The theory of disruptive innovation, introduced in 1995, has proved to be a powerful way of thinking about innovation-driven growth. Many leaders of small, entrepreneurial companies praise it as their guiding star; so do many executives at large, well-established organizations, including Intel, Southern New Hampshire University, and Salesforce.com.

Unfortunately, disruption theory is in danger of becoming a victim of its own success. Despite broad dissemination, the theory’s core concepts have been widely misunderstood and its basic tenets frequently misapplied. Furthermore, essential refinements in the theory over the past 20 years appear to have been overshadowed by the popularity of the initial formulation. As a result, the theory is sometimes criticized for shortcomings that have already been addressed.

There’s another troubling concern: In our experience, too many people who speak of “disruption” have not read a serious book or article on the subject. Too frequently, they use the term loosely to invoke the concept of innovation in support of whatever it is they wish to do. Many researchers, writers, and consultants use “disruptive innovation” to describe any situation in which an industry is shaken up and previously successful incumbents stumble. But that’s much too broad a usage.

The problem with conflating a disruptive innovation with any breakthrough that changes an industry’s competitive patterns is that different types of innovation require different strategic approaches. To put it another way, the lessons we’ve learned about succeeding as a disruptive innovator (or defending against a disruptive challenger) will not apply to every company in a shifting market. If we get sloppy with our labels or fail to integrate insights from subsequent research and experience into the original theory, then managers may end up using the wrong tools for their context, reducing their chances of success. Over time, the theory’s usefulness will be undermined.

This article is part of an effort to capture the state of the art. We begin by exploring the basic tenets of disruptive innovation and examining whether they apply to Uber. Then we point out some common pitfalls in the theory’s application, how these arise, and why correctly using the theory matters. We go on to trace major turning points in the evolution of our thinking and make the case that what we have learned allows us to more accurately predict which businesses will grow.

Is Uber a Disruptive Innovation?

Let’s consider Uber, the much-feted transportation company whose mobile application connects consumers who need rides with drivers who are willing to provide them. Founded in 2009, the company has enjoyed fantastic growth (it operates in hundreds of cities in 60 countries and is still expanding). It has reported tremendous financial success (the most recent funding round implies an enterprise value in the vicinity of $50 billion). And it has spawned a slew of imitators (other start-ups are trying to emulate its “market-making” business model). Uber is clearly transforming the taxi business in the United States. But is it disrupting the taxi business?

According to the theory, the answer is no. Uber’s financial and strategic achievements do not qualify the company as genuinely disruptive—although the company is almost always described that way. Here are two reasons why the label doesn’t fit.

Disruptive innovations originate in low-end or new-market footholds.

Disruptive innovations are made possible because they get started in two types of markets that incumbents overlook. Low-end footholds exist because incumbents typically try to provide their most profitable and demanding customers with ever-improving products and services, and they pay less attention to less-demanding customers. In fact, incumbents’ offerings often overshoot the performance requirements of the latter. This opens the door to a disrupter focused (at first) on providing those low-end customers with a “good enough” product.

In the case of new-market footholds, disrupters create a market where none existed. Put simply, they find a way to turn nonconsumers into consumers. For example, in the early days of photocopying technology, Xerox targeted large corporations and charged high prices in order to provide the performance that those customers required. School librarians, bowling-league operators, and other small customers, priced out of the market, made do with carbon paper or mimeograph machines. Then in the late 1970s, new challengers introduced personal copiers, offering an affordable solution to individuals and small organizations—and a new market was created. From this relatively modest beginning, personal photocopier makers gradually built a major position in the mainstream photocopier market that Xerox valued.

We still have a lot to learn.

We are eager to keep expanding and refining the theory of disruptive innovation, and much work lies ahead. For example, universally effective responses to disruptive threats remain elusive. Our current belief is that companies should create a separate division that operates under the protection of senior leadership to explore and exploit a new disruptive model. Sometimes this works—and sometimes it doesn’t. In certain cases, a failed response to a disruptive threat cannot be attributed to a lack of understanding, insufficient executive attention, or inadequate financial investment. The challenges that arise from being an incumbent and an entrant simultaneously have yet to be fully specified; how best to meet those challenges is still to be discovered.

Disruption theory does not, and never will, explain everything about innovation specifically or business success generally. Far too many other forces are in play, each of which will reward further study. Integrating them all into a comprehensive theory of business success is an ambitious goal, one we are unlikely to attain anytime soon.

But there is cause for hope: Empirical tests show that using disruptive theory makes us measurably and significantly more accurate in our predictions of which fledgling businesses will succeed. As an ever-growing community of researchers and practitioners continues to build on disruption theory and integrate it with other perspectives, we will come to an even better understanding of what helps firms innovate successfully

Source: https://hbr.org/2015/12/what-is-disruptive-innovation

To build a culture of innovation, ideas must be able to flourish.

All companies acquire culture, with or without trying. Some cultures become more innovative than others. How do they accomplish this feat?

In this post, I explain how companies cultivate innovation by contending with two culture algorithms: one governing individual behavior and the other, group behavior. I provide advice on specific actions you can take individually to grow your innovation culture—and if you’re also a leader, further steps to nudge your organization closer to winning your future.

 Culture begins with you and an idea.

The solid foundation for a science of innovation is our biology. Through this lens, we can see an idea for what it is—a network in our brains. When a new idea comes to mind, it does so because a specific constellation of neurons fires with each other for the first time. Whether your idea is a new way to solve a complex business problem, a tagline in a marketing campaign, or a software application feature, ideas are physical networks of thousands of co-firing neurons.

Mind boggling, right?

Although we do not know precisely how creativity works, we do know that it is an evolutionary process within the brain. It depends on neurons exploring the adjacent connections they can make with other neurons. Through trial and error, we consciously and subconsciously explore variations of an idea, discover its merits and faults, discard unworkable ideas, and nurture the most successful. This process is possible—and only possible—because a specific network of neurons connects with new neurons or adopts a new configuration.

The “idea” of an idea as a network makes several imperatives clear. A network must be both dense and dynamic to produce innovation. We can’t have an epiphany with only a few neurons firing. And even if a network is dense, it must also be changing; a static network is incapable of exploring new possibilities and improving upon existing ideas.

How, then, can we become more innovative individuals? We can push our brains to form more creative networks by placing ourselves in environments that mimic our neural signature—connecting with diverse people and ideas and experimenting with the ideas that emerge.

Step 1: Increase the density, diversity, and dynamism of your innovation network.

First ask, “How extensive is your network?” If your network is small, expand it. For instance, consider attending a virtual cocktail party. And once social distancing passes, commit to never eating alone.

Next ask, “How diverse is your network?” Consider how many people you connect with weekly with different backgrounds and perspectives from yours: teenagers and senior citizens; people who were born in or come from other countries or socioeconomic backgrounds; those with different political leanings from your own; and colleagues from different divisions, professions, and industries.

If your network consists of similar people, make it a priority to identify and get into conversation with people who are different from you. Reach across the aisle. Do it weekly, if not daily, and guarantee that it happens by scheduling it in your calendar—now.

How many conferences do you attend each year? Once they’re back up and running again, attend at least two. When you’re there, make an effort to meet new people and get to know what problems and issues they’re facing. Ask for their ideas and perspectives on the problems you face. If it’s not feasible to attend conferences in person, do so virtually, and set aside time to watch one TED Talk daily. And this is important—engage in the conversation in the comments.

Join an innovation community, and if one doesn’t exist that’s right for you, create one. Meet at least monthly to discuss trends and new ideas. And make sure its membership is diverse and includes members that don’t think like you.

Consider cross-training with experts. Let’s say you’re a Design Thinker and applying another innovation methodology is anathema. Take a course in a competing innovation methodology anyway. You may be surprised by the ideas that emerge.

Step 2: Provide a mechanism for people to easily remember ideas.

Finally, we must remember our ideas. It is in our nature not only to forget but to be overconfident that we’ll not forget. Hence, if you don’t already have a journaling practice, write *everything* down in a book, journal, or if you must, with post-it notes.

Taking these actions will increase the odds that *you* will have a spark, flash, lightbulb moment, breakthrough, or epiphany. And cultivating an innovation culture begins with *you.*

Now, are these actions sufficient to ignite a culture of innovation?

Whether neonatal ideas survive or not depends upon another challenge—how well you can nurture them to be spreadable to others.

Culture evolves as ideas spread to others.

While it is true that ideas happen inside minds, no mind is an island. Our connections with others give flight to ideas. Gossip, internet memes, and well-posed ideas can spread like wildfire. How do ideas like these come to flourish?

There are three characteristics of ideas that thrive. These ideas:

1. Grab and hold our attention;
2. Are easy to remember;
3. Compel us to act.

The others die.

Consider the last idea you encountered. Did you act on it? If so, you transmuted the idea from the world of neurons into physical behavior. Writing an idea down, expanding on it, or presenting it to others gives it life. Liking a post, sharing it, or—even better—commenting on it, amplifies the idea and nudges it to evolve into something more spread-worthy. Your conspicuous purchases advertises desires, beliefs, and ideas to others. So, too, does working to break free from a bad habit and replacing it with a good one. It is action—and only action—that allows sparks to leap from one innovator and ignite another.

Your action gives the idea the potential to be seen, understood, and imitated. If the idea then grabs and holds someone else’s attention, it has another chance to be understood, remembered, and—if useful to the holder—acted upon again.

Ideas that survive take hold, are retold, and over subsequent rounds of retelling, the most spread-worthy ideas will spread widely and eventually take over the culture. As different minds tinker with the idea differently, the idea will cumulatively evolve to become more effective at spreading.

Just as an idea is a network in a brain, culture is a network of ideas that link brains—a set of shared ideas that cause their holders to act alike in some ways.

Therein lies the challenge in stoking a culture of innovation. It’s not enough to have a fully formed idea in your mind of how the world could be and a way to make it so. It’s necessary to translate the web of ideas in your mind into a string of action that is worthy of the attention of others, causes them to seek to grasp the idea, and motivates them to act, thereby transmitting the idea to others.

Action is necessary because we cannot download each other’s knowledge like an app. Without action, an idea lies inert in a siloed mind. With action, an idea becomes noticeable. It can vie for the attention of others, win their acceptance, and affect their behavior. And activities that cause an idea to spread do not need to be an explicit retelling of the idea in writing or presentation. As long as it can be observed and imitated, it can spread.

How, then, can we organizationally become more innovative?

Recognize there’s a direct connection between our biology and culture. We’re not blank slates. We can only use the tools we’ve inherited. Instead of obsessing over innovation theater—such as idea challenges, hackathons, bean bags, and smoothie machines—play with the significant forces that have shaped us over eons.

If we wish to nurture an innovation culture, we must cultivate an innovation network. This approach is sometimes called mimetics, which calls on us to follow biology as a teacher in fostering change. Start by supporting your people with the tools that help them form denser, more diverse, and more dynamic networks.

Foster internal meetups. If you can afford it, pay for their attendance at conferences. Open your all-hands meetings with an external speaker. If that’s unreasonable, play a TED talk.

Pay to train your people in a variety of innovation methodologies. If that is unaffordable, buy them books monthly and incentivize them to study them, such as with 30-minutes of daily paid leave to read.

Give them a place to record and remember their ideas. You could undoubtedly implement a heavyweight innovation management tool. There are effective lightweight solutions, too. Moo, for example, offers high-quality journals suitable for this purpose. At the start of meetings, give each team member a standup-minute to share one new idea. For the most promising idea in a given round, set a clock for ten minutes and allow the team to discuss it. You might be surprised by how quickly innovation begins to increase.

Next, engineer the structure of your innovation network to optimize the flow of useful information. Planning this system requires balance. At one end of the spectrum, a network with no connections and no information flow is like ice—a solid frozen in time. At the other extreme, everyone is connected with everyone else, inundating them with information and ideas. There are numerous collisions—as we see in any gas—but ideas form and dissolve quickly like wisps of clouds. No one retains information.

The best network will find a middle ground. Rather than connect everyone, get the right people connected. Identify who is responsible for making sure the *right* products and services will enter the development process. Your guiding team will likely include a mix of developers, engineers, scientists, marketers, and front-line leaders.

Then ensure they have the information they need to conceptualize winning solutions (i.e., products and services that get the customer’s “job” done better or more cheaply). They must also be able to assess, with a high degree of certainty, which proposed solutions will get the “job” done best and win in the marketplace. They must have a fail-safe method in place for deciding where to invest. In my experience, companies spend far more marketing inferior products to their customers than they spend gathering and prioritizing their customers’ needs. They further forgo opportunities when they fail to disseminate those insights far and wide in their innovation networks—where other innovators can make the best use of that information.

Don’t be that company.

Step 4: Align your teams by giving them a north-star—a strategic intent based on the core jobs your customers are trying to get done.

You also need to give your innovation teams a destination postcard—a strategic intent—that paints a picture of a future worth creating. Here are a few examples of strategic purposes that are job-focused, capture the essence of winning, and set targets that deserve personal effort and commitment:

• “Land a man on the moon ahead of the Soviets.”
• “We want to put 1000s of songs in your pocket.”
• “Save endangered species from extinction.”

(As an aside, Strategyn’s purpose is to enrich lives by bringing predictability to the often-random process of innovation. We’ve thus set our strategic intent as, “Help 30 companies secure a market leadership position in the next three years.”)

What future can you create that inspires you and calls your people to bring forward their best ideas and thinking?

Creating strategic intent is especially helpful when facing tribalism – behaviors and attitudes that stem from strong loyalties to particular social groups, which tend to slow innovation. Tribalism results in different groups pursuing different goals or pursuing the same goals with different beliefs. This misalignment is like many sabretooth tigers, each pursuing different wooly mammoths. Both are now extinct. By appealing to a shared identity, a shared ideal, and shared destination, setting a strategic intent aligns those who get it and want it to work together, as a pride of lions, on the hunt to create a desired future.

Step 5: Live by values that increase the odds that the best ideas emerge and are allowed to spread.

Finally, consider your values. In innovation cultures that flourish, while everyone desires to be right, they collectively want to know the truth. They thereby live by values such as:

1. Everyone must acknowledge that not everyone can be right about everything.
2. Everyone must give airtime to conflicting views.
3. You have to provide reasons for your beliefs.
4. You’re allowed to point out flaws in the opinions, ideas, or thoughts of others.
5. You’re not allowed to forcibly shut people down who disagree with you.

Consider the extreme case in which the opposite of these values is present—it’s the very definition of a static, unchanging culture. Don’t attempt to engineer a culture that is, whether by design or accident, in opposition to these values. It’s a losing proposition.

Culture can be shaped to cause ideas to flourish.

What is a good innovation culture? We can judge the goodness of a culture by its fitness for the organization’s purpose or intent. Ask, “How well does our culture help our people and our customers to get their jobs done?”

Mostly, culture comes to be by accident. Are we taking our good and bad innovation fortune for granted? What if we can actively shape it instead?

I propose that we *can* shape our innovation culture. Let’s carry forward our list of imperatives:

1. As individuals, increase the density, diversity, and dynamism of our own networks of connections with people and ideas.
2. Provide a mechanism for people to easily remember ideas (and find them when forgotten).
3. As leaders, increase the density, diversity, and dynamism of connections *between* people in our organizations.
4. Align our teams by giving them a north-star—a strategic intent based on the core jobs your customers are trying to get done.
5. Live by values that increase the odds that the best ideas emerge and are allowed to spread.

Culture embodies the lessons of our inheritance—both its gifts and burdens. It’s part of what explains our past success. What predicts our future success? Your contribution and our collective ability to help ideas to flourish.

What Is an Innovation Culture?

What happens if you ask a group of so-called innovation experts about their definition of innovation?

Nick Skillicorn did this and he gathered the answers in an interesting blog post that shows how vastly different even topic experts see the term “innovation”.

Here are some examples:

Steven Shapiro:

”Very simply put, innovation is about staying relevant. We are in a time of unprecedented change. As a result, what may have helped an organization be successful in the past could potentially be the cause of their failure in the future. Companies need to adapt and evolve to meet the ever changing needs of their constituents.”

Gijs van Wulfen:

“An innovation is a feasible relevant offering such as a product, service, process or experience with a viable business model that is perceived as new and is adopted by customers.”

Kevin McFarthing:

“The introduction of new products and services that add value to the organisation.”

Paul Hobcraft:

”The fundamental way the company brings constant value to their customers’ business or life and consequently their shareholders and stakeholders.”

Paul Sloane:

“Creativity is thinking of something new. Innovation is the implementation of something new.”

I was also asked to contribute to this experiment and this is my quote: “I try not to define ’innovation’ as we should tone down our use of the word and term.”

If you follow my work, this is no surprise. I believe we need to tone down the use of the word and the term, innovation, and we need to stop using the term “innovation culture” entirely.

On the latter, it is just impossible to create a strong innovation culture, when no one seems to be able to agree on the meaning of innovation. As Nick clearly revealed with his experiment, we have different views even among a group of experts, and I hope you trust me when I say that this problem of having different views and thus a lack of language and understanding around innovation is even worse in large companies and organizations. We need to build strong cultures, but don’t fall into the trap of calling this innovation culture.

However, I am also on a learning journey myself since I started my “crusade” against our usage – or misusage – of the terms. I had a session in New York recently, where the audience provided some compelling views that the term “innovation” is still quite popular among consumers. Thus, it still appears in sales and marketing efforts towards B-t-C target groups although I did get a fairly strong consensus that the work force in many places are fed up with the terms.

This makes me believe that we will see a similar sentiment among consumers in the coming years. They are also tiring on innovation. This raises a big question. What comes next?

Here, I believe that we need to look into an evolution of the terms. On a personal level, I am fond of the term “transformation”. As everything happens faster and faster, we see more and more changes to our business and corporate environments. Thus, we need to transform into something else. We don’t really know what this should be, but my guiding light here is that strong companies and organizations in the future do four things very well – and better than their competitors:

1. They listen better
2. They adapt to what they hear, see and learn
3. They are willing and able to experiment to get the best structures in place based on this
4. They execute better than anyone else.

Thoughts?

Reference: https://blog.hypeinnovation.com/the-definition-of-innovation

There are twin forces at work, feeding off each other. We are facing greater disruption and an increasing innovation pace. These are constantly combining, relentlessly adding new shape to our future. We are actually caught up in a very revolutionary period.

The days of simple product innovation are dwindling. It is through the fourth industrial revolution (also known as Industry 4.0), currently being undertaken, that technology, talent, and new innovation ecosystems are emerging – building greater complexity into our final innovation offerings. Intelligent automation and technology are fuelling this new industrial revolution. And this unprecedented, exponential pace of change is increasingly reliant on collaborative platforms to realize the result: more radical innovations.

Innovators struggle to manage in a new way

Organizations everywhere are facing mounting pressure to transform – to shift from product-centric business models to new models focused on creating and capturing different sources of new value. As a result, innovation is becoming more complex.

At the heart of this transformation is the fourth industrial revolution. Here, manufacturing is fast becoming the digital manufacturing enterprise (DME). The DME is designed to increase response rate and manage in more efficient, connected, and effective ways. There is this growing recognition that everything needs to be connected to bring a different perspective to any global value chain –one of being far more responsive and bringing manufacturing closer to the customer need.

How does your organization feel about our digitally connected world? We are all becoming more connected in the way we work, collaborate, and manage. Organizations are attempting to “fuse” different technologies to manage the existing physical world differently and are preparing themselves for the interplay between the physical and virtual world – one where this “connecting up” is promising to bring us. The ongoing investment in IT infrastructure is drawing in investments. It is changing the nature of where we will look for innovation outcomes in the future.

The fourth industrial revolution is one where we are gaining new knowledge and understanding. It is offering a very different potential for constructing new business models, products, services, and societal solutions. Many manufacturers are still in the early stages of this fourth revolution, but you have this sense of feeling that we are continuing to disrupt everything we know.

Welcome to the 4th industrial revolution

Wherever we turn in the manufacturing world, the technological revolution immerses us. The scale, scope, and complexity are things we’ve certainly never experienced. It is exposing us to exponential technologies. But what does that mean?

We seem caught up in such levels of velocity, scope, and systems impact – it is seemingly exponential, occurring at faster rates of change. Companies are radically overhauling entire systems of production, management, and governance on a constant basis of change. We have unprecedented processing power, storage capacity, and access to various avenues of knowledge. These are being combined with emerging technology in fields such as artificial intelligence, robotics, 3D printing, nanotechnology, biotechnology, material science, and quantum computing. It is creating fresh challenges and opportunities within innovation. Are we equipping ourselves to explore these?

Of course, we have faced industrial revolutions before. But, being caught up in one tends to leave us often conflicted. The first industrial revolution was based on water and steam to mechanize production. The second revolution was the use of electric power that led to the creation of mass production. Then we had the third revolution, where electronics and information technology started to deliver automated production. This fourth one builds on the third. It is the digital revolution where we are witnessing a fusion of technologies that seem to be blurring the lines between those past established borders to open up different meaning and business potential. It is truly exponential.

Confronted in multiple ways

We are looking increasingly to our engineers, designers, and scientists to unlock these new knowledge flows that bring us whole new areas of technological-based innovation. Product innovation is continually giving way to new concepts that have technology built into them. Our innovation has become increasingly complex, connected, and contextual.

Our industry value chains are being radically redesigned to accommodate “connected worlds” being more reliant on “everything” being digital. This is giving us new options for adapting quality to differently defined market needs. We are learning to respond digitally, in more dramatic and dynamic ways, to reflect pricing opportunity on increasingly opportunity marketing, so as we can appeal to wider sets of audiences or push our offerings out to explore different market potential.

As we continue to design manufacturing to be fully connected-up, we can adjust faster, scale differently, and deliver quantities to varying cycles of demand, closer to the need of the day and more appealing to the customers. Our innovation scope changes with these new dynamics.

Today, we see a different spectrum of choice. We can order personalized clothes online that reflect the latest fashion, seen only days before. Manufacturing and delivery are taking days and not months to be available in-store or delivered to your door. We can design our own shoes. We can build complete vacation packages, designing our travel to meet our specific needs and budget. More and more, we want tailored experiences or solutions that fit our design need, not just “items” sitting on the shelf.

Mass production has given way to tailored design. We can track our orders, and we can engage directly with those that can deliver to our specific needs. Our engagement and growing relationship with customer service, our needs, and the organization’s service and response are all changing. All provide innovation opportunity to exploit.

Manufacturing is in a massive transformation

Manufacturing has progressively formed around cyber-physical product systems (CPPS) that are merging our real and virtual worlds into a seamless one. Software is optimizing every process and task, whether performed by humans or machines. These are ongoing online networks of machines connected in similar ways to our social networks that are linked through technology and digital infrastructures. Everything has become “smart.”

The revolution underway is connecting all the parts: the “internet of things” (IoT), of data, of services, and of people. We are very much still in the middle of this revolution, but it is where innovation will greatly benefit as this connecting-up continues.

We are constantly seeing progress occurring all around us. For example, we’re now more dependent on cloud processing and data storage than ever before. We are recognizing the value of having digital twins to simulate our manufacturing environment. We are designing software solutions specifically to simulate different scenarios, mirroring our real time to test options and optimize different set-ups, to reflect demand.

Our manufacturing plants are becoming far more integrated – virtually integrated. We are building industry 4.0 open standards so increasingly we can connect across manufacturing ecosystems even more, so as to reduce disruption or provide greater flexibility. We are exploring data analytics for learning and predicting, and this is placing a greater emphasis on collaboration, experimentation, exploration, and coordination from all this connecting-up.

Consequences of the 4th industrial revolution

We must reflect on all these direct consequences of the fourth industrial revolution. Where technology has combined with the physical to raise our customer expectations even further, it has given us different product enhancements that fit with our lives, one where we can contribute and collaborate more.

The customer is increasingly at the epicenter of the economy. The products and services are enhanced through the digital capabilities that boost their value and worth. New materials are making our assets more durable and resilient, and data and analytics provide valuable feedback needed to build even better services and performance for the future. All this connecting and reacting is requiring new forms of collaboration, and we are seeing new types of organizations emerging. They are far more dependent on platforms and ecosystems. Innovation is the unlocking mechanism.

We are required to alter our understanding of Innovation due to this 4th revolution

The consequences of the fourth industrial revolution can be seen in the shifts of our emphasis taking place around innovation. We are focusing more of our innovation spend on technological innovation. We are constantly looking at the changes to our existing business models to reflect these changes, and we are integrating our innovation systems to explore entirely new business models.

We are connecting innovation more than ever. For example, choosing a blockchain technology requires significant collaboration and technology understanding. We are reliant on so much to generate “our” innovation solutions, far more than in the past.

The interactive World Economic Forum map is worth exploring. As you click on the links, you quickly recognize how interconnected our innovation has become. Not just in being able to produce accepted solutions but being having a ‘richer’ choice on where to focus our innovation efforts. Our innovation is becoming reliant on the fourth revolution and how it is all connecting us up, to provide our future growth through greater collaboration.

Reference: https://blog.hypeinnovation.com/innovation-fourth-industrial-revolution

To address these challenges, our deep tech fund team will focus on deficiencies at both the firm and ecosystem levels to help companies realize their market value in a more compressed period.

1. Improve coordination among government departments

Many countries have made it a priority to develop strong deep tech ecosystems. Canada is no exception. Numerous federal departments and agencies are keen to increase collaboration with deep tech firms. However, government players often have a hard time engaging with the private sector, while start-ups struggle to access public procurement programs.

BDC Capital’s Deep Tech Venture Fund team will try to act as a matchmaker between government and start-ups. Our goal is to connect departments and agencies with leading technology companies.

For example, quantum company Xanadu recently secured a $150,000 federal research project and a follow-on $1 million prototype project. We believe that this kind of industry-government collaboration can go a long way to helping commercialize these technologies in Canada.

2. Strengthen links to corporations

Large corporations are not investing enough in Canadian R&D and, as a result, our country is losing talent and important IP to other countries. While many large local and foreign corporations are eager to collaborate with Canadian deep tech firms, start-ups are often ill-equipped to explain their value proposition and generate interest. In general, the ecosystem is still young and needs to do more outreach to corporations.

Our deep tech team has a successful track record of building relationships with the senior management of leading corporations interested in supporting the development of Canadian firms. The fund will work to encourage corporate support for Canadian deep tech firms by becoming major customers and/or development partners for them.

3. Bolster technical and managerial support

The development of start-ups is often slowed by gaps in technical and managerial expertise. Because the ecosystem is so young, there is also little engagement and coordination between deep tech communities in Canada. Instead, deep tech clusters tend to coordinate more with foreign markets than with each other.

Our team we will provide technical expertise, insights on specific segments and facilitate market entry to portfolio companies. We will also provide them with coaching, networking opportunities, market insights and access to potential customers. At the ecosystem level, we have many partnerships that position us well to cultivate a Canadian deep tech community, bringing together a diverse set of participants from different industries for mutual benefit.

4. Compress the runway to commercialization

Deep tech firms typically have a longer timeline to maturity than other VC-backed firms. Besides their novel technologies, applications often have a hardware component, which requires a longer development period. Additionally, a lack of funding for Canadian deep tech companies has tended to slow their development.

We recognize the longer development timelines for these industries and that’s why our fund’s life is 12 years in contrast to the usual 10-year life of a general VC fund. We will be a patient partner for firms, investing enough capital in successive funding rounds to allow them to scale up and develop their products. Nevertheless, we believe that with better funding, stronger links to government and private sector actors and better access to technical and managerial support, start-ups in this domain can substantially accelerate their timeline to commercialization.

On the path to a vibrant deep tech sector

As BDC Capital, we are confident that Canada has everything it needs to build a vibrant, globally competitive deep tech sector. However, much work needs to be done to ensure that start-ups have the support they need to turn exciting discoveries into transformative products and services.

Our new Deep Tech Venture Fund knows bringing Canadian innovations to global markets will take more than just dollars. That’s why we will play a leading role in nurturing partnerships between government department and agencies, private sector players and start-ups to grow international champions for the benefit of Canadians for decades to come.

Results-only innovation is an exploration of what is viable and pragmatic. This can help produce additional value for businesses and end users.

Every business wants to be innovative, but not all companies understand what innovation is—and isn’t. Large companies with well-funded research and development programs often point to those as evidence of their innovation capability. In reality, their teams are usually engaged in work that’s more akin to invention than innovation.

There’s a difference between invention and innovation. The invention process involves creating something entirely new, whereas innovation is the process of recombining, repositioning, or reimagining the fundamental elements of an existing concept to produce new value—a remix. The size of the team engaged in this process and the tools and techniques they use are irrelevant. What matters is creating demonstrable, quantifiable value rather than focusing on upfront research and development or generalized “experimentation.” The focus should be on scalable, industrialized services.

Firms that consistently engage in this kind of pragmatic innovation, or “results-only innovation,” can disrupt industries and change consumer behavior. Others can expand product lines or gain operational efficiencies. Not every attempt is successful, but the chances of success are inherently better when firms employ results-only innovation.

The Art of the Pragmatic

While innovation is often viewed as an exploration of what’s possible, results-only innovation is an exploration of what is viable and pragmatic. It requires practitioners to continually ask why things are the way they are. For instance, why choose a particular design? Why prioritize user-centricity? Why focus on a certain development?

Rather than look for ways to replace a product or process, practitioners determine what value that product or process delivers to end-users and to the business. Then, they seek ways to amplify it.

One modest alteration to the design and development process can introduce a broader understanding of potential value. Firms with innovative corporate cultures are always improving. They understand that creating new value doesn’t necessarily mean overhauling what already exists. Rather, they invest in results-only innovation by pinpointing what needs to change.

Many firms focus on the minimum viable product or first release product to the detriment of moving toward a scalable solution. Too often, considerations regarding the creation or augmentation of the business built around the product are given short shrift. For some, this might be the tech infrastructure (e.g., DevSecOps or CloudOps), but in many cases, it’s a series of added factors (e.g., the tech infrastructure plus team capabilities, go-to-market initiatives, organizational change management, and executive buy-in).

How Data Makes a Difference

The best way to pursue pragmatic innovation is to introduce a new, equally-weighted facet: data. When deciding whether to pursue innovation, practitioners might ask a multitude of questions related to this important business asset. For example, what data becomes available through a modification? How can it be mined? Can it inform other product or business decisions? Can it be sold? Should it be sold? Could it power artificial intelligence models or advanced analytics?

Smart firms will also ask whether the data generated through the process of innovation can contribute to further innovation in the future. Innovative companies are far more likely than competitors to invest in data-intensive technologies and projects, according to a recent Harvard Business Review report.

Innovation ROI is often viewed as something separate from the pursuit itself. However, practitioners of results-only innovation take the opposite viewpoint. By weighing the prospective business value, user value, and data value that could be derived from their work, teams gain a clear understanding of success and can focus their efforts and investments accordingly.

Investing in Results-Only Innovation

The Harvard Business Review report revealed that 42% of organizations planned to increase their innovation budgets in 2021. Those that adopt the principles of results-only innovation will likely see significant returns in terms of greater efficiency, more revenue, or increased customer satisfaction, among others. Companies that want to be among them should keep these three tips in mind:

1. Don’t be afraid to challenge central expectations

A recent McKinsey & Co. survey found that many global executives are halting innovation to focus on other priorities in the wake of the COVID-19 pandemic. Unfortunately, doubling down on what has worked in the past is not a path to stability or growth. In fact, it can make organizations more vulnerable as time goes on. Firms should continually question their expectations so they can adjust them when necessary—and before it’s too late. Impact requires commitment even when things don’t go according to plan.

2. Strive to reject orthodoxy that exists for its own sake

Just as firms should question their expectations, they should also feel comfortable challenging the assumptions they’ve relied on to get where they are. Even if those assumptions were correct in the past, they might not be in the future. Companies tend to have good reasons for doing things a certain way, but that shouldn’t stop them from looking for better alternatives. A culture of innovation and creativity is also one of perpetual discontent with the status quo. Innovators should welcome debate, as the ideas pursued should hold up to the scrutiny of multiple viewpoints and the rigor of multiple challenges. Any decisions made should be supported by facts, evidence, and data.

3. Understand the need that underlies a process or workflow

Don’t approach reimagining as merely an exercise in iterative improvement. Ask why a process exists in the first place, and strive to quantify the business, data, or user value that it delivers. This is especially useful when designing customer experiences. About 58% of innovation leaders believe that customers will pay a premium for better experiences, according to the same Harvard Business Review report. By starting the innovation process with a clear understanding of customers’ needs and desires, leaders can augment the value they deliver and design new and exciting experiences that customers are ready to purchase.

Although firms should always aim to create new value, the innovation process won’t always result in success. But a failed experiment is not a failure of the entire effort. It represents a tested hypothesis — and those don’t always come back with the expected results. Companies should aim for measurable results with quantifiable value. If they fall short, then they strengthened the workflows and thought processes necessary for future success.

Source: https://innovationmanagement.se/2021/11/18/create-better-business-outcomes-with-results-only-innovation/

Established firms’ strategies remain characterized by the inability to master—some will say even comprehend—the economics of choosing. It is particularly surfacing unresolved relationships between [1] technical-technological, [2] economic and [3] social combinations taking place within established firms e.g. manufactured product.

Hayek (1937) already explained that “Since equilibrium is a relationship between actions, and since the actions of one person [here the board of directors] must necessarily take place successively in time, the passage of time is impossible to exclude from a meaningful equilibrium theory.” Lakatos (1970) brought a contextualization by saying that since we replace a theory in the light of an alternative, we should consider not isolated theories but a sequence of them in a “scientific research program.” Decisively, Senge (1990) declared that system thinking is a philosophical alternative to pervasive “reductionisms” in Western culture including the pursuit of simple answer to complex issues. Recently, Noteboom (2010) circumscribe a description as “hard core explanatory principles, surrounded by a protected belt of subsidiary assumptions.”

Reconciled Candidate Innovation Methods

1. On the technical-technological front, Clayton Christensen (1997) demonstrated that “successful, outstanding companies can do everything ‘right’ and yet still lose their market leadership—or even fail—as new, unexpected competitors rise and take over the market.” In this vein, Clayton explained that the technical trajectory of the firm was becoming obsolete because a new one was interfering, overnight, coming from “the low end of the market,” in the form of new economic patterns, leaving the owners of the market at bay.

2. On the organizational front, with entry thinking initiated by Penrose (1959), David Teece, (1997, 2017) argues that production function is quite sterile and demonstrated that intellectual impasse could be opted out while applying the capabilities principles. In short, tangible and intangible resources, and more, upscale themselves into capabilities. As such, ordinary capabilities allow “to do things right” (efficiency) and dynamic capabilities “to do the right thing” (innovation).

3. Both theories enjoy an overwhelming consensus and admiration, although with an enduring quality of being “abstract” and “with limited utility.” In fact, practitioners agree both, but do not mark out quantitatively any. To my assumption, both principles are belonging to the same mechanism and therefore are both part of the solution. Accordingly, it must be reconciled.

Disruptive Innovation Capability = Technical Path Dependency

4. Regarding the disruption theory, we are now accustomed that “lucky entrepreneur” can take over the market from the established firm. Technically speaking, it means that we can find a continuum, but economically there is a shift in ownership. The process turns in “new hands of competencies,” organized “against” the established firm (Christensen, 1998). As a matter of fact, innovation scorecards of established firms eventually reveal a “hard core.” Academics call it path dependency, which is singled out in the disruption phase. Schumpeter (1934) already told us “that the economic perfect and the technological perfect need not, yet very often do diverge, not only because of ignorance and indolence but because methods which are technologically inferior […]. At this point the economic element is sharply contrasted with the technological.” Critically, practitioners need a new repertoire of action that isolates the path dependency i.e. disruptive capability.

5. Regarding the capabilities theory, researchers like Ambrosini and Bowman (2008) support that “while many fields address change-related issues (eg. organization learning, cognition, innovation …) none, expect the dynamic capability perspective, specifically focuses on how firm can change their valuable resources over time and do so persistently.” Yet, Winter and Nelson (2002) alerted us that, amid “an impressionistic level of competence puzzle,” a repetitive enforcement of capabilities seems to hold a secret, an opaque meaning that is trapped in the bizarre. “Real actors simply do not have the vast computational and cognitive powers that are imputed to them by optimization-based theories. Decisions defy basic principles of rationality and sometimes border on the bizarre.” Disruptive capability “at the heart of innovation” aims to unlock the philosophical bizarre.

6. Unfortunately so far, economic reality does not necessarily carry out the methods to their logical conclusion and with technological completeness, but subordinates the execution to economic points of view (Schumpeter, 1934). A possible transcript could be that zero level, ordinary and dynamic capabilities are economic in nature and disruptive capability is technical. To prevent falling into the hands of lucky entrepreneur, practitioners need to overcome this bizarre sequence by isolating a firm’s disruptive capability that will be instrumental to sense, seize and reconfigure.

Systemic Economic Phenomenon Unfold During Consecutive Materialisation of Four Types of Capabilities

7. Upon Nelson and Winter, solution paths may include a steady state or a set of them. But the commitment to the […] behavioral assumptions does not depend on the achievement of steady state. [On the contrary], modelers typically sought to analyze behavior and phenomena under roughly out of the equilibrium. Edmund Hesser (1859-1938) is speaking about “pure consciousness” which can be reached through “phenomenal reduction;” a method whereby all factual knowledge and reasoned assumptions about a phenomenon are set aside so that pure intuition of its essence may be analysed.

8. This is where disruptive innovation and its dilemma settle into its firm phenomena. All four does magnify an organic and systemic economic phenomenon that is composed of zero level capability [Nelson and Winter, 2002], ordinary and dynamic capability [Teece, 1997-2020] and disruptive capability [Chenevier, 2021]. Dilemma becomes phenomena paradigm; the later bearing one passage of time ref. ad infinitum (Collis, 1994).

9. This mental model, definitively optimistic, intends to comprehend the end of an economic phenomenon (yours as a board member?) as blackboard time to reconfigure the technical orchestration, on the premises of “the last thing.”

Source: https://innovationmanagement.se/2021/12/07/innovator-dilemma-vs-innovator-phenomena-the-theory-of-the-firms-phenomena/

Innovation transformation requires multi-faceted talents who can combine a profound understanding of big-size organizations, with a rebel spirit and a drive for change.

We summarized 10 peculiar traits of these talents. 

1. REBEL

To make a corporation change, you need to be a rebel by nature. This role requires you to challenge the WoW of a company that is just not as innovative/rebel as you are. You’ll have to provoke and instigate change in people, for the better.

2. EMPATHETIC

When you’re transforming the culture of a 400,000-employee organization, you’re impacting on the life of 400,000 individuals. Great empathy is required to understand the point of view of multiple people, so that you can design a change program that takes everyone into consideration and impacts people’s life positively.

3. INSPIRER/STORYTELLER/MOTIVATOR

Most people see change as a scary, perilous path. A great Change Manager has the innate capability to inspire and motivate, by showing how the new ending point would impact positively the organization, and by building a strong relationship with the people involved.

4. PROJECT-ORIENTED

Many Change Managers have to follow up on dozens of innovation projects. Project management experience is certainly required to keep the pace of multiple initiatives running in parallel and to deal with dependencies.

5. BUT ALSO… BIG-PICTURE ORIENTED

Project management skills are just as important as the ability to look at all the projects from a global perspective. A multi-layer viewpoint is required, to have a good view of both the project and the organizational level.

6. EXPERIENCED IN INTERNAL POLITICS

A corporate is packed with internal politics. Innovation projects are the perfect fuel to spark internal fires. A Change Manager will need to spend a lot of time on internal communication.

7. RESILIENT

It takes a certain energy to transform the culture of a company. Great transformation leaders get their fuel from extreme challenges and are persistent to make change happen, even if it takes a while before they see concrete results.

8. EXPERIENCED IN DT AND LS

Solid knowledge of Design Thinking and Lean Startup methodologies is a fundamental requirement for anyone who is building new capabilities at an organizational level. This knowledge should combine a theoretical approach with hands-on experience, thus assuring a perfect overview of both pros and possible challenges of these techniques.

9. ADAPTIVE TO EXCEPTIONS AND FAILURE

An Innovation Transformation program deals with a monstrous number of uncertainties. A great Change Manager can find quick answers when the plan needs to change and can find a learning experience every time failure occurs. In other words, keep the transformation goal in sight, while being open to change how to get there.

10. STRATEGIC SIGHTED

Innovation projects fall by definition out of your companies’ comfort zone. Can you inspire others with a clear vision of where else the company needs to look?

Reference: https://www.boardofinnovation.com/blog/innovation-transformation-lead-change-manager/