Author Archives: toni

Innovation and power: a touchy relationship

Innovation’s very essence is to provoke changes that create value. In contrast, power seeks self-perpetuation through control. The institutionalized power is, thus, generally averse to anything that implies changing or questioning the statu quo and, deep down, it perceives innovation as a threat.

Nonetheless, most organizations’ governing heads pompously declare to be enthusiastic about innovation. Some have gone the extra mile and created an entire industry of so-called innovation directorates, agencies and departments whose real agenda ends up being no other than to prevent uncontrolled change from happening and provide photo opportunities.

This contradiction, which in my experience is applicable to numerous business corporations, academia, administrations and public bodies, is at the heart of many frustrated innovation programs. And it also pretty much explains the increasing feeling of decline in the whole innovation hype.

Consider, for instance, a company that sets up a strategic innovation plan to enhance its product line. The CEO promotes this in all good faith hoping for returns in greater sales, market share, revenue, etc. Of course innovation is the last Holy Grail to provide all this. After all, they have been bombarded with endless success stories of unicorns and startups that got it made through their innovation approaches and management. So they cannot afford to lag behind and take the executive decision of hiring consultants, designate a Chief Innovation Officer in the house and move on to the real daily fight. Find here a very harsh yet funny account by Jeffrey Baumgartner on what goes next:

http://www.creativejeffrey.com/creative/innovation_past_its_sell_by_date.php

Or think of an emerging innovation cluster in a poor performing region. Until financial autonomy is reached, its own existence will practically depend on the money made available by the local policy making power. And this means years because it takes time to build trust among the associates and produce a substantial mass of services and projects that fund the cluster’s structure. So in the meantime, what kind of attitude can be expected from the cluster board and management towards the regional government? Good guess, not too hostile, to say the least. It can get worse. The cluster management may learn that it’s easier to stay cozy with power, produce cosmetic events and void reports and get regularly subsidized rather than push real innovation in the ecosystem and risk becoming a nuisance for someone. In time it will grow into another “innovation vector” that is pointing nowhere, while some officer in Brussels is lost in data trying to figure out what went wrong with cluster policy.

So we seem to be at a catch 22 here, where innovation must be nurtured precisely by what will tend to suffocate it sooner or later. There is not a simple and universal way out of this, but I think addressing the following would be a good start:

  • Accountability: players involved in innovation projects, their partners and stakeholders must know what top decision-makers did, what were the costs, the returns and the alternatives. In the case of public entities the entire society has a right to know all this. You may refer to https://www.transparency.org/glossary/term/accountability for a pretty straightforward definition of accountability. And, by the way, also a comprehensive list of the many things that go ugly when power is not held accountable.
  • Language: it’s about time we end pseudo-academic debates on what is innovation and how it is shaped. Innovation is pretty recognizable when it happens and certainly has more to do with action than with semantics. Incidentally, it is not R&D, nor creativity nor technology. It never stops amazing me the amount of confusion, pretentious literature and fake consultancy sold at executive levels around this.
  • Results: innovation outcomes are more difficult to measure than others (i.e. financial indicators or marketing metrics) because of technical and cultural reasons. And sometimes the results you get from innovating are just the (extremely valuable) lessons learnt from failing. This often gives a very convenient excuse to incompetent or evil power servants, always ready to bypass monitoring or fill it with noise. It is important not to let them get away with it.
  • Managers: OK, Peter’s principle does happen and we’ve all seen people in the wrong places. But odds for a lousy CFO or CTO to endure are pretty slim because they’d be lethal for the organization in the short run. It’s a different game with innovation, though. I’ve been around innovation managers that would have trouble just defining the concept after years in the job. This has to stop.
  • Leaders: Innovative enterprises need support (not just budget) from a figure that understands, believes and evangelizes the benefits of innovating. It should be crystal clear to everyone involved what exactly the governing direction does (and does not do) to allow for and foster real productive change.

I agree it’s easier said than done. And, in some places, just examining this shortlist would take a revolution (structural beheading included). But I think it’s worth trying a.s.a.p. because I’m deeply convinced that the way this innovation-power balance is managed greatly determines what companies and countries end up producing.

Innovation and specialization: too smart too soon?

For any industry I can think of, specialization is a pretty unquestioned means for differentiating. Put simply, innovation management is basically about what an organization does or can do to generate an “unfair advantage” based on knowledge. When successful, this advancement lets the company deliver more value to the market and in turn capture more value from it, thus increasing its bargaining power. And this value will mostly come from changes based on specialization at different levels. In the process, disrupting routines and implementing specialization will likely trigger some conflicts among different areas within the company. Also the undertaken efforts will differ across different organizations’ cultures and resources, but it would seem difficult to find a single enterprise disregarding the idea of specialization in itself.

However, if we change focus and move from companies to regional innovation ecosystems this solid shared view on specialization fades.  At least in my experience with immature ecosystems, not all actors will precisely show enthusiasm for the specialization idea to the point where key incumbents find it perfectly legitimate to state their aim is to mimic what other ecosystems are doing.

Specialization is demanding because it makes weaknesses evident and pushes the capabilities of local stakeholders towards new technologies and skills. It will no doubt alter the frequently complex equilibriums in the governance of the local set of players with dissimilar interests. I personally think it’s great news if it does, because that is precisely what territorial innovation should be about in spite of comfort (https://hbr.org/2012/05/if-youre-not-pissing-someone-o)

In mature systems with an open innovation culture in place the right dynamics will materialize and realign actors towards a new common vision where all find winning scenarios. But in early stage (no matter how old) systems their governance, vision and leadership are not sufficiently developed. So when the challenges of specialization make some stakeholders feel threatened the rest will probably indulge for the sake of cohesion and formality. At the end of the day, specialization is a sexy prospect but stakeholders are your roommates.

In this context a genuinely European approach came to being: the regional innovation smart specialization strategies, RIS3

The rationale behind them is to build upon each region’s comparative and competitive strengths and thus exploit opportunities and emerging trends to achieve steady economic growth. RIS3 Agendas are to be designed following a very thorough methodology that provides itself innovative elements, like the Entrepreneurial Discovery Process approach:

http://s3platform.jrc.ec.europa.eu/edp

I think RIS3 have introduced very interesting conceptual elements in the European innovation landscape from which practical outcomes are yet to be materialized. More than 150 European regions have conducted a challenging strategic reflection based on a common ground. This seems an excellent platform for efficiently allocating public (and private) funding for innovation, but will it be so?

Here are some questions I consider worth paying attention to in the coming months:

. Will RIS3 be effective in spurring inclusive, sustainable and smart growth? How can the attribution of results to RIS3 be measured?

. Who and how will ensure alignment and coordination of RIS3, H2020 and ESIF?

. What are the incentives put in place at supra regional level so that regions with identified RIS3 complementarities find it productive and easy to cooperate?

. In immature ecosystems such as the ones described before, how can a genuine Entrepreneurial Discovery Process of independent, distant to power, stakeholders be guaranteed?

I think this last point is key to make a true difference with respect to strategic attempts in the past. I will be writing more on innovation ecosystems and power in my next post.

Success in innovation ecosystems

Based on own experience I came up with an informal list of items that I think are key to an innovative ecosystem for it to thrive over a significant time period. It doesn’t attempt to be anything more than a practical checklist to a first characterization approach. What I would start looking into is:

. Size and critical mass

. Specialization

. Distance to power

. Strategic vision

. Open innovation culture

. Technology approach: adoption versus invention

. People involved

So let’s start with size and critical mass. Like it or not, size does matter. Regardless of how innovatively appealing your products may be, it is unrealistic to try and compete on your own in a global market if you are a micro-SME, as is the case with a huge number of businesses in Europe (http://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:Enterprise_size).

The way out of this “size trap” is, I think, either scaling up product and company or else being exceptionally good at productively networking with other SMEs outside your internal market. Both solutions are costly for an SME in terms of capital and culture, but if they manage to succeed they will most likely have a competitive advantage toward bigger corporations typically less agile and market responsive.

An ecosystem populated with such SMEs will soon start seeing internal and external synergies exploited and will capture the interest of similar companies from other regions. The process will hopefully grow exponentially and beyond a certain point there will be no turning back, thus consolidating the innovative environment.

In connection with this I think a reflection on the public SME support programs throughout Europe should be made. Are we putting the right means in place or rather helping SMEs survive staying small and local?

A good approach here may be the SME Instrument (https://ec.europa.eu/programmes/horizon2020/en/h2020-section/sme-instrument), which I consider an ambitious innovative concept in the right direction. We will soon see its deployment and phases 2 and 3 results.

Far from being an expert in the matter, I would think a similar logic is applicable to the size of research groups and their competitiveness at global level. It seems not so evident: http://www.nature.com/news/bigger-is-not-better-when-it-comes-to-lab-size-1.16866

But then again, this raises further questions. I will just leave one on the table. Are number of publications and their impact indexes the right indicators to measure productivity in research? This is indeed connected to the next item in my list: specialization.

Debunking innovation myths. Why some do better than others

Territorial indicators on innovation performance are periodically made available by different organizations (http://antonioviader.com/innovation-policies/metrics-monitoring). In European regions that score poorly there is a typical reaction to each report. Scarce public investment in innovation is the recurring argument put forward by many to account for bad results.

I think this is an oversimplified and incomplete view. To foster innovation at regional level there needs to be an adequate ecosystem allowing for it. Low public investment (not to be confused with expenditure) is frequently part of the problem but not the only nor the most contributing factor. Investment (both public and private) is a necessary condition, in the same way water is a requisite for life as we know it. But just watering desert sand will unlikely grow anything.

In following posts I will write about some of such lagging ecosystems’ attributes and how I think they could be more successful. The first element I want to tackle here is what I call the “Lost in Translation” effect. It has not much to do with Sofia Coppola’s awesome movie, but the name just fits in nicely. Too many innovation regional policies I have seen are designed by merely transplanting lines of action that have proven successful elsewhere. But they fail when deployed at home because a thorough analysis of territorial capacities and characterization was not seriously taken into account.

An illustrative example of this is, I think, the myriad of Silicon Valley clone candidates that have been planned and embeded in regions all over Europe trying to replicate its success. The problem is that SV constitutes a unique natural ecosystem resulting from dozens of interrelated factors that simply cannot be forced to occur again in the same combination. Among them there is, yes, a huge public investment (mainly emanating from the impact of science on the military industry after WWII). But equally important, if not more, in the making of SV was the academic profile of Stanford compared to the traditional European and Ivy League universities or the affordable housing for high-tech workforce and available business space. These and many more ingredients combined created an environment where a genuine “no fear” culture could thrive and resulted in the entrepreneurial success everyone else tries to translate. Understanding this helped me realize why it’s so hard to get the next Apples and Googles in Europe.

I think we need to forget about translating and quickly come up with a genuine European approach to innovation. Unlike many, I’m optimistic about it. A competitive advantage could precisely come from our regional diversity properly managed. This opens up questions regarding specialization, governance structures and critical mass that I intend to address in following posts.

I will be more than happy to hear your experiences and opinions, specially if they are different to mine. As I said, I think diversity is a great innovation driver.

Innovation, just another hype?

Everyone seems to be into the whole innovation thing lately. However, I have seen more than one C-level business person without a clear insight on why innovation is relevant to their company.

Needless to say, with some politicians, public officers and so called policy makers my experience is way more deceiving. In some environments innovation is merely utilized as a trendy excuse, useful enough to create structure and budget around it.

In my next posts I’ll give my view on the reasons that contribute to such a scenario and the dramatic consequences I think it will lead to.

I would be very interested in sharing similar (or different) experiences and opinions you may have.

Cheers,