No tool or technique will improve the innovation culture of your company – it is a relationship thing and leadership is central to success.
I share some thoughts in this weeks Thought Thursdays newsletter of the USB Executive Development.
Click here for the article on the USB-ED website,
I have been inspired by some of the metaphors developed by Sonja Blignaut in her blog. She uses these metaphors to help leaders understand polarities, balance and strategic fit.
I therefore thought that I should write up two metaphors that I often use when helping leaders to decide where to focus their strategic innovation attempts. When leaders have to decide on what to focus their attention, they can either strengthen their base, which is focusing on where they can improve what already exists, or they can build bridges, which is focusing on the future, exploring beyond the horizon.
Let me explain these two metaphors.
Strengthening bases. From an innovation perspective, strengthening the base is all about using current resources, infrastructure and people in a more optimal way. This process need not only be inwardly focused, but could also apply to improving interaction with suppliers and relationships with clients, or improving access to existing markets. In the base-strengthening mode there is a strong focus on getting the basics right, on becoming more efficient, and on measuring progress and performance. In a base-strengthening strategy there will be a lot of efforts aimed at improving current products and services as well as processes and internal systems.
Building bridges. From an innovation perspective, building bridges is about reaching out into adjacent or new territories. These territories could be either technological innovations or markets or even new business models. While the direction may be clear, the exact approach may not be immediately clear. A few pioneers, typically with a broader skill set, are sent to scout for possible beachheads or footholds and then help the organisation to establish anchor points across uncertain territory. The mindset of management is flexible, targets are negotiable, and performance is measured more in terms of potential than actual performance. In a bridge-building strategy there will be a lot of attempts to try new ideas, to experiment with new marketing methods, technology and even partnerships, both in terms of product/service and process/system innovation and business model arrangements and management systems.
After explaining these two different mind sets I like to ask leadership teams according to which metaphor they are operating You won’t believe how often teams cannot agree on whether they are building bridges or strengthening bases. This usually leads to an interesting discussion. Ultimately it is not about choosing one or the other, but the organisation must be clear about which area it is focusing on: base strengthening or bridge building.
I don’t want to overdo the metaphors, but I’d like to make one last point. These two metaphors require different mindsets and skills. Base strengthening is more operational, can be more accurately managed and measured, and deals with a lot of knowns. It is complicated, but it can be planned, results can be compared, and adaptations can be made to try and improve results. Bridge building on the other hand is riskier – it is less operational and more exploratory. There are lots of new challenges, new learning and unexpected requirements that could delay progress. It would be unwise to focus on bridge building when there are dangerous cracks in the foundations.
When leadership teams discuss their current strategy they quickly realise that while they are striving to build bridges they are in fact mainly busy strengthening the bases. Employees feel frustrated when their leaders are mainly talking about bridges to new opportunities when it is clear that there are many basics that are not receiving attention that are required for a strong base require. Think of the broken window theory and how quickly we become conditioned or used to things that are out of shape or incomplete -we just aren’t aware of what’s happening. Furthermore, strengthening the base could also consume so much of their resources that organisations can lose touch with the real world beyond the organisation. Leaders have to find ways of balancing attempts to reach into the unknown with attending to the basics that makes a base a stable, reliable platform from where the organisation can build its portfolio of strategies.
When I am asked to help a team with their innovation strategy, I always ask about their past innovation activities. Often I am told that they are not yet innovating, or that they innovate infrequently, or that they are planning to innovate more in the future. However, if you ask the team to think about recent attempts to change, improve and restructure their activities, they quickly come up with a long list of innovations that they never recognised as such. These improvements might have achieved a specific purpose, but perhaps they could have been leveraged to have a more profound effect on the organisational culture. Almost every opportunity to adapt something in an organisation is also an opportunity to strenghten the learning culture, build trust, deepen the use of knowledge, encourage experimentation and to be more innovative.
To help teams recognise how they might have innovated in the past, I explain three different kinds of innovation. It is by looking back that we can also look forward.
The most easily identifiable form of innovation is innovation aimed at developing new or improved products and services. In technical products this product development process may require deep knowledge of how to harness natural phenomena or use certain technology, while in other sectors like the food sector developing a new product may require a good understanding of consumer tastes and different ingredients. Not all new products require a complicated design and development process.
Process innovation is slightly more difficult and involves making improvements to existing products and services or designing completely new products and services, often in an incremental or ongoing way. Process innovation could be aimed at improving efficiency and reducing waste or costs, or it could be the introduction of new equipment and technologies into an existing process. While many smaller companies lack this process improvement ability in-house, even high-tech manufacturers depend on specialists external to the organisation. In places where these experts or specialists are not available, process improvement costs are much higher and improvements are more difficult to implement. In many industries, product innovation is made possible by new process innovations, so manufacturers who integrate new equipment into their production facilities may be able to offer new products and services simply by upgrading their systems. An interesting phenomenon is that enterprises that are good at continuous process improvement are often able to introduce many more product innovations, as they typically have internal systems for product development, product distribution and knowledge accumulation.
The third kind of innovation is focused on business model innovation and organisational design. This kind of innovation is all about internal organisation, functional specification, combining different kinds of internal expertise, knowledge and technology domains and being able to adapt the management of a company division based on differences in specific contexts. We include innovation in marketing strategies, innovation in supply chain integration, and innovate approaches to co-opting or working with customers as well as improved management models under this heading. Enterprises that are able to manage innovatively tend to be better at process innovation, resulting in more options and the ability to improve products or services.
Many improvements that my clients want to undertake span all three of these types of innovation. Yet, the way how you go about innovating are slightly more difficult and may require different team and expertise configurations.
This is a revised edition of a blog post I wrote back in 2011.
When working on the improvement of innovation systems in developing countries, we have to work with firms. These firms have several roles, and there are three units of analysis:
Generally, firms that are able to lead the way, or could be good role models, are difficult to involve in development programmes for a variety of reasons. I won’t discuss that right now. What is important to remember is that most firms not only absorb or use technology and knowledge, they are also the main sources of knowledge and technology. This is both from a supply perspective (equipment suppliers, technical or specialist sources of knowledge, etc.) and from a demand perspective (demanding customers, sophisticated demand). Whether firms are aware of their role as disseminators of knowledge of technology is another story!
I will rather focus on how to identify the firms that we can work with to improve innovation and competence in all three units of analysis discussed above. Remember, our objective is to find ways to improve the dynamic in innovation systems that will result in the modernisation and technological upgrading of industries and regions.
More than 25 years ago Bo Carlsson and Gunnar Eliasson described a concept called “economic competence”. At the time they defined economic competence as “the ability to identify, expand and exploit business opportunities” (Carlsson and Eliasson, 1991). This is a useful definition as we have to remember that we cannot innovate on behalf of a broader industry. Somehow we must work with those firms that are able to innovate, imitate, adapt and integrate new knowledge and ideas.
According to Carlsson and Eliasson, economic or business competence has four main components:
Economic competence must be present in sufficient quantity and quality on the part of all relevant economic agents, users as well as suppliers, government agents, etc. in order for the technological system to function well. This is both true at a local or regional level, our a national or sectoral level.
If the buyers are not competent to demand or use new technology – or alternatively, if the suppliers are not able or willing to supply it – even a major technical breakthrough has no practical value or may even have negative value if competitors are quicker to take advantage of it.
I think that this business approach of choosing the entrepreneurs that we work with is very relevant to finding the people who can absorb new ideas and make them work in a developing country context. I would also go so far as to state that I do not believe that it is feasible to select “change agents” according to social criteria such as gender, age, etc. – but that we recognise that change within economic systems happens because of the economic competencies of the people who are recognised in the system (regardless of their demographic data). The reality is that you cannot be competent on behalf of other people!
I challenge you to review the firms that you are working with to see if they are economically competent!
Sources:
Carlsson, B. and Eliasson, G. (1991). The nature and importance of economic competence. Working Paper No. 294, The Industrial Institute for Economic and Social Research (IUI).
Porter, M.E. (1991). “Towards a dynamic theory of strategy“, Strategic Management Journal, 12 (Winter Special Issue), pp. 95-117.
This is one of my favourite topics to write, read and talk about. How knowledge can be leveraged to enable innovation in organisations. Even if it is tacit, or people don’t even know they posses valuable knowledge, leaders can create an environment where these ideas can be surfaced, explored and leveraged.
The pdf here contains three revised blog posts that I wrote on my ‘thinking out loud‘ blog site over the last two years. I’ve had the text edited and have made some improvements. Take a look and let me know if you find this useful.
Over the last five months I created think space to ponder what it is that I want to do in the next five years. I pondered what my “why” is, what it is that drives me from bed in the mornings early, what it is that draws me into books, articles and podcasts.
I realised that my passion is innovation. Not the “design a new mousetrap” variety, but the kind of innovation that happens when leaders decide that they want to improve their environment. This means product/service innovation, process/system innovation and also business model or strategic innovation.
Coaching has always been an essential part of what I did, but it mostly played a secondary role. I would be contracted to conduct some kind of capacity building or consulting work, and would spend a lot of time coaching individuals or whole teams. Now I want coaching to become more prominent, with my technical experience providing content and backup.
Towards the end of last year I decided to participate in an advanced coaching course to refine my skills. During this course I realised how much I yearned to help leaders transform their workplaces, their organisations and their communities.
I believe that anybody, any team, any organisation can be more innovative. When people can contribute and actively participate in innovation processes, they are more fulfilled and creative. Therefore they are also more productive and more valuable to the organisation and society. But teams that are not used to “thinking” together over diverse functions, levels or even systems needs help from a coach.
I also believe that central to innovation is a process of dialogue. It is ongoing and ever expanding over functions, boundaries and even organisations. This dialogue is not just about talking, it is about leveraging knowledge, challenging paradigms and exploring ideas, concepts and possibilities.
However, it is not easy to get started.
For this reason I created the Innovation Coach offer. Head over to www.innovationcoach.co.za for more information. I have developed an option for individual leaders, as well as an option for teams. There is also an option to coach inter-organisational change and innovation processes, like when organisations wants to improve their role in an innovation systems, clusters or communities.
For my regular followers, this blog will remain the place where I think out loud. Here I will express my thinking in half-baked and fully baked ideas.
The Innovation Coach website will have its own blog feed and email subscription options. For the moment you would have to subscribe to both if you want to stay abreast of my thinking on innovation, change and development.
My reasoning behind creating the Innovation Coach as a standalone offer is that I intend to position this offer to clients and organisations who do not identify with economic development. They are somewhere in a business, an university or a team. They need a coach who can guide them through a process of widening, rethinking or deepening their innovation, knowledge creation and organisational development offers.
You can help me by sharing the address of the site with your friends, with leaders in the systems where you are working in who you know can benefit from a coach.
For the last four years I have been working on this idea of catalysing or instigating innovation (take a look at my “thinking out loud blog“). It is about what leaders at different points in organisations or networks can do to improve their systems, products, environments and structures.
Central to innovation is the generation, recognition and exploration of knowledge. This knowledge can be trapped in the minds of individual staff, customers, suppliers or users, or it can be explicit. It can be latent, or it can be in your face but not used.
Another central pillar to innovation is dialogue. By this I mean not just a conversation, nor do I mean communication systems. I mean an ongoing and ever expanding process of change through dialogue – the exchange of ideas, the exploration of concepts, the identification of mental maps, attractors and emergent properties, the breaking down of aggregates and boundaries and the construction of new concepts. Dialogue spans many levels, it functions throughout the organisation and even spills over the boundaries of the organisation into other organisations, cultures, systems and networks.
By combining our research in Mesopartner on complexity and evolutionary thinking, and our experience and practice in promoting innovation within and between organisations, I came up with four frames to instigate innovation.
I describe the four frames in more detail below the diagram. In the diagram the activities are on the left hand side, and the documented strategies and how they are connected are on the right side. You have the read this diagram from the bottom up.
The first frame is about the interaction between the strategy of the organisation, the business, the unit or the team and the innovation strategy. Many organisations have a business strategy and then a separate innovation strategy. Or they have only a business plan used mainly for financial reasons, and do not spend sufficient time tracking technological change, market change and new paradigms. Ideally the business strategy and the innovation strategy should be tightly interwoven, with the one strongly shaping the other. The more your team innovates in products, processes and business structures, the more innovative your business strategy will be.
The second frame is about how the organisation recognises, generates and leverages knowledge. This is about creating new organisational and personal habits about generating, testing, combining and stretching the use of knowledge. It enables organisations to become more thoughtful, more intentional about learning, exploring and the leveraging of knowledge to become far more innovative. In this this frame the organisation activates its resources and systems to become more knowledge intensive. The result of this frame is a knowledge, dialogue and learning strategy that feeds into the innovation strategy outlined under the first frame.
The third frame is about developing a portfolio of improvement activities that spans different time horizons, technologies, markets and functions. Many companies already have improvement activities, but because the first two frames are not in place, these projects are often isolated, project driven and to some extent even disruptive. Every opportunity to change something small, to replace something, to move something or to install something should be an opportunity to strengthen the cultural traits that are healthy, and to dampen the organisational habits that are not supporting the business strategy. From this frame we develop operational and functional or unit-level strategies that operationalise and feed back into the two earlier strategies.
The fourth frame is about networks that connects the inside of the organisation with broader knowledge, technology and societal networks. It is about developing and strengthening the knowledge networks and flows within the organisation and to external organisations. Here the organisation intentionally builds the technological capability of external knowledge partners. It is from here that the organisation can support research and development and longer-term scientific thinking. Here the organisation also purposefully engage in trans and multidisciplinary research, where the thinking and knowledge base of the organisation gets stretched. From this frame we develop a network and research strategy that feeds into the earlier strategies.
Over the years I have assisted many organisations to embark on this journey. I have seen at first hand how organisations and teams that have purposefully improved the way they talk to each other have shifted from being followers to becoming innovative leaders. I have seen the power of simple frameworks that allow deep reflection on perspectives, a continuous process of a calibration of ideas that are mixed, re-mixed and tried. I have also seen how managers at all levels and individuals grow in confidence as they feel more acknowledged, valued and fulfilled.
I hope you will take your team on this journey!
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In 2016 I wrote an article for the University of Stellenbosch Business Schools Thought Thursdays newsletter about how leaders can unlock knowledge intheir organisations to enable innovation. This article has lead to many
interesting presentations, speeches and conversations. I also wrote several follow on articles on the cunningham.org.za that can all be accessed from this link.
In the USB article I wrote that leaders must incentivise and encourage staff to accumulate knowledge through deduction and experimentation, as well as reaching beyond their organisation. This would require that staff are encouraged to invest time in reading, exploring and trying out new ideas. Learning by doing should be encouraged, and tacit knowledge should be actively sought out and leveraged.
For the readers of this blog I think that article is a good starting point to reflect on the culture of acknowledging and encouraging knowledge creation in your organisation. It is not so important to try and formalise all knowledge as it is to actively encourage employees to actively seek out what they know and to experiment with how this knowledge can be used, recombined and leveraged.
Many of my friends are leaders. All my clients are. They are leaders because they naturally develop people around them. Not only because of a title. You can recognise a good leader by how many of their followers are also leaders. Leaders and their follower leaders co-develop their skills. So leaders help each other, up-and-down the hierarchy and side-by-side in a network. Leaders are not threatened by people in their structure becoming better and better at leading, they usually take pride in how others are rising up. This makes the whole organisation like a network, like a collective brain. Managers don’t always like this, they don’t like it when people lower in “rank” challenge them, asking more of them. They prefer the hierarchy, which is more like a spine and less like a brain. But this is not the place to go into the difference between leaders and managers, or brains and spines.
So this is my main point for today: Leaders ask better questions, so that their teams can search for better questions. They are on a perpetual search process for better formulations and for “higher” questions that stretches everybody to think wider, deeper and more creatively. The goal is not better answers, that belongs to the linear world where questions have specific answers that are either right or wrong. Leaders know that by formulating better questions they enable everybody around them to explore better in this complex world where there are many formulations of a question, each with many answers. Good questions lead to better questions. Leaders somehow understand this complexity, where there are multiple hypotheses that explains what we see or can measure. This means many questions, and many possible answers, and many more reformulations.
These better questions are not random, and they do not emerge out of an isolated mind. They emerge from the very networks and contexts that the leaders are immersed in. Leaders can sense the better articulation of questions, or the unsatisfactory answers from their teams. They can feel that people are not satisfied, and instead of ignoring the issue, they enable a process of reflection with others to lift out the issues that matter. Leaders can also sense when people have fallen back on routines to get things done, so often the questions leaders ask require people to stop, reflect and question. This is not always appreciated as it takes energy to step out of the groove and to engage with new questions.
Right now in South Africa we need more leaders to ask better questions. Better questions about the role of business in the society. Different questions about how to allocate resources between many competing ends. Tough questions about balancing the rights of particular groups and individuals with the well being of the society as a whole. When I look at they way questions are framed by political leaders they often pose ideologies as questions. The very nature of an ideology is that it provides answers, often irrespective of the context. While some of these questions are important, they are closed. They do not allow for much debate, exploring these questions are not really permitted. These kinds of questions do not help as they don’t only exclude beneficiaries, they also exclude the connections of minds. While leaders in the non-government sectors often scoff at political leaders, many business leaders themselves have an ideology about how a workplace should be organised, how they game should be played. They often forget their own bias. Much of my work is about helping these leaders reflect on their own theories.
Focus. Back to my main point. If you are a leader (which I believe you are) then step forward in your environment, and offer to pose the questions that are on people’s minds. Are people feeling hopeless? Then ask questions about what it would take to have hope again. Ask questions about creating alternatives, or for taking stock of what exists and what can be done with what you have.
You have to set down a framework where people know that even if it is uncomfortable, certain questions that are sensitive or uncomfortable should still be explored. If you are afraid that people will burn you on a pile of office furniture then express your question as a theory, and ask your people to help you verify or invalidate you theory. Articulating the difficult questions, those ones where we just don’t seem to have all the right words, this is what we do as leaders. And then we join our people and help search for answers and listen for signals that there are better ways to formulate our questions.
Oh, and this process does not have an end. This is what we do. We ask better questions. All the time.
I have been holding back on this post for a while, because it touches on a very sensitive situation here in South Africa regarding the student protests about university fees (see #feesmustfall). In South Africa, many of our research and technology development units that are publicly funded are hosted by universities. These centres depend on students and particularly post graduate students to deliver services to industry. At the same time these centres depend on industry to commission research, prototypes and to also take up the graduates. With the massive shortage of funding in the education sector, many of these centres and their hosting universities are starved of funding.
In August, I was helping a leadership team think through their industry strategy. I realised that their strategy was dependent on two implicit assumptions. Firstly, that the student unrest about the fees would be contained and short lived, with government miraculously finding funding from somewhere to relieve the pressure in the system. Secondly, they assumed that the private sector would somehow remain keen to invest in R & D, problem solving and prototyping despite the political uncertainty and adverse business conditions that we have in South Africa at the moment.
I helped the team to develop a set of scenarios, and this is what this post is about. It was a spur of the moment idea at the end of a meeting.
A simple way to develop scenarios would be to take the two assumptions (we usually use uncertainties) and to construct a simple 2 x 2 matrix. I know a 2 x 2 matrix has many shortcomings, but this simple matrix was to allow a team to explore several topics they have been hesitant to consider collectively. This was about helping a group make sense so that they could develop some actions together. With the leadership team, we wrote an assumption about the stability at the university on the horizontal axis. On the left we have a stable political environment at the university, with some high uncertainty about how long the peace would last and how much public funding will be available. On the right hand side we wrote that the situation becomes both unstable and uncertain. This axis is all about the stability of the hosting university.
On the vertical axis we wrote at the top that business people remain optimistic and continues to draw on the facilities and the services of the research centres, while at the bottom we formulated the opposite.
This simple matrix gave us four quadrants which we numbered 1 to 4 clockwise.
The instruction to the team was to think of each of the quadrants in the extreme of the two assumptions of the quadrant if they both played out. I won’t repeat all that was said here, but will just briefly capture some ideas. In quadrant 1, the situation at the university was stable, while business people continued to draw on their resources. The group agreed that this was the preferred quadrant!
Then they consider quadrant two, where the university was in chaos, and industry had to find alternatives for their services, or they were stuck. Trust relations developed with industry over many years were harmed (again).
In the 3rd quadrant, industry is depressed or paralysed, while the university is unstable. Everybody loses. Good graduates can’t find work, good researchers and lecturers lose hope and possibly leave the system, while business slowly but surely falls behind because the instability is very local. Globally competitors are investing, expanding and growing because the world goes on.
In the 4th quadrant the industry is depressed, meaning that demand from industry is possibly suppressed. The stability at the university is uncertain, meaning little investment takes place. The university does not have the resources to build capability or offers that helps industry, while industry does not have the resources to expand their investment. The whole system just hangs there waiting for something to give.
Now I know that this little scenario exercise was done very fast (we spent an hour on this), and yes, I know it does not address the fundamental issues that the university and government (and politicians) have to sort out. But the leaders quickly realised that their whole strategy was based on a quadrant 1 scenario. In fact, the very academics that always complains about the short term focus of the private sector were now trapped in a short term survival mode themselves. No industry or society can increase its wealth, prospects or competitiveness by waiting, especially when global competitors are at the door, looking for opportunities! This quick exercise helped the team to realise they needed to expand their offerings to be ready for the very likely other quadrants. They also realised that they had to think of ways of adapting their strategy so that the small steps they could take with their existing resources would lay “platforms” or stepping stones for an as diverse as possible range of future alternatives. For instance, one of the technology centres decided to shift its focus from a product development to a process enhancement focus, because there was a strong interest from industry to find ways of improving operations, cutting costs and improving flexibility.
The scenario dialogue enabled several follow up meetings where the team could draw in more people and together re-imagine their future alternatives. Everybody was relieved that they had some options, where before this meeting they felt trapped without many options.
What I tried to illustrate in this post is that a simple scenario exercise could be a great instrument to help a team realise that despite almost certain disruptions, they could still think in the short term and the longer term. They had some options, they could even create more. By anticipating the future they also felt more ready for the disruptions that we are all waiting for.
For me it was also important to see how this team realised that their clients (industry) also faced huge uncertainties, and that if the research centre could offer services that reduce risks and costs while at the same time creating alternatives for market and technological development. Somehow shifting the focus from their own survival (and fears) towards the needs of industry and graduates looking to complete their research helped them move forward. Thus I could help the team consider how they could ensure their clients continue to innovate, which in turn helped the leadership to better understand how they themselves then have to be innovative.
Innovation was instigated!
