Knowledge Management – the Engine for Innovation
March 20, 2010 by Andrew (Drew) · Leave a Comment
In advocating for innovation it seems as though “innovation happens” is the mindset carried by many mistaken adherents to the cause. You just have to trust it and it will come, they say (or not). This is the equivalent of saying “magic happens” when faced with a “Mechanical Turk”. Data goes in one end, magic happens, and a desired output comes out the other end. I’m sorry – innovation is not based in gold-pooping unicorns, nor is it something that should be left to the whims of inevitability or caprice. Innovation needs to be specifically and studiously fed a fuel of knowledge in order to succeed. And if knowledge is the fuel, then knowledge management is the engine that drives innovation.
It’s not what you know, it’s what you do with what you know
Of central importance is the changing nature of competitive advantage – not based on market position, size and power as in times past, but on the incorporation of knowledge into all of an organization’s activities.
- Leif Edvinsson Swedish Intellectual Capital Guru
When Peter Senge defined The Fifth Discipline (as opposed to The Fifth Element) in 1994, one of the tenets of embracing the concept of becoming a “learning organization” was the use of effective knowledge management. Knowledge management in his model was a way to accelerate the performance of the organization so that it might better think holistically and systemically, and thereby design better solutions to its challenges faster. It required that organizations not only attract and retain bright people, but that they harness the thinking of those bright people in such a way that their efforts could be captured and populated across the organization.
The issue with knowledge in organizations is not that it isn’t available; the problem is that knowledge is not readily available at the time and point of need. As this dilemma relates to innovation, it is an even bigger issue. Innovation places huge knowledge demands on organizations. To be truly effective it must reach across all knowledge sources both internal to the organization and increasingly, thanks to open innovation practices, external to it. Knowledge must be easily and freely available for recombinant thinking approaches and to be applied directly to pressing challenges. Unfortunately, many knowledge management solutions sacrifice ease and access to the twin overlords or taxonomy and ownership.
Permission-based knowledge management systems, the ones that sequester information into functional groups with associated administrative and rights management restrictions, do not foster and promote the kind of knowledge transfer for which the learning organization calls. They kill it. Is there a place for intellectual property protection and management? Absolutely. But knowledge management need to head towards greater freedom to be of better value for innovation.
Groups filled with big brains and bright ideas applied to thorny issues equals…
Imagination is more important than knowledge
- Albert Einstein
What is the promise of knowledge management? For one thing it enables organizations to leverage their tacit knowledge more broadly among their members. By applying knowledge management to key data sources, and capturing the experience of organization members in an explicit and coordinated manner, the opportunities to decrease the innovation cycle time are correspondingly increased.
To better coordinate knowledge management, via systems and processes not only technologies, user-led innovation communities may be created. Innovation communities when people within an organization who work together explore and create new approaches and then implement them. They are usually a subset of communities of practice or information communities (both of which are commonly tied to functional expertise.) Communities of practice are communities or networks of individuals and/or organizations that coalesce around an information commons, usually a body of knowledge that is open to all on equal terms. The Project Management Institute is one such community of practice.
Knowledge management will never work until corporations realize it’s not about how you capture knowledge but how you create and leverage it.
- Etienne Wenger
From communities of practice, innovation communities may form to directly apply their shared knowledge in new and interesting ways. As the costs of diffusing knowledge are getting steadily lower, as computing and communication bandwidth expand, the geographic dispersion and cultural diversity of these groups may increase, too. This makes the notion of having the big brains all in the same room for innovation to occur (e.g., the Manhattan Project) is no longer a necessity. But as a proponent of both knowledge management and face-to-face communication (and relationship-building) I see a place for them both to continue to coexist.
Dick Brandon once said that, “documentation is like sex: when it is good, it is very, very good; and when it is bad, it is still better than nothing.” In a sense, knowledge management exists in a similar vein. Some, no matter how rudimentary, can be helpful in the development of innovation. The challenge is to “wire up” knowledge so that it is readily available to inform innovation practices, such as, design thinking, ethnographic study, and prototyping. That process is often best addressed at the human interface level.
The innovation wisdom of individuals, crowds, communities, countries
Knowledge without wisdom is a load of books on the back of an ass.
- Japanese proverb
The purpose of knowledge management is to help an organization marshal and management it’s knowledge for the best gain. Knowing who to connect and what to connect them to is a part of the wiring up previously mentioned. It takes a clear understanding of the social network at play in an organization to understand who those people might be that can most benefit from both access and connection. It takes a form of organizational wisdom that many organization’s lack.
In a previous post I discussed a variety of impacts that may be felt through an over-reliance on the formal power resident in the organization chart. Knowledge management cannot fall prey to the turf battles that organization charts so often represent. Instead it must be liberated so that the cross-pollination often necessary for the greatest innovations might occur. Because even if you manage your knowledge carefully – you organize it, structure and store it, within an inch of perfection – if people aren’t using it to help make your organization more effective, efficient, and successful, what’s the point. A better filing system is not the heart of creativity. But knowing and using what you know?
There’s genius lurking in those files. It is just waiting for the right people to use it.
There’s no such thing as knowledge management; there are only knowledgeable people. Information only becomes knowledge in the hands of someone who knows what to do with it.
- Peter Drucker
Customers in Innovation – Sound and Fury Signifying…
March 12, 2010 by Andrew (Drew) · Leave a Comment
The watch words for innovation at present are “open innovation” and “customer-centricity”. The idea that the customer should not only be invited into the innovation process, they should be at its very heart, is of paramount significance. The oft-quoted Henry Ford, “If I’d asked my customers what they wanted, they’d have said a faster horse,” for years held sway over product development. The thinking was that customers don’t know what they want until we tell them and sell them. That may have worked in the era of Mad Men, but customers’ access to data and ability to wield it to their own purposes means that that they can be excluded from product and service innovation at a producer’s peril.
We don’t know what we don’t know
If you’re not serving the customer, you’d better be serving someone who is.
- Karl Albrecht
The fact remains that most companies producing products and services have only a limited perspective on their customers’ needs (as those needs relate to their set of offerings). Which means often the stewards of innovation are flying blind. Recently April Dunford, of Rocket Watcher, posted on why it might be important to run a customer advisory board. Her directives speak to the need to include a customer perspective in the mix that not only provides insight into the customer experience of your products and services, but one that also reaches beyond the horizon to provide a glimpse into potential new markets.
Without customers’ perspectives it is very hard to know limits of what you do and do not know. Inviting them into the mix means that even if you can’t name the dragons at the end of your world (read: market) you can at least see them. The other opportunity to be created by including customers’ views in your thinking is that not only will the community that they form will feed you new ideas and innovation options, that same community will also generate the goodwill that comes from an expanded network. You can create the opportunity for customers to share and network with each other, which may not have an immediate benefit to you, but you better believe it will have a positive return.
One of my personal guides as I ventured into the world of consulting services many years, Nancy Truitt Pierce (the Founder and CEO of Woods Creek Consulting Company in the Seattle, Washington state area) was a great proponent of the customer advisory council. She actually turned the advisory council concept on its head and made networking the heart of its reason for being. She now has a model of consortia that encompass the needs of her customers: technology sector executive peers, senior executive peers, sales executive peers, and CFO’s. Each group meets to share insights, advise each other, and Nancy moderates. Long term many members have become Nancy’s clients and she brings their insights back into her firm to innovate her service offerings
Our customers don’t know but they can show us
Be everywhere, do everything, and never fail to astonish the customer.
- Marshall Field
For many companies though, the customer cannot conceive what they need because they are too close to their issues. No matter how hard they might try to articulate their concerns they fall short. This leads to poor communication and inadequate responses on the part of market to meeting their needs. This is not satisfactory for anyone.
Again, the key is to get closer to the customer so that the path to innovation is as pain-free as possible. The design power-house, IDEO, when working on product design opportunities for their clients uses ethnographic study (targeted, field-based observation) to achieve this end very readily. They have perfected a multi-layered approach to observing the customer experience, that may include questioning, but more often than not involves direct experience of customer’s challenges live, in real-time. Sometimes it involves their staff essentially moving into the home of a customer in order to glean first-hand experience. One of IDEO’s partners, Proctor & Gamble has actually adopted this concept and uses it to drive their own innovation processes.
P&G’s approach is called the “Living It” program. Living It creates opportunities for P&G’s ethnographers to live with customers (willing participants), to observe how they go about their everyday lives. The ethnographers get to rapidly identify customers’ needs first hand by seeing what their customers are trying to do, and how they might be hampered by their environment or the inadequacy of their tools. They can then use these insights to identify potential new products that would make customers’ everyday lives easier. This focus on understanding customers’ needs through jobs and desired outcomes is absent from the question and answer-based innovation process that passes for customer involvement in many companies today.
Opening innovation to the customer experience
The purpose of business is to create and keep a customer.
- Peter F. Drucker
The next step beyond experiencing the customer live and in real-time is to actually open the innovation process so that they are not passively observed; open innovation brings customers into the mix to co-create and design solutions that meet their needs without the filter of internal enterprise interpretation. This kind of inclusion would have been considered nightmarish in past generations. “Invite the customer to develop their own products?! Why the heck would I do that?!” might have crossed the mind of more than one researcher or product developer. The inherent fears at play driving that reaction were loss of control and like Nosferatu, once they were invited into the process they might never leave. The shock was that not only did customers behave themselves, but given their vested interest in the design outcome, they were enthusiastic collaborators.
Stefan Lindegaard, the founder of innovation consultancy 15inno based in Copenhagen, is one of the most vocal proponents of the open innovation model. His advocacy for open innovation is breaking open the discussion about its utility for all types of companies. Previously open innovation was reserved as the practice of larger companies with the funds to develop a customer engagement model (see P&G above), yet Stefan is making the case that open innovation should not only be embraced by all companies, no matter how small, but that it should tap the widest global network possible. His reasoning, why limit yourself when who knows where you might make the best solution connection?
Not every suggestion warrants action (but they all warrant a response)
Innovation comes from the producer — not from the customer.
- W. Edwards Deming
What happens when your open innovation network comes with ideas that are not the right fit for your organization? One of the failings of inviting the customer into the innovation experience is that companies do not actively manage that experience. If you think a customer having a poor purchasing experience can cause havoc you haven’t seen anything until you have seen a customer relationship poorly managed when it is invited into a closer discussion about product development and is ignored, or worse yet, discounted.
Including the customer in your innovation processes requires just as much planning and management as your marketing and sales management processes. To neglect this preparation, or poorly implement the management of the customer experience as you bring them into your organization’s systems and processes can not only damage the immediate client relationship it can actually damage their total lifetime value to your enterprise.
Before a customer suggests an idea that you know you cannot and will not implement, develop a plan to address that potential problem. Either, remove the circumstances in which that request might be formed by developing a set of clearly defined and constantly visible expectations against which you can manage their experience. Or, develop contingent strategies that acknowledge their contribution and defuse its impact. Failure to do so might result in disastrous consequences. Losing customers while trying to meet their needs is certainly not a good result from your innovation efforts.
After all, you are trying to meet their needs not create new ones that they will seek another provider to solve!
Innovation Economies & The Benefit Of Creative Destruction
January 29, 2010 by Andrew (Drew) · Leave a Comment
…Business is not a sporting event. Victory for one company doesn’t mean defeat for everyone else.
- James Surowiecki
Innovation As An Economic Mover And Shaker
Today innovation sits at the heart of economic value creation. If the 1980’s were all about productivity, the 1990’s were about quality, and the 2000’s about globalization, the current decade will most likely be about the capacity of organization to harness the controlled chaos inherent in innovation to create value. With the acceleration of globalization process, innovation is more and more seen as the appropriate tool to create business value. We recognize that innovation within an enterprise occurs in a framework of economic production and diffusion.
That framework is governed by (Porter’s) five major forces:
1. Customers Buying Power. Towards them must be oriented all the efforts of the firm, particularly concerning modifications of switching costs, manufacturing processes, or the positioning of the products and services. Innovation in the way the customer sees your industry or product may directly shift the balance of their buying power. Consider the commoditization of the flat panel TV industry as one area in which that balance has shifted in the space of a couple of years.
2. Suppliers Bargaining Power. Due to their huge power of negotiation, especially when they may be sole supplier in an innovative new industry sector, they are able to use their influence to shift supply chain economies causing disruption.
3. Threat of Substitute Products. Firms must pay attention to the threat of substitutes, and to the fact that followers do not have to support the R&D costs in the production process, and thus are able to implement the innovative service or product at a lower cost.
4. Threat of New Entrants. Anticipating and managing if necessary the different entry and exit barriers should be one of the major preoccupations of the firms operating on the market.
5. Intensity of Industry Competition. Rivalry among competitors has numerous consequences on the level of activity, as well as on the value chain, by increasing or lowering one or several structural elements of the market. Innovation may enable an enterprise to insulate from direct competition due to a technological advance for example.
This microcosm in which a firm survives requires constant surveillance and response as it continuously shifts and changes. What makes an awareness of these forces more important is that the timescale governing observation and impact has shifted; due to marketplace innovations the pace of change and rate of response has accelerated. The undercurrent at work here is that it is not enough to be aware of the environment in which innovation occurs; the effectiveness of the implementation of an innovation is critical. That is what drives economic growth.
It’s Not What You Know – It’s What You Do With What You Know
As a direct response to the neoclassical economics-fostered reasonable allocation of scarce resources, innovation economics focuses on spurring economic actors (the individual, the organization or firm, industries, cities, and even entire nations) to create value through increased productivity and implemented innovation. Innovation is a mighty lever for change and value creation. It disrupts existing systems and plays havoc with what we think we know, creating new paths for the exchange of goods, services but, more importantly, new ideas. It also provokes and promotes growth through expenditure.
Entrepreneurial profit is the expression of the value of what the entrepreneur contributes to production.
- Joseph Schumpeter
As new products are developed, new materials requiring new sourcing capabilities may be required. This creates employment opportunities, which impacts local communities. If those products become viable in the market, a whole microcosm of support is required to support the new endeavor. In the service sector, innovation practices create opportunities through the elimination of wasted time, freeing resources to be applied to other more fruitful activities. All of which is in support of value creation. Yet in order to achieve these ends innovators must forcing critical decisions in their organizations – what do we need to stop doing to make this innovation a reality? Without answering that question, innovation may become stuck.
To Make Something New You Might Need To Blow Something Up
In innovation economics, innovation lies at the center of value creation. Innovation economists recognize that innovation and productivity growth take place in the context of institutions. Indeed, it is the “social technologies” of institutions, culture, norms, laws, and networks that are so central to growth. In the eyes of conventional economists these are the elements that are too difficult to model or study. For a neoclassical economist, the focus is on the use of scarce resources to produce valuable commodities and distribute them among different people. Innovation economists view innovation as an evolutionary process in a market where firms act on imperfect information and where market failures are common.
Economic progress, in capitalist society, means turmoil.
- Joseph Schumpeter
Which leads us to one of the elder statesmen of innovation economics, Joseph Schumpeter. In his seminal work, The Theory of Economic Development (1911, 1934) Schumpeter did more than any other economist to increase the understanding of the role the entrepreneur plays in the capitalist economy. In particular, he defined the crucial role of the entrepreneur in the process of innovation and creative destruction – today it is virtually impossible to conceive of a dynamic capitalist economy in the absence of Schumpeterian entrepreneurs.
The startling thing is that Schumpeter also saw that the capability of the lone entrepreneur to significantly change the world would, over time, be supplanted by innovation through larger collaborative efforts. Schumpeter claimed that due to the application of modern techniques and modern modes of organization the innovation process would become more and more automated. Innovations would increasingly become the fruits of the organized effort of large teams. This would be done most effectively within the framework of large corporations.
Schumpeter foreshadowed, the destruction of the role of the solo inventor, and the subsequent rise of the “wisdom of the crowds” and “open innovation” before we even recognized the larger economic benefits of collaborative innovation. No matter how it is accomplished, Schumpeter clearly saw the case for the chaos and failure that innovation creates.
In fact, successful innovation is normally a source of temporary market power, eroding the profits and position of old firms (disrupting if not destroying their viability), yet ultimately each innovation succumbs to the pressure of new creations being commercialized by competing entrants. The creative destruction resulting from innovation practices is a powerful economic driver because it explains many of the dynamics of industrial change. The ongoing, dynamic transition from a competitive to a monopolistic market and back again, speaks to the impact of innovation economies.
Review: Global Creative Economy Convergence Summit – Philadelphia, PA
October 8, 2009 by Andrew (Drew) · Leave a Comment
As an opportunity to engage in dialogue with creative professionals from a multitude of backgrounds the Global Creative Economy Convergence Summit, hosted by Innovation Philadelphia and held this week in Philadelphia, Pennsylvania achieved this over-arching objective quite handily. Even in the current economy, in which tradeshow and convention attendance has dropped dramatically (in some places more than 33%), it was remarkable how many people turned out from around the world to participate. Attendees ranged from creative professionals, artists and educators, to policy experts, technologists, and government leaders. All eager to connect, share and learn.
For two days the program was packed solid with keynotes, speakers, panels and opportunities to network. As much as I would like to share everything I saw and learned during the event, instead I’d like to share some of the encounters I had with attendees and speakers.
One of the first people I met was Karen Pinzolo, the Coordinator for Arts Plan New Jersey. Arts Plan NJ is a statewide initiative to enrich and inspire individuals, and to actively engage and tap the range of artistic resources available. The Plan seeks to foster their expertise and talents in addressing a diverse range of social, economic, educational and artistic needs. Arts Plan NJ supports: Economic and Community Development; defining the Arts Organization of Tomorrow; Arts Education; Support for Artists; Access to all and broader Participation; and increased use and application of Technology by all NJ artists. This kind of direct arts engagement has the power to be life-changing, and by seeking to tap into artists as resources for the entire community has the potential to unleash creativity. One of the great things about this program is that they have a clear mission and a call to arms. They seek direct public endorsement (I have) which is a great way to engage the community at large.
One of the more interesting panels I witnessed was titled, “Creativity Around the Globe.” This panel brought together the leaders of a range of economic development leaders, all usually working in partnership with local governments but not necessary tied to the local governments. There were four development entities represented which between them covered two international programs (Canada and the UK); two regional programs (the Piedmont Triad of Winston-Salem, Greensboro and High Point, North Carolina and Prince Edward County between Toronto and Ottawa); one city (Sheffield in the North of England); and, one state (Massachusetts). Beth Siegel spoke passionately on behalf of DIGMA (the Design Industry Group of Massachusetts) and highlighted the fact that timing was everything as it took them nearly a decade to get this program off the ground. She also cited the need for seed money in order to have a meaningful impact quickly. But the key question she said that demanded an answer before they could generate any true momentum was, “What do we mean by the ‘Design Economy’?” The answer to that drives their ongoing support strategy.
Perhaps one of the most engaging panels was hosted by Steve Barsh, and include Blake Jennelle the President of Philly Startup Leaders, two of the PSL Board, Chris Cera,(co-founder of Vuzit),Tracey Welson-Rossman (Director of Sales and Marketing for Chariot Solutions), and Geoff DeMasi, a founder of P’unk Avenue, Independents Hall and Junto.org (based on a civic leadership model developed by Benjamin Franklin – that’s what I call old school!) The key learning from this panel: regardless of whether we are solo practitioners or part of a larger team, we all need to collaborate and that hand-to-hand networking and community building is all about the connections we make.
Last, but by no means least, Peter Shankman (founder of HARO – Help A Reporter Out), offered up the following: “Get up half-an-hour early every day. Use that time to connect with people in your network in a way that is meaningful to them (note: he wishes people in his 13,000+ network “Happy Birthday!”). You’ll be amazed at the result.”
Not all conferences deliver what they set out to do. Most over-promise and under-deliver. Given the diverse group of interests, Innovation Philadelphia delivered – and then some.
Bricolage – Innovating with what you have
September 25, 2009 by Andrew (Drew) · Leave a Comment
Bricolage, is a term used to refer to the creation of a work (of art, design or construction) from a diverse range of things which happen to be available, or the work created by such a process. This term comes from the French word bricolage, from the verb bricoler – the core meaning in French being, “to fiddle” or “to tinker”; in contemporary French the word is the equivalent of the English do it yourself (or DIY), and may be seen on big box hardware retail outlets all over France. It is the root of the English word “collage”. A person who engages in bricolage is a bricoleur.
So, why this term and how does it relate to innovation?
So much of the current thinking and writing about innovation is concerned with the new. The love affair innovation “specialists” have with ideation, trying to foster the right mindset to “be creative”, seems to make innovation an important and vital part of an enterprise’s success (which it is) but more often than not leaves it to the domain of a select few “creatives”. The allure of innovation living and dying at the point of gestation may be enticing but it attempts to reduce that which requires hard effort, focus and persistence to a simple application of talent. Thinking about innovation needs to be more expansive. Not compartmentalized. Not only focused on the shiny and new. After all…
There is nothing new under the sun.
- Solomon, King, Builder, Prophet
Now, I’m not talking about line extensions, or incremental change. While there may be nothing new under the sun what we do with what we have speaks volumes about our approach to innovation. Innovation is about seeking solutions. It is about reaching beyond how we presently experience our challenges, so that we can respond with freshness and elan. I was reminded of this recently by a TED Talk by William Kamkwamba a man from Malawi who changed his world through innovation.
At age 14, in poverty and famine, William Kamkwamba built a windmill to power his family’s home. At 22, he gave a presentation at TED about this innovation that changed his life. He built a windmill. Now windmills are not new inventions; they have been in use for millenia. But Mr. Kamkwamba’s creation and building of an electricity-producing windmill from spare parts and scrap, working from rough plans he found in a library book called Using Energy and modifying them to fit his needs, makes him a true bricoleur.
Karl Weick identifies the following requirements for successful bricolage in organizations, which I consider an excellent starter-kit for establishing a more comprehensive approach to innovation:
* intimate knowledge of resources,
* careful observation and listening,
* trusting one’s ideas, and,
* self-correcting structures, with feedback.
This has little to do with the new or the flashy. It has everything to do with what we need to have an place to bring something creative into being. It requires an organizational focus, marshaling our resources, that can help us knit together something possible form what is available. A case of many hands make light work.
If I have seen a little further it is by standing on the shoulders of Giants.
- Sir Isaac Newton, Physicist, Mathematician, Astronomer, Natural Philosopher, Alchemist, and Theologian
The oft-quoted Newton had it right: when we innovate we are standing on the shoulders of those who came before us. We pull from so many directions. We piece together what is at hand and we cobble it together and we make something fit for purpose. We are bricoleurs and we make what we can with what we have.
There is nothing new under the sun save what we’ve found and put to work to meet our present needs.
Global Creative Economy Convergence Summit October 5-6 2009
September 3, 2009 by Andrew (Drew) · Leave a Comment
The Global Creative Economy Convergence Summit is a two-day conference held at the Pennsylvania Convention Center in Philadelphia, PA on October 5-6 which promises to embrace the same values it champions: innovation, creativity, collaboration, shared learning, technology and open source thinking. The Summit will explore the complex ecology that makes up creative economies. It will examine all aspects of what creative ecologies need from physical space, to funding, to access to talent, to emerging technologies, to infrastructure and the policies necessary to create that ecology. The Summit will explore how open source models of collaboration and innovation are changing the dynamics of organizations and how the next generation of leaders, both traditional and non-traditional, are making things happen in their communities.
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