Thursday, April 21, 2016

“CIO Master” Tuning XIII: Three Aspects in Building Innovation As Business Capability

Innovation is a unique business capability to reinvent business, but not to reinvent the wheels.

Innovation becomes simply “creating value by solving problems in a new way.” Today, at the hyperconnected business ecosystem, innovation can happen anywhere, anytime, it expands both horizontally and vertically. There are many ‘flavors’ of innovations: systematic innovation, customer-centric innovation, open innovation, design-driven innovation, or management innovation. It’s the state of mind to think and do things from a new angle, and it’s a critical element of the business strategy and the unique business capability to gain a competitive advantage in the face of fierce competition and business dynamic. So what are further aspects in building innovation as a unique business capability?

Being innovative is more important than any specific innovation: Innovativeness is a way of thinking. The biggest source of innovation within a company is built on culture - the collective mindset. But creating an “innovation culture” involves the good alignment of people, process, and technology, partnership, manner, etc. Otherwise, it won’t sustain. Innovation is all about doing things better, differentiating yourself from competitions, run, grow and transform the business. Change is not always equal to innovation, but innovation is CHANGE. While the change was often previously discrete, intermittent, and predictable, it is now constant, discontinuous, and unpredictable, so we need to change the way we change. And that's why innovation is a strategic imperative for any business today. This is where absorptive capacity, dynamic capabilities, learning agility, etc. are needed. We don't really know the future of the industry or the environment, but we prepare ourselves to create it better and compete in it. The essence of innovation is made of trying new combinations of known things. It's the essence of evolution. Each human being is a potential innovation by definition as you won't find two humans that are exactly the same. We are all new combinations of the known, with the brainpower to discover unknowns. Therefore, being innovative, not just doing innovation.

Fine tune organizational structure and innovation ecosystem: Innovation isn't a magic word. Innovation is a discipline that, if practiced well and understood fully, reads more like a blueprint than science fiction. Overly rigid hierarchy or processes hamper innovation. If you want to be an "innovative organization," you need to shape your current business structure to match your current stack rank of areas where innovation will reap the most significant benefit. Innovation then happens in three ways - it enhances your CORE business capability, it finds a better balance with adjacent marketing, or it is completely new, which is transformative. An Innovation ecosystem is a systematic innovation methodological environment or a sort of "professional philosophy" for innovation. An enriched innovation ecosystem enables systematic innovation management. It starts with innovation strategy defines "WHAT does the organization innovate" or "where should it innovate" to support the overall strategy. The strategy is tightly connected to the business model and provides the context for the innovation. Innovation often has a lot to do with external circumstances, and management tends to focus on internal circumstances. But just because innovation is greatly influenced by external circumstances doesn't mean the innovation system of the organization is or should be unstructured. The robust process and tools that enable any entity generate winning concepts for innovation management on the consistent basis, which is the prerequisite for sustaining advantage and growth. There are many areas within a company where the innovation process can be applied to create value, from communication innovation to culture innovation, from process innovation to business model innovation; from product innovation to service innovation, the innovation context goes beyond the traditional scope,

Looking at innovation from the perspective of developing business-wide innovation capabilities: Innovation has three phases: discovery of a problem or new idea, designing a prototype solution and the ultimate delivery of a commercially astute outcome. That the best point of view is to see innovation as a system, capable of delivering organization-wide capability. The organizational content is the innovation capability which is how does the organization innovate. This requires an effective 'innovation system' that is capable of supporting both widespread incremental innovation in products/services and ways of working as well as the rarer 'step-change' innovation in products/services, working methodology, business model, and market positioning. Innovative organizations deploy a range of different management, technology, process, and structural solutions. Innovation management requires the highest risk taking at a strategic value chain; including organization, investments, and assets. Create a disciplined, managed space for developing and testing new models, products, and business approaches. Innovation ecosystem or the methodological environment should cover the whole innovation process, from processes in managing ideas or idea handling systems to idea implementation and promotion.

Innovation is a unique business capability to reinvent business, but not to reinvent the wheels. There are many components in an effective innovation environment or ecosystem, each by themselves may not cause a good environment, but collectively they can build a set of unique innovation capabilities and weave an innovation ecosystem to build a high-innovative and high-performance organization.


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