Frost Psl Article 220208
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February 7, 2008
How To Farm Lightning™: sustaining innovation in a shrinking world
Abstract In this article Brendan Dunphy argues that we need a new approach to innovation as we move from the “age of plenty” to a “new age of scarcity” driven by global demand for energy and raw materials, the sustainability agenda and environmental pressures. We will require new business models, radical innovations and new relationships to meet the challenge of “business unusual” rather than “business as usual”. These will only come about if we can learn to innovate on a much broader scale beyond our products and the walls of our company and truly embrace customers and partners in the innovation process.
The role of Innovation Innovation will need to become a central core capability for most organisations during the transition from plenty to scarcity, it will be essential to survival, let alone prosperity. Today most businesses are not designed or enabled for innovation but rather operational efficiency; innovation is at best an after-thought once the real work is done. Without re-tooling from within innovation and change will be at best sporadic, always painful and require extensive external intervention. Innovation theory and practice has come a long way in recent years, often driven by the accelerating capabilities of new technologies and the products and business models they enable. Its time to get serious, understand what is happening and why and build innovation and change capabilities into the way we do business. In short, it is time to stop hunting and start farming!
Stop Hunting, start Farming As part of the Frost & Sullivan “How to Farm Lightning™” innovation programme, we have identified the shifts in perspective necessary to re-focus and democratise innovation as the central sustainable asset for success. The 5 shifts that are most relevant to partners and partner relationships are: 1. From Products & Services to Process, Organisation and Partners – creating a sustainable capability to innovate and not just within the organisation but endto-end across its value chain, from Customers and channels to Suppliers and Partners. This expansion of innovation beyond the realm of New Product Development (NPD) will require radical expansion of the partner interface as both senior management and operations staff will need to engage on a much more frequent and pro-active basis, seeking opportunities as well as solving problems. This will require education, tools and protocols beyond what exists today. © Brendan Dunphy & Paul May 2006-2008
1
February 7, 2008
How To Farm Lightning™: sustaining innovation in a shrinking world
2. From the “Innovation exception” to the “Innovation norm” - we need to reverse the attitude that innovation is an occasional and painful experience and make it the norm. We need to ask the question, “why are we not innovating”, rather than “why are we innovating”. We need to create a business model that rewards our partners for their participation and actively encourages and motivates participation. Innovation will need to move from the “sporadic” to the “seasonal” with an innovation cycle clearly defined, understood and integrated by all involved. This will take new forms of collaboration, more open and accessible tools and an open and trusting culture with much higher level of transparency than we are used to today. 3. From High priests and sects to democracy and teams. The era of the “lone innovation star” is over. Romantics may cry but today‟s world needs not just stars but whole constellations where collaboration and sharing is the norm, not the exception, and not just within our galaxy, but embracing all in our networks. We will still need some exceptional talent but we have to provide an environment that is more supportive of them. Many more people will need to be equipped to contribute to the innovation journey, to use collaboration tools, communicate and work in virtual teams with those else where in the world and from different cultures. 4. From competing suppliers to competing eco-systems. Many Tier 1 industry leaders can only move forward if their supply chain is able and willing to followsuit. Industry-wide sustainability initiatives in areas such as CO2 reduction will not work without re-inventing existing relationships focused on broader and longerterm goals and relationships. Customer-Supplier expectations can be hugely different and without re-thinking and compartmentalising the relationship progress will be handicapped. The depth and complexity of innovation and collaboration required in the future will render existing „command and control‟ supply relationships redundant. Tier 1 players will need to create “innovation platforms” of selected partners in exclusive relationships and competing with their 3 or 4 competitors on a global basis. 5. From closely held to widely shared – the need for transparency will continue to grow in the world of scarcity and across the entire value chain. The impact of our actions for others is often obscured today; the “externalities” (such as the costs of pollution or re-cycling) go unmeasured in economic terms. Once these costs are known it becomes difficult not to address them and it is not enough to simply transfer them from one part of the chain to another. Solving these problems will take unprecedented levels of cooperation and failing to do will open up opportunities for disruptive innovation from the outside. All these shifts will require a change in how we perceive not just innovation, but relationships, information and trust. They will require a fundamental re-appraisal of the way we work together within and across corporate boundaries and the creation of an © Brendan Dunphy & Paul May 2006-2008
2
February 7, 2008
How To Farm Lightning™: sustaining innovation in a shrinking world
environment primarily designed to make this happen, not as an afterthought. They will test partnering approaches we use today and demand more from them. Are you and your organisation prepared?
Fig1 : Making change happen within a company requires a clear roadmap driven by strategy, with clear goals, leadership commitment and excellent facilitation.
About the authors Brendan Dunphy Brendan is an independent consultant and business adviser working with Frost & Sullivan for over 10 years. He has worked as a Director of an ICT technology lab, advised a wireless VC fund, started several businesses and helped numerous international corporations and teams to change to achieve their business strategies via innovation and thought leadership.
Paul May Paul is a business consultant and author who works widely with innovative businesses. He has developed innovations in insurance, procurement, intellectual property management and mobile applications.
© Brendan Dunphy & Paul May 2006-2008
3
How To Farm Lightning™: sustaining innovation in a shrinking world
Abstract In this article Brendan Dunphy argues that we need a new approach to innovation as we move from the “age of plenty” to a “new age of scarcity” driven by global demand for energy and raw materials, the sustainability agenda and environmental pressures. We will require new business models, radical innovations and new relationships to meet the challenge of “business unusual” rather than “business as usual”. These will only come about if we can learn to innovate on a much broader scale beyond our products and the walls of our company and truly embrace customers and partners in the innovation process.
The role of Innovation Innovation will need to become a central core capability for most organisations during the transition from plenty to scarcity, it will be essential to survival, let alone prosperity. Today most businesses are not designed or enabled for innovation but rather operational efficiency; innovation is at best an after-thought once the real work is done. Without re-tooling from within innovation and change will be at best sporadic, always painful and require extensive external intervention. Innovation theory and practice has come a long way in recent years, often driven by the accelerating capabilities of new technologies and the products and business models they enable. Its time to get serious, understand what is happening and why and build innovation and change capabilities into the way we do business. In short, it is time to stop hunting and start farming!
Stop Hunting, start Farming As part of the Frost & Sullivan “How to Farm Lightning™” innovation programme, we have identified the shifts in perspective necessary to re-focus and democratise innovation as the central sustainable asset for success. The 5 shifts that are most relevant to partners and partner relationships are: 1. From Products & Services to Process, Organisation and Partners – creating a sustainable capability to innovate and not just within the organisation but endto-end across its value chain, from Customers and channels to Suppliers and Partners. This expansion of innovation beyond the realm of New Product Development (NPD) will require radical expansion of the partner interface as both senior management and operations staff will need to engage on a much more frequent and pro-active basis, seeking opportunities as well as solving problems. This will require education, tools and protocols beyond what exists today. © Brendan Dunphy & Paul May 2006-2008
1
February 7, 2008
How To Farm Lightning™: sustaining innovation in a shrinking world
2. From the “Innovation exception” to the “Innovation norm” - we need to reverse the attitude that innovation is an occasional and painful experience and make it the norm. We need to ask the question, “why are we not innovating”, rather than “why are we innovating”. We need to create a business model that rewards our partners for their participation and actively encourages and motivates participation. Innovation will need to move from the “sporadic” to the “seasonal” with an innovation cycle clearly defined, understood and integrated by all involved. This will take new forms of collaboration, more open and accessible tools and an open and trusting culture with much higher level of transparency than we are used to today. 3. From High priests and sects to democracy and teams. The era of the “lone innovation star” is over. Romantics may cry but today‟s world needs not just stars but whole constellations where collaboration and sharing is the norm, not the exception, and not just within our galaxy, but embracing all in our networks. We will still need some exceptional talent but we have to provide an environment that is more supportive of them. Many more people will need to be equipped to contribute to the innovation journey, to use collaboration tools, communicate and work in virtual teams with those else where in the world and from different cultures. 4. From competing suppliers to competing eco-systems. Many Tier 1 industry leaders can only move forward if their supply chain is able and willing to followsuit. Industry-wide sustainability initiatives in areas such as CO2 reduction will not work without re-inventing existing relationships focused on broader and longerterm goals and relationships. Customer-Supplier expectations can be hugely different and without re-thinking and compartmentalising the relationship progress will be handicapped. The depth and complexity of innovation and collaboration required in the future will render existing „command and control‟ supply relationships redundant. Tier 1 players will need to create “innovation platforms” of selected partners in exclusive relationships and competing with their 3 or 4 competitors on a global basis. 5. From closely held to widely shared – the need for transparency will continue to grow in the world of scarcity and across the entire value chain. The impact of our actions for others is often obscured today; the “externalities” (such as the costs of pollution or re-cycling) go unmeasured in economic terms. Once these costs are known it becomes difficult not to address them and it is not enough to simply transfer them from one part of the chain to another. Solving these problems will take unprecedented levels of cooperation and failing to do will open up opportunities for disruptive innovation from the outside. All these shifts will require a change in how we perceive not just innovation, but relationships, information and trust. They will require a fundamental re-appraisal of the way we work together within and across corporate boundaries and the creation of an © Brendan Dunphy & Paul May 2006-2008
2
February 7, 2008
How To Farm Lightning™: sustaining innovation in a shrinking world
environment primarily designed to make this happen, not as an afterthought. They will test partnering approaches we use today and demand more from them. Are you and your organisation prepared?
Fig1 : Making change happen within a company requires a clear roadmap driven by strategy, with clear goals, leadership commitment and excellent facilitation.
About the authors Brendan Dunphy Brendan is an independent consultant and business adviser working with Frost & Sullivan for over 10 years. He has worked as a Director of an ICT technology lab, advised a wireless VC fund, started several businesses and helped numerous international corporations and teams to change to achieve their business strategies via innovation and thought leadership.
Paul May Paul is a business consultant and author who works widely with innovative businesses. He has developed innovations in insurance, procurement, intellectual property management and mobile applications.
© Brendan Dunphy & Paul May 2006-2008
3
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