Wednesday, June 30, 2021

Top-down, bottom-up, outside-in Innovation

The ultimate innovation isn’t what you do; it’s why you do it, what you deliver for results, and how being innovative becomes the state of mind individually or collectively.

Innovations in the digital age are coming at seemingly a much faster pace, more change, more potential disruption. It is a structural management process which involves many steps: the generation of an idea, the demonstration of its feasibility, its implementation, its commercialization, and its diffusion. 

At today's modern organizations, variety, hyperconnectivity, diversification, cross-boundary collaboration, and structural flexibility increase innovation intensity and expand the ever-evolving digital innovation ecosystem. Methodologically, there are incremental and radical innovations. Breakthrough innovation is most of the time a bottom-up exploration or process, and incremental innovation is a top-down management discipline; collaborative innovation is an outside-in effort to solve problems that many people are concerned about and generate unbelievable value in alternative ways.

Incremental innovation as a top-down management discipline: Most organizations take an evolutionary journey to improve their organizational maturity by managing both balance and growth cycle effectively. Incremental innovation is often driven from top down by taking a systematic approach to manage innovation with a continuous delivery of products/services/process. This requires an effective 'innovation system' that is capable of smelling growth opportunities, sensing “chance & risks” in improving working methodology, business model, market positioning, as well as managing and sustaining widespread 'step-change' incremental innovation in a structural way.

Incremental innovation is usually a top-down management practice, more science than art. Innovation science is rather more a complex of rules, practices, and examples than theoretic science. Innovation management requires knowledge, involvement, and commitment. Thus, innovation managers should create a sense of urgency to stretch up, have a bigger innovation appetite, and take the time to ride innovation curve. That also includes the effort to scale innovation and amplify its impact. So they have lots of potential and also better chances for the success of evolutionary innovation.

Scientifically, innovation is the mechanism through which you grow and evolve something to something great. Large companies are much better at incremental innovation than at radical innovation as usually they have more rigid rules, structure, or processes, not to mention that the realities of corporate life don't allow those companies to spend all their resources on radical innovation, because of the high percentage of risks of failure. A sound innovation management discipline with the right set of principles and guidelines help to further frame innovation processes, measures, and control.

Breakthrough innovation as a bottom up problem-solving scenario: Breakthrough innovation usually starts with a problem, having no solution in the current situation or existing solutions cause too many side effects. Emergence and timing brings uncertainty, but also opportunities to nurture breakthrough innovation. That’s why you can’t manipulate it from top down. Breakthrough innovation comes from the side window surprisingly. Sometimes you don’t know what you want until certain trends or technology evolution brings new chances to innovate - how to solve those existing or emerging, significant issues innovatively. Even though you cannot control, futurists or visionaries have passion to predict and industrial gurus show their expertise to analyze. Other times, you know what you want, but do not know how, that’s why it often comes from the bottom up -changing how things are being created, it is the new s-curve, which mostly requires new concepts, new knowledge, or new technology.

Breakthrough innovation is often disruptive and will change your organization or even the industry in many fields. It brings something that did not exist before at all, by creating or gathering technologies or processes, in order to bring new steps that can open to other innovations and enhancement, even trigger the chain of incremental or radical innovation. Breakthrough Innovation is better with greater ROI but with much greater risk. The radical and market-changing breakthrough innovations are specifically enabled by systems-level specifications of all the relevant products or services interactions currently and potentially tied to the targeted products or services to solve either technical, economical, or social problems seamlessly.

Collaborative innovation via outside-in collective creativity: Due to the fact that innovating in today’s digital world has become increasingly complex in nature, it’s usually a collaborative effort. The digital boundaries are not sharp lines, they are fluid and cursive to streamline information and idea flow for adapting to changes. It breaks down the variety of silos and enforce cross-functional, industrial, and cultural collaboration and innovation. Highly innovative enterprises proactively develop the information-savvy and resource-rich innovation hubs and hyperconnected digital clusters across enterprise ecosystems for enabling idea flow and creating synergy to growth. Those innovation clusters morph into larger entities that have sufficiently large internal resources and collective system potential to manage innovation in a structural way.

Modern digital technologies have made such broad-based collaborative innovation increasingly easy, and enable companies to leverage various environments or ecosystems to take multi-industrial collaboration. The smaller business players can also gain economies of scale of innovation through cross boundary communication and collaboration. The larger enterprise can renew the creative energy and rejuvenate their organization via developing the culture of learning and engaging customers/partnerships in their continuous digital conversations. It also ensures that interdependencies and loyalties between partners are taken into account and builds up a strong innovative ecosystem with harmony. In fact, many companies have never been better positioned to break out of the static industry box and engage in outside-in innovation to spark creativity and unlock collective human potential.

There is more flow of creative ideas, the innovation pie actually gets bigger as well. The good or bad innovation would depend on the business’s attitude to nourish a culture of creativity and its aptitude to manage ideas and improve the success rate of innovation. Regardless of what type of innovation initiative you take, it is important to note that within the organizations, innovation is rarely an individual action; rather, it is a team effort, and even an ecosystem level collaboration nowadays. The ultimate innovation isn’t what you do; it’s why you do it, what you deliver for results, and how being innovative becomes the state of mind, individually or collectively.


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