Innovation remains separate for the clear majority of our companies even today as it is full of unknowns and question marks. Top executives just do not like the sound of this, so they seek to ring-fence innovation. One where they want to contain it, to try to tame it, so it can mirror their (mistaken) believe that our world is one of order, control, and stability.

Instead of embracing that the real world is actually an innovating world, full of opportunity, for those prepared to take a greater risk, will have much to gain. Regretfully we still see many companies operating with a 20th-century mindset. Thankfully the pressure upon companies to innovate, to get their growth back, is getting a very tough place to operate in today without tangible demonstration of innovation being realized. There is this need to “embrace” innovation. If not, rapid extinction is occurring for many that choose to ignore the sweeping changes we are witnessing in the business world, where more open and technology-driven innovators are connecting and collaborating. Those companies that only halve-heartedly attempting change are fearful and still want to “box” innovation in. A transformation where innovation and technology go hand-in-hand does have to be utterly full on to succeed!

Talk to any executive and out they will trot that comfortable sound bite of: “well we need to strike the right risk-reward as the balance to achieve”. Probe that a little further and they start shifting uncomfortably when you focus in on innovation and their support to its activity. Just ask yourself how many people are totally dedicated to innovation compared to managing the financial risks? Innovation provides growth and future value, financial management mostly focuses on cost containment and utilization of existing assets to manage near-term value. We seem to get this risk-reward totally out of whack!

The creeping effect of Ring Fencing Innovation

I call much of what is currently going on around innovation as simply “ring fencing” so as to limit the risk that undertaking innovation can expose you too. “Ring-fencing” limits innovation impact as you continually push it back into a prescribed approach on how you view the world, one that is stable, safe and having prescribed borders and markets. Every innovation initiative is surrounded by metrics of success that are for “known” business outcomes, programs are “contained” to selected teams, labs are separated from the mainstream to ideate but fail to integrate back, business units are denied “decent” resources to pursue truly game-changing innovation. The constraining of innovation is at work, we are ring-fencing not breaking down borders.

Well, one big surprise, all of that intent on holding innovation change back are the ones drowning, or eventually being thrown out of the window on retirement packages or being sacked. If you don’t fully embrace innovation in today’s world you are the ones heading for extinction but at what price for the countless thousands being caught up in salvage attempts, arriving too little, too late.

Think about this for a moment, we are actually wanting to limit our exposure to innovation in many companies. Well if this view of mine is correct then it is no wonder it becomes hard to ‘allow’ innovation to take hold and drive a business. It is consciously being held in check as it conflicts with the present design of an entity built and designed in the 20th century. It is like the sailboats giving way to steam-driven ones or horse-drawn carriages to make way for the car. It is the (inevitable) march of progress, good or bad it happens, at speed, in disruptive force, and in gut-wrenching ways.

To break innovation into parcels of expertise, limit its resources, constrain its funding we are simply ring fencing innovation to protect the existing, to preserve the “old” order because many know of any different way of working.

Remove the Ring Fences and see what can happen – some examples of innovation being at the core

We are seeing many examples of where innovation has been totally embraced, as the core of what the company is undertaking. One good example that has ignored this 20th-century approach of managing a business is Amazon. It has been a runaway success, in taking technology innovation and exploring all the possible weaknesses in the current systems of business design. Amazon has disrupted books, supply chains,………..and so many other established industries or services that it continues to set about disrupting, and all others feel the impact. Let’s look at five:

CBInsights nicely puts it in its Amazon teardown document as “Amazon barreling into physical retail, financial services, healthcare and AI-led computing” All of these on the back of a massive e-commerce presence, transport, logistics, developing hardware devices, food delivery, open-source educational resources and advertising. It is a “colossal”  in that it prowls everywhere where it see’s inefficiency and complacency and sets about learning about the sector, disrupting it and offering the final buyer, the consumer, increased value or alternative options. Just imagine the position of AWS, the positioning of its AI assistant of Alexa, both cutting edge and learning platforms. These are real, ground-breaking innovation moves in services and imagination.

Then you have Alibaba, equally a technology-centric business built on connecting up providers of services and customers in a very technology-based approach to platform services. Alibaba is extracting out the inefficiencies of the old system by designing a new set of innovative ones built on platforms to conduct business, squeezing out margins, building scale and appeal for its customers. Alibaba is one of the most pioneering firms around, built from its firm grip on China as its core market for harvesting and experimenting. It has become known for the connecting up of the whole supply change and fulfillment consumption chain as a real leader.

Then you have the best case of taking innovation into the core and designing solutions that solve many of our previously unrecognized needs. Here I am talking about Apple, they gave us the ultimate example of good innovation, tangible products, well designed, in ways unimaginable until they are in front of us, ones that change our lives. Most of us can’t imagine being parted from our smartphone, tablet or computer today and Apple still seems laser-focused on products or usability. In CBInsights Apple teardown ” They see Apple further delve into “focusing upon Augmented Reality, Wearables, AI, Cars, And More”

Just look at Tesla and Elon Musk. What he is attempting in scope and breadth is staggering (Useful reference link). Covering off alternatives in Aerospace, AI, Automotives, Telecommunications, Transportation (space travel), Energy and Radical Manufacturing and Material Supply Chains are all so pioneering it is leaving everyone else racing to catch up. Clearly, they are at the edge of radical innovation in much of what they are pursuing.

Then we have Alphabet or Google. We all experience that omnipresence of Google in all its services under this brand. With Android Operating System, You-Tube and countless acquisitions it has spawned a business that is touching all our lives. Their approach to investing early and then exiting if it does not look to be making the “jump” into major revenue contributions is again, highly innovative, demanding on those involved and constantly experimenting to find the winning formula’s to achieve this growth acceleration.

Each of these five powerhouses of innovation has defied the traditional logic of how a business should be managed. They made innovation the core, through the use of technology, imagination, and sheer, determined visions of recognizing complacency by many of the existing incumbents. You will also recognize each of these five companies have very strong visionaries, they drive innovation from the very top.

Those left in the destructive path of companies like these visionaries and innovators

The numerous companies left in this destructive path have been struggling to survive or simply attempt to try and catch up. For so many companies they are not even embracing technology in the ways they should. They stay mired in legacy, viewing “their” established markets through very narrow prisms, distorted from today’s realities, of change transforming swaths of industries not seeing all of this coming. They refuse to see the value of connecting everything up or bulk at the cost of this. Their growth has dried up, hence why innovation is the most overused (under-worked) word that company leaders wish for but can’t come to terms fully with, it is out of their experience zone. Many simply can’t let go of their past experience, to step out of their existing models to embrace the changes underway.

They are so many laggards in the truest sense, having a self-belief of maintaining dividends, giving back to their investor’s constant returns but continuing to strip the company of its richest resources and assets; those of ingenuity and creativity, in this dominance of squeezing out all efficiency. People are creative but only when they are allowed to be  So these laggards make continuous attempts to phase innovation in, piecemeal. They shift the ‘ring-fencing’ in incremental steps. They have not realized they must “pull down the fences” they have built around innovation and unleash it, it totally different and radical ways. They are strangling the very life-blood of their future by not embracing innovation full-on.

Innovation is entering the boardroom but it still is not central to many decisions still being made- why?

We do see innovation creep increasingly enter into the boardroom but it clashes constantly with all those negative feedback loops that clash. It is a constant fight between the many forces at work. Working in innovation spaces are messy and unpredictable, companies look for predictable outcomes and drive efficiency. So much innovation progress is negated even with the positive feedback by the ‘forces’ of status quo. We keep having these countervailing forces in play. The need for maximizing efficiency, extracting constant additional value from core offerings comes up alongside venturing out of those zones of certainty into the zone of uncertainty that innovation gives.

It is a different world and ring-fencing innovation, to corral its impact is a self-defeating tragic mistake that must change.

Innovation should be the core, we have so many examples of the greater value and worth of the companies that did embrace it.

The post Ring Fencing Constrains Innovation first appeared on Building Your Innovation & Ecosystem Intelligence.

A good framework seems to grow, it becomes integrated into your thinking and application. You see increasing possibilities to apply it. One of these for me has been Dave Snowden’s Cynefin.

I also increasing apply the Three Horizons framework as well.

Both allow me to organize my thinking and provide options within any multiple evaluations to begin or shape thinking going forward. Both attempt to break down a growing complexity we all find in our word today.

One, the three horizons, attempts to sketch out our thinking about today’s world, of where we are and what we need to do to keep it going in a hopefully orderly state, and then looks to forecast out the changes we need to move towards, in a projected future and then identify the needs to get there. It passes through three horizons of today (H1), the near term (H2) and the longer term (H3).

You will find much of what I have written about on the three horizons story, within my “insights and thinking“ tab (shown above) and look for the applicable section. Equally, you can put into the search box “three horizons” and many posts will come up to explore this, if you are curious on its value, position and our need, to use this on a more consistent basis.

The Cynefin framework provides a wonderful way to sort the range of issues faced by leaders and us all, into five contexts, defined by the nature of the relationships between cause and effect. Dave Snowden has been explaining these consistently for years. Four of these five are; obvious (formerly simple), complicated, complex and chaotic states and requires us to diagnose situations and then to act in contextually appropriate ways. The fifth one is disorder, often overlooked or not fully appreciated. It is when something is unclear, it is in a disorderly, highly transitory state and needs to be rapidly stabilized into one of the other four to give it a more orderly state going forward.

So why do I see this Cynefin framework as growing in importance?

We are constantly moving from an orderly world into a more complex or chaotic one. We need to be able to recognize what we are facing when we are evaluating something, be that a problem, issue or possible solution. We need an organizing framework where we explore and then exploit, it is knowing when to do either of these becomes important.

Let’s look at different competitive environments we can face and place these into the Cynefin model.

The Obvious Environment

A relatively clear future is seen. Here the future, or the evaluation, is relatively easy to predict. Incremental innovation tends to go into this space. Adding additional features to software, in any strategic design are more predictable. We operate in this ‘state’ in repeatable and predictable ways. The relationship between cause and effect is fairly obvious to all involved so we set this up in those ‘classic’ structure and processes, having the application of regular reviews and place a clear set of measurements on them, to enable them to progress.

I often react over the use of ‘best practice’ but it is the practice we do apply to this ‘obvious’ environment if most ‘things’ are equal. Often we tag much as ‘best practice’ because we are not as thoughtful in our analysis as we should be. Much ‘best practice’ is for me, so often based on past practice, this is someone’s else’s practice, it becomes far too often just “lazy practice”. We often become “chained” to this application of best practice and totally forget to put this “practice” into its appropriate contextual setting. We get used to copying others and lose our own creativity or evaluation. The value of the Cynefin Framework is to challenge this “obvious” state and see if it is actually emerging, or moving towards a different state.

The application goes into a sequence of Sense- Categorize and Respond. That is you assess the facts of a situation or idea or concept, you categorize them and then respond, mostly on established practices or past procedures, systems or practices.

We have to watch out for a number of dangers here. Often we impose far too much micro-managing, we actually miss vital points and far too easily classify issues, as they are often presented as overly simplified. Equally the information has become condensed for higher management consumption, who do not pick up on possible growing problems or warning signals, often until it is too late. Also, we become complacent, our thinking becomes ingrained. If we miss a range of important points the obvious suddenly becomes chaotic, a crisis often born out of this poor evaluation or simplification.

The Complicated Environment

You can see distinct possible futures or projected outcomes. You have options, perhaps limited but clear and mutually exclusive to apply. You can form the future scenario’s. You can break down a construct, a proposal into short-term, frequent reviewed project landmarks. You do have options but the key is to bring everyone on to the same page. You are searching for good practice. Those ‘knowns’ need to be clarified and those felt as ‘unknowns’ need to be investigated and turned into ‘knowns’ Working in this space of complicated we need these reviews to recognize any necessary adjustments. So we need to establish some form of good investigative and application of some knowledge, usually drawn from experts or specialists.

Here we go into a sequence of Sense- Analyze and Respond. The emphasis here is Analyze and does look for this expertise to “inform” decisions to be made. We might sense what is wrong but getting to a real cause or effect needs this analysis.

Again there are numerous dangers in this complicated evaluation to look for and avoid. Engrained thinking is one, here it might be the experts more than the ones listening. Experts can dominate and highly influence conversations and one has to guard against this. Listen to alternative voices. Often expertise does come with clear opinions and those need to be questioned, to see if this opinion is missing the further opportunity, different options or can be explored in more controversial, imaginative ways. The ability is to listen out to novel thoughts and give them time to be explored. We can over-analysis, that ‘paralysis’ that needs watching out for. Here it is the chance to be more creative, to brainstorm, to allow exchanges and challenge to the surface. You often need trade-offs to arrive at a consensus or decision-making. If after a reasonable time you still have not found a solution, it might be because it is actually more in the complex rather than just this complicated environment.

The Complex Environment

Here we are getting into the area that a right answer does not exist. So many of the parts are dynamic and we are spending increasing time on breaking down ‘unknown unknowns’. We do not have the insight of retrospect but we are in a search for patterns, understanding change as best we can. Here it is constructing a solution for emergent practice. It is not possible to define distinct and/ or mutually exclusive scenarios. Cause and effect are in retrospect. You look here to focus increasingly on building guidelines, establishing rules or standards and less on applying fixed processes that do not meet this environment. Actually, there are an awful lot of decisions within organizations that are complex. If leadership imposes to early, or without the necessary thinking through is a serious error. Leaderships job here is to explore the path forward, so as to gradually reveal itself. This is the place where new business models, innovation, and creativity can emerge.

So to allow future ranges of possibilities to emerge we Probe- Sense and Respond. Sensing is where the path begins to emerge. We need to build the competencies to experiment, prototype and test increasingly in this space to allow that emerging solution to come out.

What we always need to guard against here is this falling back into past experiences, applying past practice to this situation, or ignoring major differences because it is not within our existing experiences. Often the instinct of taking control, applying command and decision-making to fit a self-imposed timeline or determined need for clear outcomes can dominate. When you are in the ‘unknown’ environment outcomes become increasingly hard to determine. The call is for more experimentation and inquiry so the probing becomes very important to make the sense. The other aspect that needs flagging here is the clarification of risk and failure tolerance. If you impose a sense of order, a call for clear outcomes, criticise failure and regard risk as unacceptable you undermind the evolutionary process. From this set of actions, you can easily fall into a chaotic state as poor decisions are based on a lack of real discovery. In the complex environment a stepping back, allow those patterns and validations to emerge and then respond to them on which, in your opinion and best judgment can succeed, is critical

The Chaotic Environment

Nothing is right in any chaotic environment. The relationship between cause and effect are impossible to clarify. The shifting is constant. It is a turbulent place to be. The most important starting point is to stabilize this “sense of chaos” as quickly as possible. They are never any recipes for success already known, you have to design it or simply build it. The key is to get reactions aligned, clarify principles to enable levels of decisions to be made, who determines what and why across all those involved. It is the nature of acting early but acting as critically important. The whole need is to transform the situation from chaos to complex. Communications and engagement are critical. Shifting ambiguity into a growing pattern of certainty through well-considered actions.

When we are faced with a chaotic environment it is Act – Sense, and Respond.  We are operating in the realm of  Novel Practice. Effectiveness comes from developing responses, build out the directives, communicating these clearly and taking constant action to restore the sense of order. It is highly turbulent, has high tension and requires a high level of pattern-based leadership. It is a place where many decisions need to be made and very little time to think.

We often hear of those legends who took control and turned something around, that saved us. One environment is completely different from another, even when you think there are similarities.  We also need to guard against placing known specialists into new environments, if they have that self-opinionated self-image. Leaders or crisis management teams do need to move the context from this chaotic to complex, and be ready to change from command and control quickly into a challenging environment where complexity needs to take hold, at the very least, to quickly stabilize this sense of chaos.

What we do know is this space is the place to impose innovation. Novelty, directive leadership all become highly valuable, people open up to experiment well. It has been suggested when you manage chaos, you manage innovation in parallel. One team focuses on the crisis, another on the innovating opportunities to do things differently. It is the time to make the real change to move through chaos, to complex, too complicated and then too obvious.

The Disorder environment

There is a fifth-domain, shown in the middle and that is the one of disorder, not knowing which domain you are in and we often struggle to recognize which domain we want to be in for innovation or to take the business forward. This disorder stays with us until we impose order, structures or clarity to the thinking and recognize the place (domains above) we should be operating in.

This is a truly random state. We need to place this disorder into its right environment and hopefully, it is only a transitory one, highly undesirable, needing to be ‘taken hold of’. Having no order needs to rapidly change. We fall into disorder when we lose attention. The most simple definition of disorder in Cynefin is the state of not knowing which domain you are in. Your immediate job is to seek out which option of the other four states will get you out of the disorder one.

Complacency can create a catastrophic failure

Finally, to complete the understanding, the Obvious domain is next to Chaos because complacency (the extreme of Obvious) can all too easily produce a catastrophic failure.  Thus that boundary is represented by a cliff, or more technically as a catastrophic fold. You can find yourself moved from an orderly, steady state, the business that is obvious to you and then thrown suddenly into chaos, by a sudden change.

There are many examples of sudden change that might mean real threats to your very survival. A sudden disruption in the market, unforeseen competition ‘suddenly appearing and totally creating havoc. You fall off the cliff and descend into chaos. This sudden shift from the obvious can become a catastrophic fold, sudden bankruptcy due to complacency and not being alert to the dangers that are building up all around you. We often fail to stay alert to changes in the market or simply ignore them.

As more and more disruption forces occur, the state of suddenly going from a well ‘oiled’ machine into a state of chaos is this feeling you are falling off a cliff. It all begins not to make any sense to you anymore, you lose that sense of order. Your solution is to try and “impose” a ‘known’ order but that might be a serious mistake, or you recognize this becomes the opportunity to construct a new order through rapid experimentation to find a new pathway back to order. You begin to open up your thinking to evalaute new models, thinking or ways to undertakre business.

So the value of the Cynefin Model

Today we are seeing “waves of disruption” that can can be depicted as the (reverse) sequence of chaos- complex- complicated – obvious, as the necessary stages to go through to meet these changes occurring. Knowing them by applying a framework likes Cynifin places it into a contextually appropriate structure, working through this through the Cynefin framework can become valuable. Knowing the different stages of how to make sense, by using this “sense-making” model really does help. Seeking out and knowing the context is critical to any decisions made on where you are classifying your order..

I wrote this  in a post “Learning the mantra of innovation context”

“The power of context shifts everything and then gives it ‘shape’. It provides the conditions and the circumstances of time and place and why we need to find and deliver something different. It provides the innovation marching orders.

If we place innovation in a certain set of contexts, then those setting about the task are more sensitive to the needs and understanding, they can relate or can reject this. It can allow them to work more clearly and effectively, not necessarily effective as innovation is inherently messy.

Context gives us certain guard rails or borders to help gain a more united focus. Where we go after that, by pushing those borders will depend on those involved by seeing a greater value in an evolving context of mutual understanding. The ‘setting it in context’ allows for dialogue, adding more value to the thinking”

I keep going back to David’s model as he evolves it through constant practice and engagement. It can be applicable to many situations.

Cynefin, by the way, is a Welsh word, it means “the place of your multiple belongings” and just apply this to all the situations you need to assess the state you are in and the type of approach you need to undertake. This model helps put much into a contextual value.

Finally, I have drawn a lot from David Snowden’s work, in certainly writing this post but more importantly to gain so many insights and stimulus for what I do and how I want to apply it. I always enjoy his thinking, challenging and wanting to explore.

The post Cynefin: A framework that grows for me all the time, in its value and worth. first appeared on Building Your Innovation & Ecosystem Intelligence.

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.

I often go back to this as it provides a real source of understanding of the shifts being undertaken within our organizations, to make the fundamental shifts in their thinking to understand where today’s and our future value creation will come from; something that is mostly due to this increasing importance of the digital changes occurring all around us.

Radical changes in the environment we are currently witnessing requires a more radical set of responses. The tangible sources of value creation are being replaced by our abilities to manage all the intangibility that is the source of our potential competitive advantage. It is found in constantly recombining the different sources of these intangibles, turning them into dynamic capabilities. It is the synergistic effects from harnessing these different sources collectively and constantly exploring and exploiting them.

This report is suggesting that the real sources of value creation and competitive advantage in the digital economy lie in fluidity and constantly evolving the intangibles. We still are failing to come to grips with this, to understand its force and position in today’s thinking. Technology or digitization has been such an underlying catalyst to this shift going on.

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

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

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

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

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

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

The post Shifting our dynamics to innovate within the digital age first appeared on Building Your Innovation & Ecosystem Intelligence.

The post Constructing Innovation as Value Management first appeared on Building Your Innovation & Ecosystem Intelligence.

I really think we should bring it up to date.

There has been such a considerable change taking place in many of the parts of innovation management, I think we need to replace the existing fuzzy front end, the pipeline and portfolio stage followed by execution with something far more reflective of how we think and what we deploy today as tools, methods and frameworks to deliver innovation.

The ‘old approach’ just does not calibrate anymore for me with where we have been heading, or more importantly in how we are attempting to manage innovation within our organizations.

So I feel we need to determine a new innovation value chain and would like to make the first attempt

Firstly we need to group the tools, methods or focus activities within the three heading I tend to feel are emerging as the ‘three stages’ of innovation.

The three stages of innovation are

1) Business Opportunity Identification. The search for business ideas that seem to offer opportunity, in its design, need and insight identification

2) The Testing, Exploring, Advancing and Learning stage. How we turn ideas and opportunities as quickly as we can into workable prototypes and where we can test the hypothesis in a direct understanding of their value in the marketplace. These will continue to be looped back from these iterations into more viable offerings (products, services, business concepts) that continue to show commercial promise as they progress through evaluations.

3) Capturing, Scaling, Executing and Delivering. Through the planning out of the portfolio, an increasing clarity emerges of its positioning. you are increasingly able to define its business model position, its strategic design, validation and re-tune its final value proposition from the customer engagement and increasing diffusion. You scale, execute and deliver accordingly on its perceived value and value creation impact.

This is my first attempt at recognizing the changing innovation value chain and what makes up its component parts for managing innovation.

These stages are not linear and sequential but loopback when they need to, so I have not put them, certainly at this time, not in a linear visual but as the phases that we need to work through in our innovation thinking and the management of the process.

I believe we do need to have a radical redesign of the innovation management process, partly to reflect the changes that have been occurring.

We are moving increasingly from products to solutions, from transactions to growing far more value-adding ongoing relationships, from a supplier of product services into highly valued network partnerships, exploring innovation across all options, instead of delivering on discrete elements. Innovation is becoming more complex, and multi-dimensional but lending itself to change.

We need a innovation process that is fully integrated, connected and compatible and can flow across our activities. with the objectives s of the business to grow and recognizes that there is the need to build a sustainable innovation capability going forward.

We are pioneering, experimenting and validating in new and very different ways into identifying different business opportunities, by testing, exploring, advancing and learning so we can deliver those that have been tested so as to be moved into more scalable, commercial propositions that meet customers needs?

Does this grouping and what each ‘houses makes sense? As I state, it is a work- in-progress and I am looking for reactions and more importantly contributions but without doubt we DO have to change the way we depict the innovation process.

We do need to bring it far more up to date and in tune with what organizations are attempting to set about for their innovation management. Any additional thoughts or views on this?

The post The New Innovation Value Chain Perhaps? 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.

I wrote at the time we can have a surprisingly strong influence on impact, as we are in a highly connected world. It is through our organizing and influencing abilities we can all partly determine our innovation future.

I suggested we have nine impact points to consider:

1. What are the triggers to growth
2. How do we deal with our legacy issues
3. What will offer us improving performance
4. The place of tacit knowledge
5. Our ability to build platforms and road-maps to build engagement.
6. The absolute skill of execution
7. How we set about adapting to change
8. What is important to empower and provide trusting environments
9. How should we measure success in appropriate impact.

So let me take this one step further.

For me the book “The Medici Effect” written by Frans Johansson holds an important place in my thinking. “Our breakthrough insights are at the Intersections of ideas, concepts and cultures” and it is the potential of exploring these intersections comes our high points of impact.

Impact has to have reasons, it has to unite and it has to have understanding of what gives it that different ‘impact’.

Our leadership today has tended to forget “positive” impact within their chase of the short-term; they are contributing more “negative” impacts in the pursuit of immediate gain. We need to institute a change in thinking.

Recently a new book came out, called “Moments of Impact” written by Chris Ertel and Lisa Kay Solomon. It is a wonderful book in that it describes the pathway to how too “design strategic conversations that accelerate change”. It tackles the way to deliver complex questions in clear ways and brings back that critical understanding of “empathy” for broader groups to relate to, by listening, detecting patterns and then they can be deciphered in what needs changing.

So our ability to listen, to discern patterns and to seek out new impact points through more intersection points does offer for a real potential to really change the game. These can be at global, organizational, social, competitive and personal levels of impact.

Where do we start to deliver positive impact though?

Besides reading the two books mentioned above let me lay out the purpose in a group of ideas where one feeds off of the other, they mutually reinforce each other. The strength is in the combining forces.

There are a group of ideals I like to offer up as ones to ‘gather around’ for higher impact returns, to ‘enable’ our potential. These are:

• We need to connect new knowledge with increasing good emerging practice
• We need to foster increasingly the trust and identification needed to explore and exploit
• We need to strengthen our alignments and look to offer appreciation more
• We need to build within ourselves more responsiveness and agility
• We need to understand the impact of our actions and decisions and what these really mean to our business, the society and the people within it
• We have to reduce leakage- that constant knowledge loss that leads to depreciation within our performances, we need to constantly renew ourselves.
• We need to sharpen our minds and gain more confidence in the choices we are making, the avenues of our creation to lead towards a new wealth, growth and set of values.

Where I put my focus is on the intersections of combining four value building vectors

Firstly we have innovation

Innovation needs a sharper meaning and focus within our organizations, it needs to be ‘crafted’ far more, and it needs to have a greater alignment and validation. It needs increased facilitation and understanding. We need to change many of our existing innovation practices that we perform into ones that deliver this increasing impact.

We need to look simply beyond ‘just’ innovation in product and services, we have to link this more into our social needs, to design different business models that give opportunity for different organization design, agility and vitality.

We are far too often stuck in the incremental mode and must find ways to get out of this rut or we never achieve ‘real impact’ and move the growth needle to a stronger value point.

Secondly we need to seek out more value-based relationships.
These need to be broader, closer and allowed to be more imaginative in cooperation and outcomes. We need to seek out different ‘pools’ of knowledge and complementary expertise.

We should leverage for all it’s worth our collaborative, network, technology skills to explore and push boundaries for discovery.

We need to have in place some mechanisms that allow for a greater choreographing of specific events and growing knowledge understanding to be able to come together due to this value-based set of relationships so we provide for more moments of impact.

Third, we need to enhance economic value as our business goal

This comes through clarity of purpose, alignment and collaboration. We need to scan our markets, our competitors and the changes constantly happening in our market environments to gather increased insights. We need to hone our selection and design of new solutions by better scanning and investigating,

We need to think of impact in different ways, ways like containment, improvement, reduction, improvements and efficiency. We need to consciously seek strategies that DRIVE growth.

Lastly, we have the application of knowledge to learn and apply

We need to learn how to trade in the new economy, the one called the idea economy. This is the place where we learn, grow, seek out impact and grow. It is the intelligence within our broader capitals, those often called the intellectual capitals made up of social, human, structural, relationship and learning.

It is by finding new combinations within these different capitals we learn to combine resources, capabilities and competencies in new and different ways. To achieve a growing positive impact we need to develop problem-solving abilities, we need to be allowed to visualize far more and to explore these ‘concepts’ more freely.

We need to focus on the creation, exchanging and acquisition of new knowledge. We need to release all the ‘idle capital’ that lies all around us to bring it back into contributing value.

We need to combine these four intersections for seeking out the positive impact.
It is finding the future value-creating points where you can extract the hidden values waiting to be discovered.

We need to promote the “thinking experience” and develop in us all the three parts, firstly of inductive thinking through direct observation, then the use of deductive thinking from analysis and logic and finally, the abductive thinking of determining what could be possible and valuable

We need to relearn how we work, how we think and how we search to combine. Our knowledge learning capacities provide the solutions to the delivery of high impact areas where we all gain in growth and wealth creation.

A time to re-equip ourselves in new ways is way overdue.

It is time we learn how to combine these intersections within our organizations. It is partly a rediscovery but it is far more a growing discovery of what is simply all around us, waiting for the right way for it to be found.

This comes from a ‘greater’ combining of different ideas, seeking out new combination, exploring different intersections that can lead to new insights for breakthroughs for innovation to happen, and then delivering these higher-value impact points we need to prosper and thrive.

The post Combining the higher-value impact points for innovation intersection. 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.