Who should be thinking about innovation in your organization?

I am often asked whether one person or function in an organization is sufficient to coordinate and manage innovation. The answer is “no”. While I agree that it is very hard to get whole organizations to think about innovation, it certainly is a distributed capability.

Let me just recap. Back in 2015 I wrote that most innovation gurus identify four functions of innovation and technology management:

  1. Searching and scanning for new ideas and technologies, both within and beyond4 functions of innovation management - Page 1 the organization. This includes looking at technologies that could affect the clients of the organization, and technologies that could disrupt markets and industries.
  2. Comparing, selecting and imagining how different technologies could impact the organization, its markets and its own innovation agenda.
  3. Next comes integrating or deploying the technology or innovation into the organization. This includes adjusting processes and systems, scaling up implementation, and project managing the whole change process.
  4. The last step is often overlooked, but new technology and innovation often makes new ideas, innovations and improvements possible. I call this last step exploiting the benefits of a new technology or idea. This could involve leveraging some of the additional benefits or features of a technology, perhaps by creating a new business unit focused on an adjacent market or particular offering.

Now these four functions could obviously be coordinated at a central or top management level, but at that level it would probably look at broader innovations in terms of high level product positioning, reforming key business processes, or considering different business models. Some would call this strategic innovation management. However, this function depends on many other decision makers, technicians, business unit managers and experts distributed throughout the organization to be repeating these four functions within their own context. Perhaps some individuals or units are more focused on certain technological capabilities, while others may be more focused on specific markets, territories and client types. Within each of these focus areas, individuals or teams responsible for the coordination of innovation would have to make sure they tap into the knowledge and understanding of their internal experts and staff, their external networks and even beyond. So the four functions are repeated at lower levels, each time more granular or domain specific (or context sensitive) than levels higher up.

Perhaps innovation coordinators at higher levels would be more focused on trends beyond the organization and even beyond their clients or markets, and most certainly the higher up you go the longer the planning time horizons would be. A great example of this kind of structure is explained in a forthcoming article by Jeffrey Immelt of GE in the Harvard Business Review. In GE they had both the top down functions, but then they also paid great attention to creating from the bottom up similar functions. During this process Jeffrey explains that they realized they needed to create these structures within sub regions, with more autonomy to make context specific decisions.

Within a larger organization, good ideas (a.k.a innovations) from one unit is not immediately copied elsewhere. This is the wrong approach to scaling. Instead it goes in at the first function (Scanning) of other units, where the suitability of the idea and its effect on the business unit or technological capability is assessed. This means that top management can detect good ideas in how rapidly they are taken up within the organization. Perhaps they need to play a role in making innovations that seem to be working in one area known to others. This reduces the dependence on “strategic bets” by top management. Also this means that scanning is not only about looking beyond the organization, it could also mean scanning internally in other units or over the whole organization to try and detect ideas that are being tried out, taken up or discarded.

You cannot centralize innovation at the levels of product, process and business models only at the top of an organization, even in a small company. So you have to find ways to distribute this capability throughout the organization. It is not smart if only higher levels of management are scanning the horizon, trying to wrap their minds around emerging trends like the impact of Amazon on an industry, Industry 4.0, the internet of things or additive manufacturing. Perhaps at higher levels there should be a push to get more people elsewhere in the organizations empowered and mobilized to make sure that the four functions of innovation are distributed, that more people are scanning, more people are thinking about the future, trends and change.

In the image included in this post, the arrows are flowing down, because I believe that leaders need to push the push functions down in their organization. As these functions are distributed through the organization, it would become more important to figure out how to feed the ideas, insights and innovation from the distributed organizational system to improve organization wide strategic insight. Also, the up arrows would make it possible for cross pollination, where ideas that works in one area are fed into the scanning functions of another business unit.

A final point is that learning is not only about what works (down arrows and up arrows). Learning is also about remembering what did not work, but also, what was not tried (arrows ending in space). Organizations that maintain up a repertoire of (failed or half-baked) ideas have a better stock of concepts that they can consider, recombine and re-imagine as they go forward.

A final word to technological institutions, industry associations and programs aimed at improving industry or regional innovation and competitiveness. These four functions are not only for inside a firm, they are also relevant to your organization. But these four functions typically play out a the level of the innovation system, the network or industry. Somebody somewhere better be scanning the horizon for what is coming, what is being tried and what seems to be working, and so on. If your industry is not scanning, then the long term viability of the industry you are trying to promote is under threat. This is where think tanks, academic research centers and strong industry associations (meso organizations) that can promote industrial change, collaboration and modernization become very important.

Contact me if I can help your organization improve the four functions of innovation within your organization and between your organization and others.

Teaching on innovation systems – afterthought

The post about how I teach on the topic of innovation systems two weeks ago really elicited a much bigger response than I expected. The tips, ideas, confirmations and questions received inspired me to think how I can share more practical training advice. I have a lot to share, simply because I love teaching on a wide range of topics. True to my mental construct of an innovator, I constantly develop small modules that can be combined, re-arranged, shortened or expanded to meet the requirements of the teams I support and coach.

For instance, the innovation systems outline that I explained in this previous posts consists of two parts: Part 1 is made up of modules on innovation and technology:

  • Innovation, invention and different kinds of innovation,
  • Knowledge generation in enterprises,
  • What is technology? Definitions, applications and implications of various definitions,
  • Different kinds of competition and its effect on the innovative behavior of enterprises,
  • Knowledge generation in enterprises and organisations

Part 2 then builds on this foundation with topics central to the promotion of innovation systems, with modules on:

  • Knowledge generation, co-generations and assimilation in societies,
  • Defining innovation systems,
  • Role of different kinds of economic and social institutions in innovation systems,
  • The importance and dynamic of building technological capability,
  • Systemic competitiveness as a way of focusing meso level institutions on persistent market failure,

If needed it is easy to bring in many other topics such as:

  • Technological change, social change, economic change (based on the excellent work by Eric Beinhoecker),
  • Assisting stakeholders to embrace sophisticated demand as a stimulus,
  • Diagnosing value chains,
  • Technology transfer, demonstration and extension, and so on

Yesterday I was reflecting with Frank Waeltring about the order of these sessions, why in my experience Part 1 goes before Part 2 and how difficult it is to present part 2 without the basics of part 1 in place. We reflected on why it is easier to start with foundation topics on innovation and technology management, and thereafter moving to the more abstract content of innovation systems.

In my experience, development practitioners and policy makers often believe the link between the subjects of innovation/technology management and innovation systems promotion is the concept of “innovation”. Almost as if innovation happens in enterprises, and innovation systems is then the public sectors way to make innovation happen in enterprises. This logic is an important stumbling block that many people I have supported struggle with. In my book on the promotion of innovation systems I created the following table to explain the difference.

Difference between innovation/technology management and innovation systems promotion

The connector between these two domains is not innovation (despite it being common two the names of the two domains). It is knowledge. Not necessarily formal knowledge (more engineers & phds = more innovation kind of over simplistic logic), but various forms of knowledge. Tacit knowledge. Knowing of who to speak to. Being exposed to other people from different knowledge and social domains. The costs and ease of getting information from somebody you know or don’t know. Learning from your own mistakes and the attempts of others.

Some places, countries and industries get this right, others struggle. Trust is central. This dynamic takes time to develop. You can sense its presence way before you can figure out how to measure it. While many of these issues can be addressed at a strategic level in an organisation like a company (or a publicly funded institution), many of these kinds of knowledge flows are inter-dependent and can be accelerated by taking an innovation system(ic) perspective.

The conclusion is a real tongue twister: The connection between the body of knowledge of innovation/technology management and the body of knowledge about innovation systems development is the body of knowledge on knowledge and how it emerges, gets assimilated, absorbed and further developed.

That is why knowledge generation, learning by doing fits in so well with part 1, but why it is not complete if not also addressed in part 2, especially the systemic elements of knowledge dissemination and absorption. It is the bridge.

 

Four functions of innovation and technology management

I want to continue the “Instigating Innovation” series (see opening post here, where to start and the post about culture here). The idea behind this series is that I explain innovation management concepts that can be used by both enterprises and technology transfer and industry support institutions.

Just to recap. I believe that many industries are struggling to modernize because their supporting institutions use completely different frameworks to manage innovation (or perhaps the supporting institutions make their choices as randomly as enterprises do). One of the first technologies that a tech transfer institute or industry support organizations should transfer to enterprises is “how to manage innovation and technology”. Just because there is an engineer or an MBA/PhD in a company does not guarantee effective or creative management of innovation and technology.

Today I want to focus on the four broad functions that must be managed strategically in every enterprise and supporting institution. Even if someone in the organization has the job title of Innovation Manager or Technology Manager these functions should still be visible throughout the organization. In other words, this is not somebodies job, but it helps if somebody coordinates these activities.

The four functions agreed by most scholars and innovation experts can be summarized roughly as:

  1. Searching and scanning for new ideas and technologies, both within and beyond the organization. This includes looking at technologies that could affect the clients of the organization, and technologies that could disrupt markets and industries.
  2. Comparing, selecting and imagining how different technologies could impact the organization, its markets and its own innovation agenda.
  3. Next comes integrating or deploying the technology or innovation into the organization. This includes adjusting processes and systems, scaling up implementation, and project managing the whole change process.
  4. The last step is often overlooked, but new technology and innovation often makes new ideas, innovations and improvements possible. I call this last step exploiting the benefits of a new technology or idea. This could involve leveraging some of the additional benefits or features of a technology, perhaps by creating a new business unit focused on an adjacent market or particular offering.

When I visit institutions, organizations and companies, I always ask “who is thinking about change taking place beyond your industry or key technology?”. I cannot tell you how often I hear that “the CEO” or “production manager” are on top of new developments and will be attending a tech fair next year. How can this huge responsibility fall on the shoulders of one or two people, who are at the same time biased towards the current strategy and that favors justifying past (sunk) investments? Or ask “How did you choose between two technologies?” and you will be surprised how little time was spent considering new business opportunities, or how few companies asked for onsite demonstrations or samples from their preferred technology providers.

I will refrain from being too critical of technology transfer institutions and industry supporting organizations, except to say that these organizations should be a prime example to industry of how to scan, evaluate, compare and integrate new ideas and technologies. We don’t just want to see the shiny machines and neat facilities, we want to understand how you arrived at your decisions, and how you made the best of your investments after implementing the change. Furthermore, industry wants to know what is next, or what is outside of their vision and how it may affect their industry.

To bring it all together, technological upgrading of industries are plagued by many different market failures. These failures include the tendency NOT to invest due to high search costs, due to fears about making the wrong choices, or because so many decisions and changes must be made at the same time. This while the business continues, markets fluctuates, and technologies change faster and faster. Companies (and institutions) cannot afford to only kick start innovation management just before making a change (or when forced by external forces to make a decision), these functions must be managed strategically on a continues basis, both at the level of top management and within the different functions of the organization. Both companies and their supporting institutions need to manage innovation and technology, not only from an operational perspective (striving for continuous improvement, etc) but also from a strategic strategic perspective.

Innovation as cultural as opposed to innovation as a technique or function

Reflecting on the correspondence I have received after my previous post and recent training sessions with manufacturers, I realize that people are looking for tools and tricks to “fix” innovation. Sometimes it is actually not even about innovation, but about making up for past decisions like not investing in technology or market development when they should have. Others think of innovation as a function, or as a management tool that can be standardized into a job description or an area of responsibility. While this is possible in some contexts, I don’t find this approach to innovation so useful in the smaller and medium sized manufacturing firms and the research/technology institution space where I am working in.

For me, innovation is firstly a value, perspective on how organizations should be. When management says “we are an innovative organization” or “we want an innovative culture” or “our reputation is that we are innovative” then we can move to tools, portfolios, tricks, and tweaks (those things that people in innovation functions must attend to). Many textbooks, articles and blog sites on innovation and technology management are then useful. Actually the challenge is to decide which of the bucketloads of advice to use, and consultants like me typically help organizations to choose a few tools and to then use them consistently and fully. I would dare to say that it is relatively easy to help companies that are already innovative to become more innovative.

The area that I am really intrigued by, are those organizations that are not innovative, or that would not describe themselves as having an innovative culture. Maybe they used to be innovative. Maybe they are innovative in some areas, but not in others. Maybe they had one or two tricks in the past that have now become old. These could be extremely competent organizations, like a research programme, a manufacturer of highly specialized industrial equipment, or an organization that simply design and manufacturers what their customers expressively tell them to make. Even if the outputs of these organizations can be described as “innovative”, these organizations themselves do not necessarily have innovative cultures that constantly are creating novel ideas, processes and markets. In my experience these organizations have technically brilliant people, but management is often not able to harness the genius, experience or creativity of their people. The main reason for this is not a lack of technique, tools or tricks. It is because of a lack of an innovative culture, leading to a lack of innovative purpose. These organizations are trapped. They are equipped for the past, but they are paralyzed by all the choices they have to make about the future. For management, it feels like everything that they have in place are inadequate and need equal attention, ranging from attracting staff with better (or different) qualifications to finding new markets, developing new technological capability, sorting out cash flow and capital expenditure, addressing succession planning, etc.

Improving the innovation culture of an organization is a complex issue. It is not about tasks, functions or tools, but about changing relations between people, within and beyond the boundaries of the organization.

When working with organizations that must improve their innovative culture, motivational speeches, optimistic visions of the future, etc, are not useful and could in fact deepen the crises facing management. Instruments such as scenario planning, roadmaps, foresight techniques, or interventions like starting a R&D unit, a lean exercise to reduce waste, are all addressing the wrong issues and distract management from confronting the real issue that are stifling the organization. It narrows the ability of management and specialists to scan within and beyond the organisation for opportunities that could be used to change the way people work together, think together, solve problems together. The typical employee in a manufacturing or technical environment loves solving problems, love tinkering with novelty. But often management becomes so performance or target obsessed (lean?) that they don’t tap into the latent potential of their people.

Improving the innovation culture process starts with connecting management back with their people. It starts in the present, the now, not the future scenarios, not with using innovation techniques, better analytical tools, and in most cases not with some or other management fad. It goes beyond trying to improve products, processes or business areas, beyond gaps in the management capability. It must look at the relations between people, between what people know and can do now (or in the recent past), and the potential the people see to make small improvements.

When management has the courage to decide to improve their innovative culture it starts a process that cannot be described as incremental improvement, as that sounds too directed. It is rather like a deepening, or an awakening where employees are inspired to contribute, and management is more aware what they can do to enable their employees to become more innovative on all fronts. Of course, management also face the risk that outdated management approaches that does not seek to empower employees to be creative will be exposed, and some tough decisions will have to be made.

For me the most promising approach to improving innovation in an organization is a organization development approach (not limited to design, not based on technical innovation instruments) based on complexity thinking, like our Systemic Insight approach. We are using instruments such as Sensemaker developed by Cognitive Edge to find areas for improvement, areas where relations between knowledge objects (knowledge, artificats, heuristics, etc) and people can be improved, starting from where the system is and then probing to understand what the immediate potential is for improvement. It allows people to take many small steps in parallel to improve the system and to push back the boundaries that have constrained the creativity in the organization.

In my view, building an innovation culture goes far beyond establishing or refining innovation management functions. It is a strategic issue that is initiated by top management, but that will soon spill over into every area of the organization, hence it cannot be driven from a management function like “innovation”.

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