by Haydn Shaughnessy, writer and consultant on innovation and business change.
The past ten years has seen a proliferation of innovation methods: open innovation, design thinking, service design, reverse innovation, new scouting techniques, ecosystem investments such as GE’s healthymagination and more.
But over the course of that decade innovation and its practitioners have grasped for but so far failed to land the next phase of innovation – innovation as strategic change, except of course in select cases. Innovation is primarily about method. And that has to change. In order for it to change we need to begin describing innovation tasks in strategic terms instead of in methodological terms.
Over the past three months I’ve had a chance to talk with a variety of companies that are pushing innovation very close to this new strategic dawn (and wrote about it here). Simultaneously I was writing The Elastic Enterprise, an overview of how some companies are creating an entirely new form of competitive advantage, without actually talking about innovation.
There is a handful of key pivot points for companies right now – social business, mobility, big data and agility, and innovation – but what gets continuously overlooked is that the structural changes that companies like Apple and Amazon have wrought on the enterprise operating system is far and away the most effective strategic innovation in the current corporate playbook. So why are we talking innovation method?
In part because that’s where we are. It’s difficult and sometimes rude to suddenly shift conversations, to presume or imply that the current one has lost relevance. But I think it has. However, there is also a small number of new approaches to innovation or new needs in the innovating enterprise that I think bring them close to the kind of elasticity we see at Apple and Amazon.
Before going onto those a quick definition of that “elasticity”.
Elastic enterprises have cut the umbilical cord that tied them to their highly bureaucratic past. They have managed to scale their businesses without adding the type of complexity that they are then forced to manage – and in the process lose focus and overhead.
Complexity is shifted outside the walls. And in the case of Apple and Amazon is managed through terms and conditions, the stuff developers or content producers sign up to when they want to create an app or publish a book. It is not managed through something as costly as a legal contract. These companies align with hundreds of thousands of partners at a cost approaching zero in time and management overhead.
Companies that ignore these new forms of scale could hardly think of themselves as innovative, yet indeed these advances are ignored. However, companies are doing other things and here are eight of them, leading up to what I’ve called the strategic options portfolio. Strategic options portfolio management is a place where innovative and elastic companies meet. These eight elements, I think make up a more mature view of innovation, one that takes companies to the point where they are transforming what innovation means.
#1. Managing an extended knowledge pool
Companies that do good innovation are finding that they have to master a new kind of knowledge management. The ideas that make for important advances can come from anywhere – customers, old idea challenges, that new news aggregator that one of your folks hooked into, your own big data resources. None is more important than the other.
#2. Enhanced configurability in innovation management platforms
There is now at least a dozen different modes of innovation – from reverse innovation, to design thinking, business model innovation and more. The likelihood is that somewhere in your organization all 12, and more, are in use. You might have started your innovation journey in product design but your real estate managers have already stolen a march, and your supply chain experts are at it too. Innovation techniques proliferate within an organization, often without reference to each other and innovators are finding that they need a management platform that is highly configurable so they can support innovation anywhere, any time, any style.
#3. Supporting the innovation continuum
That any time, any style, relates closely to the new idea of the innovation continuum. Innovators have been stuck at the front end of innovation, the ideas’ generation bit. In fact innovation has become too closely associated with ideas’ generation with blue chip companies now deciding they are going to do innovation on commoditized platforms that help generate and collect ideas.
Good practitioners have left the ideas bit behind. The best innovators develop innovation programs with a market entry model attached. They see innovation as integral to their changing understanding of the market and they seek out support that helps them manage back and fore along the continuum.
#4. Responding to mobility
Mobility is transforming the workplace, not only because it stimulates a “bring your own technology” mind-set. Companies that are proactive in innovation are adapting their innovation processes to the mobile worker, for example making ideas’ capture simple by using a smartphone’s camera, tagging and a caption to let mobile workers push ideas into the innovation platform from wherever they are (in the factory, up a pole, in a remote mine).
#5. Enhancing collaboration and employee engagement
Companies like Bombardier report significant increases in employee engagement through the use of innovation – as distinct from the use of collaboration strategies. Innovation is inherently an engagement practice, though you have to be smart about managing that engagement, giving employees feedback and letting them know where their contributions are headed.
Innovation rather than collaboration fires up engagement but it’s wise not to take employee contributions for granted. Innovation is not part of the job description so their engagement needs appreciating and nurturing.
#6. An accelerated innovation cycle
Every good practitioner knows they face an accelerated innovation cycle, in part driven by the entry of software development into so many areas of product. Software start-ups have moved on from periodic release schedule to constant updating, setting a new pace in innovation cycles that product makers have to follow. In the productivity software space, for example, Huddle has monthly updates to its software – competitor Microsoft Sharepoint, has new releases every two years.
But it’s not just software. iPad 2 for example was well advanced s iPad 1 was launched. iPad 1 allowed Apple to collect customer use cases and preferences as iPad 2 was nearing launch. Product is becoming like software.
#7. The move to strategic options building
Companies that don’t have strategic options are failing. Think about RIM. Over the past two years everything it had done seemed to be the only thing it could do. innovators are developing for what might not happen as well as for what will. They are running multiple (hundreds in the case of P&G) of innovation projects simultaneously. They are building options at a strategic level that will allow senior executives to control the company’s relationship with the market by making situational decisions, i.e. responding to what emerges rather than waiting to be found out by sudden market shifts. The problem of course is that this calls on the goodwill of employees and their creativity, in situations where they are often already hard pressed.
#8. Creating an innovation architecture that encapsulates all elements of innovation activity
That also means creating an innovation architecture – embedding innovation in the corporate process and treating it like a maturing discipline. An innovation architecture will give shape to multiple projects using multiple techniques, integrate essential lines of information from the knowledge pool, link to M&A and corporate venturing, and to standards’ bodies, and provide executive with a snapshot of the maturity and prospects of the portfolio.
Strategic options are served by an architecture of activity, something that is often there but latent in your organization.
I think these eight elements bring innovators up to the point where they can be as dynamic as an Apple or an Amazon but not to the point where they can scale their operations in new ways. To do that, they actually need to believe that new ways of creating wealth are possible. That might seem like a tall order – yet we’re used to people saying we now live in a post-industrial world. What we’re not used to is actually identifying, describing and defining what post-industrial means. Most versions of post-industrial look very normal. Well, here it is. Huge elasticity from low friction business , a post-industrial model of the enterprise for winners. To get there, we have to transform, rather than perfect, innovation.
About the Author
Haydn Shaughnessy is a writer and consultant on innovation and business change. He writes the Re:Thinking Innovation blog at Forbes.com and is the co-author of The Elastic Enterprise, a structured overview of the key economic and management transformations that are giving companies new ways to scale their growth. He was worked as a science officer at the EU, in advanced communications, as well as serving as a Partner at social agency. The Conversation Group, and a television and print journalist. He is a visiting fellow at the University of California, Irvine.
ISPIM Innovation Watch
ISPIM Innovation Watch is a series of short articles on the latest trends in innovation management. The ideas expressed in the articles are those of the authors alone and do not necessarily represent the position of ISPIM.