Entovation International


Blueprint for the 21st Century
Innovation Management

by Debra M. Amidon, Founder and Chief Strategist, Entovation International Ltd.
(Journal of Knowledge Management, Volume 2, Number 1, September 1998)

This paper argues that the foundation for a new economic order has been laid. It is one that rests on the value of human potential and how it might be systematically leveraged for the benefit of mankind. The challenge is to determine the integral linkage between human potential and economic performance. This will be accomplished by creating a worldwide innovation vision and culture, supported by innovation tools, techniques and metrics.

Introduction

The challenges that confront institutions approaching the third millennium are complex, diverse and compelling. Such change dynamics are kaleidoscopic in nature, transformative in impact and international in scope. One could take on the traditional planning role of identifying and overcoming obstacles in attempts to control the environment so as to minimize any negative impact. Such has been the focus of competitive strategy for the past three decades.

A more constructive strategy is collaborative and synergistic. It embraces the inevitability and strength of change in ways that catapult learning forward, stretch imaginations and define common ground for contributions from diverse paradigms. Such a strategy recognizes the value of the whole and its interrelated parts, operating as an evolving ecological system in which streams and cross-currents of activity are opportunities to harness the value of knowledge.

The Case for Innovation

The Business Intelligence (UK) research project documented in Creating the Knowledge-Based Business contains 33 leadership case studies that illustrate the various dimensions of Knowledge Management (Skyrme and Amidon, 19978 pp. 67-68). In almost every case references are made to the need to create a culture of sharing, openness, learning, collaboration, trust and innovation. Peter Drucker claims innovation, and the ability to measure the performance thereof, is the one competence needed for the future. In the accompanying survey performed by Ernst and Young, innovation is the primary attribute most important to an organization’s future in both Europe and the United States.

The graphic in Figure 1 portrays the next wave beyond re-engineering and quality. In what has become known as Charles Handy’s Sigmoid curve, enterprises must transform at point A. If they reach point B, it is too late.

 

Figure 1: The emerging wave of the sixth generation
Figure 1: The emerging wave of the sixth generation.
 

Overlaid on the graphic are five business generations. A sixth stage has been added that represents work done with Leif Edvinsson, Vice President for Intellectual Capital, Skandia, where managing the future is the real agenda for the 21st century. In Power of Innovation, the 1996 Supplement to the Interim Report, the image used is that of a powerful wave to depict the complex, but robust, innovation system needed to manage the intangible assets of an enterprise (Skandia, 1996).

 

Creating the Innovation Culture

Creating the culture where knowledge is valued and shared effectively is one of the most difficult challenges faced in practice. One of the primed influences may actually be the competitive environment that has been developed over time and begins with a child’s birth. Competition is healthy when describing sports, and it was appropriate for an economic climate where resources were plentiful. Once global competition became a reality, available resources shrank rapidly overnight. However, the knowledge economy promises an abundance of resources if the metrics and measurement systems can be properly defined.

Of primary importance is the innovation language – a language that transcends the paradigm and biases of one function or another. Ideally, such a language would also encompass industries, sectors and regions of the world, and therefore be universal in scope. There are several attempts to define the language with a glossary of terms. Of course, the language must be adapted to the heritage, purpose, mission and strategy of a particular entity. It is important that the language be established and pervade all operations and planning efforts. The intent of this paper is to suggest that the language can best be created under the rubric of innovation strategy – redefined, of course, according to the flow of ideas.

Culture extends beyond the enterprise. When the stakeholders in the process are considered (e.g. suppliers, alliance partners, distributors, customers, competitors and even the customer’s customer), the view of the knowledge base from which organizations might learn is expansive. The Strategic Business Network (SBN) is illustrated in Figure 2. This model is in direct contrast to Alfred Sloan’s multi-divisional structure for organizations, which was well suited to the Tayloristic industrial paradigm. Dividing the large enterprise into independent strategic business units was considered the optimal way to measure performance.

Figure 2: Strategic Business Network
Figure 2: Strategic business network

However, the dynamic economic climate demands a networked, fluid organizational structure that balances accountability with responsible risk taking. It is not the parts themselves that add value, but the synergistic nature of the whole, the value of which is greater than the sum of the parts. This is the nature of fusion and the result of symbiotic learning networks, both human and technical. Demonstrated value resides in the interfaces between the boxes, sometimes described as the white space, which must be the object of our performance management systems.

Shared purpose is essential for an enterprise to thrive in the dynamic global economy. Amidst the turmoil and chaos of the past decade, throughout downsizing and re-engineering processes, many organizations have lost their sense of direction. Initiatives have become fragmented and, worse still, internally competitive. Interestingly enough, it may not be the financial resources that are scarce today as much as the mind-set and available commitment time of the enterprise leaders. Too often managers operating in the traditional, competitive work climate are managing initiatives with unnecessary duplication of effort and sub-optimal allocation of resources. In many instances organizations must find a way to coalesce, rededicate themselves to a common agenda, and respect the complementary competencies that can be brought to bear. Creating the community of innovation practice may be one way to begin the process.

Innovation Overview

Excerpts from some of the more recent publications in which we find documentation on the foundation for an economic climate based upon the value of human potential and the flow of knowledge in the terms of innovation are listed below:

World Economic Survey
The Organization for Economic Co-operation and Development (OECD)
European Union
United States of America
The World Bank

 

 

Crafting A Worldwide Innovation Vision

Innovation must be in the head, heart and hands of every participant in the system. It does not mean that everyone is an expert technician and expert marketer at the same time. What it does mean is that everyone has knowledge of the entire innovation system and his/her particular role in that process. It does mean that there is some common language and shared purpose, and that the boundaries fade between functions, sectors, industries and cultures of the world. It means that there is a basic trust, mutual respect and collegial competencies. In addition, it is likely that a thirst for learning pervades the culture.

That being the case, players at all enterprise levels (from microeconomic to macroeconomic) can share these modern management philosophies, an in so doing overcome the barriers and obstacles to progress. Academics, government officials, industrial executives and non-profit practitioners may all participate in this community of innovation practice. With this in mind, a three-dimensional transformation matrix has been and can be applied (see Figure 3). This includes the activities that can be mapped according to the different economic levels, as well as the three elements of the architecture: economic, behavioural and technological.

Figure 3: Three-dimensional transformation matrix
Figure 3: Three-dimensional transformation matrix

Management accountants should think about their activities, according to three time lines: immediate (one year), medium term (one to three years), and long term (three to six years). These can be completed function by function, business unit by business unit, company to company, sector to sector, and nation to nation. In short, this is the blueprint that could provide a mega-level view to contrast the innovation activities.

This is an analysis that can be performed to any useful level. In considering a vision for the future, the stretch is the creation of the global innovation infrastructure, with regional collaboration for shared prosperity.

Germany hosts The World’s Fair in the year 2000. Hundreds of theorists and practitioners in the new community of knowledge practice ill convene for a Worldwide Innovation Congress. Economic, behavioural and technological issues will be reconciled there. A common language will evolve that promises to bring together the foundations of knowledge and the process of innovation in ways never before considered.

This vision is achievable. It is inevitable that some events will prompt a worldwide understanding of the real value of intellectual capital and how it can be put to societal advantage. Given recent initiatives by the European Union, the OECD and The World Bank, such a vision may be closer to reality than previously thought.

 

Calibrating the Innovation Strategy

How might one get started? A Knowledge Innovation™ litmus test is provided as a sample of questions to be answered for an organization to assess its capacity for innovation (see Entovation International's Litmus Test). There are actually over 70 questions in the full assessment available in text or software application form (Amidon, 1997, pp. 62-63). The questions provide a sample of ten carefully researched dimensions of innovation and may be answered individually or in a group. Using this as a dialogue tool, participants may get a better understanding of the complementary competencies that can be brought to bear.

If seven out of the ten questions were answered in the affirmative, it is likely the organization has a good handle on the innovation process and knows how to create an environment for the optimal flow of ideas contributing to the vitality of the enterprise. Primarily negative responses to these basic innovation questions should drive an organization to examine its processes for bringing ideas to market and leveraging intellectual capability into the future. Even if the score is high, the questions can frame an innovation dialogue.

Conclusion

The foundation for a new economic order has been laid. This does not mean the answers are known, but there exists a better understanding of the elements of the infrastructure and the right questions to be addressed. This is a very different paradigm from previous agricultural, industrial or service economies. It is one that truly rests on the value of human potential and how it might be systematically leveraged for the benefit of mankind. The challenge is to determine the integral linkage between human potential and economic performance.

The knowledge economy only affords an unprecedented opportunity for creating the future. This is a climate in which ideas will be valued, but only as they are applied to advance society, however that may be defined. The answers lie in an effective innovation strategy, redefined according to the flow of knowledge: ideas to prosperity.

Increasingly management responsibilities will be viewed as facilitating the learning process, which includes external stakeholders (e.g., suppliers, distributors, alliance partners, customers, and even competitors). How these relationships are managed is far more a matter of collaborative expertise than the competitive skill with which most are familiar.

Values, valuation and valuing will gain prominence as executives search for what to measure, and how and when to evaluate performance. Only when we have a common language across borders – functions, industries and countries alike – can we begin to explore the prospects for collective prosperity.

The identified trends (established, emerging and over the horizon) provide a glimpse of the fundamentals of the future. Implementation will vary (company to company, industry to industry, nation to nation), but coming to a common understanding of a mutual mission could enable better utilization of financial, technical and human resources.

With the emerging community of innovation practice, it is understood that various practitioners throughout the value system can contribute. How they are engaged in a common mission determines how they are able to leverage their complementary competencies. Rather than competing for resources and spheres of influence, individuals, groups, organizations and nations can realize what they have to gain through collaborative versus competitive strategy.

The core premise of the future is collaboration. This does not mean that organizations do not compete; competition is inevitable. It does mean that that their orientation shifts to one of sharing and leveraging one another for mutual success. In national and global terms, this is described as creating the common good from which all benefit. Previous eras have experienced reliance upon resources that are depleted. Perhaps the era based upon the bountiful resource of knowledge provides an opportunity for true global symbiosis.

Organizations must create the integral connection between the value of human capital and economic prosperity. What is obvious is that this cannot be done in a vacuum. Creating the knowledge innovation language, culture and shared vision is by definition a collaborative process. History will document how well this transition is led.

 

Bibliography

Amidon, Debra M., Innovation Strategy for the Knowledge Economy, Butterworth-Heinemann, Boston, MA, USA, 1997, pp.62-63

Brown, Harold and Herzfel, Charles (Eds.), Global Innovation/National Competitiveness, The Center for Strategic and International Studies, Washington, DC, 1996.

Bush, Vannevar, Science -- The Endless Frontier, A Report to President Roosevelt, Order No. NSF 90-8, National Science Foundation, Arlington, VA, USA, 1945.

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Miller, Riel, Measuring What People Know: Human Capital Accounting for the Knowledge Economy, OECD, Paris, 1996.

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Paye, Jean-Claude, "Policies for a knowledge-based economy," OECD Observer, No. 200, June/July, 1996, p. 5.

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Skandia, The Power of Innovation, Supplement to the 1996 Skandia Interim Report, Stockholm, Sweden, 1996.

Skyrme, David J. and Amidon, Debra M., Creating the Knowledge-Based Business, Business Intelligence, London, 1997, pp. 67-68.

Stevens, Candice, "The knowledge-driven economy," OECD Observer, No. 200, June/July, 1996, pp. 6-10.

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This paper is extracted (with additional information added) from Collaborative Innovation and The Knowledge Economy, Management Accounting Issues Paper No. 17, published by The Society of Management Accountants of Canada (ISBN: 1-894091-40-X). This report is available in English and French for $20.00. It may be ordered from the Society, PO Box 176, Hamilton, Ontario, L8N 3C3, Canada. Tel: +1 905 525-4100, Fax: +1 905 525-4533. E-mail: orderdesk@cma-canada.org. Website: http://www.cma-canada.org.

Debra M. Amidon may be contacted at Entovation International Ltd., 2 Reading Avenue, Suite No. 300, Wilmington, MA, 01887, USA. Tel: +1 978 988-7995 Fax: +1 978 863-0124. E-mail: debra@entovation.com. Website: http://www.entovation.com/.

 

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