Innovation remains separate for the clear majority of our companies even today as it is full of unknowns and question marks. Top executives just do not like the sound of this, so they seek to ring-fence innovation. One where they want to contain it, to try to tame it, so it can mirror their (mistaken) believe that our world is one of order, control, and stability.

Instead of embracing that the real world is actually an innovating world, full of opportunity, for those prepared to take a greater risk, will have much to gain. Regretfully we still see many companies operating with a 20th-century mindset. Thankfully the pressure upon companies to innovate, to get their growth back, is getting a very tough place to operate in today without tangible demonstration of innovation being realized. There is this need to “embrace” innovation. If not, rapid extinction is occurring for many that choose to ignore the sweeping changes we are witnessing in the business world, where more open and technology-driven innovators are connecting and collaborating. Those companies that only halve-heartedly attempting change are fearful and still want to “box” innovation in. A transformation where innovation and technology go hand-in-hand does have to be utterly full on to succeed!

Talk to any executive and out they will trot that comfortable sound bite of: “well we need to strike the right risk-reward as the balance to achieve”. Probe that a little further and they start shifting uncomfortably when you focus in on innovation and their support to its activity. Just ask yourself how many people are totally dedicated to innovation compared to managing the financial risks? Innovation provides growth and future value, financial management mostly focuses on cost containment and utilization of existing assets to manage near-term value. We seem to get this risk-reward totally out of whack!

The creeping effect of Ring Fencing Innovation

I call much of what is currently going on around innovation as simply “ring fencing” so as to limit the risk that undertaking innovation can expose you too. “Ring-fencing” limits innovation impact as you continually push it back into a prescribed approach on how you view the world, one that is stable, safe and having prescribed borders and markets. Every innovation initiative is surrounded by metrics of success that are for “known” business outcomes, programs are “contained” to selected teams, labs are separated from the mainstream to ideate but fail to integrate back, business units are denied “decent” resources to pursue truly game-changing innovation. The constraining of innovation is at work, we are ring-fencing not breaking down borders.

Well, one big surprise, all of that intent on holding innovation change back are the ones drowning, or eventually being thrown out of the window on retirement packages or being sacked. If you don’t fully embrace innovation in today’s world you are the ones heading for extinction but at what price for the countless thousands being caught up in salvage attempts, arriving too little, too late.

Think about this for a moment, we are actually wanting to limit our exposure to innovation in many companies. Well if this view of mine is correct then it is no wonder it becomes hard to ‘allow’ innovation to take hold and drive a business. It is consciously being held in check as it conflicts with the present design of an entity built and designed in the 20th century. It is like the sailboats giving way to steam-driven ones or horse-drawn carriages to make way for the car. It is the (inevitable) march of progress, good or bad it happens, at speed, in disruptive force, and in gut-wrenching ways.

To break innovation into parcels of expertise, limit its resources, constrain its funding we are simply ring fencing innovation to protect the existing, to preserve the “old” order because many know of any different way of working.

Remove the Ring Fences and see what can happen – some examples of innovation being at the core

We are seeing many examples of where innovation has been totally embraced, as the core of what the company is undertaking. One good example that has ignored this 20th-century approach of managing a business is Amazon. It has been a runaway success, in taking technology innovation and exploring all the possible weaknesses in the current systems of business design. Amazon has disrupted books, supply chains,………..and so many other established industries or services that it continues to set about disrupting, and all others feel the impact. Let’s look at five:

CBInsights nicely puts it in its Amazon teardown document as “Amazon barreling into physical retail, financial services, healthcare and AI-led computing” All of these on the back of a massive e-commerce presence, transport, logistics, developing hardware devices, food delivery, open-source educational resources and advertising. It is a “colossal”  in that it prowls everywhere where it see’s inefficiency and complacency and sets about learning about the sector, disrupting it and offering the final buyer, the consumer, increased value or alternative options. Just imagine the position of AWS, the positioning of its AI assistant of Alexa, both cutting edge and learning platforms. These are real, ground-breaking innovation moves in services and imagination.

Then you have Alibaba, equally a technology-centric business built on connecting up providers of services and customers in a very technology-based approach to platform services. Alibaba is extracting out the inefficiencies of the old system by designing a new set of innovative ones built on platforms to conduct business, squeezing out margins, building scale and appeal for its customers. Alibaba is one of the most pioneering firms around, built from its firm grip on China as its core market for harvesting and experimenting. It has become known for the connecting up of the whole supply change and fulfillment consumption chain as a real leader.

Then you have the best case of taking innovation into the core and designing solutions that solve many of our previously unrecognized needs. Here I am talking about Apple, they gave us the ultimate example of good innovation, tangible products, well designed, in ways unimaginable until they are in front of us, ones that change our lives. Most of us can’t imagine being parted from our smartphone, tablet or computer today and Apple still seems laser-focused on products or usability. In CBInsights Apple teardown ” They see Apple further delve into “focusing upon Augmented Reality, Wearables, AI, Cars, And More”

Just look at Tesla and Elon Musk. What he is attempting in scope and breadth is staggering (Useful reference link). Covering off alternatives in Aerospace, AI, Automotives, Telecommunications, Transportation (space travel), Energy and Radical Manufacturing and Material Supply Chains are all so pioneering it is leaving everyone else racing to catch up. Clearly, they are at the edge of radical innovation in much of what they are pursuing.

Then we have Alphabet or Google. We all experience that omnipresence of Google in all its services under this brand. With Android Operating System, You-Tube and countless acquisitions it has spawned a business that is touching all our lives. Their approach to investing early and then exiting if it does not look to be making the “jump” into major revenue contributions is again, highly innovative, demanding on those involved and constantly experimenting to find the winning formula’s to achieve this growth acceleration.

Each of these five powerhouses of innovation has defied the traditional logic of how a business should be managed. They made innovation the core, through the use of technology, imagination, and sheer, determined visions of recognizing complacency by many of the existing incumbents. You will also recognize each of these five companies have very strong visionaries, they drive innovation from the very top.

Those left in the destructive path of companies like these visionaries and innovators

The numerous companies left in this destructive path have been struggling to survive or simply attempt to try and catch up. For so many companies they are not even embracing technology in the ways they should. They stay mired in legacy, viewing “their” established markets through very narrow prisms, distorted from today’s realities, of change transforming swaths of industries not seeing all of this coming. They refuse to see the value of connecting everything up or bulk at the cost of this. Their growth has dried up, hence why innovation is the most overused (under-worked) word that company leaders wish for but can’t come to terms fully with, it is out of their experience zone. Many simply can’t let go of their past experience, to step out of their existing models to embrace the changes underway.

They are so many laggards in the truest sense, having a self-belief of maintaining dividends, giving back to their investor’s constant returns but continuing to strip the company of its richest resources and assets; those of ingenuity and creativity, in this dominance of squeezing out all efficiency. People are creative but only when they are allowed to be  So these laggards make continuous attempts to phase innovation in, piecemeal. They shift the ‘ring-fencing’ in incremental steps. They have not realized they must “pull down the fences” they have built around innovation and unleash it, it totally different and radical ways. They are strangling the very life-blood of their future by not embracing innovation full-on.

Innovation is entering the boardroom but it still is not central to many decisions still being made- why?

We do see innovation creep increasingly enter into the boardroom but it clashes constantly with all those negative feedback loops that clash. It is a constant fight between the many forces at work. Working in innovation spaces are messy and unpredictable, companies look for predictable outcomes and drive efficiency. So much innovation progress is negated even with the positive feedback by the ‘forces’ of status quo. We keep having these countervailing forces in play. The need for maximizing efficiency, extracting constant additional value from core offerings comes up alongside venturing out of those zones of certainty into the zone of uncertainty that innovation gives.

It is a different world and ring-fencing innovation, to corral its impact is a self-defeating tragic mistake that must change.

Innovation should be the core, we have so many examples of the greater value and worth of the companies that did embrace it.

The post Ring Fencing Constrains Innovation first appeared on Building Your Innovation & Ecosystem Intelligence.

A good framework seems to grow, it becomes integrated into your thinking and application. You see increasing possibilities to apply it. One of these for me has been Dave Snowden’s Cynefin.

I also increasing apply the Three Horizons framework as well.

Both allow me to organize my thinking and provide options within any multiple evaluations to begin or shape thinking going forward. Both attempt to break down a growing complexity we all find in our word today.

One, the three horizons, attempts to sketch out our thinking about today’s world, of where we are and what we need to do to keep it going in a hopefully orderly state, and then looks to forecast out the changes we need to move towards, in a projected future and then identify the needs to get there. It passes through three horizons of today (H1), the near term (H2) and the longer term (H3).

You will find much of what I have written about on the three horizons story, within my “insights and thinking“ tab (shown above) and look for the applicable section. Equally, you can put into the search box “three horizons” and many posts will come up to explore this, if you are curious on its value, position and our need, to use this on a more consistent basis.

The Cynefin framework provides a wonderful way to sort the range of issues faced by leaders and us all, into five contexts, defined by the nature of the relationships between cause and effect. Dave Snowden has been explaining these consistently for years. Four of these five are; obvious (formerly simple), complicated, complex and chaotic states and requires us to diagnose situations and then to act in contextually appropriate ways. The fifth one is disorder, often overlooked or not fully appreciated. It is when something is unclear, it is in a disorderly, highly transitory state and needs to be rapidly stabilized into one of the other four to give it a more orderly state going forward.

So why do I see this Cynefin framework as growing in importance?

We are constantly moving from an orderly world into a more complex or chaotic one. We need to be able to recognize what we are facing when we are evaluating something, be that a problem, issue or possible solution. We need an organizing framework where we explore and then exploit, it is knowing when to do either of these becomes important.

Let’s look at different competitive environments we can face and place these into the Cynefin model.

The Obvious Environment

A relatively clear future is seen. Here the future, or the evaluation, is relatively easy to predict. Incremental innovation tends to go into this space. Adding additional features to software, in any strategic design are more predictable. We operate in this ‘state’ in repeatable and predictable ways. The relationship between cause and effect is fairly obvious to all involved so we set this up in those ‘classic’ structure and processes, having the application of regular reviews and place a clear set of measurements on them, to enable them to progress.

I often react over the use of ‘best practice’ but it is the practice we do apply to this ‘obvious’ environment if most ‘things’ are equal. Often we tag much as ‘best practice’ because we are not as thoughtful in our analysis as we should be. Much ‘best practice’ is for me, so often based on past practice, this is someone’s else’s practice, it becomes far too often just “lazy practice”. We often become “chained” to this application of best practice and totally forget to put this “practice” into its appropriate contextual setting. We get used to copying others and lose our own creativity or evaluation. The value of the Cynefin Framework is to challenge this “obvious” state and see if it is actually emerging, or moving towards a different state.

The application goes into a sequence of Sense- Categorize and Respond. That is you assess the facts of a situation or idea or concept, you categorize them and then respond, mostly on established practices or past procedures, systems or practices.

We have to watch out for a number of dangers here. Often we impose far too much micro-managing, we actually miss vital points and far too easily classify issues, as they are often presented as overly simplified. Equally the information has become condensed for higher management consumption, who do not pick up on possible growing problems or warning signals, often until it is too late. Also, we become complacent, our thinking becomes ingrained. If we miss a range of important points the obvious suddenly becomes chaotic, a crisis often born out of this poor evaluation or simplification.

The Complicated Environment

You can see distinct possible futures or projected outcomes. You have options, perhaps limited but clear and mutually exclusive to apply. You can form the future scenario’s. You can break down a construct, a proposal into short-term, frequent reviewed project landmarks. You do have options but the key is to bring everyone on to the same page. You are searching for good practice. Those ‘knowns’ need to be clarified and those felt as ‘unknowns’ need to be investigated and turned into ‘knowns’ Working in this space of complicated we need these reviews to recognize any necessary adjustments. So we need to establish some form of good investigative and application of some knowledge, usually drawn from experts or specialists.

Here we go into a sequence of Sense- Analyze and Respond. The emphasis here is Analyze and does look for this expertise to “inform” decisions to be made. We might sense what is wrong but getting to a real cause or effect needs this analysis.

Again there are numerous dangers in this complicated evaluation to look for and avoid. Engrained thinking is one, here it might be the experts more than the ones listening. Experts can dominate and highly influence conversations and one has to guard against this. Listen to alternative voices. Often expertise does come with clear opinions and those need to be questioned, to see if this opinion is missing the further opportunity, different options or can be explored in more controversial, imaginative ways. The ability is to listen out to novel thoughts and give them time to be explored. We can over-analysis, that ‘paralysis’ that needs watching out for. Here it is the chance to be more creative, to brainstorm, to allow exchanges and challenge to the surface. You often need trade-offs to arrive at a consensus or decision-making. If after a reasonable time you still have not found a solution, it might be because it is actually more in the complex rather than just this complicated environment.

The Complex Environment

Here we are getting into the area that a right answer does not exist. So many of the parts are dynamic and we are spending increasing time on breaking down ‘unknown unknowns’. We do not have the insight of retrospect but we are in a search for patterns, understanding change as best we can. Here it is constructing a solution for emergent practice. It is not possible to define distinct and/ or mutually exclusive scenarios. Cause and effect are in retrospect. You look here to focus increasingly on building guidelines, establishing rules or standards and less on applying fixed processes that do not meet this environment. Actually, there are an awful lot of decisions within organizations that are complex. If leadership imposes to early, or without the necessary thinking through is a serious error. Leaderships job here is to explore the path forward, so as to gradually reveal itself. This is the place where new business models, innovation, and creativity can emerge.

So to allow future ranges of possibilities to emerge we Probe- Sense and Respond. Sensing is where the path begins to emerge. We need to build the competencies to experiment, prototype and test increasingly in this space to allow that emerging solution to come out.

What we always need to guard against here is this falling back into past experiences, applying past practice to this situation, or ignoring major differences because it is not within our existing experiences. Often the instinct of taking control, applying command and decision-making to fit a self-imposed timeline or determined need for clear outcomes can dominate. When you are in the ‘unknown’ environment outcomes become increasingly hard to determine. The call is for more experimentation and inquiry so the probing becomes very important to make the sense. The other aspect that needs flagging here is the clarification of risk and failure tolerance. If you impose a sense of order, a call for clear outcomes, criticise failure and regard risk as unacceptable you undermind the evolutionary process. From this set of actions, you can easily fall into a chaotic state as poor decisions are based on a lack of real discovery. In the complex environment a stepping back, allow those patterns and validations to emerge and then respond to them on which, in your opinion and best judgment can succeed, is critical

The Chaotic Environment

Nothing is right in any chaotic environment. The relationship between cause and effect are impossible to clarify. The shifting is constant. It is a turbulent place to be. The most important starting point is to stabilize this “sense of chaos” as quickly as possible. They are never any recipes for success already known, you have to design it or simply build it. The key is to get reactions aligned, clarify principles to enable levels of decisions to be made, who determines what and why across all those involved. It is the nature of acting early but acting as critically important. The whole need is to transform the situation from chaos to complex. Communications and engagement are critical. Shifting ambiguity into a growing pattern of certainty through well-considered actions.

When we are faced with a chaotic environment it is Act – Sense, and Respond.  We are operating in the realm of  Novel Practice. Effectiveness comes from developing responses, build out the directives, communicating these clearly and taking constant action to restore the sense of order. It is highly turbulent, has high tension and requires a high level of pattern-based leadership. It is a place where many decisions need to be made and very little time to think.

We often hear of those legends who took control and turned something around, that saved us. One environment is completely different from another, even when you think there are similarities.  We also need to guard against placing known specialists into new environments, if they have that self-opinionated self-image. Leaders or crisis management teams do need to move the context from this chaotic to complex, and be ready to change from command and control quickly into a challenging environment where complexity needs to take hold, at the very least, to quickly stabilize this sense of chaos.

What we do know is this space is the place to impose innovation. Novelty, directive leadership all become highly valuable, people open up to experiment well. It has been suggested when you manage chaos, you manage innovation in parallel. One team focuses on the crisis, another on the innovating opportunities to do things differently. It is the time to make the real change to move through chaos, to complex, too complicated and then too obvious.

The Disorder environment

There is a fifth-domain, shown in the middle and that is the one of disorder, not knowing which domain you are in and we often struggle to recognize which domain we want to be in for innovation or to take the business forward. This disorder stays with us until we impose order, structures or clarity to the thinking and recognize the place (domains above) we should be operating in.

This is a truly random state. We need to place this disorder into its right environment and hopefully, it is only a transitory one, highly undesirable, needing to be ‘taken hold of’. Having no order needs to rapidly change. We fall into disorder when we lose attention. The most simple definition of disorder in Cynefin is the state of not knowing which domain you are in. Your immediate job is to seek out which option of the other four states will get you out of the disorder one.

Complacency can create a catastrophic failure

Finally, to complete the understanding, the Obvious domain is next to Chaos because complacency (the extreme of Obvious) can all too easily produce a catastrophic failure.  Thus that boundary is represented by a cliff, or more technically as a catastrophic fold. You can find yourself moved from an orderly, steady state, the business that is obvious to you and then thrown suddenly into chaos, by a sudden change.

There are many examples of sudden change that might mean real threats to your very survival. A sudden disruption in the market, unforeseen competition ‘suddenly appearing and totally creating havoc. You fall off the cliff and descend into chaos. This sudden shift from the obvious can become a catastrophic fold, sudden bankruptcy due to complacency and not being alert to the dangers that are building up all around you. We often fail to stay alert to changes in the market or simply ignore them.

As more and more disruption forces occur, the state of suddenly going from a well ‘oiled’ machine into a state of chaos is this feeling you are falling off a cliff. It all begins not to make any sense to you anymore, you lose that sense of order. Your solution is to try and “impose” a ‘known’ order but that might be a serious mistake, or you recognize this becomes the opportunity to construct a new order through rapid experimentation to find a new pathway back to order. You begin to open up your thinking to evalaute new models, thinking or ways to undertakre business.

So the value of the Cynefin Model

Today we are seeing “waves of disruption” that can can be depicted as the (reverse) sequence of chaos- complex- complicated – obvious, as the necessary stages to go through to meet these changes occurring. Knowing them by applying a framework likes Cynifin places it into a contextually appropriate structure, working through this through the Cynefin framework can become valuable. Knowing the different stages of how to make sense, by using this “sense-making” model really does help. Seeking out and knowing the context is critical to any decisions made on where you are classifying your order..

I wrote this  in a post “Learning the mantra of innovation context”

“The power of context shifts everything and then gives it ‘shape’. It provides the conditions and the circumstances of time and place and why we need to find and deliver something different. It provides the innovation marching orders.

If we place innovation in a certain set of contexts, then those setting about the task are more sensitive to the needs and understanding, they can relate or can reject this. It can allow them to work more clearly and effectively, not necessarily effective as innovation is inherently messy.

Context gives us certain guard rails or borders to help gain a more united focus. Where we go after that, by pushing those borders will depend on those involved by seeing a greater value in an evolving context of mutual understanding. The ‘setting it in context’ allows for dialogue, adding more value to the thinking”

I keep going back to David’s model as he evolves it through constant practice and engagement. It can be applicable to many situations.

Cynefin, by the way, is a Welsh word, it means “the place of your multiple belongings” and just apply this to all the situations you need to assess the state you are in and the type of approach you need to undertake. This model helps put much into a contextual value.

Finally, I have drawn a lot from David Snowden’s work, in certainly writing this post but more importantly to gain so many insights and stimulus for what I do and how I want to apply it. I always enjoy his thinking, challenging and wanting to explore.

The post Cynefin: A framework that grows for me all the time, in its value and worth. first appeared on Building Your Innovation & Ecosystem Intelligence.