Category Archives: Innovation

Innovating forwards and backwards

I am a follower of #innovation, resulting in an all-day parade of tweets about self-driving cars, intelligent robots, business models, CO2-neutral buildings, growing efficiency in solar energy and smart gadgets. I feel at odds with those ‘experts’ who applaud innovation as the Holy Grail for our society’s future without making any difference.

In this post I will introduce a distinction between innovation forwards and innovation backwards. Innovation will become a matter of choice! At first, three different types of innovation will be identified. Each of these types has its technical and social variant.

Technical innovation

Lopende bandType 1 innovations intend to increase labour productivity: Mechanisation and IT have enabled mass production at low prices by automation of assembly lines, warehouses, administration and bookkeeping. Besides, technical devices are replacing conductors at trains, cashiers in supermarkets et cetera.

gadgesType 2 innovations occur when companies replace products by attractive alternatives in order to escape the downward spiral of price competition and decreasing margins. To be successful, public has to perceive the new products as contributions to the quality of their lives and be willing to pay accordingly: PC’s, iPhones, iPads, digital camera’s, navigation systems et cetera

biobased economy2Type 3 innovations intends to secure life and a decent level of prosperity in the long run and do not result in major financial rewards at short-term: Sustainable energy, bio-based economy, clean-tech, biological farming, reuse of materials et cetera.

Social innovation

Lopende bandType 1 innovations include huge improvement of labour productivity under humane conditions, based on large-scaled production, task-differentiation, assembly lines and flexible payment, albeit at the cost of the total destruction of craft[1]. During the last century, Frederic Taylor’s principles have been refined by competence management, lean production, ICT and sophisticated planning and control systems, which have extended to medicine, accounting and teaching.

Mondragon3Type 2 innovations are aimed at the restoration of challenging job content. Improvement of labour-productivity is accompanied by an increasing number of low-strain jobs and by disappearing engagement. In the meanwhile, engagement is decisive in knowledge-intensive companies. Consequently, smart companies skip intermediate management levels, introduce servant-like types of management, create flexible work conditions and diminish differences in compensation between managers and professionals. Besides, a growing group of former employees is creating networks of collaborating self-governed and owned companies.

BuurtinitiatiefType 3 innovations partially replace representative by direct democracy. People are taking responsibility for their own neighborhood. Employee ownership and cooperations are reviving. Financial institutions, healthcare, assurance and social care will redevelop bottom-up. Social enterprises will replace not-for-profit bureaucracies. These new ventures will operate from a welfare perspective in the first place. The rebirth of the civil society will partially replace the eroded welfare state. An already uncountable number of initiatives are moving already into this direction in many countries[2].

Innovation forwards and innovation backwards

The distinction between two pairs of three types of innovations each enables me to explain the difference between innovation forwards and innovation backwards

The purpose of innovation forwards is a ‘livable existence for future generations worldwide. Type 3 innovations (technical and social) are its main driver, supported by type 2 and type 1. Innovation forwards does not exclude improving productivity, for instance by deployment of robots, but it will enforce procedures safeguarding autonomous and challenging jobs for all[3].

Forwards and backwards innovationThe purpose of innovation backwards is growth of company turnover and shareholder value. Type 1 innovation (technical and social) is its main driver. Types 2 and 3 are supportive. Innovation backwards might include the acceptance of so-called corporate social responsibility, but only if it contributes to profit, reputation and shareholder value.

Currently, innovation backwards dominates innovation forwards. Overall indicators are: the on-going increase of CO2-emissions[4] and the increasing differences in between rich and pour countries and between its inhabitants[5].

At the same time, the power of innovation forwards is increasing. The Deloite report The Big Shift is unveiling global changes during the last decades includes many hope-giving details[6], the following trends particularly:

  1. big shiftThe connection between technology and information science (Internet of everything);
  2. The distributed character of knowledge and the emergence of the independent knowledge workers and Makers;
  3. The collapse of large multinational organizations, favouring a globalized network economy;
  4. The growing power of self-governance and local autonomy.Societal transition
Societal transition

Publications about societal transition and change are abundant. For instance, in The Netherlands, influent authors like Jan Rotmans and Marga Hoek motivate thousands of change-making groups and individuals and are inspired by them. Here, I will spend a some attention to the new book of the well-known organizational scientist Henry Mintzberg, titled: Rebalancing Society. Radical Renewal Beyond Left, Right and Center [7].

societyMintzberg offers ample evidence for the dominance of innovation backwards. From 1980 on, the multinational corporations have increased their global and national power[8]: The economy of free enterprise has become societies of free enterprises. Except for maximization of their own profits and shareholder value, private companies have encouraged consumption[9] and borrowing large amounts op money. They have externalized their costs and evaded paying taxes. The ever-weakening government lost its countervailing power[10]. However, restoration of the power of the state is no option. A repetition of all well-known arguments between social democrats and liberals will occur and will not generate any change. The on-going growth of the plural sector is Mintzberg’s hope for the future. The plural sector has always been of utmost importance, for instance by the emergence of cooperations and associations. In the US, in average, each citizen is a member of two associations. There is a myriad of new initiatives by citizens in every field, varying from health, education, neighbourhood, and environment.

In addition, education, health and transport are parts of the plural sector, although these sectors have been weakened by privatisation. The growing group of social enterprises might be added too[11].

This leaves us with the question what each of us can do to promote innovation forwards. Henry Mintzberg: The place to start confronting the exploiters of this world is in front of our own mirror.

You and I are called on stage. Find your character in the table below

Rollen innovation forwards

[1]Less humane practices can be found in the apparel, mechanical engines and in construction in emerging countries. These activities are all parts of the supply-chains of western (and Chinese) companies.

[2] See Blessed Unrest by Paul Hawken (2007)

[3] Carl Benedikt Frey and Michael A. Osborne (University Oxford, UK), The future of employment: how susceptible are jobs to computerization (September 2013)

[4] See for details until 2014: http://infographics.pbl.nl/website/globalco2-2014/

[5] See for details Thomas Piketty’s book Capital in the 21e century.

[6] The Big Shift http://goo.gl/QaNXdy is edited by ‘The Edge’, Deloite’s research institute.

[7] An earlier version of this book (2014) can be downloaded here: http://www.mintzberg.org/sites/default/files/rebalancing_society_pamphlet.pdf

[8] Withdrawing by the US of the Bretton Woods Agreement, meaning the decopling of the value of money and gold was a first step in the financialization of capitalism.

[9] With respect to food and beverages: In 2014 two of three adults in the US are overweight or obese (69 percent) and one out of three is obese (36 percent) www.hsph.harvard.edu/nutritionsource/an-epidemic-of-obesity/

[10] In1952, companies paid 32% of all tax incomes in the US. This percentage is decreased to 9% now.

[11] This article unveils the objectives of social enterprises: https://www.se-alliance.org/what-is-social-enterprise It clarifies why this type of enterprises fits into Mintzberg plural group.

[12] Het Defence Advanced Research Project Agency (DARPA) is an excellent example of public support in the development of industry and educational institutions.

[13] The representatives in the US are virtually unable to increase taxes for the rich: Nearly all members of the Senate and most members of the House belong to the 1% top-earners of the US.

Leave a comment

Filed under Innovation

How to reduce the failure rate of innovation

‘The innovation journey’ – written by Andrew van de Ven and his team[1] – is offering a vivid description of the innovation experience of 14 North American companies. The book offers snapshots of brilliant ideas, whimsical processes, failure and success. After having read the book you will understand why 50% of all investments in R&D had to be amortized.

Against this background, it is not surprising that scientists and business people have been thinking for decades how to improve the efficacy of the innovation process. The most famous example is Cooper’s stage-gate model. The underlying assumption of this model is that the success of the development of new products and services depends from moving along consecutive stages with Go / No-go decisions in between.

Stage-gate model

You will ask, “Does it work?

The question that has to be answered is which kind of ‘guidance’ will facilitate innovation processes best? Most authors feel that the initial stage of the innovation process – named ‘fuzzy front end’ or ‘ideation’ – offers best chances for improvement.

Last year, I did a research project in order to unveil whether careful planning of this stage will increase the success rate of innovation. I visited ten companies where I spoke with managers and leaders of innovation teams. Each of these companies deployed the FORTH innovation method (developed by Gijs van Wulfen) in the period 2007 – 2013. I wanted to discover critical success factors during the initial stage and the impact of the initiation stage at next stages as well.

Download the research report HERE

The FORTH innovation method is modelled like an expedition[2]. The innovation team moves along five stages: Full Steam ahead, Observe and learn, Raise ideas, Test ideas and Homecoming.

FORTH methof

The first step – Full steam ahead – includes a precise definition of the assignment. Here the management takes the lead. A good assignment defines the direction of the expedition, and the conditions that have to be met. Besides, the team is selected based on criterions like diversity, innovation-mindedness and team spirit. Premature generation of ideas is a frequent mistake in this step, resulting in the failure to make an adequate selection.

Therefore, during the second step – Observe and learn – participants visit customers or clients at home in order to discover preferences regarding new products or failures connected with existing products. For most participants this is the first contact ever with customers or clients and the experience is valued highly. In addition, the participants are enabled to deepen their knowledge of new technological developments, mostly related to ICT. By taking this step, participants are developing a feeling for customer frictions and innovation opportunities.

With this baggage, participants are ready for the third step, raising ideas. New ideas are produced by hundreds and afterwards channelled into 12 concepts. These concepts are carefully scrutinized, taking into consideration the conditions that were formulated at the beginning.

Now a next step – Reflection – can start. A second confrontation with customers or clients is organized in order to check the assumptions regarding the usefulness and market-potential of the concepts. In the end 3 – 5 concept survive, often after thorough revision.

The last step – Homecoming – includes further elaboration of the concepts into mini new business cases, possibly with the help of internal or external experts.

All companies that participated in the research expressed their enthusiasm about the FORTH innovation method. They were convinced that no ‘mini new business cases’ would have come into being without the systematic and motivating character of the method. Besides, participation at the FORTH innovation trajectory has created an innovative mind-set and a corresponding innovation culture. Employees are eagerly waiting for the next innovation expedition to start.

Critical remarks have been made too. Some members of the innovation team went too fast through the process of discovering customer frictions and customer needs. In some cases the satisfaction with the results of the ideation stage resulted in a rash decision to enter the market without additional research.

Gijs van Wulfen’s ‘Innovation expedition’ is based on thorough knowledge of potential failures that are described in Andrew van de Ven’s ‘Innovation journey’. Therefore, both books are sides of the same medal.

At Thursday January 15th 2015 4.00 PM Herman van den Bosch and Gijs van Wulfen will discuss the results of the research project mentioned-above. You are kindly invited to participate and to listen to the discussion and to ask questions (by chat) if you want.

Go to: http://portal.ou.nl/en/web/masterclass-mw-150914 for signing in and to register.

If you have arrived at the right page, press SIGN IN before registering and move along the prescribed steps. It will take you a couple of minutes.

[1] Van de Ven, A., Polley, D., Garud, R., Venkataraman, S (2008): The innovation journey, Oxford University Press, New York.

[2] Van Wulfen, Gijs (2013): The innovation expedition. A visual toolkit to start innovation. Bis Publishers, Amsterdam

2 Comments

Filed under Innovation