Innovation agenda (finally) on the radar chart

The key for firms who want to develop an innovation strategy is to look at knowledge - especially new knowledge - as a resource, says Debra Amidon. She explains the “kaleidoscope” of change within organisations and how to migrate from business planning to innovation planning.

We’ve all become actors in the exploration of the new innovation frontier but it has taken some time for the knowledge community (infant as it is) to acknowledge the importance of the innovation system, rather than merely accounting for intangible variables or cultivating knowledge sharing networks and communities. Knowledge sharing to what end? How does one chart the interdependence of performance, behaviour and technology? It is not the knowledge that gets created as much as how it is put into action and shared or applied in ways that generate value, however that might be defined.

Now, chief knowledge officers (CKOs) have morphed into chief innovation officers - the new CIO’s. Our top leadership has evolved from a past in which command-and-control was the managerial order of the day but many are trying to manage organisations in dynamic business environments with 50-year-old management technology. These concepts may be quite foreign and very difficult to justify. How does one create a rationale and business plan for an un-served market and unarticulated needs? The fundamental market changes of uncertainty have changed the core role of executive leadership into one of trust, learning and inspired vision.

Historically, good managers were able to create a high quality product or family of products, identify the potential market, develop a strategy and leverage the results. The current kaleidoscopic environment prohibits such simple, linear successes. Amidst such dramatic change, organisations must create ways to manage stability and change simultaneously, according to the management philosopher Henry Mintzberg.

We live in an interdependent world. Independence is no longer a viable managerial option. Similarly, changes do not occur in a vacuum. One change has an automatic effect on another series of variables and, subsequently, is effected by those changes - usually in unexpected ways. Reality is that there are hundreds, maybe thousands, of key variables which are integral to the survival of an enterprise

Leadership in the knowledge economy is different from the industrial or even information economies. It is an economy in which the innovation capacity of every human being, enterprise and nation is fully engaged. It is an economy in which culture and heritage are respected, commonalities are more important than differences, and aspirations can be shared across boundaries. It is an economy that demands a fundamental new mindset and common language to harness the capabilities of a global, networked world.

Success begins with a calibration of current state, articulation of future state and the gap analysis of initiatives to guarantee leadership positioning. Ideally, it connects initiatives across functions, product specifications, markets and geographies to harness the intellectual capital and intangible assets of the enterprise in ways that are cost-effective, efficient and result in impact.

From business plan to innovation strategy

A strategy is a deliberate plan of action and the leadership capability to see the plan through to execution. An innovation strategy is similar to a road map in that it outlines where an enterprise is to go and organises the resources to get there. However, there may be no perfect map and the measuring devices may not be as accurate. A competitor may change the whole landscape even before we reach goals.

Key to developing an innovation strategy is looking at knowledge - especially new knowledge - as a resource. Knowledge and innovation are the key players in the path of progress. An innovation strategy is also distinct from business planning. For instance business planning is an analytic routine based on the tacit assumption of continuation of current situation (status quo). Innovation strategy, on the other hand, is a synthetic practice based on innovation and uncertainty - something which capitalises upon the effects of a kaleidoscopic economy.

The first step for an effective innovation strategy is to make the process explicit. It is that simple and that complex at the same time. If the process is not managed systematically, it is left to serendipity. Most organisations expect innovation from R&D, the function where new ideas are funded. With a global and interdependent perspective of the enterprise, ideas can and must come from every function and external stakeholders.

A geographic atlas provides a systematic presentation of the world, or part of it, on a flat surface, although the earth is a globe. It provides a methodology needed for planning and implementing travel and is generally considered a comprehensive resource of the world, as we might know it today. Usually, it consists of three distinct, albeit interrelated, parts: mapping for organising commonalties, scaling to provide measurement and relational information, and a compass for direction.

Shortly after the astronauts of Apollo 17 reached the moon, the world awakened to a new perspective of bringing a vision into reality. It required more collaboration and faith than anyone previously dared to dream. Results were wondrous beyond expectations. Similarly, executives today are caught in a quandary; they can continue to utilise the tried-and-true methodologies (unsuited for today’s economic environment) or they can experiment with the unknown and venture forth with management initiatives that project innovation, creativity and responsible risk.

New assumptions have formed:

1. Knowledge is the primary driver of innovation, not technology.
2. The value of human potential can and should be linked to economic results.
3. It is a system dynamic, not a cause-effect value chain that is operating.
4. A prosperous future is based increasingly on interdependence, interaction and collaboration.
5. It is the flow of knowledge that must be visualised, monitored and incentivised.

Integration of knowledge as an interdependent variable into conventional business methodologies creates a dynamic no less dramatic as the shifting from a flat earth view of the world to a global view. Initially, the world was seen as two-dimensional, similar to how many business managers perceive their business environment today. Design a market matrix, create a balance sheet and manage the process in a simple, methodical linear mode. Build the better mousetrap and the market will beat a path to your door.

Similarly, business planning is the current representation of the process and plans necessary to position a particular enterprise with competitive advantage in a particular industry or region of the world. It provides a methodology to define business plans usually based upon a product/market portfolio. In contrast, a three-dimensional global view capitalizes upon the dynamics of the multiple effects of what we describe as a kaleidoscopic economy. It is not the speed of change of a variable, or the speed of change of multiple variables; it is the compounding effect of the speed of change of multiple variables creating a business environment that is difficult to understand, much less to manage.

The challenge is not to make existing businesses bigger but to create new businesses. It is not to evolve existing technologies as much as it is to envision products and services which meet the unarticulated needs of customers or an un-served market - and to do so ahead of the competition.

This abstract was taken from A Knowledge Innovation Kaleidoscope. KM Coming of Age, by Debra Amidon, founder and CEO of ENTOVATION International. Download the full article here.