bridge to deliver against the specific innovation strategy.

So often this recognition is never fully appreciated and where innovation really does break down because the alignment is not fully made of matching resources, and capabilities with the approach needed to be taken. Knowing the differences and why is vital.

Explore these different decks, some of it will seem blindingly obvious, some perhaps not. Come join in the open collaborative discussion on the wiki at http://cirf.pbworks.com and make a contribution or seek an answer.

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I really would like to reduce this diffusion of spent energies, so these efforts are directed at the critical points of understanding within the innovation process, to drive through new initiatives in a sustaining way. If we can gain this depth of understanding by all, then there is a greater identification to the whole.

Also, we gain a better appreciation of the parts we are playing within the system to make a more positive contribution to growing your innovation activities in a clearer environment. It would improve innovation identification and outcome results.

So with this thinking behind us, Jeffrey Phillips at http://www.innovateonpurpose.com and my organization through http://www.agilityinnovation.com, we began to talk through and exchange ideas and concepts for building a collaborative innovation framework.

We wanted any end result to be open and freely shared with anyone.

We wanted others to build on these early attempts to move, if we can, to a better standard. We recognized whatever we produced needed adapting to meet different circumstances but was generic enough to be recognized.

The aim of attempting a collaborative innovation framework came from this opening exchange between us. We are keen to have a growing contribution so we can establish the validity of the approach and demonstrate that the model is a starting point for any kind of innovation effort.

To this end we have set up a wiki for this and encourage anyone wanting to contribute or simply be involved to register and join in any discussions to advance this collaborative effort.

This is at http://cirf.pbworks.com

We submitted these concepts for unveiling our approach at InnovationManagement.se, with the opening article on this discussion at: http://bit.ly/ee8ID7nd and also at InnovationTools.com that is found here  http://bit.ly/gTWKyx.

We want to engage also our own network of practitioners and draw in the broader innovation community wherever we can. We want the ‘wisdom of the innovation crowd’ with your help.

Outlining our approach
We decided that it has to remain as simple as it can. The results published initially are a series of PowerPoint presentations not dressed up as ‘sexy, all bells and whistles’ but basic in delivering the appropriate message.

We broke down the thinking into three slide decks as we felt you can become overwhelmed and lose the many separate messages that make up the total collaborative innovation framework.

Let me explain the three decks briefly:

The first, Innovation Business Architecture, starts by “peeling” the innovation onion.  We recommend starting at the strategic level, and working down through several other “layers”, including people and processes.

The goal of this first model is to deconstruct the important drivers and influencers which will direct innovation activities. What is important is to recognize your anchor points for ‘doing’ innovation. The strategic need and what we call the orientation points or anchors.

The purpose of the IBA deck is a deconstruction that will suggest an innovation framework.

The second presentation, Core Innovation Reference Framework, builds on the first presentation by using the deconstructed model to identify five “areas” of focus for innovation success: Strategic Context; Trajectories, Discovery and Insight; Systematic innovation Process;  Go to Market; and Enabling and Scalable Infrastructure.

These five “areas” of focus for innovation detail how the firm sets strategy (Strategic Context) for innovation, how it gathers insights and trends (Trajectories), how it prepares products for the market (Go to Market), how it enables and scales innovation activities internally and externally and how it conducts systemic innovation activities consistently.

Any innovation process must map back to these suggested five focus areas and fully considered.

The third presentation, Examination of Innovation Types, examines a range of innovation “types” within the context of the innovation framework defined in the Core Innovation Reference Framework deck. Using the framework we can establish which focus areas are critical for innovation success in the different innovation types.

For example, we can see that Needs-based innovation relies on Trajectories, Discovery and Insight for success because of the importance placed on customer needs.
Investigating the innovation “types” within the framework provides more detailed and careful examination of the actual work involved when innovating using that “type” or approach.

There are really numerous key differences between the different ‘types’ of innovation, distinct attributes to successful deployment.

These can be also viewed at slideshare as well as on the two leading innovation sites of InnovationManagement.se and  InnovationTools.com and we suggested best viewed in this ‘given’ order:

http://fwd4.me/00F7
http://fwd4.me/00F8
http://fwd4.me/00F9

The importance is in the potential takeaways

We believe that creating a common innovation model or framework will have a number of benefits, for innovation practitioners, for companies and for innovators.  It can become the common reference point to build from.

It can be used repeatedly to refresh and validate changes in thinking and can allow us all to move on from focusing on the process of innovation to the leveraging of the innovation process- a huge step in our opinion.

Who gets value from this?

For a corporate innovator or practitioner, a common innovation model provides a clear starting point for innovation, developed and validated by a number of innovation experts.

This common model accelerates acceptance internally and reduces the work necessary to clarify and implement an innovative approach.  The model also demonstrates what factors must be considered when innovating, which helps define the investments and constituents involved.

For a company or organization considering an innovation initiative or program, a common innovation model removes uncertainty around innovation, provides more clarity, and helps establish the parameters of the effort.

It highlights the areas of the business impacted by an innovation effort, and dives specifically into the needs and requirements by innovation “type”.  A common model also eliminates the confusion caused by competing consultants, theories and philosophies.

For innovation consultants or advisors, a common innovation model creates more business since clients can articulate their needs more easily through a common innovation model.

Reducing confusion and uncertainty more firms will conduct more innovation work more frequently, leading to more business and more innovation.  Work moves from process to outcomes, giving better returns.

What we are asking of you- the next steps

We ask that you review and think through the innovation approach we’ve documented.  As you consider these models, please recommend updates, edits or additions to the model, with special focus on the Core Innovation Reference Framework and the Examination of Innovation Types.

You are encouraged to send your feedback, updates or enhancements to any part of the model to:
Paul Hobcraft of Agility Innovation                                           paul@agilityinnovation.com
Or
Jeffrey Phillips of OVO Innovation                                            jphillips@ovoinnovation.com

We will publish updates to the model and we encourage active discussion and commentary on the Collaborative Innovation Reference Framework at the dedicated Wiki: http://cirf.pbworks.com

We encourage you to visit, join and comment so we can build on this further. Innovation needs to move on, we do need to rethink how we can leverage innovation more, not spend the present enormous amounts of resources, energy and debate on achieving a basic understanding. We need to move beyond that

We must leverage innovation for our collective futures and not stay bogged down in deciding the innovation process on a piecemeal basis.

The post The thinking behind creating an open collaborative innovation framework first appeared on Building Your Innovation & Ecosystem Intelligence.

We describe and prescribe to a set of innovation methods that we believe can greatly simplify the innovation process. Here we lay out the beta version of a collaborative innovation framework.

Jeffrey has commented on his blog http://bit.ly/eBGKS5, “We believe that framework can help reduce the mystery and develop a “standard” for innovation which enables more firms to innovate and accelerates the adoption of innovation.  This is not to say that the model we are developing will be a “cure-all” for every situation. 

Any firm starting an innovation effort will need to adopt the model, and then adapt it to its needs.  But by exposing the model and examining the different innovation “types” (business model innovation, open innovation, design-led innovation, service/experience innovation, etc) we can establish the validity of the approach and demonstrate that the model is a starting point for any kind of innovation effort.”

Over the next few days, we are unveiling the approach at InnovationManagement.se , with the article opening this discussion at:  http://bit.ly/ee8ID7 and also at InnovationTools.com coming out later in the week.

Our goal is to encourage everyone to comment on the model we’ve developed, and add to it.  We encourage you to join us to develop a common reference framework that everyone can use or adapt to their needs when they start innovating.

To that end we’ve developed a wiki, entitled the Collaborative Innovation Reference Framework, which will allow anyone who is interested to participate in the development and extension of the innovation model we are proposing.  Please visit the site and let us know if you’d like to join us in developing or extending the model, or would simply like to be part of the community.

The three models we propose start from the most abstract viewpoint and quickly dive into specific details.  We have developed three key presentations which unveil the approach, and they must be viewed in a specific order we believe.

These can be also viewed at Slideshare:
http://fwd4.me/00F7
http://fwd4.me/00F8
http://fwd4.me/00F9

As I have outlined our goal in providing these opening thoughts is an innovation model that others can adopt or adapt openly.

We would want to encourage, discuss and openly collaborate around these suggestions so please help us create a transparent, collaborative reference framework that removes some of the mystique from innovation, so more firms can innovate more quickly and with greater confidence.

The post A beta version of a Collaborative Innovation Framework first appeared on Building Your Innovation & Ecosystem Intelligence.