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Innovation and Knowledge Strategies for Today's Economy: An Interview With Debra M. Amidon
(December 23, 1997)
by Stuart Haggard, U.S. Department of Veterans Affairs

Debra M. Amidon is the author of Innovation Strategy for the Knowledge Economy: the Ken Awakening, 1997, ISBN 0-7506-9841-1, published by Butterworth-Heinemann and co-author with David J. Skyrme of the comprehensive report, Creating a Knowledge-Based Business, 1997, ISBN 1-898-085-27-7, published by Business Intelligence Limited.

Debra is the founder and President of Entovation™ International, Ltd.—a global consulting network which links forty-seven countries throughout the world. Debra holds degrees from Boston University, Columbia University, and MIT where she was an Alfred P. Sloan Fellow.

Stuart Haggard: Debra, first of all thank you for agreeing to an interview with the Inter-Agency Benchmarking & Best Practices Council (‘Council’). We are excited to talk with you about innovation and knowledge strategies, particularly in the context of today’s global economy.

Question: Your book, Innovation Strategy for the Knowledge Economy: The Ken Awakening, seems to stress the importance of innovation as a critical success factor in global competitiveness. If that were the case, would you please elaborate?

Answer: Most executives agree innovation is a major factor in global competitiveness. A number of current studies draw, or reach similar conclusions. Peter Drucker, in a Harvard Business Review (January-February 1995) article entitled "The Information Executives Truly Need," indicated innovation was the one competency needed for the future and the ability to measure the performance thereof. It is that simple and that complex. Innovation, however, should not be described from the perspective of technology alone. In other words, we are not only talking about technological innovation, decades of history and a body of literature and research. We are talking more about the knowledge-based economy. Most prominent are the principles of knowledge creation, sharing, and application. How innovation relates to economic growth is the focus more than the technology. The result is a redefined definition of innovation according to the flow of knowledge.

You mentioned innovation is a critical success factor in global competitiveness. A critical issues monograph—Collaboration Innovation and Knowledge Economy—is scheduled for release in mid-January 1998 by the Society of Management Accountants of Canada. In short, the focus on competition has not created the kind of synergistic, symbiotic opportunity-based view of the economy. What is needed, is a new orientation from global competitiveness to global collaboration.

Question: What is your view about the differences, if any, in the structure, roles, and applications of innovation and knowledge management in public sector versus private sector organizations?

Answer: The management methodology is identical. The management techniques and even underlying philosophy and principles of practice are the same regardless of the size of the organization, sector of society, or region of the world. What is different is the array of competencies brought to bear. Let me try to explain. I spent a number of years in higher education as a university administrator, time as a government official, and twelve years at Digital Equipment Corporation as an industrial practitioner. I noted far more similarities in those three environments than differences. The language may differ, the focus may differ, but how one manages into the future is virtually the same.

Stuart: Well, Debra that supports the view expressed in a videotape produced by Price Waterhouse on Best Practices featuring James Burke. In that videotape Mr. Burke makes a point that the ‘genetic makeup’ of organizations is 95% the same with organizations having far more similarities than differences.

Debra: Ten or fifteen years ago, such a comment would have been heresy because—industry, academe, and government—seemed to have little or no respect or knowledge of one another. Today, executives realize the unique competencies of other organizations, and the advantages of collaboration with them. Value lies in combining competencies toward shared goals. For example, consider the flow of ideas. No longer do the best ideas reside in the ivory towers. Some of the best ideas come from industry and government. Where the ideas originate is less important; it is more important what is done with them. This is why the focus on innovation is permeating all institutions—so this figure of "95%" is also my experience. It reminds me of a presentation I attended in which the speaker believed the future belongs to those who can cross boundaries, organizations, sectors, and regions of the world.

Question: This leads to another question. What are the greatest barriers to corporate innovation? And what strategies or business practices have proven useful to overcome such barriers?

Answer: Simply stated the greatest barrier is competition for resources. When resources are plentiful—financial, technical or human—many ideas can bloom. When competition for resources arises, people withhold ideas—treat knowledge as power—and build barriers and boundaries. With the impact of downsizing on the morale of individuals and organizational culture, individuals become more competitive at the same time that collaborative practices are necessary to support successful innovation. That does not work in a global economy characterized by intensified global competition, the commoditization of products and services, and increased consumer demands and sophistication.

For all the good created by a decade of intensified reengineering, there has been a concurrent effect of people (fearful of losing their jobs) hoarding ideas and the thwarting of collaboration. What is required is an organizational culture that promotes a respect for one another’s ideas, values people for their individual contributions to the whole, and builds trust.

Question: Can ‘innovativeness’ be taught?

Answer: Some people have the ability to generate more ideas than others—that is a simple fact. I even have chronic "ideaphoria"—a constant flow of new ideas and ways of thinking.

Some individuals have this idea generation ability and it can be nurtured. A second group of people is better at listening—superb at knowing how to develop value from others. Thirdly, there are individuals who are good at exploiting, experienced at selling or marketing, or experts at discovering the value of knowledge at the point of delivery. The innovation value system requires the spectrum of expertise.

What concerns me is the way people are defining innovation. They think invention and innovation are synonymous—where invention is actually the first stage of the process of innovation. Another concern I have is the shift toward creativity at the expense of quality. What is required, of course, is a balance of the two. Perhaps what is needed to be taught, in addition to critical thinking, is a balanced view—this simultaneity—the co-existence of opposites— in the system or concept, which was developed by Mel Horwich of MIT years ago. Innovation by definition balances the quality with the creativity—it balances the operational perspective or short-term with the strategy formulation or long-term perspective—it balances profitability with growth.

Stuart: So what I am hearing in part is concern that the human side of organizations is not getting the proper attention in terms of innovation and creativity?

Debra: Well, it gets even more complicated. The productivity paradox is originally described as a technology paradox—why are we not getting the productivity or economic benefits from the infusion of significant investments in technology? At Digital Equipment Corporation, we established the first industrial-strength management systems research organization in 1988. We created a management architecture. The management architecture had five (5) components: Performance; Structure; People; Process; and Technology. We developed those five components based on mathematical models—which applied a real research rigor to the work. But if one simplifies the architecture, one sees that the five components can be narrowed down or clustered into three: Economic, Behavior, and Technological. But notice that the behavioral component—which includes Structure, People and Process—represents three-fifths of the equation. So the productivity paradox says that we are not getting the economic benefit from the technology because of the behavior implications. Individuals across multiple disciplines are beginning to recognize the value in balancing all three (economic, behavioral, and technological). So the information technology (IT) community is looking at the economic and behavioral implications. The organizational development and training community is looking at the economic and technological implications. The economic community is realizing the intangible value (human assets) of the firm. Companies (e.g., Skandia) are publishing annual reports to document and track intangible value.

I wish to make one other comment in terms of can "innovativeness" be taught. I said that effective strategy requires a balanced approach. I believe it is not a matter of being taught, as much as it is a matter of an environment being created where ideas can flourish, and applied to increase the profitable growth of the enterprise, the vitality of a nation’s economy, and the advancement of society. So three economic levels can operate simultaneously: enterprise, nation, and society. It is a matter of providing the infrastructure, respect, the trust, and the imperative to create value from ideas. The focus is not on training, rather on the environment that supports and fuels learning and innovation.

Question: What ‘best practices’ of knowledge management and corporate innovation can you share with use as a result of your experience?

Answer: In my collaborative work with David J. Skyrme, our research identified an emerging set of business practices that leverage knowledge including: knowledge mapping, knowledge databases, and improvements in knowledge transfer and diffusion. Our work also identified recurring practices such as: (1) knowledge leadership which includes top level corporate support and a clear vision of the role of knowledge organizational success; (2) a clear value proposition of what knowledge is vital to success in key markets; (3) a knowledge creating and sharing culture; and (4) a well developed technology infrastructure. These practices collective represent best practices of knowledge management.

With regard to corporate innovation, the bottom line best practice is that leaders of corporate innovation are learners and leaders.

Question: What aspects or business practices of corporate innovation seem either least developed or understood based on your experience?

Answer: As I was alluding, innovation—defined according to the flow of knowledge—is the language that binds all activities through the value system and networks the activities of individuals, organizations, sectors, nations, and society. In the publication by the Society of Management Accountants of Canada, we actually created a transnational holonomy that connects economic levels into a common vision of innovation. I believe manufacturing is really innovation with a capital M. The roots of the concept came from the manufacturing community, but agility actually traverses all the functions of the organization. The origins of Concurrent Engineering are Innovation with a capital E. The focus on marketing, sales and services, may be innovation with a capital C, and how one brings marketing into research is really at innovation from the perspective of the customer.

The CEO sits at the helm of corporate innovation. If no one has responsibility for managing the ‘cradle to grave’ innovation process and the flow of knowledge is left to serendipity, then by default the CEO owns it. Smart CEOs understand the need for Chief Knowledge Officers and place them strategically in their organizations.

There are excellent examples of CEOs who effectively manage innovation, such as Ray Stata, Chairman of Analog Devices. Remember what I said about resources becoming scarce with downsizing, global competition, and the commoditization of products and services. Competition for resources is absolutely fierce. Functional organizations—engineering, finance, R&D, manufacturing, sales, IT—all develop initiatives competing with one another when it comes to developing a corporate strategy. When these initiatives are analyzed, there are far more similarities than differences.The competition for resources, is not necessarily competition for the economic and technical resources. The competition is more for access to leadership. So, the CEO should view all the competing initiatives together as parts of the innovation process.

Stuart: My experience in government has been much the same that is it is very difficult to get a number of disparate initiatives viewed and treated as being similar or complimentary as opposed to different. One major initiative of my job involves a "One-VA" initiative, which represents a rudimentary attempt to bring together a number of seemingly disparate federal and VA initiatives and reduce redundancies and leverage resources, which continues to be quite challenging.

Question: The report, Creating the Knowledge-Based Business, which David J. Skyrme and you recently authored contains a tremendous amount of information on the subject of knowledge in the context of organizations. What lessons or information can you share with us as a result of your work?

Answer: Five conclusions come to mind.

First, the momentum of knowledge management is increasing and global. There are about 50 knowledge management conferences scheduled in the next year. Conferences have been held in Canada, Israel, China, Latin American, and the European Union. The World Bank has a Chief Knowledge Officer. Individuals and organizations are realizing the importance of knowledge in their work.

Second, the implications of knowledge management transcend any organizational function, sector, or geographic region. The community of knowledge management—brings together the complementary competencies of diverse perspectives.

Third, the movement is one of intangibles. That does not mean financials are not important. Organizations appear to be measuring, what is measurable—not necessarily what needs to be measured. How does one measure the value of interaction, partnerships, collaboration, and innovation? Old ways of managing will not work in the future—the environment is too chaotic. Interactions are more important than before.

Fourth, I would focus on culture. In the report, Creating the Knowledge-Based Business, almost every case study identified the most difficult initiative as the establishment of an organizational culture which values and rewards ideas, learning and knowledge sharing.

Fifth, determining the value and contributions of knowledge are very difficult aspects of knowledge management. What knowledge is most valuable?

In short, the movement is unleashing significant energy at the level of the individual level while at the same time providing a sense of same purpose—economic prosperity.

Question: Several of us on the Council have discussed the possibility of sponsoring a benchmarking study on innovation since our experience suggests a lack of published information and knowledge on this subject and the fact that federal agencies are facing the consequences of the Government Performance and Results Act of 1993 (Public Law 103-62) which promotes outcome-based performance measures, strategic plans, and program evaluation. What are your reactions to this and are you aware of any published benchmarking studies on innovation?

Answer: Well, I am aware of several efforts to track technological innovation—the OECD for example. I think there are exemplary studies supported by the University community evidenced in the international participation in the Innovation Research Center (IRC) and electronic newsletter. In January 1998, McMaster University in Canada will host the 2nd World Congress on the Management of Intellectual Capital. There are numerous efforts to track management practices. The American Productivity & Quality Center (APQC) and Arthur Andersen provide one example. They created the Knowledge Management Assessment Tool (KMAT). APQC has established a clearinghouse with best practices on knowledge management which includes hundreds of organizations.

What I have not seen is the interrelationship or infusion between the economics, behavior, and technology communities. These communities are beginning to converge. I would suggest the scope of any innovation study be international. I think it should be done with other organizations. Have I seen a benchmarking study, which includes work with this kind of scope of innovation and knowledge strategies? No. I certainly would be willing to review the scope of such a benchmarking study. The results could provide a foundation for the World Innovation Congress planned for the World’s Fair in the Year 2000 in Hanover.

One word of caution on a benchmarking study. Benchmarking for the future can be effective. A benchmarking study that focuses on practices that are not novel, documents existing practices. What is needed is benchmarking which provides insights to influence emerging or future practices and establish standards for the ‘World Trade of Ideas.’

The views expressed by members of the Inter-Agency Benchmarking & Best Practices Council do not necessarily represent the views of the U.S. Department of Veterans Affairs.

referring page: http://www.va.gov/fedsbest/Speakers-Amidon.htm?B1=Amidon+Interview

Copyright 1998. Used by permission.


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