Thinking about ecosystems certainly allows us to go out of our normal scope of internally generating new products.

It opens up a host of possibilities, that can add significantly to a new service design, new capabilities and solving more complex problems.

In opening up to managing within ecosystems, you begin to see your ability to contribute and tackle societal problems within a collaborative system.

You can see new opportunities that can allow you to enter new markets that would have been impossible as an individual organization.

You begin to see the power, scale and strength of having the collective collaborative ability to extend beyond more traditional thinking design. You go beyond the utilization of leveraging existing infrastructure, building on others’ specializations and leveraging through technology powerful new concepts to tackle increasingly complex innovation design.
We are all making greater connections within ourselves as we find and connect to our own “tribes” that all the different social platforms are providing. Crowdsourcing is another example that is offering huge potential to exploit as it can encourage much to forge, serve and grow whole new communities from a ‘simple’ beginning, building on real-time knowledge.

The future of collaborations can increasingly share previously idle or under-utilized assets. We are seeing the most valuable companies that are emerging today are largely based on sophisticated platform business models where ecosystems are vital to their health and global ambitions (Apple, Amazon, Car Manufacturers are all examples).

But be aware – the challenges are difficult to work through
Often this involves designing the architecture, platforms, construct new standards and be equipped to integrate and adapt different members of a community, who have something relevant to contribute. Managing this growing form of complexity is challenging old theories, boundaries, organizations and how they exist going forward.

Ecosystem innovation today is more about managing beyond the immediate known found within one organization’s limited focus of the world. The race is to gain advantage and often try to dominate and influence the future direction a market will take. This requires a broader perspective, a greater diversity of thinking by tapping into varying levels of specialized expertise.

Regretfully we are not yet fully equipped to manage these new innovation ecosystems. We need to think through a better emerging theory of leading or good practice. We need to advance the measurement and impact that ecosystems will have within advancing our innovation activity.

Measuring innovation in ecosystems has real differences

To start we need to measure innovation more on the following aspects:
Linkages – content and productivity of relationships, alliances, collaborations, interactions, networks, clusters and all the complementary aspects and assets deployed to do this
Knowledge engagement – the ability to attract knowledge into the organization, through greater content and value, through the people involved and the way we anchor and diffuse this new knowledge.
Intangible assets – increasingly people and the combination of their intellectual capital in knowledge, relationships and how they structure work will be the central focal point of innovation success.
Conditions for innovation – we need to develop the ability to ‘sense and respond’ to shifts in markets, from the competition and evaluate these changes in ‘real time’ and we will become far more reliant on data and analytics for this.

Connecting these four critical aspects becomes vital. As we learn to collect all this incoming knowledge (data-driven) this will then impact our own innovation programmes and require them to be more adaptive, dynamic and fluid. We need to recognize changing patterns, and then build in these reaction points to keep our own innovation activity staying ahead of the game.

Organising within Networks of Firms within multiple Ecosystems
The organization that envisages a changing world needs to organize around ecosystems to deliver on that vision to gain the leading influencer’s position.

Ecosystems require increased interactions within the community and need more tightly controlled activities to gain the synergies and effects from working within an ecosystem. Relationship management needs to keep focusing on enhancing, driving innovation and knowing how to adapt this within the whole concept. No easy task.

Ecosystems that ultimately produce new business models rest on a large capacity for agility within the participating organizations. Internal capabilities and competencies get highly stretched by the new dynamics taking place, you need a strong orchestrator of the ecosystem to manage these challenges and many cultural biases that can blind a ‘line of sight’.

Aligning partners on a platform needs-basis is very different from aligning them to just one organization’s needs. In the past we adapted to meet that specific requirement of that one dominant organization as they controlled the process.

Today you can argue differently, why what you see as needed is not the best and maybe different from first envisaged, and it is better and evolutionary but demands more change and disruption internally. It allows for more breakthrough innovation, greater challenging of the existing status quo and often taking organizations out of their existing comfort zones.

As we think ecosystems, we need to think differently

Think carefully through any move to join innovation ecosystems, they do have a high, immensely attractive return, if managed well; they are nearly always disruptive to the existing markets and highly valuable to the participants. There also is a big ‘but’ here, since the pathway to get to that ‘success point’ is full of potential risk and immense ‘spent’ energy.

Watch out for those “burning platforms”
Burning platforms will be all around us, as we continue into the age of disruption. To counter this we must welcome the new era of global collaborative innovation where we will be learning the abilities to move between different ecosystems, collaborating at different levels of participation, to extract completely different forms of innovation value that advance our growth prospective.

A suggested way we need to think about building ecosystems

One recent report I was reading from Deloitte, based on some of its recent analysis, suggests that we need to consider and recognize where ecosystems and the platforms will help us. They suggest we begin by answering these initial questions that I have adapted and extended:

1. What makes up the critical capabilities for minimum viable transformation to participate and learn about this shift taking place to understand and participate?
2. What needs to evolve in the enterprise strategy and especially where platform thinking comes into play, to radically alter the innovative offerings that are not available as a stand-alone organization?
3. How can we liberate the internal potential of resources, stored knowledge and latent assets so as to tackle harder challenges that can transform an industry and who can help in this?
4. Finally living in a changing world of blurring boundaries, and uncharted frontiers, how can we participate in different ecosystems of learning and value that can transform our competitive position and provide us with a substantial leap?

In Summary
The ecosystem, through the use of technology, the cloud and a diverse set of collaborations will increasingly become the mainstream for innovation inputs, accelerants and delivery value.

We need to prepare for it, experiment and become involved in different offerings. Platforms, strategic partnerships, and new business models all will be on the agenda of any serious global organization and learning to deliver through this requires a radically different innovation system of management built around adapting and changing ecosystems.

Innovation will move from being based on incremental innovation, all designed in-house, into bold, collaborative offerings, cutting across today’s established industry boundaries, pushing out across different innovation frontiers, participating on a variety of platforms and extracting in different ways across multiple ecosystems.

This will open up the whole need to re-evaluate the governance, the risk management and the resources needed to operate in this new innovating world. It is going to demand a very different set of disciplines, processes and design.

Are you exploring this new innovation dynamic of platforms and ecosystems yet? You do need to get into a position to experiment, test, exploit and explore in limited ways to learn and adapt.

It is even more dramatic in change than moving from closed to open innovation, it will challenge much that was only recently established to be radically redesigned and altered again.

The post Innovators – are you thinking about Ecosystems? first appeared on Building Your Innovation & Ecosystem Intelligence.

The new combination is the new connections through people and things (IoT) that we can achieve a new innovation potential.

We will obtain increasing more powerful insights that have the real potential of being turned into new innovation outcomes, through the connected businesses we are presently needing to build. This can generate new value and business propositions.

Today the virtual world of digital is moving much faster than the physical ‘enacted world,’ of turning insights into actual innovation activities, through the innovation pipeline. Our innovation systems are lagging significantly behind. We need to radically redesign them and bring them up to date, fit for managing innovation in the 21st century.

The whole discovery to final execution, is for most organizations still a very fragmented, often disconnected system. It is highly reliant on manual systems with people often disconnected from the real innovation engagement making decisions on inadequate data or insights.

We are failing to leverage all we have gained from our innovation understanding over the years. We have this ongoing inability to adapt, to connect the innovation system through the use of technology and growing value networks, so as to provide the integration, the dedicated resource and accountability to deliver successful innovation outcomes that our customers require.

Successful outcomes are certainly possible, from a well-designed innovation management system brought up to date, adaptive, flexible and responsive, if we apply the time and effort to conceive and construct it.

It is still managed mainly through a linear process of stage-gates and investigation / validation to decide to move on or not. I can’t see this continuing to work in any efficient or effective way in such a digital hyper connected world, where insights flood into the innovation engine room, expecting the same ‘hyper’ response and delivery outcome result.

We need to address this incompatibility, we need to integrate and harness the innovation management system and bring it completely up to date and integrated in design and function.

In a series of posts I have been arguing that innovation management needs to radically be redesigned, based on the thinking around the shift from products to solutions, from transactions to growing far more value-adding ongoing relationships, from a supplier of product services to highly valued network partnerships, exploring innovation across all options, instead of delivering on discrete elements; this requires managing the whole ecosystem of the innovation design differently through technology, driving the design and response capabilities where platforms dominate and transformation becomes an ongoing process, to constantly evolve the business model, so as to seek out constantly changing market opportunities, in agile, adaptive and fluid ways, for successful innovation outcomes that meet those real customer needs.

Mashing up for explosive change
I recall reading that up to now, each digital technology change was a separate era of change, to absorb and adapt towards, yet today we are facing something seemingly different, a collision, a whole mash-up of disparate technologies and systems, that seem to be heading for such an explosion of change, a post-digital transformation.

This merging of cloud, big data, social, and the internet of things is becoming the new system of discovery according to some. Others call it the crossroads where the post-digital reality of bringing together the cloud, mobile, interconnected devices, data analytics and embedded intelligence are pointing us to a hyper-connected world, less tomorrow, more speeding towards us in the here and now.

Digital matters, in its raw innovating power and its potential business impact

I think digital is clearly a transformational phenomena across much of today’s existing business. The unique combining of the cloud, big data, social streaming, the internet of things, mobility, the industrial internet, are all making this the time for new growth opportunities through this digital economy and the radical overhaul of the activities to realize the benefits.

The enterprise integration will need to be constantly evolving, adapting and become highly agile, it will totally redistributed, decision authority will move more rapidly towards evolving business models and distributive decision-making, to seize breaking opportunities far more quickly than in the past.

Business models will not stand alone, they will interlock in intelligent ways, to benefit from scale that becomes the essential need and greater appreciation of sharing services, jointly working towards common outcomes.

These strategic connections will open up different partnerships, opportunities for shared cost of new channel developments, separate value propositions driven through common back office services and increasing requiring a platform management to manage these.

We are transcending traditional industry and product boundaries
The dizzy array of strategic choices will totally disrupt existing business models if they are right in their design.

The whole world of communicating, transacting and designing all the different negotiations and products that meet the immediate needs of the customer makes this the “digital business era”, where constant redesigning and orchestrating the parts will keep it at the forefront by a constantly evolving set of combinations and leveraging a network of diverse capabilities.

It will be how and where a business or entities of business come together and see where ‘people, things and their business offering’ can come together for mutual value based on the unique combinations of the different technologies available.

There will be a constant evolving evaluation of the assets both internal and externally that make up this digital world (people, the business and things) that will take this out beyond the control of one company, into a system within a larger system to make it work at a constantly evolving speed and gain adoption. Innovation will certainly not get any easier; it will be faster, more demanding and a heck of a lot more risky.

Innovation is caught up in this transformational change.

To be an innovator, you are always restless but the present structures and frameworks that innovation operates within have been often highly constraining and heavily reliant on manual operations. Innovation as a system has often conflicted within the approaches taken by our organizations.

The quest is in finding different approaches to allow the human side to shape, interpret and extract the value not just in what they want to see but through different lenses

The balance in innovation activity is changing
What needs changing is the innovation process to accommodate these changes that are occurring all around us. We will need to transform much within our systems but more importantly to orientate our skills to receive, translate and diffuse new knowledge, in significantly different ways.

It is through this combination of people and ‘things’ connecting into our businesses that we will be able to extract new observations, to give us insights that can lead to completely different innovation opportunities.

Huge amounts of data can be interpreted through specific algorithms but these will have to have set very clear parameters set within them, for them to be of any worth on what we believe is needed by our customers, for delivering successful innovation outcomes.

The real need is delivering a new integrated innovation engagement platform

Without doubt digital and physical operate at really different speeds. We need not just a new innovation management system, we need a modern engagement platform. We need to integrate and sync so many transaction and stand-alone systems that have been allowed to proliferate over the years to meet specific business needs.

The growing pressure will be demanded to find solutions that provide a cohesive and business-focused approach to the new social enterprise where we seek engagement at scale into a multiple array of communities and advocates that has data and innovation as its core.

The Need to Automate the Innovation Process

We still are very reliant on stage gate intervention points, often more due to dogma and imposed oversight by committees occasionally meeting.

Decisions are determined by the human, based less on hard knowledge or dynamic intelligence, often these have tended to be thinner on the ground to validate concepts and judgement becomes highly personal and reliant on (past) experience.

What can we change within this? There are leading practices to compare and contrast with but we do need to push this automating the innovation process further, in different ways.

How can we connect, enable and deliver better innovative outcomes?

There is so much to be realized, connected and enabled for the higher scale, richer, more innovative business outcomes but it is a massive undertaking that is only just being ‘kicked off’ by the current internet of things. It will eventually become the integration of everything but the disruption and realization of what needs changing is only just dawning on many.
We need to review organizational engagement.

Much has to change, be uprooted and completely revisited to begin to design a new digital and physical integrated innovation system.

The need to respond quickly to new business objectives

We will need to adjust our thinking on risk. Technology insights can provide a better mitigate risk, it can equally fine tune innovation but it can equally make it far more complicated. Massive amounts of data can complicate decision-making, determining the right decisions and next steps.

Technology will require opening up the present risk mitigation process to capitalize on emerging opportunities at greater speed and higher levels of compromise, to meet that emerging opportunity ‘seen’ requiring it to be turned into commercial offering quickly, so competitive advantage can be gained.

Managing digital knowledge that adds value and growth

Digital technology is about to become the precursor for all the changes we have put off for years within our organizations. We need to radically improve our abilities to engage, relate and discover new innovation opportunities at a completely different level of faster performance.

There are many issues both strategic and tactical to work through, to extract the rich potential from any digital transformation for new innovation growth outcomes

Digital is presently moving way ahead for the systems our organizations have presently in place. What does need changing to ultimately yield the innovation returns we will be looking for?

Expectations and reality needs resetting, the hard work is not ‘just’ in connecting the technology, it is its impact that it will have across the organization to be able to ‘react, respond and reorganize’ in very different ways from today’s practices.

We are dealing with a completely different set of mindsets, skills, procedures, governance, processes and responsibilities. To gain from the digital evolution taking place we need a robust, comprehensive and radical overhaul of much of what is going on within our organizations.

We need to begin to really think though this as a complete redesign – achieving a clear engagement platform for all to gain from

So in our need to achieve a greater engagement from everyone within our organizations we need to recognize the importance of having a ‘modern’ engagement platform available, a central place for scalable learning to take place, so we can structure the new knowledge and insights that is coming into the organization and manage this through a well-designed innovation system into a final execution of successful innovations.

Moving from ad-hoc approaches to an integrated, synergistic and designed for each organizations unique state for the innovation management process to perform in today’s and tomorrow’s world on a sustaining basis. One where technology is central to its structure, highly connected, highly adaptive and totally fluid in its response to meet the constant array of innovation opportunities, looking to have solutions applied to them.

Is there not a mounting case for designing a new innovation management system?

I clearly am convinced there is and it certainly can be designed today in my opinion.

What is involved in plotting out a new innovation roadmap, who is the lead orchestrator or the navigator in this and can we structure this design accordingly, to bring it into our organization sustaining innovation?

One that offers a system that is fully integrated, connected and compatible with the needs of the business to grow and recognizes the need to build a sustainable innovation capability.

One that can to capitalize on the innovation opportunities being discovered in new and different ways that need connecting and accelerating, into commercial propositions that meet customers’ needs?

I want to look deeper into these in the coming weeks to add some thoughts to this new innovation system design and where and with whom it fits.
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The post Technology leads, innovation exploitation is lagging first appeared on Building Your Innovation & Ecosystem Intelligence.

They become fixed, rigid and locked into their established ways, not adapting to the changes occurring around them. We often give up and leave, moving on to better places and challenges.

We seemingly are reluctant to undergo any transformation, experimentation or adjustment in our organizations until it becomes a matter of survival, then its often far too late.

Then it becomes a mad scramble to transform ourselves, often with damaging consequences of deteriorating performance, battling more competition that are sensing our weakness, never capable of returning to those previous highs.

We simply  hate adapting or adjusting, certainly on a constant basis, we resist any form of ‘greater’ transformation – why?

If we can’t adapt to changing times, we simply struggle to survive, that is the growing reality operating in today’s environment. Simply put companies ‘die’ due to their inability to adapt to change and transformation projects fail because the message somehow fails to register and never gets completed to the original objectives.

According to a survey by McKinsey in 2011, 72% of our transformation programs fail to deliver on their original targets. Also one out of every two of our top organizations in the Fortune 500 will be gone, history, dust, taken over in ten years, according to the OECD.

Unless we create a strategy to transform, how can we re-imagine our innovation processes?

We talk so much about “innovation is critical” today and in our future, but is rarely achieved.The confidence levels plummet as the pressure to innovate mounts, simply because the necessary components of delivering innovation are critically missing.

Innovation requires us to do something different or something new, to explore, where as transformation wants to make dramatic changes in the form, appearance or performance, more to exploit and capitalize on changing conditions. We are at a crossroads of determining if the management of innovation should change and if so, how.

I argue that innovation management needs to radically adjust and will be based on the thinking around the shift from products to solutions, from transactions to growing far more value-adding ongoing relationships, from a supplier of product services into highly valued network partnerships, exploring innovation across all options, instead of delivering on discrete elements; this requires managing the whole ecosystem of the innovation design differently through technology where platforms dominate and transformation becomes an ongoing process to evolve the business model, so as to seek out constantly changing market opportunities, in agile, adaptive and fluid ways, for successful innovation outcomes that meet those real customer needs.

In this fourth post of an extended series I explore the potential for changing the management of innovation, this looks at transformation, our willingness and capabilities, on being capable of “moving towards a new way of managing innovation”

This does require a transformation of how we design, structure and bring together all the relevant part of the innovation process. This requires technology to be central to this different thinking, alongside a radical shift in how we see innovation. I refer back to my evolving hypothesis above of where, why and how this innovation management needs to shift.

Can innovation and transformation combine and work together?

We hear far too much about the need to transform and change. We do need to get a whole lot fitter in our innovation understanding to transform it into a more robust, sustainable process.

Firstly isn’t Change and Transformation the same thing? Well, not really.
Change = to make or become different (often includes more or better). This is where incremental improvement resides. Most of our innovation activities reside in this change space, fooling us, tricking us to believe we are “making real change”, whereas we are just pushing ‘things’ along.

Transformation though is = a thorough or dramatic change in form or appearance. This is where breakthroughs live. This is where innovation needs to go to counter the fundamental shifts going on in our markets, to really drive and thrive in an increasingly hostile environment.

Yet both transformation and change bring new possibilities into reality.

Both require thinking that is broad and expansive, with a strong sense of curiosity and discovery.

Unless we refocus our current management approaches to both be transformation and innovation, we will continue to face losing our competitive edge. Needlessly defending and spending our capital on the position of yesterday, not looking to seek out and transform to seize the new positions or opportunities that are occurring in our rapidly changing world.

Adapting the business model to the needs and desires of the market

There is a real shift for adding greater value within innovation occurring. There is this growing recognition that product alone has good value but it is the power of combining this with a range of services, by designing this into specific business models and solutions, that deliver on the needs of the customer.

I was reading an interesting article from LEADing Practice® posted on the iGrafx site who offers a set of process design, analysis, optimization and management capabilities . LEADing Practice® performed a study (not sure when) to uncover the obstacles to achieving innovation and transformation. 1,765 CEO’s and 2,936 business leaders representing all major countries and industries were surveyed.

In this article they were suggesting that most successful companies’ focal aspects of innovation are on new value, revenue and service models, while transformation is centered on cost, operation and performance.

To quote from the article “It’s no coincidence that when talking about successful companies and their ability to adapt to change, that they are achieving both innovation and transformation by applying both best and leading practices in appropriate domains of the business”.
“Best practices are transformative and should only be applied to non- core competencies that don’t effect differentiation – they are purely about meeting the market standard. These lend themselves especially to cost and operating models, which are not made up of core competencies. Leading practices are about doing things efficiently, but different – innovating. They are how they create value, deliver service and generate revenue and growth.”
“While best practices are tried and true methods that can and should always be applied, leading practices are methods of adapting best practices to situations that require a difference – this is a key differentiator”.

I needed to pause for thought on this as they are suggesting transformation and innovation are separated on their focal aspects. I’d never broken them up as specifically as this as I always saw this as the two sides of the same equation – the front end (value, revenue, new value propositions) and the back-end ( managing costs, operational aspects and the broader performance of key stakeholders) but both working towards a common goal- transformation through innovation.

I am a great admirer of Alex Osterwalder and the work his team over at Strategyzer are doing around and applying the Business model canvas into designing new models that have innovation and transformation as part of them. Does this article raise a new way to think about the design of the BM.

I actually do need to think about the linkage of transformation and innovation through the lens of the BMC some more, based on this article.

I do have a certain ‘crankiness’ around best practice – it is often a killer of your innovation

I do get a little cranky on this ‘reliance’ on best practices, most of our organizations like to gravitate towards. I totally agree for innovation it is actually the art of “learning practices” that emerge as ‘leading practices’ but these evolve often in highly unique and different ways. Often that is why innovation is hard for many, as they often fail to recognize the uniqueness within its makeup for them and take the existing practices, to simply copy.

Best practice is where everyone seems to want to go, the lazy and mistaken route to transformation and ending up at a point of no differentiation as everyone is also attempting to get to this point of best (existing or past) practice. It is leading practice, exploring, keeping it still efficient but different that you move towards a real competitive difference. I call this far more the ‘emerging practices’ that are working on the parts that add value, service and new revenue. These are often highly unique to individual circumstances, individual organizations and their market conditions and position.

The article stirred up my thinking at least, reaffirming my own beliefs on practices, on the increasing importance of the business model design in all we do and think. When we want to innovate, we should look at the transformation impact and this suggested allocation has sharpened my thinking, although parts of the article I’d debate or want a deeper explanation. Still take a read.

The experimental model is replacing the rational choice model

Rational choice is the familiar one where we set ROI’s, KPI’s, establish clear milestones and expectations from new projects or innovation. We are driving towards predictable outcomes. Is innovation by its unpredictable nature on time, always defensible and predictable? If it is then we are back in the land of incremental innovation where risk gets delegated down and we keep informed only to ‘what we think we know’ not what is changing. We lose so much by approaching innovation in a ‘prescripted’ manner.

The experimental model is far more the place to be in today’s uncertain and rapidly changing world. To succeed in today’s networked economy, businesses must participate in dynamic, evolving networks of diverse organizations based around platforms and ecosystems offer the fertile ground for collaboration and transformation.

And while such networks can be difficult to navigate, they offer companies the opportunity to evolve their business models, deepen skills and knowledge, expand into new markets, and scale operations. To experiment we limit risk, we learn through engaging in market understanding, validating needs, we adjust our model, then we rapidly scale, keeping competition lagging.

For companies seeking to reinvent not only their products but their business models, minimum viable transformation allows for rapid iteration on the unknowns of a new business model. This MVT thinking comes from Deliotte University Press and partly from one of my favourite thought leaders, John Hagel III. It builds on the initial work of Eric Ries and his minimum viable product thinking within the lean startup thinking methodology.

For companies seeking to reinvent not only their products but their business models, minimum viable transformation allows for rapid iteration on the unknowns of a new business model—anything from minute changes to operational processes to full restructuring of the go-to-market strategy. At its core, it’s a strategy for gathering validated learning about individual business model elements, then assessing how those elements interact and combine to form one cohesive strategy.

Based on the minimum viable product and lean start-up philosophy you are replacing internal intuition with the learning to iterate around your learning about market factors and what is valued and needed as innovations and adaptive business models.

The experimental model with the MVT thinking contains the risks down to more manageable levels; it allows you to explore market needs far more and exploits new learning by delivering and adapting ‘as you go’ and then scale.

You are combining the power of transformation and innovation.
Transformation and innovation are combining as your new agenda. To achieve a growing understanding of the kind of decisions companies want to make then we must transform ourselves on how we undertake innovation, to lead us out of average performance into a more radical, robust growth performance.

We must envisage, invest and lead and this will come through adapting far quicker to different business models, use new technologies and its powerful connection and analytical capability, so we can critically evaluate the operational process and engage with customers in all possible ways.

Innovation is far from static, it should be highly dynamic, it should be adapting and adjusting, it should be highly fluid. I’ve written on this need for fluidity as we are facing this considerable discussion around changing structures and models to become more adaptive, agile and fluid, to react and deal with this increasing turbulence occurring all around us.

Summary

We need to react and become more responsive, becoming more adaptive to changing environments and business challenges, that are often unknown, unexpected, or not yet explored or exploited.

Shifting to a different change model to meet the changing market conditions and customer needs will require a high level of transition; it needs us to transform our innovation management practice

A further white paper “Why innovators need a new change paradigm” takes this need for transformation even further, by looking more specifically at emerging models and the competencies required to react to this change in these more ‘fluid’ ways.

To achieve this different state, technology is central. My next post in this innovation management journey discusses why “Technology leads, we are lagging”

The post Our inabilities to adapt needs changing. first appeared on Building Your Innovation & Ecosystem Intelligence.

We are moving towards a new management of innovation where ‘greater’ collaboration is fueling new business models built on platforms, formed around ecosystems of communities with vested interest, contributing and extracting value.

Today and in the future, the value is created outside the individual company and not within. It is far more working as a constellation, drawing from an evolving network effect seeking out combined solutions from this design.

This third post of an extended series on my thoughts on “moving towards a new way of managing innovation” that explores the potential for changing the management of innovation, this looks at the significant value of platforms and ecosystems.

We need to find a new way of doing things differently around innovation and its management.

This is based on a relationship-based, networked designed concept built for collective activities. Relationships where shared value leads to a value creation that no one single organization can provide.

This requires open collaboration and an environment seeking mutual promise from individual input, contribution and extraction, delivering an integrated set of services and solutions being constructed on the platform from a sharing of knowledge, for delivering into evolving value propositions, all benefiting from, both collectively and individually

I am proposing in this series a view that innovation management needs to radically adjust and will be based on the thinking around the shift from products to solutions, from transactions to growing far more value-adding ongoing relationships, from a supplier of product services into highly valued network partnerships, exploring innovation across all options, instead of delivering on discrete elements; this requires managing the whole ecosystem of the innovation design differently through technology where platforms dominate.
Moving towards an even greater openness

We are evaluating and changing our existing focus from being closed up and having an exclusive internal orientation to innovation solutions, into ones that are having a far more open stance, more collaborative, open to external ideas and thinking. We are searching for more collaborative innovation combining external partners into more ‘collective thinking’.

These dialogues within the ecosystem, influence and shape each other, they alter the terrain, they compete and collaborate, they share and create resources, they co-evolve and adapt to new understanding, becoming increasing dynamic and interconnected, due to the recognition of mutually building value is greater than individual solutions.

The greater the collaboration improves chances of creating even greater value, finding solutions that are unique, radical in design that customers rate and seek out to resolve their needs.

The value of being involved in a dynamic platform offers the provision of constantly building and increasing the value of the services and content found on that platform, it continues to evolve and improve.

It proliferates, is dynamic and constantly evolving where everyone contributes, everyone benefits in a shared ‘commons’ but within a unique entity offering sustaining competitive advantage, solving complex problems but providing individual needs and returns.

Shifting towards many to many (m2m)

This shift to collaborating on a many to many platform is offering us extra acceleration that is needed to improve our innovation performances in radical designs that can significantly change existing market spaces from concept to market delivery. The phase of “open innovation” connecting one party with another (one to one) is well-established. We are presently entering the phase of ‘many to many’ and the use of platforms to manage this is still in ’emerging practice’.

Collaborative innovation is also leading us to higher chances of achieving greater impact and success, as nearly all novel ideas lay outside the organization’s domain of understanding. As we increasingly include the customer and their needs within our understanding, these multiple collaborations and dialogues are building this better internal understanding.

There also seems that many organizations are presently searching for their new business models’ of innovation delivery or architecture. I’d say we are presently in a state of flux on adjusting to all of what this might mean, in customer and market offerings, as well as internally adapting our structures to the new forms required in these business model changes.

Loops are replacing the linear

Equally, we are constantly moving from managing in linear innovation processes and making these more adaptive, constantly looping back when new information or data is being discovered, increasing this knowledge and insight in highly dynamic, constantly evolving and informing ways.

We need to adjust and learn the value of platforms, about the power of ecosystems and be significantly open about partnerships and shared intellectual property to tackle far more complex innovation challenges.

If we set about to properly designed business platforms these create and capture new economic value and scale the potential for learning across entire ecosystems of resources and participants that can give new meaning to innovation solutions that tap into our needs and can be scaled and adapted constantly.

Adjusting to many different forms of external relationships

We are forming external relationships in many different ways as this increased diversity does matter to each organization for building different competitive positions in their innovation offerings.

We are creating the potential to deliver innovative products and services through new business models that would not have been enabled by only having the one organization attempting it. Collaborations are significantly adding value into the innovation equation.

Also we are seeing complexity rising considerably. The search for finding greater value is shifting even further, increasingly forming around innovation ecosystems, loose federations of vested interest, forming and dispersing when the job is complete.

So is ecosystem thinking part of your innovation make up? Let me offer some thoughts.

So why are business ecosystems emerging as a real competitive force?
As we begin to open up our thinking the concept of ecosystems will increasingly having a powerful effect on our future growth perspectives, as different partners will all contribute to this often ‘emergent’ thinking to increase the total sum of the value.

Our innovation exploration will become far more evolutionary and requires a completely different way to think and manage these ‘relationship contracts that are forming around a given concept of platform engagements.

As we tap into all the expertise up and down the value chain we will become far more aware and will need to explore all the depth in thinking, contributing and making available through extending our connections in deeper and broader ways.

Knowing how to adjust, accommodate and shift our thinking requires us to become more agile, finding new ways of connecting and working.

A single industry focus is in decline

Opportunities exist everywhere. We need to look well beyond our own industry to evaluate different perspectives, seek out the potential of different concepts that can be adapted to our own industry.

Many companies are exploring the value of becoming involved in a business ecosystem that crosses a variety of industries to build new communities that have the capacity to transform existing environments.

A new battle ground of organizing ecosystems and providing platforms

As an example, let’s take the “battle of mobile devices” has now become a war of building the better ecosystem. It is not one single product it is chasing an increasing share of minds, preferences, changing habits and tastes and to achieve this ‘paradigm’ shift the search is on for forming the ecosystem that can deliver this ‘transformation’. This is coming through apps, technology, different value propositions built into a platform of offerings that combine through your mobile device.

Another example is the Autodesk facilities at Pier 9, in San Francisco which includes a cutting edge digital fabrication lab, a woodworking shop, a metalworking shop, a 3D printing lab, laser cutting and printing capabilities, an electronics workshop, a commercial test kitchen, and an industrial sewing center as well as smaller specialty project areas, all highly linked into technology and services.

This is allowing for start-ups, small and medium-sized organizations are given even more chances to bring their concepts to life and finding the opportunity to compete with larger organizations through this approach.

The combination is helping you to create real functional end-use parts with additive manufacturing, production processes and software applications all in a one shop environment.

In the car industry, consolidation is forcing a collaborative rethink. Sharing core platforms is driving commonality and global flexibility. There is this industry push for more universal regimes to drive down costs, guarantee quality and standardize the production and supply chains.

This approach is cutting across suppliers, extending collaboration between traditional rivals on this need to contain costs and variance and extend global reach. It has enabled a significant shift on redefining competitive positions closer to customer needs by focusing on distinctive propositions, less on car assembly (since industry reliability has universally risen by applying industry ‘best’ practice for much within the manufacturing and production of cars).

Also one outstanding example is Saleforce.com as a platform manager, today positioned as the customer success platform, where they offer a trusted enterprise cloud app platform for building and managing all your customer relationships. Today Salesforce is powering innovation in sales, service, marketing, community, analytics, apps, and more.

Stepping out is stepping up

Today there is growing realization that thinking ecosystems can allow us to have a new framing of possibilities and offer us different mind-sets that tap into different and diverse relationships, partnerships, alliances and collaborations. This was unthinkable until recently, without the enablers to make these connections through technology and more open platforms where you can come together and collaborate.

Also the positioning of platform thinking is another. To quote, I believe from Marshall Van Alstyne, a professor at Boston University “products have features; platforms have communities“.

Today we are realizing that the growth and value lies within communities, we see Uber owning no cars, Airbnb bring ‘idle’ real estate into places to stay, and Facebook creates no significant content itself, it just provides the space (platform) for others to build and extend their communities as part of their social strategy or simply a place to go and keep in touch and aware. In all three of those examples, platform users represent the origin point of the product or service.

What the companies we are valuing the most? Take a look all are based largely on technology with platforms where the ecosystem thrives through the exchange, interactions and collaborations they provide. Google, Apple, Amazon, Alibaba along with GE, Intel, Cisco, Microsoft, IBM, Samsung, Oracle.
We are equally searching for ways to democratize our business model’s today, one way is through crowdsourcing that can represent the future true value of the platform investment by others joining, creating and providing additional new value.

As we embrace “all things digital” and connect between ever-increasing communities, we will tap into and rely far more on a wide partnership of contributions. We are significantly recognizing the limitations of our past products and services, this way of innovating is on the way out, and platforms are the ‘in’.

In summary

The increasing value of participating in ecosystems allows for large and small organizations to create, scale and serve markets in ways unthought of previously. The ability to interact and co-create in increasingly sophisticated and novel ways on platforms opens up new opportunities.

These ecosystems form a bond of shared interest, of recognition and purpose which quickly becomes established as the new ‘commons’ in sharing and contributing and the platform management organizes and shapes the value for all involved to ‘extract’ their share of the innovation solution.

The future of successful innovation management is managing in the cloud, on platforms and through ecosystems. These are radically altering the way we need to manage our innovative designs.

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Publishing note:  Part of this blog post was originally written on behalf of Hype and with their permission I have republished this as part of an extended view on my own site to bring this into this series.

The post The innovating power of ecosystems and platforms first appeared on Building Your Innovation & Ecosystem Intelligence.

We are also witnessing such significant erosion of long-standing practices, and established boundaries between suppliers and customers, you get this feeling that everything is blurring.

This is part two of an extended series on my thoughts on “moving towards a new way of managing innovation” that explores the potential for changing the management of innovation.

How can the innovation process capitalize on all the changes we are undertaking at present in new ways, in broader engagements and collaborations, to deliver more effectively on the promise within our innovation potential?

Well I would suggest we do need to refocus

There is a very strong case we need to rethink the whole management of our innovation activity, as innovation is failing to deliver on its potential promise in the current ways we are attempting to undertake it, highly constrained and under-resourced.
We need to integrate product, service and business model innovation as a very basic must, so we can get closer to the demands within the marketplace necessary to succeed today, where customers are buying outcomes that they value, that fit their particular needs.

The ability to sell solutions that deliver the required outcome is a shift that is extremely challenging and needs a more radical thinking in my opinion on how we value and manage our innovation practices.

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

I have already started to lay out a case for significant change in my first post “Shifting Radically the Innovation Business Model” suggesting the innovation consultant has to redesign their role, position and service offering, to stay relevant within any management of innovation.

Producers of innovation need to transition radically into a different innovation delivery & design structure.

The radical changes we see occurring all around us requires radical responses. Our business organizations have relied on familiar practices, most established and still stuck in the last century, of driving internal efficiencies and effective practices to the exclusion of adopting a more fluid and adaptive approach that continually adjusts to today’s more consistent changes.

Our organizations are far too rigid, still ‘wedded’ to their tangible investments in land, materials, and labour focusing often exclusively on the financial capital part delivering on the short-term returns only and not fully grasping or experimenting with any new framework that is being born out of the digital age, one that extracts from all the capitals that certainly contribute to innovation in such significant ways.

There is this new set of challenges confronting us. We all feel the need for speed as the pace of innovation quickens, as we face shortening life cycles, greater competition and growing market pressure.

We are being pushed to look increasingly outside our own organization to seek the multiplier effect, to tap into different scale and diversity, and learn and quickly adapt from others.

We are suffering this ‘blurring effect’ as different, often novel business models in their solutions, are cutting across through past traditional borders, combining different value propositions that are totally disrupting and eradicating established positions, in record-breaking time and no one is immune to this ‘disruptive effect’

We are facing some challenging times with our structures, organization designs and the relevant internal skill-sets, all facing significant challenges and rapidly becoming ‘not fit for purpose’ in this challenging business environment.

We are holding onto the tangibles as our point of value we measure and not understanding the real ‘power’ within our intangibles to invest in them at significantly higher levels.

Far too many of our business organization are trapped in the past designs, old business models and product only orientated solutions that fail to excite their customers, who are increasingly becoming restless and demanding solutions to their unique needs, far more ready to abandon established brands if others deliver on those needs.

The shift to intangibles within the digital age

There was a report written in 2013 entitled and under, “The New Normal: Competitive advantage in the digital economy” written for the Big Innovation Centre, an initiative of The Work Foundation and Lancaster University.

This was rightly suggesting that the real sources of value creation and competitive advantage in the digital economy lie in fluid and constantly evolving the intangibles. We still are failing to come to grips with this, to understand its force and position in today’s thinking.

Technology or digitization has been such an underlying catalyst to this shift going on.

They see through their research, that the increasing digitization of economic activities has improved the detailed measurement of business activities (which aids better strategy formulation and positioning), enabled faster and cheaper experimentation (which fosters organizational ambidexterity and increases the likelihood of spawning innovations), facilitated the easier sharing of observations and ideas (which allows for the capturing of insights and learning from network members), and increased the ability to replicate innovations more quickly (which improves transaction cost efficiency).

These they suggest are the dynamic ‘factors’ of the digital economy, and must be harnessed in addition to the conventional factors of production, if firms seek to not just survive but also thrive in the new normal.

They are also outlining in this report,that  there are seven intangible sources of competitive advantage and are in effect, interconnected and complementary. The real sources of value creation today and gaining competitive advantage lies in fluid and constantly evolving intangibles, such as firm strategy and positioning, radical innovation and first mover advantages, intangible resources and competencies, organizational ambidexterity, network effects and externalities, transaction cost efficiency, and relational optimality.

It is the smart configurations, unique to each organization, of applying several or more of these intangibles that will create the new value in product and services and drive an even greater business model innovation change, to gain and sustain the competitive advantage.

The thinking they suggest requires a new ecosystem paradigm shift, needing a reinvention of the business model. I would suggest on the very way we manage innovation.

We must recognize our existing approaches to innovation need radically changing.

Why? What do I mean here? We seem to be failing at an awful lot.

Take a look at this list, far from exhaustive but it covers many of the problems we still face on innovation management. Opens a PDF file…..                      A selection of the causes that presently that are still holding innovation back

We are failing to address our failures in innovation. We need a radical transformation.

It is becoming clearer that organizations acting alone or in restricted collaborations are certainly not ideally placed to capture the opportunities available. They are often stifling innovation. The open innovation attests to that, it has helped but it is failing to be the radical catalyst for exceptional growth.

After some initial spurts of additional growth it seems to simply settle back into being ‘simply part of the established norm’ and is often simply supporting the ongoing incremental performance. Can we go beyond this?

A radically different orchestration of innovation – highly networked
In my view, we must go way beyond “open innovation” as we practice it today. There is a real need for a broader ecosystem approach that taps into a constellation of diverse and specialized players that all come together around a particular challenge, collaborating to deliver growing complex solutions that offer real growth value for the client.

I would argue this fits within a constellation of partners all working towards delivering innovation that is highly valuable, radical, disruptive and distinctive. A network of highly vested ecosystem partners all working towards a common goal on behalf of the organization that holds the principle intellectual property as the founding partner.

An ecosystem arrangement with a multitude of agents participating in resolving complex challenges, sharing their individual knowledge, pooling their collective expertise, working in a collaborative creative environment, of a platform design where the development and commercialization of the process is established. Where it is mutually understood on who shares or owns what, and working on creating real value creation that delivers on the expertise and passion-infused into this.

These clearly needs orchestration but we have to think perhaps differently on who this orchestrator might be. This is the subject of a future post within this discussion.

The need for a radical design and more collaborative exacting solution-driven innovation

Value creation and value delivery are proportionally coming from those that provide a real service to customer needs, and design their business models to be highly adaptive and flexible.

This requires this growing ‘constellation or network’ that provides specialized experience, advice, information, assurance, infrastructure and leasing and far less reliance on the traditional need of owning physical goods, all working within the specific innovation ecosystem and platforms designed to facilitate and collectively solve bolder innovation issues and challenges.

This I would suggest calls for a very radical ecosystem of design consultants and a partnership of vested stakeholders that work within an innovating hub. They collaborate and build the unique ecosystem required that provides the value delivery system to manage this.

My thinking continues in further posts around this theme of creating a greater collective engagement to deliver on the innovation promise in radically different ways, moving towards a different innovation management system than we have at present.

The post Moving towards a new innovation service model first appeared on Building Your Innovation & Ecosystem Intelligence.

I have been spending some significant time questioning the current innovation business model, from both the customer’s (clients) perspective and the innovation consultants’ one.

Now we all know not all things are equal, many companies have invested significantly in improving their innovation capabilities.

Many of these have been heavily reliant on outside help in achieving this position yet all the effort has led to limited returns for many and still a work-in-progress.

Yet far more of our business organizations are continuing to really struggle on their innovation activity for a whole host of reasons that seem never-ending, disappointing in end result and stuck in management quicksand to ever really change.

For me, the process and management of innovation really does need to be definitely questioned.

Perhaps we are in urgent need to change the very dynamics of how we undertake innovation.

In my research I certainly felt also the innovation consultant is struggling. They might be in the wrong place for their service offering. Also countless studies on companies’ innovation performance are indicating the ‘needle’ of improving total innovation performance is stuck or gradually being pushed up with a lot of effort, questionable reward.

We are failing to push the needle into dramatically improved innovation performances.

Surely this is the time for a more transformational change in how we conduct our innovation business?

The innovation business failure that lies within our companies continues.

If we take a current example, Jeffrey Phillips, over at Ovo Innovation has conducted a practitioner’s survey, in what the people who are actually “doing” innovation are actually thinking, to compare this with what the leaders at the top are feeling is happening.

It seems a significant yawning gap is apparent but not addressed. In summary, on the results gathered so far:

“The results so far suggest that while innovation is a key strategic focus, it’s still taking time to filter down to a day-to-day activity, frequently losing out to other priorities. The front end in many companies is poorly defined and much of the innovation work is incremental. Many of you worry about your internal innovation pace and losing out to competitors and new entrants. Innovation failures are frowned upon and few people have a chance to develop new innovation skills. Over two-thirds of those who responded felt that their company was failing to innovate at the same pace as competitors and new entrants, and almost 75% of respondents felt that they’d accomplished less with innovation than was possible within their organization”

I would say a depressing picture but in many ways ‘par for the course’ in what I feel also. Surely the innovation model within our business companies is indicating that it is not working, it is a broken innovating business model. It needs something radically different to occur.

The innovation consultants’ dilemma

The consulting industry is currently caught in the classic Innovator’s Dilemma, written about by Clayton Christensen. Christensen shows how most companies miss out on new waves of innovation. His answer is surprising and almost paradoxical: it is actually the same practices that lead the business to be successful in the first place that eventually can also result in their eventual demise.

The consulting firm has become fairly caught up in a specific transactional business model with their clients and that is progressively not working as well as in the past.

The struggle is to find a different, sustaining business model and one of the keys must lie in the relationships between client and consultant. Constantly relying on outside help has considerable danger as the knowledge often does not reside inside and the employment of the consultant gives the needed expertise and experience that often never gets transferred or embedded. This might be great for reoccurring fees but not for all that is required for internal strengthening. It simply pisses the employee off.

Clients have been progressively attempting to change their reliance on outside help by employing consultants within the organizations. Many large organizations have their own internal consulting teams deployed to offset external needs and bolster their internal capabilities.

I personally find this solution has not worked as well as intended, as they, the internal consulting team, over time, get sucked into issues detracting them from being the internal force of change, desperately trying to influence the leadership but eventually ending up as being allocated specific projects as project overseers or implementers. This reduces their impact and has erosion of influence over time, they become simply part of the furniture, caught up in the ebb and flow, like everyone else.

So the innovation consultants needs to change – why?

I get the distinct impression the focus of most innovation consultants is still locked into product innovation or improving the process of the pipeline / portfolio, the idea generation and project execution model. It is not evolving into broader services or accounting for the transformations underway at the clients end.

Are the innovation consultants reacting to the massive changes in information asymmetries occurring and proving solutions to these? There is this growing redundancy of idle assets that are struggling to be reconfigured to take on new challenges and new purpose and failing to be agile, flexible and adaptive.

The significant shifts deriving from technology change and digital disruption are not yet being translated into new innovation processes, frameworks or methods to extract the value of speed and unique insight and translate that out quickly into new products and services.

The exploding position of mobile use and growing engagement opportunities with customers and other vested stakeholders this can offer is yet to be fully embedded into the innovation process.

There is a ‘heady’ mix of change swirling around the clients and are they being resolved with the outside help as much as they can. I’m not talking here of the technology consultant, I am asking is the innovation consultant as up to date on all the changes going on to improve the innovation process?

Equally are innovation consultants engaged across the whole innovation process, or participating in ever-increasing specialized niches of discreet work? Are they as influential on the internal innovation process or just simply providing the necessary resources on a ‘as and when’ need, due to resource constraints at the clients?

Are they as ‘tuned-in’ and expert enough to be of value to specialized internal groups, working on their part of the innovation process or equation? Does the innovation consultant have depth in their own bench strength to provide ongoing value to their clients?

Can innovation consulting firms step up to the plate and deliver differently?

So I feel the business model mostly worked in consulting firms is broken. It is not in step with the changes going on. It seems ‘steps behind.’ It still wants to focus on the product, product idea generation, and the product pipeline and product portfolio as the main focus point.

I think this is rapidly a focus of being in the past and new business models need to address the service provision far more.

The relationship with clients has been firmly in the transactional approach. They worked on specific problems, reviewed, recommended new designs, sold and delivered these and moves on (and out) of the clients.

Today the real value is not so much in transactional work but building longer-term relationship work. The idea of imposing solutions that fit their own capabilities and activities is missing the mark, I believe, in offering customers distinct, tailored solutions fulfilling their unique needs.

To get to this point, consultants will need a far more networked approach on who they are tapping into, drawing down from an array of outside specialists to deliver the right mix of activities, and expertise. It will lie less in-house, more recognized as specialized, contracted out to work within the solution delivery, seen to resolve the client’s needs.

This will require a more ecosystem approach, drawing in those who share in creating, resourcing and designing solutions, that deliver to specific customer needs.

We need to accept that innovation is a complex system; it is not any more delivering ‘boiler-plate’ solutions.

Redesigning the consultants business model

For this to work consultants need to think through their existing business models and construct these far more towards a service provision that delivers more exactly to customer needs.

Any new business model needs to focus on finding the real overarching value that the client wants from the service provider and what they can deliver.

I believe it will be less transactional and will enter a richer- relationship partnership, that makes the consultant far more accountable to deliver on this, in all its forms but more ‘vested’ in the outcomes. The key becomes knowing exactly the value proposition.

Also any new consulting model needs to deliver less on outputs and more on real measurable outcomes, the value delivery part. How this needs to be constructed, to make it specific to unique client challenges, yet scalable in different client work taken on, so as to defray the costs and attract the partnership value into the ecosystem of value partners so as to sustain and nurture what it offers, as leading-edge and highly value.

One that is constantly adding, so it continues to push in how it evolves and keeps attracting the client to participate, with all its connected value, providing a value proposition that delivers innovation in radically different but highly rewarding ways.

To achieve this the real skill becomes the building up of any existing value proposition and reconfiguring it to create a more appealing and valuable value proposition and offering a better value delivery system to deliver on this, through an ecosystem approach.

My plans to evolve this thinking
I have been working on these in my own mind over the recent weeks and I plan to share some of this thinking in the weeks ahead. I have structured my thinking (so far) into six parts.

At present, I’m still mulling over how to deliver on these as separate posts or some mixing and matching up to bring this all together..

The six parts planned at present are: 1) the further case for building a new innovation service model, 2) the role of the navigator and orchestrator, 3) transformation- what does that really mean and its impact on whom, 4) plotting this out on an innovation road map, 5) structuring the innovation accordingly- between whom and where and finally, 6) technology is leading and we as innovators are lagging, the time to retake this ground for delivering real customer value.

Moving towards a new way of doing things.

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

Let’s see where I go in this in the coming weeks, hopefully somewhere of future value, so as to shift our innovation thinking to exploring new solutions to improve on its mediocre current performance.

How can the innovation process capitalize on all the changes we are undertaking at present in new ways, so as to adjust to a different world of ushering in greater ‘engagement to deliver on the innovation opportunity’.

The post Shifting Radically the Innovation Business Model first appeared on Building Your Innovation & Ecosystem Intelligence.

Today I think we are yet again at yet another crossroads in this innovation understanding and perspective. That is to extract the leading edges required from their innovation activities within organizations. This will require fresh innovation consulting business models to exploit the growing complexity of managing emerging innovation practice to support and extend their understanding.

I’m attempting to get my head around it, let me share some of my thinking here.

There has been a continual shift of where innovation knowledge resides. The external provider, who was the main source of latest insight, hands on practice and leading ideas in the past, I think have been significantly falling behind in recent years, on their contribution and value to organizations.

The advice they are providing is shifting from deep research and repeating practice into investing into offering more the insights of what might constitutes leading edge models to then suggest offerings that generate client value, as a must to understand and have. They have moved from clear ‘leading’ practice proponents to often ‘lagging’ but are exploiting their connections for knowledge insights to offset this.

Innovation knowledge is residing far more in-house of the client

The innovation knowledge needed for completing innovation has transferred more and more within the actual organizations needing to achieve the innovating. Through their constant ‘sets of experience’, working daily within innovation they are building up some essential capabilities and capacities. The external provider has to be able to spot and fill the gaps to offer any value, they are not leading but responding.

With the growing reliance on collaborative tools and the use of technology has meant much more of the complexity of projects has to be managed from within, far too much of the necessary insights and linkages needed cannot come from external resources.

Consultants are being relegated to issues that remain complex but essentially generic, important to organizations but not the vital part of innovation need.  The use of external providers has progressively reduced in high-end value activities into more gap filling ones, as they lack the depth of inside knowledge to pull together the thinking and outcomes needed for delivering the innovation outcomes.

Their value as project specialists has even diminished due to the network need becoming so vital within dispersed organizations and this requires a deepening internal understanding and where the knowledge resides to be extracted.

It seems the role of the consultant has become more marginalised or specialised.

The business model for innovation consulting needs changing. Innovation within consultancies has been seen to be a cheap exercise to support, often not seen as the powerful force for driving the growth and fortunes of the organization as it should have been.

Much of innovations troubles today have been this poor recognition of the need of innovation to ‘reside’ in the boardroom.  It was disconnected from the strategic domain as it was a little ‘abstract’ and intangible, light on established practice.

Today that has changed, innovation needs a much higher focus, it needs to be fully aligned to what an organization wants to do, if it wants to thrive and grow. Innovation is very strategic.

There was also the ‘established practice’ over many years of consulting multiple times across similar issues that were just repeating themselves across many clients that had value that clients were willing to pay for. Often the consultant invested in the costs only once to find the (common) solutions and then set about extracted an increasing yield of return from repeating this multiple times. Today clients see through these practices and are certainly seeking uniqueness to their specific problems. Best practice still extracts from that rather tired model of establishing common practice.

Today innovation needed has to be increasingly unique, for the end results to stand out. This has its implications for anyone providing a service.   The value of best practice might give assurances to the doubters but it is the growing focus on emerging or novel practice that is more valuable to know about.

Also the growing use of open innovation has also enabled more organizations to learn from others and exclude the middle man, by working directly with others tackling similar problems and learning from each other.

Large Consultants are becoming marginalised as they lack the depth of expertise, collaborative inputs that contribute, the notable exception being still in technology application and the expertise and knowledge to link this across global organizations.

The large consulting practices certainly still possess the ‘on-hand’ extra ‘feet-on-the ground’ to augment the repeating work being undertaken within organizations or validating its position. These shift means thinner margins, more chasing to cover growing fixed costs being built up in the broad scoped consulting practice.

Shifting focus on what innovation consultants need to offer.

Consultants working in innovation today, are less ‘innovation factories’ producing the solutions and are often left with more ‘constant’ re-bottling the wine’ to maintain their place. The taste is for consistency not challenging the palate. Consultants can become more advocates for change but this needs a consistency of focus to extract value out of, as the external source of championing change, by providing the knowledge insight.

There is also this rapidly adjusting position into specific ‘knowledge providers’ and validators. Just look at the explosion of thought leadership coming from consulting firms, their ability to hone in and benchmark trends by having access to C-level executives provides a more ‘open’ understanding that internal analysis can ‘pick apart’ and absorb or reject.

Actually in a recent piece of research by www.sourceforconsulting.com they are suggesting the Law of Inverse Audiences for though leadership pieces: the narrower your focus (research or thought piece) the smaller the number of readers but the more interested and engaged those readers are likely to be.

The real insight in this was not so much thinking you know your audience here but the trend that is occurring- to forward this insight onto colleagues as validation or collateral to doubters. Yet the consultant who researched or wrote the piece will most probably never know where it has been used as it’s gone internal. Inside absorption of this external knowledge and what was actually achieved by the consulting firm that undertook this. The old model states “the client will think of us when needed” Will they?

No, the business model for innovation consulting is actually under attack, the position of making money is becoming a whole lot harder unless you shift perspectives and redesign what you can offer so it ‘fits’ far more with the internal needs of clients today.

Are these some of the shifts we are detecting?

An initial work-in-progress list of the shifts in consulting taking place relating to innovation – so what is missing here? This is certainly not exhaustive and not set out to be that, it is attempting to ‘ indicate’ the consistent shifting that has and is taking place in adapting the innovation consulting business model, in search of growth and utilization.

What does the future hold for ‘traditional’ innovation consulting?

Whatever the shifts taking place and I think there are many, the established, more traditional consulting model is not working for innovation. They are being marginalized, left often to catch up with the work going on within their clients. The consultant is not leading; they are following in the practice of innovation. Greater specialization is required and seemingly valued by clients. Knowing what this is becomes the hard part.

There also needs to be further work on what differentiates’ one consultant with another. The client is far more discerning, reacts very negatively to any ‘one size’ fits all approach as innovation activity is unique to each client. The establishment of more Chief Innovation Offices or Vice Presidents for innovation are demanding more from their service providers than ever before. These providers need to be clearly seen as differentiators otherwise that will not get house room.

Shifting sands, covering up old weaknesses

The world of consulting does need to change but many of the client issues still continue to remain the same or in some cases might have even got worse. It becomes  the consultants challenge on more how you can reduce the ‘pressures’ on internal teams or provides real ‘impact’ that supports ‘delivery’ differently than before and can’t be achieved internally alone.

Clients still struggle with a consistent ‘lack of time’ and as we know time is either a friend if you have it or the worst enemy to innovation if you don’t. Just simply chasing for client answers is getting worse rather than better.  Clients are constantly stretched in their utilization of the limited resources they have available to them. They are constantly being distracted away from managing the bigger picture, into side events or having ‘dual’ roles.

There remains this chronic attitude of “I’m not taking any risk or we don’t have a real appetite for experimentation” pervading board rooms. The reality is clients still want tried and tested solutions, yet for me, crazy as this is, they are reluctant to be the experiment lab yet they cry out for the need to be different. How do you ‘square that off’ with what innovation needs to have – a constantly exploring and experimental climate – to find new solutions?

Client budgets seem to be tighter each year, the cost of each innovation undertaken is rising and taking more time and cost as well as the toll for dealing with growing complexity and conflict is demanding. Organizations and the individuals responsible are under growing pressure for innovation to generate real sustaining growth.

Consultants have to manage complexity within today’s dynamics.

Consultants have to work through these dynamics to find their position to offer value and how to figure out what their position is so as to provide the relevant services. This will increasingly call for a far more flexible, agile and focused model than ever before. The pressure on margins, the inability to have more ‘bench strength’ simply waiting around for that client call, the procurement procedures that batter down fees, scope and future options, limit detailed discussions until contracts are awarded makes this harder to work through, yet consultants must.

There are also seemingly more competitors around, in the form of boutique providers of really specialised focus or industry specific expertise, a clutch of independent providers of detailed innovation knowledge and plenty of workshop and training providers, all nibbling away at those finite client budgets that keep eroding the margins and scope for building a reputation for innovation consulting.

Can today’s consulting practice for innovation stand out?

How can they provide real needed and welcomed services to the client? It is getting harder I feel out there for many and the search for different and unique innovation consulting business models is definitely on.

Some are managing this by working on their value position to offer 1) new solutions, 2) adapting solutions that are more evolutionary in their growing understanding, 3) thought leadership that provides new insights and advice to underpin selected competencies and 4) being masters of creative problem solving.

Getting your specialization right

For me I designate these emerging inovation practices as made up of 1) Systems thinkers,2) Structure implementers, 3) Subject Matter experts and those that are 4)Advocacy Catalysts within innovation, or there is a hybrid of all of these, aligned more than likely to a given innovation specialisation.

Whatever the services offered, these still need to be valued by the client (as their clear jobs-to-be-done) and to be positioned and recognized as the service provider who can deliver a higher degree of uniqueness for supporting the specific solutions on these.

I think this is calling for very different innovation consulting business models, more agile, flexible and adapting to unique conditions found within each client.

So if you are an innovation consultant are you mapping your one out or working through the multiple options on your business model canvas yet? I would, as it is not just to survive but to search and find the winning ways to thrive and be recognized as the expert needed.

As for clients, to extract real value from your providers are you clear enough on what you need? Perhaps I can help? I prefer to work in the advocacy space and try to offer subject matter thinking.

The post Are we getting real value out of innovation consultants? first appeared on Building Your Innovation & Ecosystem Intelligence.