Innovation is often too intangible, full of unknowns as the very nature of anything new and different. Innovation risk leaves many executives very uncomfortable.

Organizations get uncomfortable when the words “radical” “intangible”, “unknowns” and other words like these when they form part of the conversation. It often starts to induce that “risk twitch” where that careful management for short-term performance might become threatened, or the manager feels any decision is ‘going out on a limb’ and possibly career threatening.

That growing uncomfortable feeling that innovation places their bonus at “risk” so they like to ring-fence innovation as much as possible. Now some of that ring-fencing is fine, you contain a risk to keep it manageable but most innovation does not constitute organization risk, yet it gets caught up in that risky fear that innovation seems to induce. Actually, if we were managing innovation at the core, our risk management for it would be very heightened and managed differently, but how many of our companies’ have innovation as their core?

So I always welcome discussion on risk and innovation. The more we talk about it the better for what is coming towards us.

As we talk about managing risk and innovation we can become more comfortable, yet when you often hear those leading the discussions on this innovation risk, where they keep overemphasizing “Risk-appetite, risk-attitude, risk-adversity, broader risk, even risk-contagion,” now if this does begin to get you nervous. Reality simply is, when most of the innovation is exploring the unknown to change the known for something better, then organizations seem to go into a certain “lock-down” when it manages the innovation-risk equation. Innovation remains uncomfortable for many senior executives.

Recently I re-read a recent PwC report “Managing risks and enabling growth in the age of innovation” as they continued to periodically give risk an innovation focus. We need more reports on innovation and risk. I can recall two or three reports they produced around this ‘risk and innovation’ theme over the years, happily sitting in my taxonomy of innovation, always useful to refer too. This latest one had an opening theme about innovation being described in more revolutionary terms such as part of the fourth industrial revolution, the second machine age, the cognitive age and this is adding more pressure to innovate or search for “greater innovation within companies.

Of course, the more you invest in innovation, the likely the risks will increase. So the report polled 1,500 executives, focusing on managing innovation risk and how effective they are in managing this risk-reward balance needed for innovation. As I have just finished writing about innovation and the 4^th Industrial Revolution in my last post, it was good to try to find some new ways to look at the changes going on in innovation.

I cannot agree more with PwC and the fact that the innovation and changing risk landscape is making us all think differently. I have called this the “new innovation era” where technology is underpinning so much of innovation’s activity and outcomes.

I have written about risk at different times, such as a post “Treating innovation risk differently, dealing with uncertainty” and a few times since. Enter “risk” into the search box to check these out if you are interested. A very extensive review of risk I wrote in suggesting “Developing a new framework for risk and innovation”

Yet this post is not about the risks but the emerging possibilities

As we enter this different era of innovation, as we begin to connect “everything up” through implementing the 4^th Industrial Revolution we do have so much new possibility for innovation than ever. Two of the visuals (figures) within the PwC report excite me in the optimism of taking innovation out.

If you look at the “within 3 years” add-on (see below), it does paint a really good picture of innovation opportunity, and by implication, the increased risk, in my opinion. This will simply not be the “as is” to simply extend our existing innovation activity,” it will be radical in innovative change. It simply has to be, coming from technology connecting up our networks supporting and forming new collaborative relationships providing us a growing set of new technology options, we have to integrate within our business thinking. These are all emerging frontiers for innovation to explore

Combining technology and innovation gives me real optimism for innovation, does it for you?

Yet just question if you are focusing on these types of innovation? I bet you many of you are not giving this much focus, your company is still debating and figuring out how to integrate the systems and processes required for such a magnitude of change. Well, innovators need to start pondering all the possibilities. Ask yourself what new innovation growth they could bring to your innovation activities?

There are new sources of revenue, of building out our growth options will certainly come from technology- it will enable projects, form new alliances through the greater ecosystem and network forming platforms. We have the potential for this connecting ability to achieve scale and global presence through the ability to connect across global networks and form new partnerships. New business models can emerge, enabling a moving beyond traditional borders, adding in new supply chain resources. All grow in innovative opportunities when you build out a digitally connected enterprise.

Then I wanted to put another spin on a second  PwC visual shown below.

This one outlines'” a programs ability to effectively manage AI, IoT, and robotic risks”. Confidence is growing as we learn to embrace and value new technology enablers. Now my spin is simply  around “where is the new innovation possibilities in the exploitation of these emerging new technologies?” They really excite me, a little frightening for me as well, yet this adoption of new technology innovation must have so much new innovating potential, waiting to be extracted from implementing and leveraging these new technologies.

When you consider the incredible list of technology enhancements we are thinking through and adopting across a business, as we  learn their value to our business, we can clearly see a number of real innovative growth opportunities as we embed and extract value out of these:

• We can streamline operations and maintenance
• We can optimize assets and increase their ‘connecting’ value
• We can get closer to greater workflow automation
• We will focus on data as it forms a greater part of our strategic input as well as build out the security of this
• The ability to engage with customers directly and in highly personal ways from the connected 3economy
• We can achieve a higher dynamic of scale, speed, size and customer intimacy thanks to technology.
• We can achieve rapid adaption and continuous improvements through greater data monitoring and management.
• We can own assets, share and build out our service provider activities from leveraging technology
• New Business models become increasingly possible by mixing and matching resources and opportunity spotting.
• We gain new learning and awareness, sharing and exchanges on experiences

All of these bodes well for a new innovation era they give me optimism. Just reflect on this excellent visual supplied by PwC on each of the enablers to achieve this new range of innovative options.

Yet the innovation impact is troubling me though. Can we achieve all the promise emerging from these different technologies?

The huge elephant in the room is this: do we have a new innovation system in place to adapt to all this significant change occurring in the next few years?. Our present innovation processes and structures live in a different age, the old industrial age, not in the new one, the one where we connect up everything, as the 4th Industrial Revolution indicates can be realized. I wrote about this from the innovation perspective in my last post “Innovation cannot expand without the 4th Industrial Revolution“.

Have you explored these yet? I think we are still grappling with their meaning, their new positioning inside and outside our organization on their effect. Yet if we ask “what are those new possibilities” by exploring them from the innovation perspective, it perhaps offers some really new, exciting innovation potential we can only begin to consider.

Innovation is moving from taking an idea, validating it and then run it through a pipeline to build out and commercialize. Innovation is going to get increasingly complex as it brings in all the different technology enablers into play. What they provide is data, in new insights on how to manage, respond and connect all part of the business, to extend this into customers to engage. Without a doubt we need to design a far better process to innovation, we need to rethink how we manage innovation.

I am scratching my head on this, yes I am getting splinters in doing this, but we are changing the very way we are needing to manage innovation. It involves different people, different thinking, different processes and this adds up to a very sizable new level of risk that we have to manage and orchestrate. As PwC suggests there is a new risk appetite in how we are investing in technology and yes, we are learning to share risks far more through managing innovation, this being far more through platforms and ecosystem design. We need to manage our assets differently, we need to invest and equally divest and outsource and give a real fresh emphasis to our innovation capital differently, and that also means discussing innovation risk differently.

I don’t have the answers, only some emerging thoughts on where this seems to be heading- the new innovation era –  but we do need to lift innovation out of its place today and give it a much higher sense of urgency in how we manage it. Risk’s are taking on greater risks in Security, in Transaction, in Customer dialogue that innovation needs re-setting.

It is all about building new capabilities and the capacity for innovation

As we move towards a new age where technoölogy connects us up we are forced to address the need for a radical review of our existing capabilities. Do we have the capacity and skill-sets for extracting out new innovation opportiûnities? We will need a much higher level of “rapid and effective” sense-making, portfolio management, and execution, of those new innovation opportunities.

We will certainly need a very different approach to risk management. The greater the innovation opportunity, the higher the risk management becomes. We need reset points all round We are going to be dealing in a world of “all things” being visible and a greater relationship with all potential things being invisible. We are dealing in a world of the immediate, to read and react too and the dual world of scoping and exploring, based on a greater informed gut-feel, growing in relying on data validation and a healthy theoretical belief and vision of how this all connects up all those ‘famous’ dots.

Today we are facing increased frequency to react, a greater pace and speed to move from decision to execution. We need to redefine new tolerances of performance, to firstly seize and then grow these “breaking” opportunities. These new opportunities are coming from multiple points of value, not just one product or a service perspective, they are all different and we need to bring a different thinking to innovation to manage them accordingly.

We need to accommodate data analysis through ‘richer’ visualization tools, we need better dashboards of discovery and awareness, we need a new approach to different capturing tools on the needed innovation inputs, drawing our attention of where innovation is emerging and signaling opportunity. It is the ability to utilize and extract from all this technology connecting-up, through our learning of the innovation outputs and outcomes from applying the 4^th Industrial Revolution, through working in platforms and ecosystem designs for innovation, we really need this transformation of innovation thinking

Interestingly I feel one old evaluation model of innovation risk actually seems to have a new twist or lease of life if we add one new evaluation dimension. We have mapped innovation ând its associated risk according to three dimensions in the past: the degree of uncertainty, the degree of controllability and the relative importance in benefit. Well perhaps we add another, the degree of technology connection (our network relationships) we have embedded and put to use in our innovation activity.

In Summary

We are recognizing there is a growing pressure to change, the technical advantage is offering new revenue and innovative sources of growth. We can see a dramatically changing landscape of the business boundaries becoming more permeable, and a increased pressure on resource management in a changing world. Innovation needs to shape up to deal with this.

I want to thank PwC for their continued focus on innovation and risk. This recent report gives me optimism. It raises the level of risk but it is offering different strands of thought (for me) to begin to frame my “new era of innovation” in further ways.

The post Optimism in Innovation, Thinking About Risk Differently first appeared on Building Your Innovation & Ecosystem Intelligence.

Everything we should be aiming towards boils down to the judgement of a ‘successful execution’ or not.

It is this last, hard five yards of all the work that went into something, which can make or break so much of the efforts that have gone into this emerging ‘commercial life’ of our new innovation activities.

We should regard the back-end of innovation as the rugged part

I love the association of the “fuzzy front end” with ideas, brainstorming and all those creative energies bringing ideas to life, but sadly unless that final ‘rugged terrain’ at the back-end is not travelled we never see the innovation come to life in the market place.

To travel the final ‘rugged terrain’ of innovation execution I believe requires fortitude, stamina, belief, a healthy dose of courage and as much commitment from the whole organization engaged in the innovation process as any ‘front end’ or driving it through the pipeline, yet we often fail to recognize that.

Yet resources seem to be peeled away when we get to the final Execution
Resources get pulled away, repositioned back at the front or in the middle to push others through the pipeline, leaving a dwindling, sometimes scarce resource to push that last five yards.

The R&D group feel their role is complete, the new development team finalize the official ‘hand over’ and the leadership for development and growth begins to get distracted away to push more through the pipeline, taking experienced resources with them. Suddenly it is down to a small team to tackle this execution stage and all it means.

Dealing with many conflicting internal wants and needs is complex
When you get into the final stages you really have to take into account all the individual demands such as “why my country is special”, or “we can’t agree on the final selling price due to a different market (evolution)” or “our major client cycle for approval is not for another six months” or the final design disappoints when you are well passed the discussion stage, all can drive you ‘up the wall’ but need carefully handling. Effective execution gets very complicated and the skill of the project coordinator comes really to the fore.

You can suddenly you become ‘stretched’ in catering to those often conflicting needs if you have not constantly engaged or consulted. If you leave these essential conversations late in the development process as you look around for additional help there seems a lack of clear leadership on who determines final execution, it seems to have gone missing in action.

It becomes tough and complicated to execute well, you sense a feeling of growing exposure and increasing frustrations.The great idea within the product might remain but the execution pains undermine much of the pleasure or sense of satisfaction.

Engage early but be crystal clear on what can be accommodated and what can’t. Get all stakeholders involved but seek the clarity of the ‘red lines’ from the senior person responsible and be prepared to escalate issues up the decision chain for the earliest resolution as you can

So what is needed at the execution end?
There are a number of thoughts here but three big traits stand out for me:

1). An overriding bias for action, irrespective of the challenge, problem or issue to be resolved – don’t let it fester. Take them head-on. Keep the execution pedal flat to the floor, so others understand the sense of commitment and personal passion. Let it become infectious, in a positive way.

2) Really tap into all the knowledge out there in the market place, face the client, sell the product, explain the story, hone that value proposition and keep ‘pivoting’ until you get it right. You unblock the roadblocks, you unlock the mind, and you change the dynamics.

3) No pathway of execution is smooth; it is a rough and rugged road. Recognizing and valuing any breakthrough solutions to move them forward is critical. Forward momentum in any execution plan is essential; as issues come in (and sure they will) you will meet them with a commitment and passion to get them resolved. You offer the ‘waves of support’ to others.

Standing in the deployment zone focused simply on ‘executing away’

Offer true leadership that is leading from the front. Be ready to set and live the expectations; you define the critical deliverables, establish accountability and resolve the conflicts quickly. You influence and install the metrics that are execution specific.

You actively seek commitments from the wider team of stakeholders, vested in a good result. You never forget to share all the news, the good and the bad parts of the progress back into the organization.

You set out clearly to communicate accurately and frequently, keeping on top of issues, break down problems, reaching back into the organization for help when help is needed. You offer true execution leadership, from the front.

Just remember it is only realized when this innovation becomes the buyer’s choice to invest in.

Those known to be good execution people are a valuable resource, they bring the results in and that is highly prized as so few have the resolve or ability to do this.

Organizations are constantly lamenting their lack of implementation capabilities. Go blaze the path as you are actually making and leading the changes. It is how you set about the execution of innovation that will separate you from the pack but it

Remember new innovations replace something of the existing.

Innovation does not stop when it goes out of the organizations doors, it actually only just begins, and it has to prove itself, it needs to justify all the hard work that went into it. It got to here because it was seen as worthwhile, expected to make a contribution.

To make innovation work, it is only when it is in the marketplace – judged by customers sufficiently enough to stump up their cash – that we have a successful innovation.

To get there is often travelling over some rough, tough terrain and the more you are exposed, the more you learn. When you execute you need to deploy a significant skill set and dedicated resource to bring home the results.

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Publishing note:  This blog post was originally written on behalf of Hype and with their permission I have republished it on my own site. I recommend you should visit the Hype blog site where they have a range of contributors writing about a wide-ranging mix of ideas and thoughts around innovation, its well worth the visit.

The post The last five yards – the really hard part first appeared on Building Your Innovation & Ecosystem Intelligence.

There is still a continued reluctance for exploring new radical innovation opportunities and although organizations ‘talk’ growth, they continue to struggle in achieving it through new innovation.

The incremental commitments to innovation still rule the day to move growth along. Until new sustaining confidence returns to our economies, risk mitigation dominates as markets continue to be more volatile and unreliable in predictive data and executive sentiment remains cautious.

Our organizations are looking for a higher certainty of return and seek sometimes endless validation and justification before they commit, even to small incremental changes. It is no wonder incremental innovation dominates in our innovation decisions; it is where reality sits for many. Are we heading off in a bad innovation direction?
Solidification in organizations seems to be moving towards simplification
As this incremental set of attitudes solidifies within organizations, have you noticed a growing trend of recognizing the processes and systems built up are actually more complex and creating ‘drag’ on performance demands? There is a move to greater simplification that strengthens the incremental mindset. We are perhaps ossifying innovation in our organizations if we elect to take this simplification route.

Risk readiness might be taking a bigger ‘back seat’ than we expect. This has significant implications as organizations continue to lose the ability to be ‘growth ready’ to execute on any sudden change of executive direction if market conditions suddenly change. Many are losing the ability to innovate beyond incremental approaches. It might catch them out badly if markets suddenly change and they are faced with a very different set of challenges demanding a more radical set of innovative solutions.

What signals are showing through?
Often we read of the likely demise of innovation but I think it’s ‘nature’ is changing. At the top of our organizations there continues to be this higher dissatisfaction with the value and returns within innovation and this is possibly being addressed in different ways down below in the organization, to compensate and appease.

Risky projects for the majority are not the place to blaze away in their careers; they want the known reward from keeping ‘steady’ the ship and being part of the incremental growth movement, to be seen as good operators working at constantly offsetting any risks, delivering what is wanted to be heard, not the bearer of bad news.

Do you spot this trend within your organization or industry? That growing movement where the ones intent on developing the routines that increasingly are only focused on incremental improvements are in the ascendency? Those driven by pushing hard for operation productivity to the exclusion of a number of traits associated with more radical innovation or potential breakthroughs.

Driving innovation through productivity has a real drumbeat
Are you in that place where there is this constant attention to improving practices continuously, to the exclusion of enquiry and only investing in the capacities that supports the delivery of this drive for greater productivity. A place where organizations are constantly seeking out those best practices, by wanting to eliminate variation, believing to simply copy others gives them the answer.

Do you gain that sense of impatience to evolve and develop in your own unique ways, as you attempt to short cut your own development in this blind copying? All around you feel that growing sense that the movement of six (sic) sigma is resurfacing, tapping into this quest for greater productivity and the ‘richer’ innovation potential seems to diminish?

When you have this incremental mindset then you become dedicated to standardization, you focus on real-time performance that can be measured and judged, you promote a more careful evaluation of innovation practices, striving to eliminate variances, you become relentless to reduce the unpredictable activities.

It becomes the prevailing organization mindset, the radical innovator drifts quietly away, disillusioned with where it is all going. Left to the gods of others making market change.

Organizations are more comfortable with improving productivity
There has been so many years of cost cutting, the consultant is also repacking it’s services from the present col-de-sac, largely played out, by housing organizations needs under the appeal for this quest for simplification.

Recently I was reading a report from www.sourceforconsulting.com that simplification is the next step in the evolution of productivity. The argument goes productivity is linked to growth and as our organizations are still very determined to do more with less, rather than simply less, the rise of rationalization grows and the demands to tap into this gathers pace.

Mitigating risk is the easier option
It is the attraction of combining this prevailing risk mitigation mindset with the idea of standardising and simplifying, validating through increased data verification and mining, striving for benchmarking and searching for best practices seems to go nicely with placing the innovation bets on increasing the incremental activities, all to the detriment of seeking out more radical innovation. Less risk, steady growth, fits with the short-termism of the board. Reward and remuneration become increasingly geared to this.

The vicious circle of meeting the board’s demands for immediate return simply tightens the noose and the longer-term building of capabilities for new innovation continue to slide, pushed off to yet another day, somewhere in the future. Does that really matter to the current board executive or his external board? Managing today’s volatility and uncertainties means risk mitigation is dominating. Let tomorrow be managed by someone else.

Are the majority of our organizations becoming the great sustainers?
A recent article by Gary Pisano on the HBR blogs was arguing for the defence of routine innovation. He suggests the vast majority of profit from innovation comes from the stream of routine, or sustaining, innovations that accumulate for years.

He mentions Intel as a great sustainer, with its value proposition of higher-performing, higher-margin microprocessor chips has not changed. Growth is slowing but Pisano’s argument is Intel has generated cumulative operating income before depreciation of $287.4 billion. That is a lot of cash generation to keep investing or distributing back to the shareholders.

Equally, Pisano argues Microsoft that started as a great disruptor but for much of the recent years, it has been following a sustaining path, defending its position. Of course it has perhaps missed out with this prevailing ‘mindset’ on some really key growth areas, yet it has earned $325 billion over three decades.

The article is equally suggesting Apple is a sustaining, more incremental organization today. It has generated $150 billion is cash flow since 2011. The emphasis is perhaps less on the next big disruption and more on aesthetically pleasing designs and versatility in their devices.

Are we leveraging to existing strengths and not grasping new opportunities?

Gary Pisano’s point is as an organization becomes well established, its innovation strategy needs to understand how to leverage distinctive existing strengths to generate and capture ongoing value.
It is about recognizing and organizing innovation around the repertoire of existing strengths to extend increasing the value from innovation, to play to your existing strengths. Or is it?

Are we not putting off our future by not investing in the future? How can we strike a balance on this and what should that allocation of resources be like? What needs to be brought in to add to the existing repertoire of skills?

Is the innovation message today becoming more deliberate in its design?
I wonder what is around the corner. So is the message today the one of trading off the risks of radical, disruptive innovation for the more incremental, sustaining innovation? Is this the period of evolutionary innovation, less revolutionary?

Of course, we all know that oblivion is potential ‘just around the corner’ as there are many competitive forces at work looking to disrupt.

For me, it does seem far too many of our organizations today might be far too focused on protecting and defending their existing positions, they are failing to extend beyond a core. Are our organizations working on incremental innovation to the detriment of more radical and riskier innovation? Is that unhealthy or simply prudent?

I fear the innovation balance seems not right.
Of course the strategic view of sustaining innovation while you explore and experiment the next big potential wave is the best approach but I tend to feel the dominating mindset of risk mitigation today, is driving many to simply just become incremental innovators only and that has a growing risk attached to it.

You continue to lose the skills, the understanding that more radical innovation is very different in time, in placing your resource allocation and building all the different skills and experience you need and these need to be consistently worked at. They can’t simply be turned off and on when changing market conditions are suddenly confronting you.

If incremental innovation dominates we lose the future
If one type of innovation prevails and begins to dominate, the risks of not providing for a healthy future increase, and we are ossifying our innovation.

We begin to lose our abilities to be responsive and flexible. We lose our agility to respond to changes in our markets.

What is always needed is to strike a good balance in our innovation portfolio, between the immediate and the future.

We need to not forget that we all must manage in all three innovation horizons to have a (greater) chance of achieving a really sustaining future.

The post Are our organizations ossifying their innovation or simply have no clue? first appeared on Building Your Innovation & Ecosystem Intelligence.