new approaches to business management - Building Your Innovation & Ecosystem Intelligence

Fusion, Flow and Fluidity are needed in our Management Practices

@paul4innovating — Mon, 19 Jun 2017 11:06:40 +0000

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.

The more ‘open’ Absorptive Capacity Process

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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Seeking fresh winds and new directions

@paul4innovating — Fri, 18 Sep 2015 15:05:17 +0000

Anyone who has felt the ‘full force of the wind’ will know the feeling of how hard it is to keep on your feet, to stay determined to stay upright and true, to hold the course, whatever happens.

When you feel the force of change running through the organization, you tend to have that same sensation, to resist the force with all your energy.

It is often really hard to let go, the environment was something you had become used to, you accepted and become resigned to its weaknesses and constantly exploited its possibilities or even possibly the other way round.

Ignoring the power of choice within change is dangerous

Constructing a climate for any transformation is hard. Our cultures are deep-rooted; we resist those winds blowing into us “full-on,” well beyond being reasonable or smart enough to avoid them before they confront us. The Chinese proverb below gives us a clear choice: “to build walls or build windmills”

When an organization decides to change its culture, set about constructing a different climate or environment so innovation can thrive. But there are so many steps to work through, so many obstacles to overcome, bridges to burn, habits to undo as well as construct the path of understanding, of recognition and providing the building blocks to this.

So often the top organizations keep delivering their message from the top, they so often fail to listen to the message from the bottom. Change is often resisted simply because the organization never takes the time to really listen to the views of the very people they expect to simply change..

Context is the vital ingredient often never told for innovation.

Often we hear “location, location, location” as the mantra for the real-state property. What should the mantra be for innovation? For me, it is “people, people, people” followed by “context, context and context”. We have often heard (and it is totally right) that innovation only happens through people. Everything else – systems, processes, structures, incentives and investments, sets the context that defines how people approach their jobs.

Context not only sets the stage, it gives us the reason to go and find the tools to get the job done but it is ‘our’ people who need to be motivated to go find them and apply them.

The power of context also refers to the conditions and circumstances of time and place for combining new ways to make a shift, a new understanding, perhaps to make the organization more sensitive to the need for innovation, to help fully support the people to innovate.

Context is powerful but only in the hands of knowledgeable people.

So to make the change we need context – the understanding of why we need to change and what we need to do with it. Then we can begin to think of the climate and eventual culture we want to have so as to achieve the change.

These actions shape behaviours that alter perceptions, establish themselves within the larger social group that change is directed towards, it alters the ‘norm’, opens up new possibilities and pushes the established boundaries.

Innovation is very fluid; we build systems that often impede it.

I kept a reference but I can’t recall who wrote it:

“An idea tends to be very fluid, and without context may be hard to evaluate or even consider. Certainly, any culture that discourages ideas will produce few, that rewards people for complying will not promote challenges and make the necessary breakthroughs business require today in new and different thinking. Having systems that minimize risk will also minimize innovation and risk-taking. Structures built to control only impede the very interactions that innovation thrives off of and restricting the movement of ideas will completely undercut the capacity for innovation”.

So companies need to put a great amount of attention on the context that will allow people to work clearly and effectively and provide the vital enablers that contribute to making this happen.

This power of context is something we are extremely alert or sensitive to, and when these change and we don’t understand why, we often just stop innovating, or being productive and often become disinclined to be creative. So making change for reasons that are seen as not clear to those involved stops people from doing their job of making innovation happen.

Context may be the arbitrator of success but people are first and foremost, hence why my two mantras are both critical “people followed by context” that are inexplicably linked for successful innovation but these should always be placed in the right order and recognition; people come first, context follows, innovation flows from the combination and you have the best chance to bring about positive change.

Actually making change for innovation is a lot harder.

Let me explain: Innovation, however, doesn’t work in many of our normal processes and procedures. Yes, we constantly attempt to squeeze all our innovation activity into a well-designed process but so many of those more radical innovations just cannot fit and we are then forced to ‘kill them off’ as the system rejects them.

We block any chance of making a radical change if we remain slaves to the pursuit of structured innovation alone. We should find ways to become flexible, more agile, and more ready to work with ambiguity and find the ways and means to challenge the consistent process for innovation.

Transactional processes have their context embedded in them, they are often just repeatable. Innovation, on the other hand, needs to attach context to every idea or concept, it needs to be moulded, shaped and aligned to the greater purpose, it is constantly unique and challenges the mindsets looking for simply efficiency and effectiveness.

A lot of innovation is actually not repeatable as it relies on creativity, discovery and intuition to overcome specific obstacles, all we can try to do is make them as efficient and effective as we can.

Encouraging change has one very powerful empowering step

If you encourage a certain readiness, willingness and ability to want to transform – then you must devolve power down to the individual to experiment, create, develop, to test, and then they will want to innovate.

They need to engage and identify, innovation derives from a concept in someone’s mind, who puts this into a context that others can relate to and out of this beginning comes the wish to develop and deliver this idea or concept into a final innovative product or service.

It is not the mechanical systems or processes that innovation often requires, it is the intellectual effort from the people wanting to engage in what it changes for them and those that benefit from something better and different.

Encouraging the forces, let them run free

Let those winds blow but do be ready to seek out all those within your team to harness the full forces of this change, to fill the sails that give you that momentum to move forward and pick up speed. If you lack the coordination of effort, when it is needed, and show poor commitment and enthusiasm, you create a real drag on performance.

You can often anchor and constrain the initiatives, you subject ‘forces of real negative tension’ that pulls in the opposite direction, holding everything and everybody back and eventually those full forces break free and run wild, ending up being totally out of control and all the creative energies are dissipated and going in all directions.

Remember we all need the provision of tools, encouragement, the time and space to adjust to change, to experiment and adjust, to become more comfortable, to validate a better course of action or way. We should always give liberally out the tools to do the job, but explain their purpose. We need to create the time to experiment and get used to what this means, keep adjusting and learning from the experience.

Focus constantly on the training and support always needed, you will surely lift any performance.

Finally innovation needs ‘team performance’ it struggles in isolation, it needs framing, context and dialogues to spark and evolve, and yes, always give praise and encouragement on any journey of change, lots of it. It soothes the pain of uncertainty, it strengthens the resolve to make the efforts.

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The sharks that prey are arriving a lot earlier now

@paul4innovating — Wed, 02 Sep 2015 11:26:16 +0000

Change is all around us, it is accelerating not abating. Do you feel you are trapped, encircled and just a little concerned.

You often hear of volatile trading conditions, a more complex market and situations changing constantly and moving faster than ever. ‘Much’ seems to be closing in on us.

We do know we need to re-equip ourselves for constant disruption; we are really beginning to see a shift from the classic bell curve into more of a shark fin for adopting change.

One that is characterized by sudden, even violent success or an event, some moments of brilliant dominance, followed by a dramatic change in conditions as others have spotted the same opportunity and you hit a rapid decline, the race to the bottom of competition constantly negating one another.

Market are segmenting, the life cycle is shortening or having an even longer tail of dealing with slow decline and constant erosion of any competitive position. The sharks are arriving even earlier and in a greater need to show their dominance.

It does seem “creative destruction” is a central force in many of our activities. Activities where innovation is continually replacing not just in products and new services but in designing radically different business models, searching to replace less adaptive competitors in the marketplace at faster rates.

Adoption is far earlier, the pace of change is quickening and from this, the competition is responding in new ways, often surrounding the new innovation with their version, built on often a really ‘fast follower’ principle to keep in step, and throttle off any different adoption, knowing what it costs to have to win this back over time if it can at all when it switches.

The life cycle is becoming even more important to manage in all of its stages, as its traditional shape I feel, is radically altering. It is coming faster and fading away quicker unless you manage its parts very specifically.

The VUCA world is a brutal place to operate in

Some are arguing we live in a VUCA world, full of Volatility, Uncertainty, Complexity and Ambiguity. I remember one phrase in a great book to read “Moments of Impact” written by Chris Ertel and a wonderful associate of mine, Lisa Kay Soloman.

They regard this period of living as the VUCA world, as “one that is a little like those thrilling rides you find in amusement parks but just not all of them are fun!”

These “change forces” are making many organizations and the leadership a little weary and wary, they seem to ‘double down’. They become risk-averse, defensive and determined to ‘weather it through’. They might be hanging on tight, simply believing but the force of change requires a very different set of beliefs and will whisk them away if they don’t adapt and change.

Shifting from accepted to adaptive – embracing new ways to innovate.

The changes that are occurring all around us are those sudden switches from the predictable markets that are creating interruptions to that constant reassuring rhythm of the one, three and five-year business plans. Suddenly this ‘process’ is getting challenged by novel, agile, adaptive concepts stealing the growth out of ‘our’ markets.

Lost increasingly is that feeling of being predictable, offering incremental improvements as the sure-fire way of running a business, year in, year out.

Innovation in the hands of a few has changed, it is so much more than incremental, it is radical and destructive and it’s coming at you earlier than ever, grabbing that early majority as it adapts, pivots and often blows away your ‘crafted’ design through combining a more radical solution, spotted and understood from real, early customer engagements.

Today we are far more on this quest for novel insights and much of what we will increasingly do will be transient. We are seeing much that was seemingly enduring is being challenged, even ripped out and replaced.

It is often an environment that has become a ‘feeding frenzy’ of the experiment, change, adapt and go back in and ‘attacking’ the assumptions of the business value proposition to find the ‘sweet spot’ of customer needs and why they see the value.

The “reassuring” generic statements are even more hollow than before

We might still hear the reassuring sound of those generic statements from the established incumbent of “focusing on our core assets”, “providing solid shareholder value”, “having clear target markets”, focusing on “reducing low yielding businesses to release value and drive up our stock” and the favourite by many “vested” C-level individuals announcing the latest “driving up our share price by a well-designed buyback program.”

All these ‘generic statements’ are often masking a deeper story in many organizations not at ease with themselves, at all. These reassuring statements make those on the outside feel some level of short-term comfort and stay invested but if you scratch the surface just a little, there is an underlying sense of panic. If you push too hard, and ask difficult questions suddenly it all becomes a little uncomfortable. Yet our large, established organizations are highly vulnerable to attack from their inability to adjust quickly to changed conditions.

These statements are just covering up the serious cracks appearing in the design process for new products. It is the failure not to embrace the changing management practices of working within far more lean principles, deepening design thinking, seeking out crowd-sourcing and collaborative networks, that push hard to fully understand customer engagement and challenging the business models to eventually end up with new value propositions that alter the existing market state.

Often the traditional practice organization is simply adrift in the water and others are circulating around them working through this new way of business thinking, avoiding old practices, thinking and approaches that really benefit the incumbent, often not the customer and their real needs.

The new leader within all of us needs to arise

Leadership when it wants to change for innovation needs to encourage a new set of principles so as to draw in everyone to the change process, so they can collectively unleash the potency to create the climate for creativity, innovation and eventual transformation, in a rapidly changing environment and culture that wants this change – it is liberating for individuals.

There is a lot of new thinking showing positive results and the ‘traditional’ management team or business needs to open up too much of this new thinking and find ways to adapt it and bring it in-house.

We must break out of our traditional thinking and ‘swim’ far more rigorously out of our dangerous holding patterns, to break away from the pack we get caught up in, simply accepting current practices and approaches is our only answer.

We must be bolder in where we go, in risks, in thinking, in our innovations, and in the actions we take.

When the wind of change does blow we must adjust

When the wind of change does blow and it is in every corner of every organization, it really does deliver a ‘punch’ of complex variables to manage, we do need to be ready to make the ‘required’ changes.

These ‘change winds’ influence the processes running through the organization as they are challenging and probing what is in place, they are looking to raise the creativity, by adjusting and changing the norms, making new activities work experimenting and learning.

Then you have to set about how to construct and design a more deliberate process kit for managing innovation, one that is more fluid, adaptive and agile to changing conditions and knowledge, and finally, the setting about addressing the environment and cultures needed to create more lasting conditions, so as to embed the change and establish the new (innovating) order.

Being alert, being adaptive, ready to break out and forge ahead

We are surrounded by all these sharks, hungry, constantly circling, looking for easy or ‘fat, complacent’ prey. If we are not alert to the dangers all around us we will certainly suffer. Are we the hunter or the hunted? We need to decide.

We must constantly adapt, wanting to make the change, even if it is uncomfortable, otherwise, we can so easily be swept away, at the mercy of others more adaptive.

There is no question we all need to keep moving but it is striking out with a far bolder plan to leave the ‘sharks’ behind. Let them look for the late majority or laggards that are not spotting real change occurring, occurring all around them, to become the new ‘feeding ground’.

You, simply go really hard after the early adopters and majority that determine the ones that thrive, knowing what it takes to survive and that is based largely on innovating like crazy

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