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Mikael Eriksson Björling

Things that matters! About digital transformation, design, culture and lifestyle in the Networked Society

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5 ways to master the new innovation game

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Assuming your organization has a creative mindset, and beyond the possible implications of emerging technologies, a key challenge lies in pinning down what is required from an organizational perspective for innovation to take place. To a large extent, this is the key challenge in the business world today and something that many organizations, especially larger ones, struggle with. What are the prerequisites for making innovation happen?

As part of my work with Ericsson and a recent study we conducted, we identified 5 ways to master the new innovation game. These are:

  1. Insight: Understanding people and understanding the problem
  2. Outsight: Keeping track of the world around us
  3. Innovation vision
  4. Culture as fuel for innovation
  5. Structure for creativity

Let’s look at them one by one:

Insight: Understanding people and understanding the problem

A key viewpoint that most creative thinkers will agree upon is that innovation is essentially about understanding human beings. The problems that are supposed to be solved by a structured innovation approach are ultimately human, not corporate. To identify the real problems and pain-points requires an understanding of humans in their natural habitat. Some innovators and entrepreneurs have a natural eye for the world and people around them and make the problematization and analysis by default. But in most cases, innovation requires an explicit and structured research effort of going out in the real world to gain insights that become relevant platforms for innovation.

Innovation also requires fundamental understanding of the problem you want to solve – and innovate based upon this understanding. This perspective stems from the notion that innovation is about solving real-life problems for people and digging deep into what these problems actually mean. Prehype, a New York-based venture development firm, believes that a good long problematization phase is the heart of all innovation. Nicholas Thorne at Prehype says:

“We focus our time in problem space rather than in execution space. If you get the problem right the solution presents itself.”

Outsight: Keeping track of the world around us

Innovation not only requires a solid understanding of end users, it also requires keeping track of how the world at large is changing and which implications this will have on our culture in general, and your area of business specifically. To a great extent, innovation is a question of timing and being in sync with the world around.

People and companies that are in tune with their times and have a sense of what the next big thing is will likely time their innovations relevantly, while people and companies that don’t have that outsight will waste and spoil good ideas and inventions because they don’t understand the larger sociocultural and socioeconomic context.

Innovation vision

Frederic Laloux describes how we are entering an era where organizations are increasingly driven by missions, and employees are motivated by the unique user value that they can help provide. Successful innovation comes from coming up with ideas that fill real needs and serve a purpose. In other words, this emphasizes the importance of having a clear vision for why and what we want to innovate. There are many examples of leaders who embody a vision which sparks innovation by giving employees a strong sense of purpose.

Open, flat and decentralized organizations with a creative and playful organizational culture also require a more visionary leadership. These types of organizations are made up of talented, skilled, and independent people with their own drive, who usually respond best to visionary leadership. They work most efficiently when working towards a bigger idea – a vison or a mission – that brings meaning to their work and daily tasks.

As discussed in Ericsson’s 2013 Networked Society Lab Report: Moving Fast and Breaking Things – a tale of digital business transformation, the product organization is an answer to this. The product organization is made up of a number of product-focused teams that are allowed to operate very autonomously within the organization, as long as they work towards the overall vision or mission of the organization. The role of the leader is to promote, uphold and manage the vision rather than micromanage various projects.

Culture as fuel for innovation

Culture is a core focus for organizations that aim to be at the forefront in terms of creativity. The old maxim “culture beats strategy” could actually be rephrased as “culture is strategy”. Culture plays a key role in addressing the challenge of gluing teams together and making them committed to the company mission. Creating a strong community is prioritized as a strategic way of attracting the best employees and to motivate them to spend time in the office. But culture is equally as important as a strategic way of creating an environment where innovation will thrive. The idea is that innovation can occur at all times and at all levels of the organization, given the right cultural climate.

Innovation is as much a human story as it is a story about technology. Organizational culture, people and diversity are at the heart of any discussion on innovation – and the cultural aspect of innovation was highlighted by almost everyone interviewed in our study. The argument is that companies that are able to create a certain kind of organizational culture will see innovation emerge from within the organization with much less effort than in other organizations. An innovation friendly culture will be able to manage, value and prioritize ideas that show up in the organization rather than dropping them before they are even tested and tried. Some thinkers on innovation go as far as to claim that innovation equals culture.

Structure for creativity

For the longest time there was a bias towards viewing innovation as something that just happens in a “magical” way in a black box of creativity. But even if innovation can sometimes happen accidentally, the opposite is usually true for truly valuable innovation to happen. In the academic world, innovation is often described as a systematic management process and an organizational structure, rather than a black box of creativity that occasionally generates innovative ideas with real business potential.

Academic research on innovation in organizations suggests that innovation should be managed strategically from the top level of a company. Companies should have an organizational structure that enables innovation and allows people who work with innovation to pursue careers in innovation. Companies should have a defined process for how to drive innovation within the organization, and should be able to measure and follow up on their innovation efforts just like they do in any other department of their business.

There are many different ways of perceiving how a structure for creativity is best achieved from an organizational perspective, but a common theme is that there has to be a structured process for collecting, evaluating and implementing new ideas. Without the process in place, the understanding of end users and the world they live in, the visionary leadership and the culture of innovation will not succeed in creating strong and meaningful innovation. When ideas are not acted upon, the creative force will eventually fade and the culture or vision will not be enough to encourage continuous innovation.

Like this post? Don’t forget to check out the firstsecond and third at Ericsson Big Ideas Blog

Why is innovation the buzzword right now?

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What exactly is innovation? And how does it work in the business transformation context within ICT?

At Ericsson, we have talked about the fundamental digital transformation that is taking place across our entire society for many years, with particular focus on the new opportunities and challenges it brings.

This shift has matured recently: new businesses move from startup buzz to industry disruptor at lightning speed. Just take a look at the great impact on traditional businesses that companies such as Airbnb and Uber have had in their industries. This will only accelerate as more and more intelligence moves up in the cloud.

Just a short while ago, digital transformation was only on the agenda of the larger tech players. Now, it’s on everyone’s agenda. Businesses and organizations of all sizes in every industry understand that digital transformation is also affecting them and the way they do business both now and into the future. They are all aware that in this new world there might be a garage startup, either around the corner or on the other side of the globe, with ideas that will disrupt their current market by offering radically different propositions.

So, when there is awareness, what should traditional businesses and organizations do? Let’s begin by answering the questions I asked in the beginning of this post.

There are four different drivers in our innovation model, which you can see in the figure below:innovation-model-768x332

  • ‘Outside Drive’ (at the top) are areas outside of a company’s control. This could be changed laws or regulations, shifting consumer behaviors, or new disruptive technologies such as AI, VR or 5G.
  • ‘Inside Control’ (at the bottom) are areas a company can control, such as definition of their core business, consolidation, scale gain opportunities or maturing technology.
  • The left side of the model is evolution from where the business is today, to the right which is disruption.

To secure a good position in the future market of your business, you must be aware of what is happening in your broader industry related to the fields in the model. If we plot where innovation is happening, we can see that traditional businesses focus naturally on the left side of the model in value chain effectiveness and efficiency, while we often find the digital giants and startups on the right side of the model.

The lower left corner of the model is about using new technologies to innovate for better performance of current offerings. If we take the example of a car manufacturer, this could be using ICT to automate the flow and construction of cars in the factory. Basically: do what you do more efficiently than the competition. ict-cityview-768x440The upper left corner is about using ICT to innovate value chain efficiency and improve offerings to the current market. In the car industry, this is typically a connected car. Today’s connected cars are sold as any other car, but they make use of the connectivity to improve the offerings toward the car buyer. This could be to offer safety features like calling 112 automatically if an accident happens, or having built-in connected features like ‘find where I parked my car’.

Read the rest of this blog post at Ericsson Big Idea Blog

Social businesses prefer impact to profit

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How does it work to have positive impact as the main outcome of a business and not profit? While conventional for-profit businesses have maximizing profit at the core of their business models, social businesses see profits as a tool rather than an end. Stable revenue is only a part of a much larger picture to achieve social impact.businessmodel-768x319

Social businesses use the same three-dimensional model as conventional, for-profit businesses:

  1. The value proposition defines what type of value the business is offering on the market
  2. The revenue model defines how the business is making revenue from its value proposition.
  3. The network relations define the different market actors that a business has relationships with

These three components build what social business call the ‘Financial Sustainability Model’. However, this is only one of three important components in the business model. The other two are ‘Social Impact Model’ and the ‘Community Engagement’.

The Social Impact proposition explains the intent and mission of the business. To exemplify, SiembraViva in Medellín, Colombia, offers convenience and conscious consumption to urban dwellers yet the social proposition is to empower local farmers and increase ecological produce.

The Community Engagement: This is an imperative element to the social impact proposition and financial sustainability model. Community engagement roots the social business, ensuring the social impact proposition is relevant and that the financial sustainability model has an arena on which to act. socialbusinemodel-768x202 Read more about this topic at Ericsson Networked Society site

Related: The Social Business Era: Creating Impact and Influencing Change

Say hello to the era of social business

post-1-siembraviva-768x373In our brand new report, The Social Business Era: Creating Impact and Influencing Change, we explore a new model for 2017 and beyond: The Social Business. This is a new type of company on the market that is out to challenge traditional ways of doing businesses.

The majority of companies operating today use profit as their main measurement, i.e. the business is judged by others (the market) with economic figures and the potential for growth. But things are changing.

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It is no coincidence that social businesses have recently emerged and developed in the Networked Society. But why is this happening now?

  1. The ultra-capitalistic industrial society of the late 20th Century is now being questioned as a relevant model for a ‘good world’. At the same time, the state and traditional social institutions that are supposed to care for the welfare of citizens are failing people across the world.
  2. New generations growing up with mobility, broadband, and internet access are now entering the arena of social issues. They are also used to things moving quickly, getting things done right away, and seeing direct impact. They experience frustration with old ways of doing things and the slowness and inefficiencies of institutions to accomplish any real change.
  3. The necessary technology is already in place. Today, we have technology platforms, digital tools, and social networks available for free or at a low cost, which makes it possible for people to start something without the need for large investments or technological skills.

How do we define The Social Business?

  1. No dividends allowed. “A non-dividend company that is created to address and solve a social problem”.
  2. Focus on intent and output: “An organization formed by one or more people whose commercial activities are primarily driven by the desire to create positive social change”.
  3. A broad, pragmatic approach: “A business whose primary intent is to create social impact and that uses revenue streams to become financially sustainable in order to further that impact”.

Create positive impact…who wouldn’t want to do that?

In my next post for the Networked Society blog, I will take a look at the main differences between traditional and social businesses.

Read more about this report at Ericsson Networked Society site

Related: The Social Business Era: Creating Impact and Influencing Change

 

The rise of the network-driven economy

In a post I published last week, I wrote about the game changers – the innovative individuals who are creating their own products and services, and placing them online.

Consumers that embrace social innovation and entrepreneurship are now taking the lead in determining what is interesting and what is not when it comes to the latest goods and services. This is creating an open marketplace that is changing the relation between established corporations, brands and consumers. This adjustment in the marketplace is being driven by three change agents… Read the full article on the Ericsson Networked Society blog

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