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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The post Is Innovation Capital important to us? first appeared on Building Your Innovation & Ecosystem Intelligence.

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.

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 yet investors are increasingly attributing more to the intangibles, based on limited knowledge.

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.

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.

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 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.”

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.

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 a vital part in structuring this process.

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 yet investors are increasingly attributing more to the intangibles, based on limited knowledge.

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.

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.

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.

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.

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.

Presently in many of our economies, particularly in the West, we are struggling to find real growth; we are limited in our wealth-creating possibilities.

Why is that? Our structures seem to be weak, not strong.

We are certainly relying far too much on ‘selected’ pockets of economic activity to keep us going. Technology is clearly one of these.

Yet our longer-term forces for sustaining growth remain ‘fragile’, our structures remain wickedly out of kilter and we need to find stronger connecting frameworks that reinforce each other, so we can build further upon these to manage our business activities in new ways.

In most of our economic activities technology is playing a significant part in altering our habits, routines and thinking but it alone is not enough.

For technology to really give benefit it needs to be driven by our ability to generate wealth-creating activity and that comes from integrating knowledge, gaining experience and being able to articulate this in better ways.

To achieve this, the business structures that we have in the past relied upon are in need of changing. They need different pillars to build upon.

Welcome to my four pillar room……..with a view

One such room I see has four pillars; firstly a value creation one, then one that prompts a change in our thinking around the value and creation of constantly evolving business models, a third one based on understanding our intellectual capital base, where our knowledge resides and can be harnessed, and then the final pillar of the innovation capital that can be generated from this to create wealth-generating opportunities.

Why are these four pillars important as our structure within our ‘wealth-creating’ room?

Pillar one – For me we lack the ability to articulate the value creation narrative.

We need always the wealth-generating perspective to get behind. We want to feel this is ‘dynamic’ and can offer all those involved that feeling of identification, so we can find individual ways to apply them, where there are the combining and transforming possibilities for us to, investigate, explore and exploit. We are searching to manifest fresh, new outcomes to create new wealth-creating potential.

To have the ability to articulate the value, what potentials can make up the possibilities to develop and deliver the future promise? Developing a good value creation narrative is essential, it requires critical components and for us all to identify through a common language.

Value creation and its potential can be created through the Business Model. It is identifying the inputs from the different capitals and the ways we can transform these through business activities and interactions. Our ability to articulate where the value creation potential lies requires our ‘narrative’ to be broken down, often called the value proposition.

Pillar two – The Business model is becoming even more critical today

The whole movement towards creating the business model through a canvas approach allows us to articulate our ‘potential’ value generating story. As we learn to work with all the components that make up a business model we are responding, capturing, creating and delivering a constant flow of new value generating opportunities.

The more we can express ourselves through narratives and the emerging business model canvas we are offering disclosures, we are setting in train discussions so others can contribute and add to these emerging business model concepts.

To sketch out our business model canvas, we do need to constantly work the BM canvas for the integrated design. What we must try to develop within our narrative and canvas is the underlying dynamics that capture the process of change and why this combination provides the value creation.

Underlying any Business Model is knowledge, experiences and insight. These come from combing all our capitals and the ones often described under our ‘intellectual capital assets’ become essential.

Pillar three – Re-framing the debate around our intellectual capital assets
It seems today our business environment is highly diverse, far more dynamic and subject to rapid change. We need to constantly survey the landscape to adapt and adjust, acquiring what is needed. The increasing value is to know all the potentials within the ‘interactions’ of the parts and how to renew and recombine them on a constant basis.

Often intellectual capital is grouped into three or sometimes more categories. The capitals commonly used to describe ICA are human, structural and relationship capitals. In summary:

a) human capital have at its core the competences we build, our intellectual agility and attitudes to form potential synergies for new value creation. Our outcomes are governed by our motivations to want to produce fresh knowledge creation or simply absorb what is ‘out’ there.

b) The structural capital provides ‘the skeleton and glue’ of the organization in its philosophies, processes, routines, infrastructures, culture etc., for permitting and building knowledge. It builds the mechanisms and architecture.

c) Our relationship capital, is our third ICA, which represents our abilities to make connections, to network so as to absorb, exploit and explore new knowledge, it is this new understanding that feeds and influences organizations life, to renew, to rejuvenate, and to offer longevity.

We need to move beyond often just that academic debate around intellectual capital and their asset value, moving well beyond simply infer the value of our intellectual capital, we need to really understand its make-up.

It is the interactions of these intellectual capitals that is becoming essential to understand, they make up our innovation capital. Knowledge alone has limited value, it is the knowing how to apply it through innovation that will offer us the potential for wealth generation.

Pillar four – Innovation capital is the essential strategic asset to strive for.

Innovation is made up of a collection of ‘stock’ and our abilities to allow this stock to ‘flow’. We mostly acknowledge and recognize innovation is essential for business growth and our future wealth generation potential.

Innovation is for me a real wealth generating capital, it is future orientated; it needs consistent learning, experimentation, exploration and reconfiguring. The innovation capital is the ‘core sum’ of the abilities we can combine from our intellectual capitals.

I believe we need a new innovation capital valuation model. It needs to capture the dynamic interactions of our capitals contributing and ‘render’ these into different productive outcomes. This model needs to find and then separate the ‘dynamic’ from the ‘static’ innovation capabilities, the ones that offer new potential not ones simply repeating the process.

To achieve this we need to unbundle resources, assets, renewables, competencies and capabilities and describe these outcomes in , in my view, a fitness landscape that provides a visual of what you have, what you might need and highlight where the critical gaps lie.

We are needing to understand how our organizations can integrate, reconfigure, renew and recreate its resources and capabilities to build different value creation propositions and business models.

Recognizing the combining effect of the four pillars

For me, it is recognizing the ‘combining effects’ of these four pillars; of value creation (vc), business models (bm), intellectual capital assets (ica) and innovation capital (ic). It is the dynamics within the multiple combinations that will generate the future wealth creation we need.

We are in need of having a better understanding of the integrated value focal points of these four pillars combining, they need connecting so we can build the supporting structures and place the roof of need, our wealth creating one, to give us a new potential of harnessing our innate abilities to be creative.

These four pillars offer perhaps a new core, a new transforming power, they make our activities connected and dynamic.

Unlocking all our potential is the job needing to be delivered upon

Our job today is to unlock the potentials from knowledge, harnessing our capitals to focus more on releasing our resources to work on their dynamic capabilities that combine vc + bm + ica + ic to make this a ‘room’ that gives us the potential to reside and generate new wealth potential.

A transforming one, where the make-up of value creation, articulated through business model designs by knowing the capitals that ‘feed into’ and build our stocks and flows for new innovation that does have the greater potential for wealth creation to occur.

The post Building upon four key wealth creating pillars first appeared on Building Your Innovation & Ecosystem Intelligence.

The work of David Teece is hugely influential on exploring dynamic capabilities.  It was my reading of one of his early papers, published in 1997 (with Gary Pisano and Amy Shuen) that got me started down the dynamics path and my quest to identify the innovation landscape required by each organization to become innovation fit.

Teece’s concept of dynamic capabilities is a theory about the source of corporate agility: the capacity (1) to sense and shape opportunities and threats, (2) to seize opportunities by mobilizing your resources to capture new value from those opportunities, and (3) to maintain competitiveness through enhancing, combining, protecting, and, when necessary, reconfiguring the business enterprise’s intangible and tangible assets by transforming them for continuous renewal. This makes organizations potentially dynamic.

Recognizing and adapting to today’s and tomorrows challenges.

The challenge is how to position or reposition today’s resources for tomorrow.

I focus on the three horizon framework as this points an organization towards a ‘possible’ tomorrow and then they have to position their resources to ‘ready’ themselves.

Today organizations need to (radically) break free from copying and evaluating to markets in similar ways to their competitors. The difficulties to make this change in thinking is caught up in existing practice, organizations are often ‘wedded’ to best practice, want to stick with the learnt practices that have served them well in delivering particular outcomes in the past.

Best practices are ordinary practices, they dampen down the uniqueness and difficult to imitate ones that have the real dynamic potential to set the organization apart, give them a possible distinct advantage.

Shifting the “way we do things around here” is really hard

We need to think differently, we need to build into the culture of our organizations a more “evolutionary fitness,” so as market conditions change, the capabilities adjust and adapt accordingly. This comes back to David Teece’s “sensing, seizing and transforming” of the managerial activities to accomplish this.

Analysing changes taking place and linking these to then adapting the resources has not been as well ‘connected’ in organizations as they should. I have argued often if we don’t align innovation and strategy, how can we build our capabilities? We fail to make many internal connections and this is where knowing the dynamics within the system will significantly help.

Are we protecting our critical resources of building ongoing capabilities?

It often surprises me about the sheer amount of effort put into capturing and protecting intellectual property. Of course any IP needs protecting but it allows you a limited position, in time, in market opportunity yet often it sparks off a second round of innovation to circumnavigate this by your competitors.

Much of your success to hold your position or to take your IP further is totally dependent on building your capabilities (to innovate). You need to actively work at building your internal propriety aspect, your internal or ecosystem capabilities. To do this they must become dynamic, ever evolving and adapting to changing conditions.

You have to invest to understand how the underlying system works

Innovation is different, it challenges much of the existing routines and systems. To integrate innovation into your systems and structures you should firstly map what you have, recognize what you don’t and seek ways to bridge any gaps. But you have to know what you are trying to achieve strategically through innovation and most do not.

This requires a fair amount of work. To do this you need to map your existing capabilities for innovation, and then explore the evolving landscape you think ‘makes up your future landscape of opportunities and then integrate the understanding of the changes taking place with the capabilities you require. You need to bridge those gaps.

To do this you need to have a sound intellectual structure of your innovation system and this needs to be dynamic not locked up in outdated best practices, mimicking your competitors, these need to be unique and difficult to imitate, forward-looking and highly adaptive to the change going on all around you constantly.

Redesigning your routines for innovation is essential

Are yours locked in routines that focus exclusively on efficiency and being effective? If so, you will continue to struggle with finding innovation that sets you apart as the dynamics and their routines that are needed for innovation to succeed and be embedded are different and not built on ordinary capabilities or existing practices.

Your search is for emerging practices and capabilities that you require to add to achieve more radical innovation outcomes that go beyond the incremental achievements that can be copied very fast by others.

You need to build your reflexes and innovation muscle differently and that requires exploring an innovation fitness regime to map these out and bring innovation closer in its alignment to the strategic needs facing our organizations today.

Setting yourselves truly apart

To set your organization apart, to make it unique and ready to apply innovation in evolutionary ways, it needs to be more responsive to this constant change going on in markets and adapting to new customer needs.

An organization has to be constantly sensing and searching, and then ready to seize and transform and this requires a highly adaptive and dynamic responsive to constant change, though managing the capabilities to deliver on this the innovation required.

Knowing your innovation fitness dynamics is critical within this.

The post Understanding the dynamics within your innovation system first appeared on Building Your Innovation & Ecosystem Intelligence.

The greater fitness you achieve equates to more value creation potential.

The ability to inter‐couple landscape entities, to constantly combine the different capabilities in different often unique ways and exploit individual interactions alters your dynamics to innovate and does improve repeatable cycle times from this constant recreation potential.

The key is to know what these capability points are – by dynamic linking those that are important and ignoring those that are not.

By learning from these experiments or adaptive walks you can quickly operationalize routines that can be quickly absorbed across the organization and so reduce uncertainties and strengthen the capabilities.

The ability to create ‘natural tensions’ from this fitness learning triggers the need to further explore and search out different combinations, this adds even further to your dynamics of innovation understanding.

Tensions can be healthy if channeled correctly, these are the ‘value insight’ moments where diverse knowledge suddenly combines into new potential innovation activity.

We need to search for clear distinctive capabilities so they can emerge and combine in new ways; these are your dynamic points for innovation.

* These are unique to you, they make you distinctive.

* They lead you to new growth, new creations, and new opportunities to innovate.

* You evolve. You constantly look to combine in different ways to stay ‘dynamic’ and sustaining.

If you would like to learn more then please contact me and we can set up a ‘decent’ conversation or meeting to talk through this specifically. Contact paul*AT*agilityinnovation.com

Of course there is a terrific amount of good material on this website to explore and to help you. I encourage you to do just that, to go on your own ‘walkabout’ of this site, take the appropriate time and then we can begin the expedition this is more ‘fit for purpose’ for you and your organization’s specific needs.

The post Greater fitness in innovation offers more value creation potential first appeared on Building Your Innovation & Ecosystem Intelligence.

I had previously provided a review more on the Strategic and readiness part of the Imaginatik report, in my post “The coming age of innovation in 2014 and beyond” and less so on the other part discussed, the Process and Execution part.

It is the process and execution side that have more of the deeper issues to tackle and more importantly, the one’s that take considerable time if you are tacking culture and the environment to allow for innovation. They are far more complicated to provide answers too. I feel like pushing this along, here goes:

The process and execution of innovation is actually more challenging, it is where value creation lies or not.

As Imaginatik comment in their report: “developing an organization’s operational capacity for innovation is challenging” as it is the translation and organizational understanding that makes it work or not. You achieve or fail in the values creating process and that influences the commitment to innovation.

Although I’d firstly argue we need to fix the top of organizations far more initially, simply as if we can’t get the essentials right from this top viewing perspective, you simply can’t get the organization to respond.

If you lack good engaged leadership committed to innovation and a well thought through alignment of strategic and innovation objectives you will end up with often mediocre and disappointing results and an organizations puzzled and left in ‘fuzzy innovation land’.

Organizations will also never get into any  consistent “innovation rhythm” unless you really get down and get your hands thoroughly dirty in fixing the organization’s capacity for innovation and that takes a long time of dedicated effort and deep understanding.

Fixing it means it has to become aligned, to run at least in parallel with other systems, it has to show its worth and to do this, you must know innovations real value and contribution. You simply can’t be ‘airy fairy’ about this.

Until we recognize fixing organizations capacity to generate that good, highly prized consistent performance and expected value required, it will remain tenuous in the judgement of innovation’s value contribution at C-level and those competing for scarce resource.

If we can’t describe the benefits and its value contribution constantly, innovation remains as being constantly questioned and certainly resource-stressed, often out of ‘whack’ with the rest of the organizations structures and systems. Innovation needs to constantly demonstrate ‘return’

Innovation will continue to struggle unless we really understand its capital.

If we don’t understand where the innovation value resides we will certainly struggle to continue to build innovation’s position in the organization.

Today innovation is still regarded as ‘expendable’, sacrificed on the altar of short-termism.  This creates a growing uncertainty, often reducing innovation down as that no real ‘sense of urgency’ and becomes ‘contained’ in discrete projects, failing to offer that real, substantial, ongoing value for the enterprise.

We simply don’t ‘unlock’ the real value of innovation. If we lack the understanding and abilities to build this sustaining operational capacity for innovation we have ongoing problems.

There is the need as its longer term goal, to be simply fully embedded inside the organization that it ‘resides’ and simply becomes indistinguishable, it becomes the operating core, constantly aligned to the strategic needs and goals. Innovation’s benefits must be outstanding.

The Imaginatik report commented “When asked what benefits their respective organizations have received from innovation, nearly one-third of respondents said benefits were either non-descript and intangible, or were self-referential nods to improvements in the innovation process itself. Thus, the single most common answer avoided mention of any tangible, proof-positive business results from innovation efforts whatsoever.”  Surely this does not help the longer term health of innovation?

The report suggests three main conclusions that can be drawn from these findings.

“First, innovation can generate real, and sometimes very substantial, value for the enterprise – capable of adding hundreds of millions, sometimes billions, to the bottom line. However, many organizations have failed to unlock any tangible value from innovation – and therefore instead cite advancements in innovation’s cultural relevance, or process sophistication, as “benefits” in lieu of anything more substantive”

So why was it in this report that the most commonly mentioned innovation benefits were made around cost savings and efficiency gains? There are some real dangers in this in my opinion.

Innovation needs to substantiate itself, in its importance, its role and its enabler to create growth, wealth or shareholder returns and underlying value creation.

If it cannot or we fail to articulate it, innovation will remain “expendable,” it will remain vulnerable to the whims of the short-term as it is not ‘validating’ itself enough. The value from innovation needs better articulation.

Let me offer a place to begin on value creation.

Value creation should be a core business strategy.

Why do we have such difficulties explaining the value and benefits from innovation? We need to tackle this, the earlier the better. Innovation is made up of both tangible and intangible value. It is until we recognize the underlying capitals that make innovation capital; we will always fall short on providing its real worth.

Innovation outcomes are far more explicit if you understand these capitals that make up innovation. These are often called the intellectual capitals or stocks of (potential) value. These can be financial, manufacturing but more the human, social and relationship capitals.

These capitals transform raw ideas into the commercial outcomes. Working these capitals the value of an organizations stock can be enhanced or simply preserved and can equally diminish if not managed well and thoughtfully.

How best can we explain value / value creation?

Firstly value is the total of all the capitals I mentioned above; we need to understand what ‘makes these up’ in our organization. These are unique and when applied generate new innovation capital

Also value is the benefit captured by the organization, it is outcomes (of innovation and other things) to generate the market value and present and future cash flows within organizations.

Value can also be the essential achievements of the organizations objectives, it can be value created by the organization itself or by combining with others.

Failing to articulate the value creation of innovation

So if we can’t explain the make-up of the intangibles within innovation we often simply fall back on generalizations, non-descriptive and self-referral nods to ‘improvements’ and ‘cost savings’ and that tends to group ‘benefits and value creation’ into incremental gains. Surely we can do better than this?

We must start looking for more strategically important outcomes; we must unlock the knowledge and raw data and translate this into tangible results that can be clearly seen. To achieve this innovation needs to align itself to strategy and the organizations objectives.

Innovation needs to be a mix that has growing substantive benefits; otherwise it will remain on the periphery of the organizations activity. To become central, to drive growth, to create wealth innovation needs to be seen and clearly demonstrates its value.

Leaders, shareholders, stakeholders, employees all need tangible proof-positive benefits from the business results that can be directly attributed back to the innovation efforts. Innovation efforts need to be better understood and we gain a clearer understanding of where the value resides.

Innovation will remain tentative, always stuttering along, lacking this absolutely organization innovation rhythm if it is not fully understood in where it generates it capital from and what new capital and stock it provides.

Where should we start in putting the value into our innovation efforts?

Our innovation value needs to come from our abilities to articulate the business case, an area of notorious weakness for most organizations and its alignment into the strategic direction and goals the organization needs to pursue.

Not a bad place to start is constructing the business case on four value creation pillars, shown here:

Need– We need to always understand the place and value of innovation from the customers perspective. They ‘attribute’ value, we in organizations then set about convincing them it meets their needs.

We always need to search for the customer jobs they are looking to be done. This is where the real innovation value resides. Articulating these needs within the organization and delivering innovation to these needs makes for a more sustaining innovation appreciation.

Uniqueness– innovation to be valuable has to be new; it has to improve on the existing. To achieve this we need to value our other ‘uniqueness’ – the internal innovation capital and how knowledge is translated from the initial idea into a commercial offering. We need to build around uniqueness found in our organizations, but you firstly have to know where it is located!

Strategic direction– the imperative for innovation to be ‘seen’ as successful is to align itself to the strategic direction. We need to know this direction, otherwise innovation remains uncertain, often ad hoc and misaligned. It is incumbent on our leaders to align innovation and strategy.

There is no better place to begin than using the Executive Innovation Work Mat to make this a comprehensive document to give this strategic guidance and create the conditions for innovation to thrive and get into a sustaining rhythm

Core competencies– we need to know what is needed. Firstly to understand the type of innovation we want to achieve to align to the strategic direction and goals.

Again there is no better place to start than work through the “collaborative innovation framework” provided in a open commons platform. Building the core innovation competencies requires building the capacity to innovation, the capabilities and competencies to make successful, sustaining innovation to happen.

Value creation comes from understanding where it resides.

So to understand value you need to have a well thought through strategy. Briefly it consists of

1.  Recognizing opportunities that are going to create new value
2. You need to recalibrate your innovation radar and be selective on what offers new value, not just sustaining existing value,prune your pipeline to give additional ‘weight’ to what gives new value,
   
3. Organize the organization into having a distinct, unique and consistent innovation rhythm of research, develop and then repeating this, time-in and time-out. 
4. Lay in the essential rewiring the organization always needs for aligning innovation to strategic goals, by making important organization changes and rock- solid comprehensive governance structures and metrics that seek to measure ongoing value from cradle to grave and finally,
5. Reinforce the value by knowing the success factors within the make-up of value- exploring all the capitals and stocks.

Ultimately value creation has transformation power.

Value creation is a core need both in innovation and strategy. We do need to align our value creation story far better from our innovation activities. This is one of the critical sources of misalignment innovation leadership needs to address.

Understand the make-up of value creation, in the capital, stocks and flows and capture both the intangibles and tangibles better for the value creation story. If this is well seen, understood and determined, it will deliver more on that promise that innovation does provide.

We do need to work on the benefits and value story so much more, otherwise, innovation remains outside the core of organizations, always lagging behind the huge effort to support the business as usual

*What was useful was a framing article by Accenture: “*Business at its Best” Published in 2011

The post Where innovation value resides first appeared on Building Your Innovation & Ecosystem Intelligence.

The critical design is of three mutually supporting capability building platforms do need to be put into place.

Within an organizational setting, you need to have in place three supporting capability building platforms; organizational supporting, knowledge and competency gathering, and a clear innovation process to channel new capacity through as final products or new services. All three need to be in place and integrated.

If you have these three platforms in place you can begin to move from more of an ad hoc set of capabilities through to a more integrated, synergistic and unique innovation capability framework to grow from.

Organizational support platform is made of proving clear leadership and commitment to building capabilities by setting in place an infrastructure that accesses, anchors and diffuses capacity, so it not just flows but is constantly creating and exploiting for new economic and social value.

You need to ensure the conditions for a trusting environment and climate are actively worked on and supported and finally provide the resources and ways to measure this to support and re-enforce the value of this corporate initiative. You should take a look at a previous blog here:  http://bit.ly/mV7zjP.

Knowledge & competency platform is where you permit time to discover and absorb what is being made available. The key absorptive capacities mentioned above. Deliberately allowing the time to explore both the external world and the internal world, and then setting about to capturing this ‘new’ knowledge through clear consolidation techniques and technology is vital.

Knowledge should focus on a given core and context of what the organization is looking to achieve and want to learn from/about. You need to explore explicit and tacit knowledge. See my recent blog on tacit knowledge:  http://bit.ly/sthlG1)

Innovation Process platform lies at the heart of your innovation capability needs. This I have called the Innovation Business Architecture within work I completed with Jeffrey Phillips of OVO, and can be viewed here http://bit.ly/ggKQCs .

The process needs to have in place the capability to explore, to converge, to keep moving through the innovation pipeline, a portfolio of concepts and be able to consistently consolidate and further exploit the ‘raw’ material of these ideas and concepts, by designing in some controls and risk management.

Other thoughts for thinking through the innovation process are discussed here  http://bit.ly/tUQBml and here  http://bit.ly/ikgR4f as well.

Moving from ad hoc to an integrated, synergistic and unique state

It is not just simply having in place the three platforms outlined above; each is a building block on top of one another, dependent for the ‘strength’ of the structure and to achieve a momentum from have ad hoc capabilities to call upon, usually scarce and over stretched, to this integrated state.

The need is to recognize that you do move, over time and dedicated effort, from ad hoc availability through a more formalised and recognized capability building process into a more broad based structure with deepening capacity to innovate.

This is where the three building platforms become tightly integrated to gain a more synergistic effect for all that that participate to learn from and this growing innovation capacity provide increasing self-governance.

The need for external inputs is essential

Building the internal capabilities happens largely by the way it ‘embraces’ the world. The more you seek, the more you gain, and the more you are able to see new possibilities. Seeking knowledge externally clearly comes from the encouragement of exploring networks, and building relationships- accessing the external capacities through scanning, scouting and collaborating openly.

Finally, market-learning capabilities feed into this cascading platform
The real strength of appropriate innovation is designing in the right tension points- see my blog http://bit.ly/tUQBml  on this. “Appropriateness has to be designed in“. Set within these platforms you need to build in new (ongoing) capabilities for Co-creation orientation, Customer Knowledge Acquisition, Customer Sharing Dialogues and Information Interpretation.

This knowledge becomes your collective memory where capabilities learn and grow from these customer conversations, actively sought out and nurtured. Not only will you learn, but you have to unlearn here as well.

Having a reflective market-learning outcome part built in enables new learning opportunities to be embedded and often triggering those critival behavioural changes often needed to align to market opinion and sentiment.

A short ‘call to action’ summary

I would argue strongly for this need to focus on the value of having a clear innovation capability platform structure as it has the real potential to transform the organization into a perpetual learning one, unique to your environment, and capable of lifting innovation delivery significantly.

This dedication grows your capability maturity and can offer much.

If you want to find out more, keep tuned in or simply track me down. This is my passion and focus within what I like and want to do- advancing innovation capabilities and capacities for those that want to see their innovation efforts thrive.

Based from an academic paper from H E Essmann & N D du Preez advancing the view of maturity application and innovation models.

The post Building an Integrated Innovation Capability Framework first appeared on Building Your Innovation & Ecosystem Intelligence.