What’s your biggest problem in turning great ideas into great outcomes?
- Coming up with the idea?
- Turing the idea into a tangible product or service design?
- Or building support for it among stakeholders?
It’s time to look up from our book on association management best practices to understand that the answers to today’s or even tomorrow’s challenges for creating healthy, strong and vital organizations may lie beyond our boundaries of thought or spheres of influence.
If you want to innovate says Hansen and Brikinshaw in their HBR article “The Innovation Value Chain”, you need to develop an end to end disciplined approach for turning an idea into a product or service from idea generation to conversion to gaining market acceptance. A common theme is the integration and collaboration between and among internal and external stakeholders.
Hansen and Birkinshaw ideas for the innovation value chain are research based including P&G who founded the extremely successful Connect and Develop strategy (see link to the right under the category Peer Production) that spawned an 18% growth in revenue.
“The innovation value chain is derived from the findings of five large research projects on innovation that we undertook over the past decade. We interviewed more than 130 executives from over 30 multinationals in North America and Europe. We also surveyed 4,000 nonexecutive employees in 15 multinationals, and we analyzed innovation effectiveness in 120 new-product-development projects and 100 corporate venturing units.
The innovation value chain view presents innovation as a sequential, three-phase process that involves idea generation, idea development, and the diffusion of developed concepts. Across all the phases, managers must perform six critical tasks-internal sourcing, cross-unit sourcing, external sourcing, selection, development, and companywide spread of the idea. Each is a link in the chain. Along the innovation value chain, there may be one or more activities that a company excels in-the firm’s strongest links. Conversely, there may be one or more activities that a company struggles with-the firm’s weakest links. “
Once you have “isolated” your weakness, consider practices that draw on more open and diverse practices to generate, design or promote your ideas.
Adding Dynamism into the Mix
A great post by Nick Brumleve from The ROK Blog adds an important ingredient to this approach. Nick says that diversity itself is the key to innovation. Not having a system to promote and measure it research shows retards your whole ability to innovate.
We are not talking about cultural diversity (e,g, race, creed, etc), but more about diversity of thought. This is more like the central thesis of “The Medici Effect” by Frans Johansson who believes that transformative innovations often occur at the intersection of different fields and industries.
How do you measure diversity of thought? Brumleve says, “a potential measure for diversity may be ‘dynamism’, a word used by Edmund Phelps, the Nobel Prize winning economist, to mean “the fertility of an economy in coming up with innovative ideas that are technologically feasible and profitable.”
Brumleve explores how dynamism can measure the capacity to innovate.
Over the past year, Phelps has written a number of commentaries in The Wall Street Journal that explore dynamism within the dichotomy of two economic systems – the economic system found in the West and the economic system found in Western Continental Europe.
Though both are systems of ownership, the economic system in the West (including US, Canada, and the UK) is marked by great openness to the implementation of novel ideas from all directions. The economic system in Western Continental Europe (including Germany, France, and Italy), on the other hand, is marked by large social institutions, including employer confederations, unions, and monopolistic banks. These and other institutions are aimed at protecting the interests of local stakeholders, sheltering the procurement of ideas from external forces, by essentially wrapping markets in a conformist cocoon of high entry barriers.
Phelps has found a striking difference between the amounts of dynamism present in the two economic systems. According to Phelps, the free enterprise system of the West – bearing the diversity of experience among managers, consumers, and financers on the selection of which innovations to undertake – facilitates and stimulates dynamism. In contrast, the Continental system – supported by measures to protect ideas from differing viewpoints and fluid market conditions – impedes and discourages dynamism.
The openness to implement new ideas from diverse sources is what ensures the equal opportunity Phelps refers to. Diversity, in this sense, is the foundation of innovation and implementation.
Ah! So it seems the more walls we throw up to protect our turf the less innovation a system is capable of generating. Well that explains alot. If you have the high ground in your association because of tenure, tradition, etc, why would you risk losing influence or power to a new idea?
Finally, Brumleve shares another study conducted by Geoffrey West in another HBR article “Innovation and Growth: Size Matters” where an analogue is presented between the laws governing organisms and the laws governing innovation. Social organisms consume resources and rely on networks for the flow of information and materials like their biological cousins.
In this study West and his team gathered data from a range of urban centers from around the world. The team measured characteristics including energy consumption, economic activity, infrastructure, intellectual innovation, and employment of “supercreative” people. Like the economy-of-scale relationships found in biological systems, these urban systems showed very similar scaling – a doubling in population requires less than a doubling in resources. To the team’s surprise, however, the study revealed that characteristics with no natural analogue – intellectual innovation and employment of creative people – had an exceptionally linear scaling – a doubling of population has a more than doubling effect on the amount of creative and economic output.
Yet, while this study seems to support population size as the determinant of innovation, one cannot overlook the fact that with the flattening of our world, the importance of a location’s scale has nearly disappeared. Small economies that once relied on the Continental economic system have found it no longer necessary to fly in the slipstream of the few large economies that do the majority of the innovating. In today’s knowledge-based economy, ideas no longer need to percolate up through companies’ R&D labs but rather can be offered from a researcher at home or a lone entrepreneur in Timbuktu (e.g. InnoCentive).
Brumleve ends with this.
If we acknowledge that we are, regardless of our industry, competing on an innovation landscape, we must then seek out diversity: diversity from around the world, from our backyard, and from within. Our flat world no longer affords us the time to rely on finding the “best practices” others have implemented or the patients for business theory to become mainstream before considering it actionable. We should not seek our twin when searching for improvement opportunities; we should seek out diverse inspirations for change and for a view of our future environment. Innovation success comes from looking beyond today and beyond our walls, looking farther a field than our competitors.
So do you think you can open up enough to create a community as dynamic as US firm Slim Device’s 12,000 customer product innovators? Or InnoCentive’s 110,000 biochemists?
Or are you willing to let the death spiral descend and watch other bright, industrious folks who we say we want as members, take their ideas and try them elsewhere?