This article is a summary of a 45-minute presentation I'm now offering to various conference audiences.
A
couple of years ago, I shifted the focus of my consulting business from
knowledge management (for which executive enthusiasm is definitely on
the wane) to innovation. It didn't take long before I realized the two
are inseparable: Knowledge and imagination are the primary drivers of
innovation in organizations. This article shows the connection between
knowledge and innovation, and why KM competencies and capacities are
essential to any organization aspiring to be innovative.
I should probably start with a definition of innovation. Mine (adapted from the Doblin Group's) is:
Innovation is the collection, assessment and implementation of ideas to transform an organization's:
- Products: product attributes (what it consists of), product performance (how it works), or product platform (how it's offered);
- Processes: internal or customer-facing processes, alliances, or technologies;
- Customer
Experience: service, delivery channels, brand, or 'wraparounds' (the
extras it offers customers, such as a connected and helpful community
of passionate users); and
- Business Model: how it makes money (or at least covers its costs)
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The
world's most innovative companies, such as WL Gore, have created
processes, systems, practices, and organizational structures that
enable them to innovate continuously, as part of their organizational
culture. Such companies are, alas, few and far between. But they are
also, not coincidentally, among the world's most knowledgeable
companies: knowledgeable about how the world works and what's happening
in markets and sciences and arts far removed from their core business.
They are less concerned with what is happening in their own markets and
industries because they are leaders -- their competitors are constantly
kept off-guard by their innovations and struggling to know what these
innovators know. Copycat products, repackaged products and incremental
improvements are not innovation.
This chart
summarizes the high-level complex-system innovative process
(understanding; engaging customers, co-workers and communities;
organizing; imagining; designing; experimenting; realizing; and,
throughout these other seven steps, continuously paying attention,
listening, observing, exploring, discovering, inquiring and canvassing)
that most innovative companies use. Knowledge continually informs each of these eight steps in the process.
This chart
contrasts the information flow in traditional organizations (top)
versus innovative organizations (lower graphic). Innovative
organizations are constantly scanning broadly for new ideas that can be
adapted for innovative purposes. Their 'information professionals' job
is to 'make sense' of the information from both primary (interviews and
surveys) and secondary (Internet and information media) sources. These
organizations share what they learn as a matter of course, in the
knowledge that sometimes brilliant innovations come from serendipitous
learnings. And these organizations engage their customers in continuous
dialogue, to co-develop solutions through a knowledge exchange of needs
and ideas.
The graphic at the top of this articles represents
the knowledge-powered innovation process we helped put in place at one
of our clients. This client was facing fierce competition from
inexpensive offshore manufacturers, and they knew that if they didn't
innovate they would die. The process includes these twelve key
components, most of which are knowledge-driven:
- Current State Innovation Assessment:
A comparison of the organization's current innovation processes
compared to leading practices and compared to the high-level
complex-system innovation process described above. A number of process
improvement ideas came out of this assessment.
- Differentiation Assessment: Competitive intelligence was used to create a strategy canvas
comparing the company's key competitive advantages and disadvantages
with those of its major current (and threatening) competitors. This
assessment drove some major changes to the organization's strategy, and
how it decided to differentiate itself through a series of innovations.
- Innovation Training: Teaching all employees of the organization how to participate in making the company more innovative.
- Innovation Lab:
The creation of an opportunity for employees to 'play' with ideas and
surface and explore potential innovations. This lab started with a
summary, provided by management, of What's Keeping the CEO Awake at
Night, the key challenges and risks the company was facing. Employees
were given a set of tools and resources on their desktops and in a
designated area of the plant, to play with, to see if they could
resolve some of these challenges and risks. Most important, they were
given paid time and permission to 'play'.
- Idea Markets: Using a form of Open Space (much like the Collective Complex-Environment Problem Resolution Process summarized in this article), employee groups and key customers co-developed solutions to some of the organization's most pressing problems and customers' identified unmet needs.
- Customer Anthropology:
We taught the customer how to invite themselves to observe key
customers' use of their (and their competitors') products, and how to
conduct that observation using leading-edge customer anthropology
techniques.
- Need/Affinity Matrix: Drawing on the customer anthropology learnings, they created a Need/Affinity Matrix
summarizing key unmet needs and customer segments that had those needs,
as part of the process of assessing the market for innovations.
- Think the Customer Ahead Sessions: Events were planned to which 'pathfinder' (leading edge thinker) customers were invited, to explore (a) what's keeping customers' CEOs awake at night, (b) key trends and market changes affecting these customers, (c) how these customers' customers'
needs will likely evolve in the near future as a result, and (d)
consequently, how these customers' needs for our client's products will
likely evolve. Nothing quite like seeing the future now.
- Seeing What's Next Program: The organization's researchers were taught to identify and surface future changes likely to affect the company, drawing on the Seeing What's Next sources suggested by Drucker, Porter and Christensen.
- Continuous Environmental Scan:
The researchers were also taught the key steps to conducting a
continuous environmental scan: (a) identifying a broad range of primary
and secondary sources to read, track and survey regularly, (b)
assignment of knowledgeable staff to interpret and summarize
information from these sources, (c) compilation of these
interpretations and summaries into an internal Ideas Newsletter, and
(d) conducting regular Implications Sessions to discuss the ideas and
opportunities presented by the ideas in the Newsletter.
- Tapping the Wisdom of Crowds:
We hope eventually to establish a process for canvassing the 'crowd' (a
selected group of employees, customers and trusted advisors) using a
Wisdom of Crowds process that will provide the client with a sense of
which innovations are most likely to be successful, which risks are
most likely to be problematic, and which learnings are most likely to
be important to the organization's future.
- Imagineering:
We taught the client how to 'imagineer': (a) creating a 'story' for
each innovation idea to help envision how it could work, (b) combining
and aggregating innovation ideas together into logical 'service
offerings', and (c) using a combination of imaginative and critical
thinking to explore and qualify (or disqualify) each innovative idea.
This process proved to be very effective for filtering and prioritizing
the ideas that surfaced from the various innovation programs described
above.
The final step in the innovation process is the
rigorous stage-gating process (to ensure the ideas, no matter how
intriguing, are strategic and economically feasible), and an equally
rigorous commercialization process, to take the successful ideas from
the drawing board into reality and operation.
I think it's
pretty clear that good knowledge processes and resources are not only
advantageous, but absolutely essential, to most of the twelve
innovation activities described above.
Many large organizations
are surprisingly un-innovative, perhaps because with a large market
share and shareholders demanding double digit annual increases in
profit they can't afford the investment in lead time to bring true
innovations to market. This is why innovation is the entrepreneur's
most valuable competitive advantage. A combination of good sources of
knowledge and people with great imaginations, channeled into some or
all of the twelve innovation activities described above, can help any
company powerfully differentiate itself from competitors and
disruptively innovate the industries in which it operates. There isn't
a better formula for success.
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