reporting value adding assets - Building Your Innovation & Ecosystem Intelligence

Is Innovation Capital important to us?

@paul4innovating — Thu, 18 Aug 2016 09:47:27 +0000

Perhaps we are failing to recognise the importance of our Innovation capital, stopping to ask how really valuable knowing this is to us?

Should we care, does it matter? I would argue it does, increasingly so. Within our innovation capital lies the future of the organisation and holds one of the really important ‘golden keys’ to the sustaining performance of the company and its future growth potential.

We need to find a way to unlock this as we are constantly being pushed for new business models that create, deliver and capture value. It is in the entire makeup, the value structure around the offering, and this is made up of distinct capitals that drive the new business towards success.

How do I define innovation capital?

“Innovation capital is the sum of all that promotes the development and changes required for achieving innovation outcomes, within one organisation or its broader networked environment, for marketplace advantage”.

“These are made up of the resources, processes, knowledge and capabilities, that are constantly evolving and highly dynamic, to build greater innovating capacity.”

The hard part is valuing innovation capital as these are constantly being renewed and evolving.

Innovation capital is a set of renewal capabilities and understanding what these are is critical but today is not well understood. We find it extremely difficult to report clearly on the makeup of our innovating capital and where we should focus in their development

Determining and being able to articulate the value within these capitals would be truly valuable and would help us differentiate between those that are static or simply repeating, and those that are dynamic, ever evolving, searching for new knowledge.

Building stock, generating flows

It is the generating of ‘new stock’ that builds the values of our future capital. It is these unique bundles of an organisations resources and assets that give us our new innovation value, through the process and flow of new knowledge and its value creation, that lead to commercialization. We need to constantly create fresh innovation capital.

It is the dynamic interactions and flows between the different innovation capital assets and the other intellectual assets that innovation requires for successful activity and outcomes. This is where absorptive capacity plays its vital part in structuring this process.

How can we capture and articulate the innovation capital?

So, the key to identifying innovation capital lies in its stocks and knowledge building assets and their uniqueness in the resources that make this up, in constantly evolving and learning, these are the real strategic asset to nurture and build. Leveraging and continually building the ‘stock’ of our innovation capital can render different productive value outcomes.

It is our ability to ‘mix and combine’ the innovation activity that it consists of, in all the decisions and activities that occur, from the recognition of a need or a problem, the decisions and then the activities that occur that build through researching, developing concepts through to the eventual release into commercialization into successful market outcomes that feeds and builds the combined innovation capital.

Knowing this make-up of our innovation capital provides us with the potential for driving our future growth. Identifying the real capital that will drive and sustain the real advantage, providing the future potential for new wealth should be the essential way we measure organisations performance, not on past financial performance or personal perception, built on limited understanding.

Holding the future back if we lack a deep understanding of our innovation capital

If we had a better understanding of the make up the innovation capital, and what makes up its critical enablers, then we are better positioned to qualify and even quantify a more confident future, based on the capital that ‘feeds’ the future potential.

We need to understand the strategic importance and take the time to explore where our innovation capital lies to understand all the value-building points. At present most corporate boards lack any clear line of sight into this, it significantly holds innovation back, it constrains growth, and it can make us all far more cautious of the future, for knowing where to invest and grow as we lack the level of what innovation capital should we be leveraging in our understandings.

I think it is the time we did clarify our innovation capital in far better ways. Need any help?

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Holding the innovations of the future back

@paul4innovating — Sat, 07 Mar 2015 10:26:49 +0000

I clearly believe we do need to understand the strategic importance of the make-up of our innovation capital, yet presently nearly all our corporate boards lack any clear line of sight into this. Why?

Not understanding what makes up the capital is holding innovation back. We are actually constraining growth through this lack of understanding as it makes us all cautious of the future.

If we don’t fully understand the make-up of all our capital should we invest or divert resources to delivering on it? I think it is high time we did.

So what makes up our innovation capital and why is it important to know?

Should we care, does it matter? I would argue it does, increasingly so. Within the innovation capital lies the future of the organization and holds one of the real golden keys to the sustaining performance of the company, or not.

The generally accepted view is that Innovation boosts a company’s earnings, speeds growth, ensures an advantage over competitors, and greatly appeals to shareholders. Put another way, businesses that deliver earnings growth based on a continuous stream of new products and services and new ways of doing business capture the innovation premium.

So tell me, why are we seemingly so bad at identifying what actually makes up our innovation capital, apart from some sweeping generalised statements attached in the accompanying comments within the financial result statements?

We need to find a way to unlock this as we are constantly being pushed for new business models that create, deliver and capture value. It is in the entire make up, the value structure around the offering, and this is made up of distinct capitals that drive the new business towards success.

How do I define innovation capital?

“Innovation capital is the sum of all that promotes the development and changes required for achieving innovation outcomes, within one organization or its broader networked environment, for market place advantage”.

“These are made up of the resources, processes, knowledge and capabilities, that are constantly evolving and highly dynamic to build greater innovating capacity.”

We are searching for what makes-up and provides the true value creation in successful outcomes; in final product, services, knowledge understanding or executing within further business models.

We need to understand what makes up innovation capital far more in the future.

Mostly this innovation capital comes from the different intellectual capitals, those unique sums within each organization, of knowledge made up of our human assets, organizational structures and social partners making up the organizations eco system.

It is when we bring these together in different, evolving ways we transform the knowledge into new economic value, through this organization and personal actions. Financial capital cannot do that; it can only fuel the other capitals, it lies idle until we employ the other capitals.

The hard part is valuing innovation capital as these are constantly being renewed and evolving.

Determining and being able to articulate the value within these capitals would be truly valuable and would help us differentiate between those that are static or simply repeating, and those that are dynamic, ever evolving, searching for new knowledge.

How can we capture and articulate the innovation capital?

I believe we can. One of the big key’s to identifying innovation capital lies in its stocks and knowledge building assets and their uniqueness in the resources that make this up, in constantly evolving and learning, these are the a real strategic asset.

Leveraging the ‘stock’ of our innovation capital can render different productive value outcomes.

It is our ability to ‘mix and combine’ the innovation activity that it consists of, in all the decisions and activities that occur, from the recognition of a need or a problem, through research, development and commercialization of an invention into successful market outcomes builds the capital.

Knowing this make-up of our innovation capital provides us the potential for driving our future growth. Identifying the real capital that will drive and sustain real advantage, providing the future potential for new wealth should be the essential way we measure organizations performance, not on past financial performance or personal perception, built on limited understanding.

We need greater insights into all our organizations ‘collective’ capitals

It is the ‘combination effect’ of leveraging all our capitals that yields the real lasting sustaining values. Today, we are lost in numbers and details, financials dominate most discussions, we need to encourage exploration into the make up of all our capitals.

Until we can peer under the organizations ‘hood’ a little more and understand the make up of all the capitals then we will continually fail to understand the real innovation activity that generates the value.

We need to know more on what can and does ‘drive’ future performance, what lies at its core or is being built-in for new capabilities and capacities to innovate, looking to secure the future.

If we had a better understanding of the make up the innovation capital, and what makes up the critical enablers, then we are better positioned to qualify and even quantify a more confident future, based on the capital that ‘feeds’ this future potential.

The post Holding the innovations of the future back first appeared on Building Your Innovation & Ecosystem Intelligence.

What makes up your innovation capital?

@paul4innovating — Wed, 25 Feb 2015 10:02:42 +0000

If someone came to you and asked the question: “tell me what makes up your financial capital?”

I expect you could answer this fairly comfortably.

It might need a little added help from your finance department but you could produce and show significant details that we are all ‘schooled’ to understand and generally have accepted, under common definitions and standard practice.

Our businesses are measured constantly on their financials, we produce a constant flow of reporting documents that provide useful insight and allow for a more informed judgement by present and future investors on the health of the company. We are ‘wedded’ to our financials and ignore the real value within our organizations of all the other critical capitals that generate and strengthen the business.

What if that same person came to you and asked instead: “what makes up the innovation capital of the company?’” could you answer this as clearly as the financial one – I would suggest most probably not. (By the way, if you feel you can then please let me know I would be more than interested).

We are focusing more on past performance and not future generating potential by staying fixated on just the financials within all that makes up our organizational capital

So what makes up our innovation capital and why is it important to know?
Should we care, does it matter? I would argue it does, increasingly so. Within the innovation capital lies the future of the organization and holds one of the real golden keys to the sustaining performance of the company, or not.

We need to find a way to unlock this as we are constantly being pushed for new business models that create, deliver and capture value. It is in the entire make-up, the value structure around the offering, and this is made up of distinct capitals that drive the new business towards success.

How do I define innovation capital?

“These are made up of the resources, processes, knowledge and capabilities, that are constantly evolving and highly dynamic to build greater innovating capacity.”

These innovating capitals build upon the capabilities of ‘sensing, seizing and transforming‘ so as to build new capital that focuses more on the dynamics within innovation.

You are searching for what makes up and provides the true value creation in successful outcomes; in the final product, services, knowledge understanding or executing within further business models”

We need to understand what makes up innovation capital far more in the future.
Mostly this innovation capital comes from the different intellectual capitals.

Those unique sums within each organization, of knowledge are made up of our human assets, organizational structures and social partners making up the organization’s ecosystem.

It is when we bring these together in different, evolving ways we transform the knowledge into new economic value, through this organization and personal actions. Financial capital cannot do that, it can only fuel the other capitals.

Within these capitals lie the three primary components of intellectual capital: human capital, structural capital and relational capital. These do the heavy lifting to generate the value in the capital.

Human Capital is perceived as the knowledge and learning abilities of the human resources, it primarily as comprising knowledge (explicit and tacit), skills, intellect and talent of individuals.

Structural Capital provides the organizational mechanisms and architecture for retaining, packaging, reinforcing and transferring knowledge along with business activities.

Relational Capital represents a firm’s accumulated knowledge and ability to absorb, exploit and extend knowledge from its relationships to create, develop and maintain conditions that serve the interests of both the firm and increase its principal external partners.

Increasingly other capitals are being given the increased focus

Technological Capital includes efforts in R&D, technological infrastructure, and intellectual and industrial property.

Organizational Capital includes elements such as organizational culture, values, attitudes, information and telecommunications capability and organizational structure.

Strategic Capital that builds up the layers to offer a viable business, it provides increasingly the logic and purpose that ‘connects and attracts’ and ‘accounts’ for delivering the business model, that provides to the market and delivers on the need to build and sustain the organization and keeps it viable and evolving..

We need to make greater efforts to measure these capitals, as they possess the value of all the knowledge used, combining human with physical capital to generate outputs that drive progress and future outcomes.

We are highly vulnerable unless we know what makes up our capital stock.

Financial Capital is useless on its own to generate growth unless it has its ‘feeding stock‘ and that is within the other capitals.

It is the ‘stock’ of these that generates the values. It is these unique bundles of a organization’s resources and assets that give us our new innovation value, through the process and flow of knowledge and its creation, leading to commercialization. We need to constantly create fresh innovation capital.

The hard part is valuing innovation capital as these are constantly being renewed and evolving.

Determining and being able to articulate the value within these capitals would be truly valuable and would help us differentiate between those that are static or simply repeating and those that are dynamic, ever-evolving, searching for new knowledge.

Perhaps a good example here is to think of Apple and its innovation premium.

Apple delivers on its innovation promise in products, we, as customers seem to want. They have mastered the convergence of ‘breaking’ technology, placing a significant emphasis on design, user experience, combining materials to deliver products that make that statement of quality, fulfill our increasing appetite for technology we see as increasingly valuable to our daily lives.

Then they bundle it by providing ease of use within the make-up of the product, offering closed platforms to enhance individual experiences and deliver this ‘bundle’ through the sheer generation of excitement and buzz.

They seem to be able to leverage all their different capitals. They build in the emotional capital, the reputation, a trust factor, raising our expectations of a future promise. They are leveraging all parts of their capital stock extremely well, on a constantly evolving platform of knowledge and learning. Can others emulate this combination effect?

How can we capture and articulate the innovation capital?

So the key to identifying innovation capital lies in its stocks and knowledge building assets and their uniqueness in the resources that make this up, in constantly evolving and learning, these are the real strategic asset. Leveraging the ‘stock’ of our innovation capital can render different productive value outcomes.

We need greater insights into all our organizations ‘collective’ capitals
It is the ‘combination effect‘ of leveraging all our capitals that yields the real lasting sustaining values. Today, we are lost in numbers and details, financials dominate most discussions.

Until we can peer under the organization’s hood a little more and understand the makeup of all the capitals then we will continually fail to understand the real innovation activity that generates the value and we will always have a lack of measuring an organization’s performance in any comprehensive way.

We rely too much on historical numbers, alongside a judgement of the rhetoric offered by the board about the promise of future performance. Judging innovation’s performance is based partly on current product launches and announced future pipelines where the board is typically cautious.

It often makes us as those investors equally cautious. We need to know more on what can and does ‘drive’ future performance that lies at its core or is being built in new capabilities and capacities.

Holding the future back

We need to understand the strategic importance of the make-up of the innovation capital and presently most corporate boards lack any clear line of sight into this.

It holds innovation back, it constrains growth, it makes us cautious of the future, if we don’t fully understand the make-up of our capital. I think It is time we did.

The post What makes up your innovation capital? first appeared on Building Your Innovation & Ecosystem Intelligence.

Shifting attitudes, think responsibly.

@paul4innovating — Tue, 19 Nov 2013 11:36:50 +0000

How do we engage within our own internal organizational communities to shifting attitudes and think in different, more responsible ways? How do we communicate our sense of purpose to the outside world? How do we integrate all the activities we are (or should be) undertaking as responsible leaders?

Are we working towards understanding the material sustainability issues better and linking them to financial drivers and where we fit within these complex issues?

There is such an increasing need to develop or simply updating our business language to build stronger cases for change, improvement and broader community engagement but these still seem to be missing.

How are organizations aligning their organizations not just with their own strategies but those in the wider world that contribute into a more sustaining future? We are needing to answer a fair few of these questions in my opinion.

The lack of engagement, of common understanding

Within each corporation there is this overwhelming need and growing concern to engage, to engage our employees, provide them a clearer sense of purpose and offer a better understanding of what a ‘higher’ purpose they are working towards looks like in their language not just through the eyes of the corporate board.

How does the external world perceive us, how do we attract new investment, greater stakeholder engagement. How can we achieve this in better ways than we are doing today?

Many of those traditional measures of purpose left over from the 20^th century are simply not working. The social contract between employer, employee and their communities has broken down and this ‘sense of drift’ is certainly making it far more difficult to galvanize each part of the renewing growth equation – including government – to fix it, to be part of a common united sense of solution that connect and resonate across all ‘vested’ parties.

The Integrated Reporting movement (www.theiirc.org )

I’m not sure how aware we all are on the work being undertaken under the auspices of the integrated reporting movement . This is a process that results in changing the communication mechanisms provided by an organization, most visibly a periodic integrated report, about value creation over time.

An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long-term.

Arguable much of the change to achieve Integrated Reporting needs to be driven by companies themselves and the development of the IIRC framework is enabling companies to shape the process based on their own experiences.

A useful starting place to pick up on this

A useful report to initially read is ‘Understanding transformation: Building the business case for Integrated Reporting’ that set out to understand the processes that companies go through as they move towards Integrated Reporting. The organisations participating in the research are at different stages but all are involved in the IIRC’s Pilot Programme, which aims to help develop an International Integrated Reporting Framework

Integrated reporting benefits, source http://www.theiirc.org/the-iirc/.

The work being presently undertaken

Over 100 global businesses and 50 institutional investors are directly involved in the IIRC’s work. This includes some of the world’s most iconic brands, such as Coca-Cola, Clorox, Microsoft, Hyundai, Tata, Unilever, Marks and Spencer, SAP and National Australia Bank.

Their engagement within the Pilot Programme are trialling the principles, content and practicalities of the Framework for two years to provide feedback and build business momentum towards its implementation.

By tracking their experiences over the two-year duration of the pilot, the aim is to capture the changes and benefits of adopting Integrated Reporting. This will help to build the business case for a wider shift towards Integrated Reporting and help to generate support among key stakeholders, including internal audiences, boards, investors and regulators.

The business and investor benefits of are seemingly compelling.

According to latest reports, the empirical evidence from the IIRC Pilot Programme shows that enables the articulation of strategy and how the business is creating value over time.

This information potentially provides the new lifeblood of capital markets. enables a better communication of the material factors that create value over the short, medium and long term. It works towards investor decision-making and the efficient allocation of capital, essential aspects needed for us all to understand.

The next step of a Consultation Draft of the International Framework

According the website after a successful three months of engagement and the launching the Consultation Draft of the International Framework at events in 10 of the world’s largest capital markets, extensive consultation has taken place with organizations across the world.

From South Korea to Sweden, Italy to Indonesia, and the Netherlands to New Zealand people have evaluated and commenting on the Consultation Draft.

The IIRC are using received submissions to shape the Framework which will be published in December 2013.

We certainly require more integrated thinking for us to all gain this greater sense of identity.

If we can achieve a means of presenting the material about the organization’s strategy, governance and performance on commercial, social and environmental issues then this is a significant step forward. By the ability to effectively connect these often siloed areas, businesses are able to provide not only an update on past performance but also a long-term perspective of future value generation.

Integrated Reporting is, therefore, potentially moving us to good, or at least, better reporting. It provides and equips companies to manage their operations, brand and reputation strategically and to manage better any risks that may compromise the long-term sustainability of the business.

If this initiative does allow organizations to present their material information about the organization’s strategy, governance and performance on commercial, social and environmental issues in an integrated fashion

Regaining engagement through in integrated reporting will benefit many.

I think this collaborative work can potentially advance some of the important areas we need, to regain the engagement within communities. Of course this integrated reporting will have far more initial value to the financial markets and direct investors but if we can begin to see a better, cohesive, articulated business story provided by organizations then it can begin to ‘flow through’ in many different ways.

Beyond the financial community, I think we can all gain by understand the specific business models better, we can begin to appreciate the assets that make up value creation far more and these will be far more based around the intellectual capital assets within organizations and we will begin to gain a higher sense of where innovation is contributing within this integrated reporting.

The value for us all is to become engaged in this work

I think this is a body of work that is well worth exploring and keeping engaged with, it may be a good catalyst for changing our thinking and attitudes and partly help us move finally away from antiquated reporting based on the last century and reporting on assets that are extremely limited on what is making up the real worth of one organization over another.

It is certainly about time that reporting within organizations became significantly better to understand where the real value creation is derived.

If the IIRC can offer a better integrated framework for reporting, something that offers a more cohesive reporting structure that is sadly lacking today, thirteen years into a new century, then we can all benefit from this better understanding.

We can then revise our views on the value and appreciation of what makes up the organization for its value creation – past, present and future – and then decide accordingly, if it has real worth or not going forward, from each of our unique stakeholder perspectives.

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