Instigating innovation in traditional industries

The average manufacturer in a developing country grapples with the notion of innovation. That is why they are often called “traditional”, although almost each industry would have one or two outliers. While governments, like South Africa, offers incentives to stimulate innovation, most manufacturers do not identify with the term the way the governments use it. For instance, when governments use the word “innovation” they often mean “invention“, in other words something that can be protected, copyrighted and owned (more about the differences between innovation and invention here). While I understand the argument for patenting and protection I think this narrow definition of innovation is inhibiting many industries from increasing their productivity and competitiveness by copying what works from elsewhere (catching up). It also fails to recognize that in many value chains the manufacturers themselves make components or sub-systems that goes into overarching architectures (defined by standards, compliance, specifications), so their design authority is limited in scope.

Innovation_invention

Herewith a list of synonyms from thesaurus.com for innovation that I have assessed to see how enterprises might understand or respond to these words:

  • Modernization – lots of enterprises dream about this but often do not have the many nor the organizational capability to pull it off (one day, next time)
  • contraption – many innovations and most inventions result in one of these. You can see them standing in the corners in most factories
  • Mutation, addition, alteration, modification – this is what most innovations in traditional industry would look like. They are doing this all the time as their machines gets older, but this behavior is mostly not recognized nor accelerated
  • newness, departure, deviation – the bolder enterprises with more financial and organizational capability might try these, but it takes capital to maintain.

Most people understand innovation as an outcome, but the word itself is a noun that implies change and novelty. It is about a shift, even if it is often incremental. The reason why so many of our enterprises here in South Africa are not deemed to be innovative is because they struggle (or perhaps do not have the organizational capability) to manage several simultaneous change processes. As Tim Kastelle posted some years ago, change is simple but not easy. Although this is often described as a technology problem it is really a management problem (see some older posts here). I would go even further and state that in many industries the margins are so thin that even those enterprises that have a reasonable management structure would struggle to finance many innovations at the same time.

However, in my experience of visiting more than 50 manufacturers every year I am always stunned and awed by how ingenious these companies are. They keep old machines running, often modifying them on the fly. They operate with fluctuating and unreliable electricity, inconsistent water pressure and often hardly any specialist support. What policy makers often do not recognize is that in developing countries it takes a lot of management time and capacity just to keep the throughput going. The time and effort to go explore “change” beyond what is necessary in the short to medium term is very expensive. The costs of evaluation new ideas, new technologies, new markets and better suppliers are all far more expensive in developing countries than elsewhere. Yet, at the heart of innovation is the ability to combine different inputs, different knowledge pools, different supporting capabilities with different market possibilities.

There are two implications for innovation promotion practitioners.

  1. The process of instigating innovation must start with recognizing how companies are innovating NOW. How are they modifying their processes (and products), and how much does it cost? What are the risks that are keeping them from introducing more novelty? Perhaps use the Horizons of Innovation (my next post) to create a portfolio of innovation (change) activities that can be identified at the enterprise or industry levels.
  2. It is hard if not impossible for different manufacturers in most countries to figure out what others are struggling to change at a technological level. Use your ability to move between enterprises to identify opportunities to turn individual company costs into public costs (this is often cheaper). Do not take the innovation away from enterprises, but use your meso level technology institutions to try and accelerate the learning or to reduce the costs of trying various alternatives. Be very open with the results to enable learning and dissemination of ideas.

The process of instigating innovation must start with recognizing where manufacturers are naturally trying to change, just like a change process in an organization must start with understanding current behavior, culture and context. Somehow innovation have become so associated with a contraptions and narrow views on technology that the organizational development body of knowledge and management of change have been left behind.

Linking: Change: simple, but not easy by Tim Kastelle

I am humbled that Tim Kastelle has quoted a paragraph from a recent blog I wrote in an article he just published on Change and why it is simple but not easy.

For my students and online learners, I recommend that you also subscribe to Tim’s blog as he deals with many issues relating to innovation and especially business model innovation.

 

A journey to change change

Holger Nauheimer and a small group of people are changing the way we see change in organizations! I am participating in the change journey, and so should you. Head over to the Change Journey now and share your experiences (or just learn from others)!

Take a look at the text below for an announcement about important training events on change.

Global Change Journey training courses: Join us for a fresh view on change in organizations

We all know that 60-80% of all change projects fail. It is time to change how we see change.

Holger Nauheimer, worldwide known as one of the key innovators in the change management field, has recently announced a new approach to change in organizations: The Change Journey. The concept radically departs from the blueprint approach of traditional change management models and is based on the fact that no two change processes are alike. Each organization that decides to embark on a change initiative has to reinvent itself and find its own path while mastering the uncertainty of the process. Holger and his colleague Vesa Purokuru have designed a tool that serves as a guide through such a journey – the Change Journey Map. With the Change Journey Map, individuals, teams and entire organizations are enabled to

  • initiate an open dialogue about the required change,
  • find common ground on the principles of the transformative process,
  • identify priority areas for intervention,
  • select the appropriate tools for driving that change, and
  • create a list of required actions in order to make change successful and sustainable.

The Change Journey Map is a tool for change leaders. It helps to refocus on the essential skill of facilitators: to ask questions which matter and which open up new perspectives. The Change Journey concept is compatible with any other organizational development philosophy and can be enriched by all other existing change management toolkits.

Learn more about on how change can happen in the 21st century and participate in one of the global workshops in Brussels, Amersfoort (NL), Los Angeles, Seattle, Washington D.C. and New York: http://www.changejourney.org/page/global-workshops.

The Change Journey supports 1WE (www.1we.com): For each workshop, course organizers will sponsor a rickshaw for a family in Bangladesh (http://www.1we.com/web/show/id=59754/langid=42).

Best wishes,

Shawn

Change in societies

The previous post described a typology of competitiveness that spans three levels. In order for individuals, hierarchies (e.g. firms) to improve their competitiveness or performance some kind of change of performance is required. While some of these changes are incremental and takes little effort, it may in many cases require a more concentrated effort to make a significant change. A few years ago Holger Nauheimer introduced me to three different levels of change that corresponds with the typology of competitiveness.

Firstly, there is change in the performance or behaviour of individuals. This may be related to an effort to improve competitiveness, or it may simply be a change of behaviour. Secondly, there are change processes in organisations in order to improve performance and competitiveness. Lastly, there may be changes at the level of the society that results in improved performance and competitiveness.

In the first instance, individuals try to change their performance or behaviour through a combination of self-motivation, self-discipline, practice and concentration. Whether the change is success depends largely on the self-control of the individual, and their own incentives and value system. For organisation to change may require small incremental improvements. In most cases a change process requires proper management, transparrent leadership, transparency and clear communication with staff. Management may decide to use a structured approach, drawing on topics such as organisational development, change management and project management. A combination of sanctions and incentives may be used to shape the behaviour of people in the organisation.

At the highest level, changes occur in societies. These changes typically affect the performance of individuals and organisation, and are also affected by the performance of individuals and organisations in the society. For leaders to influence the transformation in societies, clear leadership with strongly communicated values are required. In my imagination I can think of leaders such as Nelson Mandela and Barack Obama at being particularly good at this. The challenge with change in societies is that it is difficult to manage, due to the fact that incentives and sanctions are weaker. There is also growing awareness of the psychology of crowds and how people in societies create and respond to signals of change. At the same time, we don’t have to think of whole societies changing. Malcolm Gladwell in “The tipping point” explains that when a small enough part of a society change, that it could lead to a tipping point where a larger scale change in behaviour takes place. This activism of change agents in societies are what seems to be keeping many societies in check at the moment, while at the same time promoting ongoing improvement and advancement.

From a systems perspective, the changes in individuals, organisations and societies should be recognised as complex human and social systems. There are many feedback loops, and delays between interventions and results. Furthermore, there are complex dynamics between different elements of the system. Therefore the results of decisions to change are often unpredictable, and care should be taken to create a habit of continous improvement combined with reflective exercises to make sure that the people in the system are able to respond to surprises and changes in the dynamics.

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