We are caught in a real tug of war within much of what we do in business today; in our responses and reactions to many of the dramatic business conditions we are facing, many deteriorating or being challenged by greater global competition.

We are facing a very uncertain future if we base our actions on past practices. We need a new management model, one where we are pushing to seek increasing new knowledge.

We actually are in urgent need of a new management operating model.

A new management model where we are pushing to seek increasing ‘fusion’ but still want degree’s of separation, we are seeking out ‘flows’ through new knowledge to break down barriers that restrict new insights so as to turn these into new value creation, and we are encouraged to seek out and establish a higher ‘fluidity’ in what we do and reduce the rigidity we presently have in place in our current organizations.

There are growing concerns centered around how we need to adapt our management practices to manage in a digital world, we are grappling with the consequences and we need to find new solutions and approaches. We face issues made up of increasing information overload, coming at us at increasing speed and failing in our abilities to fully interpret this. We lack the agility and flexibility to respond to what this all means in both its implications and potential, for sensing and seizing new value creation from understanding this.

We need a new management practice to deal with our digital world. One real need is for increasing knowledge and then being equipped in interpreting this in our learning, daily routines and activities is becoming paramount to break out of a declining performance cycle.

Applying the three horizon lens to develop new management practices

If you apply the three horizon lens we need to construct management and its performance approaches differently you begin to see the pathway for change.

Applying the three horizon lens to new management practices

The idea grew from picking up on Deloitte’s Shift Index that has come out ever year since its first release in 2009 I came across a way for me to frame this.

Our horizon one (extending business as usual) needs a deeper, yet strategic restructuring of firm economics to generate the maximum possible value from existing resources

For horizon three (the future need) we need to develop new management practices to be effectively catalyzing and participating in different knowledge flows, fusing what is gained into new value creation, reducing friction and barriers, constantly refreshing and extracting from the relevant knowledge flows that provide scalable learning pathways.

Our horizon two (transition from old to new) we need significant innovation, learning and experimentation to drive scalable participation in knowledge exploration and exploitation, a duality of fluidity and stability.

See here and here for a fuller explanation of the different approaches needed in three horizon approaches, if you are not familar with this framework approach, they will help.

Let me build this out in why we need to change the way we gain knowledge and translate this.

My three points of reference in researching and framing this post are, firstly, Deloitte’s ongoing work on the Shift Index, providing a longer-term set of indicators to how we can change performance through the flows of knowledge, capital, and talent (their second wave). This is coupled with my own studies and commentary on fluidity and thirdly, the “stock and flow” of knowledge and how we can harness it for our needed sustainability and this new value creation.

The future of managing will be through ecosystems and platforms

I am constantly drawn to ecosystems and platforms as the connecting mechanism that can drive each of the stages of the three horizon view taken here. It is going to be through greater collaboration, sharing and exchanging we can learn a new form of ’emerging’ management practice

In our past management practices, we have operated and exploited the linear world for ever-increasing efficiencies and effectiveness. This relied on stability, predictability and a willing end-user, ready to accept ‘our’ offer of product or service. All three of these conditions are increasingly absent from our world today and will increasingly be challenged in the future. Our increasing connectivity, brought about by our digital world is giving us increasing volume, richness at increasing speed. We are in a hyper-connected world, potentially global for all of us and increasingly we will operate in interdependent ecosystems that allow us to collaborate and share, driving up awareness and performance.

Classic models of management get broken down in any ecosystem approach, that is why it has such an exciting potential. You have to be open, prepared far more to share, to build trust and seek out increasing relationships and diversity of knowledge and much of that comes from external sources of new knowledge. Collaborating in collective ways helps break down complexity. To be ready to respond we must be ready to seek out unexpected outcomes, to be increasingly exposed to new opinions, experiences and learn from all those adjacencies and external connections help to  add and define new potential within our domain of expertise. What will be rewarded in this connecting world is agility to respond, the ability to absorb and learn quickly, and the nimbleness to translate and adapt new learning into insights and eventual outcomes, that build out our businesses, keeping them healthy, growing and sustainable.

Our world is shifting from scalable efficiency to scalable learning

In the work of John Hagel and John Seely Brown and their associates at Deloitte University Press, this scalable change from efficiency to learning is a central tenet of their work. Achieving scale is critical for all in business, be it the entrepreneur or start-up or the large institutions wanting to span the world. If you wanted to scale it had to be “efficient and effective” in our past approaches. Yet as the two John’s point out that is great in the stable, more predictable world or market conditions of the past but not when everything is evolving rapidly or changing before our eyes. The efficiency mantra often allows for applying the “lowest common denominator of need” and reduces the impact of ‘true’ innovation.

But we are now in a world that sees exponential change caused by digital technologies, this is making everything we do as uncertain. We arte experiencing consumers increasingly demanding personalized service and offerings, then the past standardizing approach is significantly under threat. We are seeing increasing friction, deteriorating trust and growing gaps in expectancy between “what we want and expect with what we receive” and institutions need to respond to these pressures. It cannot be the approach “business as usual” it needs a new recognition as outlined in my horizon one frame above.

We are recognizing “existing knowledge is depreciating at an accelerating rate”. To create new knowledge we have to step out of our silo of the one institution into a collaborative world, connecting with others where the physical, virtual and management of systems help accelerate learning. Increasingly these learnings will come through ecosystems and platforms where you can meet and exchange in systematic and holistic ways, building growing trusted relationships, sharing and exploring ‘collective’ knowledge to solve common problems.

You move from the need of conformity to be efficient, seeking out where you fit within a ‘given’ system you look for increasing the ‘flow’ of learning by encouraging increasing fluidity and being highly adaptive. Your role is not to fit as such, it becomes how you can separate, identify and deliver more value, to translate and learn faster, to rapidly connect understanding, ideas and potential outcomes for new value.

Balancing fluidity and stability

The world we live in is relentless, it is demanding and constantly changing. We begin to believe it is in a “continuously unstable state” yet it is this ongoing receiving of contradictions we can build a different, more fluid state that is adaptive, responsive and encourages different thinking to break through our bewilderment.

We need to build far more for countervailing functions and opinions, have greater understandings of pattern recognition and maintenance and be highly adaptive in our outcomes. We must start by establishing a different boundary building understanding (governance, risk-taking, ability to recognize managing exceptions are becoming the rule in individual consumer worlds), have a growing identity formation set of mechanisms and responses (in customer touch points, response alternatives, conflict skills to resolve issues early) and develop the problem-solving architecture to be constantly evolving (shared, reinforcing and breaking down present orthodoxies).

Ambidexterity and countervailing processes need developing and embedding. Achieving a constant duality to manage in our three horizons. It is the horizon two exploration and exploitation that allows this change in managing transit from the old (h1) to the new (h3). We need to re-enforce and extend (h2-), we need to ‘undo’, explore and redesign (h2+).

To become fluid we need to absorb and respond at faster rate and that comes from the increasing flow of new knowledge. We need to be highly adaptive to a constant, multi-faceted world of connections, systems and knowing where the different pieces need to be found, so we can then ‘pieced’ together into the ‘new whole’ you are needing to design, at individual or institutional design level.

To get to a point of being fluid we need to hone our navigation skills, we need to have more assignment driven work, not stuck in repeating work that can be automated far more effectively in today’s digital world.

We need to be more agile, iterative, to be encouraged to be experimenting and exploring. We need to believe and given trust to execute and drive our results into more value-add. We need to seek out empowerment, participate in collaborative endeavors, and most importantly grasp the makeup of value creation. To get to this point we need to build one of those boundary spanning guidelines of a sound conflict resolution pathway for ourselves, our customers and our institutions and these will be ‘living constantly evolving pathways‘ that feed on new learning.

To get to this ‘fluid state‘ we all must strive for authenticity, trust, and recognition. This only will come from a real willingness to seek out diversity in opinion, knowledge and experience, to be highly visible and understanding what that means in risk and reward, looking to constantly enter and exit projects where we can truly contribute to driving up our own confidence and belief, our personal satisfaction and contributing worth.

If we can design a framework that transforms us into being highly fluid and adaptive, we can move through horizon two and its conflicting challenges. We are seeking to balance stability with an ongoing need for dynamism and responsiveness, at agile and fast ‘reaction’ times from our ‘incoming learning’ and ‘outgoing value-added‘ outcome

Seeking out the relevant flows within new knowledge for increasing scalable learning, our new institutional state.

The stock of our existing knowledge is rapidly diminishing, we need to seek out the flow of new knowledge. Our fixed and enduring know-how and sets of experience are being diminished in their value inside organizations. What was once accumulated as ‘stock’ inside the organization was how organizations exploited this for profit. Yet this is under attack from multiple sides.

We are seeing a compression of time in life-cycles, we are not in stable markets but increasingly volatile. New generation replacements, driven along by digital solution power, are pushing innovation through the pipeline faster than before. We are failing to keep up with the knowledge you need. It simply can’t reside in one company, small teams or simply with one person, it requires a network of partners collaborating and contributing their expertise into exploring and exploiting new solutions, tapping into this inter-firm knowledge flow and experience with innovative solutions that are more aligned to customer needs, solving challenges and growing complexity.

The search for knowledge means a higher emphasis on tacit understanding (this link explains tacit knowledge)This understanding comes from relationships and exchanges, from personal stories, experiences, and personal connection. Our ability to tap into this tacit knowledge comes increasingly from these ecosystems and platforms set up to exchange, collaborate, and build a network of common understanding. A common understanding of a problem or challenge, through the diversity and power of the community that works together to find solutions and resolve the multiple issues.

I do think Deloitte’s view that we need to move to scalable learning is essential to achieve. This needs completely new practices to be effectively catalyzing and participating in different knowledge flows, fusing what is gained into new value creation, reducing friction and barriers, constantly refreshing and extracting from the relevant knowledge flows.

Knowledge intensity can risk fragmentation and inequality, it can lead to concentration of market power. It is finding more universal practices can level the playing field. Digital is part of this leveling. We equally have to learn how to create, disseminate and use knowledge differently.

Here I am a particular fan of absorptive capacity that pursues potential knowledge and extracts out its realized value through transformation and exploitation.

As more information comes towards us at increasing volume, we need to find ways to adapt and interpret this. There is a greater set of ‘forces of variation’ for innovation solution selection, all requiring this increased knowledge understanding. To codify and relate to this we need a structure to manage this knowledge flow, hence my belief in us needing to understand absorptive capacity.

In a future post, I will look more at knowledge and all its important components. We totally understate the value and importance of knowledge. It is managing the different types of knowledge that offer us the solutions in our digital age. We need to design a scalable learning approach (horizon 3 outcome) and recognizing all of what ‘makes-up’ knowledge is important to build into this h3 solution.

In summary

We need to harness the capacity of learning through the competencies for new knowledge acquiring. We need to replenish the internal diminishing stocks of knowledge with a constant flow of new knowledge. This comes from outside, it comes through networks, relationships and collaborations increasingly built on ecosystem and platforms.

It is our increasing ability to participate in this growing formation of managing knowledge flows, harnessed through digital solutions, as they will move us to value creation. Ones that are increasingly  collaborative, between partners but also with customers, all increasingly contributing their knowledge, insights, and needs to finding joint solutions and resolving challenges.

To achieve better outcomes and to drive sustained growth we need different management practices. We require scalable participation (ecosystems) to relate too and generate new knowledge flows. We need to be increasingly responsive, adaptive and fluid in any design of structures and solutions.

Performance requires us to quickly learn and translate, that cannot come from the pursuit of efficiency, it comes from learning to be highly adaptive and responsive, to have a high level of fluidity to fuse all the flows of knowledge into new potential value creation.

We do need this new management model to adapt to the digital world and all the uncertainty of our prevailing conditions of more open competitive and challenging markets, more demanding customers and the constant waves of information and ‘forces of change’ raining down on us. We need a new way of working to counter this.

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Deloitte has set up different thinking tanks. An exceptional one is Deloitte University Press who publishes some really good original articles, reports, and periodicals that provide insights for businesses, the public sector, and NGOs. They break down their topics into these:

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Far too many organizations still don’t provide the opportunity for everyone to contribute to innovation. I think as open innovation moves from the labs and research centres then OI will be one of the ways for a shift in thinking to take place, not just with the outside world but within the inside organization for a number of reasons.

Critical needs of open innovation are the trust, the behaviors and the relationships that need to be at the forefront of thinking when you engage in more opening up to fresh avenues of innovation thinking. I think this changing mindset of how to manage within will permeate throughout the organization more and more as these (often dormant but available) skills get put into practice more.

We struggle to get rid of the ‘command and control’ approach to encourage more distributed sharing and exchanges to reflect the need today of being more agile and fluid in how we meet rapidly changing market conditions and counter threats or seize breaking opportunities.

How can we influence leadership in everyday contexts?

As a starting point to distribute innovation we need to reset the innovation mindset. Formally appointed managers will never achieve without gaining the respect of the people around them, which is simply a common fact of life!

We still have incredible difficulty learning this in many organizations. It does seem a more distributed leadership structure built on individuals who have strength to influence others is more likely to succeed- the respect of your peers has greater power than impose and control.

We often recommend organizations seek out and appoint passionate champions (W L Gore) or ecosystem champions (P&G) to organize and influence innovation work. There is a lot of research work presently going on that is studying the type of behaviors, traits, characteristics needed for these pivotal innovation roles so they can be used for the appropriate need to encourage and ‘push’ existing initiatives or champion new ideas. It can flatten the organization structure.

The flat lattice organization is a start.

W.L Gore practice a distributed leadership model that has a ‘lattice’ structure where they discourage hierarchy, titles and trying to impose and look to encourage the ‘voice’ from within the organisation to self commit and identify in a culture that demands each to offer their unique contribution to delivering innovation.

They work on achieving respect throughout the organisation based on a fascinating set of disciplines NOT rules and hierarchy. They build into everyone’s job innovation.

Distributed innovation requires a flow of knowledge

Innovation has many definitions but one I might mention here is it is ‘doing new things or improving existing things that add greater value’ is a great place to start for everyone in your organization to actively seek out their potential contributions.

If we feel our contribution is valued this becomes a powerful motivator not just to turn up for work, but to engage in new productive work. It becomes a more dynamic environment, not static to work within and just attempt to identify with.

What is changing constantly around us in this distributed innovation need and we need to put a better system in place to capture distributed knowledge.

Networks are giving us all that incredible shift to ‘connecting for value’ not just ‘discovery’, we are constantly needing to re-arrange, recombine, react and explore to problem-solve and often improvise on a daily basis.

Recognizing  what helps knowledge to flow in a distributed innovation model
– Recombination and connections will help us within a more distributed innovation society to manage.
–          The geography of innovation knows no barriers. If we don’t operate in a more distributed way we are going to miss so many ‘breaking’ concepts that are occurring in innovation on a daily basis. We need to capture these. This requires front line effort and capital but by distributing the task, you have the chance of a greater knowledge flow.
–          How do we cultivate ‘global people’ power? In a world of changing knowledge, we need to recognise that educating and informing our people and our network of what we are doing will lead to the contribution, to the capture of knowledge and reveal the skills dormant in us all to identify productive knowledge.
–          How can we design for greater learning? How can we turn knowledge into innovation potential?
–          How can we build in greater levels of collaboration and adaptability? These are human dimensions we need to encourage by distributing the tools and clarity of purpose to those within our company to ramp up the innovation pay-offs increasingly expected.
–          Innovation is full of ambiguity, often little clarity so you need to give your organisation greater freedom and permission to investigate, capture and push back knowledge through this distributed innovation network.

Distributed innovation needs to cultivate Absorptive behavior and allow it to flow.

We need a system to capture and allow knowledge to flow. For me the adoption model seems to be one worth investigating. If we want to achieve the goal of distributed innovation we need to have in place this possible framework.

Nesta (www.nesta.org.uk) produced a report some time back called “innovation by Adoption” and I feel this has a good framework that support distributed innovation.

The report argues in a place with a strong absorptive capacity three main outputs subsequently result from the flow of external or distributed knowledge: (1) the creation of new innovation; (2) the creation of new knowledge; and (3) that it does lead to new economic and social value.
Innovation by adapting the adoption model within your distributed innovation needs.

If we agree that most innovations happen outside often self-imposed boundaries then we have to extend to all our boundaries and beyond. We have to open up.

We certainly understand that today innovation is not confined to the walls of one particular company. The world ‘absorbs’ more innovation than we can turn into greater value but we need to attempt to capture this and see if and where its value might lie.

This is going to be achieved more likely within a distributed approach asking everyone to contribute to innovation ideas and providing them on a consistent basis the likely content and context fit that they need to look for .

We need to continue to push innovation created often locally, back up through the organization so it can potentially turn these insights into innovation that will find a place in our world that improved on the existing that was something that we contributed too, that can be highly motivating.

For this to happen organization have to recognize the inter-dependency and reliance that a diversified, distributed engaged group of people can bring to accelerate innovation to share, explore and work on turning ideas into new solutions .

What we need to find is ways to absorb this flow of daily knowledge, quickly recognize where it might meet our needs and then fit these to the wider audiences available that search for innovative solutions.

There is an awful lot that can derive from a more distributed innovation network that allows a greater flow across a networked organization.

Approaching absorption in two ways
Absorptive capacity captures and enables this flow in each direction. Nesta through its research into this absorptive need also suggested a model called the AC/DC model where they argue you need to develop two broad sets of capacities: the absorptive capacity (AC) to identify, value, and assimilate and the development capacity (DC) of places to develop and exploit such knowledge.

AC/DC Model

We need to adopt a more distributed innovation model in our thinking

Applying these two models into your thinking to achieve a more distributed innovation model would help to capture, anchor and diffuse all the innovation that lies not just within the ‘walls’ of your organization but just beyond where your local people can see it, value it and bring it into the organisation as one of their contributions to innovation.

Permit people to ‘see’, to ‘engage’, to become ‘deeply involved’ then organizing around distributed innovation can lead to greater empowerment and sustaining your innovation engine and knowledge.

Fortune will favour the connected mind not just the brave lonely few.

Are you building your distribution innovation model yet?

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