Four functions of innovation and technology management

This article is meant for my business clients and colleagues managing technology transfer and innovation extension services.

In the past I have written much about the professionals and organisations who are responsible for helping entrepreneurs to improve and strengthen their innovation portfolios on my personal blog site.

To recapitulate: I believe that many industries are struggling to modernise because their supporting institutions use completely different frameworks to manage innovation (or perhaps the supporting institutions make their choices as randomly as enterprises do).

One of the first concepts that a tech transfer institute or industry support organisation should transfer to enterprises is “how to manage innovation and technology”. Just because there is an engineer or an MBA/PhD in a company does not guarantee effective or creative management of innovation and technology.

Today I shall focus on the four broad functions that must be managed strategically in every enterprise and supporting institution. Even if someone in the organisation has the job title of Innovation Manager or Technology Manager, these functions should still be visible throughout the organisation. In other words, this is not somebody’s job, but it helps if somebody coordinates these activities. Also, see these four functions as the minimum. More mature innovating organisations will have far more depth than these four high level headings.

The four functions agreed by most scholars and innovation experts can be summarised roughly as:

  1. Searching and scanning for new ideas and technologies, both within and beyond the organisation. This includes looking at technologies that could affect the clients of the organisation, and technologies that could disrupt markets and industries.
  2. Comparingselecting and imagining how different technologies could impact the organisation, its markets and its own innovation agenda.
  3. Next comes integrating or deploying the technology or innovation into the organisation. This includes adjusting processes and systems, scaling up implementation, and project managing the whole change process.
  4. The last step is often overlooked, but new technology and innovation often make new ideas, innovations and improvements possible. I call this last step exploiting the benefits of a new technology or idea. This could involve leveraging some of the additional benefits or features of a technology, perhaps by creating a new business unit focused on an adjacent market or particular offering.

When I visit institutions, organisations and companies, I always ask “who is thinking about change taking place beyond your industry or key technology?”. I cannot tell you how often I hear that “the CEO” or “the production manager” are on top of new developments and will be attending a tech fair next year. How can this huge responsibility fall on the shoulders of one or two people, who are at the same time biased towards the current strategy which favours justifying past (sunk) investments? Or if you ask “How did you choose between two technologies?”  you will be surprised how little time was spent considering new business opportunities, or how few companies asked for on-site demonstrations or samples from their preferred technology providers.

I will refrain from being too critical of technology transfer institutions and industry-supporting organisations, except to say that these organisations should be a prime example to industry of how to scan, evaluate, compare and integrate new ideas and technologies. We don’t just want to see the shiny machines and neat facilities, we want to understand how you arrived at your decisions, and how you made the best of your investments after implementing the change. Furthermore, industry wants to know what’s next, or what’s beyond their vision and how it may affect their industry.

To bring it all together, the technological upgrading of industries is plagued by many different market failures. These failures include the tendency NOT to invest due to high research costs, due to fears about making the wrong choices, or because so many decisions and changes must be made at the same time – this while the business continues, markets fluctuate, and technologies change faster and faster. Companies (and institutions) cannot afford just to kick start innovation management immediately before making a change (or when forced by external forces to make a decision). These functions must be managed strategically on a continuous basis, both at the level of top management and within the different functions of the organisation. Both companies and their supporting institutions need to manage innovation and technology, not only from an operational perspective (striving for continuous improvement, etc.) but also from a strategic point of view.

The importance of the middle management layer for innovation

I love reading material and listening to podcasts about innovation and organisational change. One thing that strikes me is that a lot of the material focuses on the role of the leadership at the top of the organisation. This is at odds with my daily experience of working in small and medium-sized organisations.

In most of the places where I work, the challenge is often that there is a thin or non-existing layer of lieutenants that can coordinate and implement the ideas originating from higher up. Over many years of working in the manufacturing sector in South Africa I have often been struck by how “smart” top management can be, but then how wide the gap is between top management and the workers facing clients or working on the factory floor.

Recently, while reading the November-December 2017 issue of the Harvard Business Review, I found this quote from a March-April 1972 HBR article. It is from an article by Hugo Uyterhoeven.

This quote is exactly why I think we don’t always have to start with innovation right at the top, although top leadership that supports broad innovation certainly helps. Sometimes a motivated middle manager could be a great starting point for an improving innovation. Taking ideas from the top or using feedback from below or outside of the organisation, could be as good a starting point as the vision of a great senior leader.

The middle management level is also where coordinators of innovation or change can benefit from instruments developed in the field of complexity thinking or naturalistic decision making, like the instruments developed by Dave Snowden or Gary Klein or many others. Decisions at this level are often made with limited resources, incomplete information, competing objectives, tight time lines as well as shifting patterns. As the quote from Uyterhoeven suggests, these decisions often have both strategic and operational value. From an innovation perspective it means that the focus should not only be on developing good products or improving services, but also on innovation regarding how decisions are made, conversations are held, opinions of team members are elicited and considered, and how teams within organisations reach out to other silos or even organisations. Moreover, knowledge is created and recognised for its practical value by middle managers.

I believe that every middle manager can play a critical role in enabling an enabling an innovative culture.

One last thought related to this topic: while many companies have several reliable middle managers, they often don’t have succession plans in place for this level. There isn’t a pipeline of talent being refined in the organisation. Losing a great middle manager can have a great impact in small and medium-sized organisations. I have seen many small companies stumble because they don’t pay attention to the depth of their middle management

Innovation strategy metaphors: building bridges or strengthening bases

I have been inspired by some of the metaphors developed by Sonja Blignaut in her blog. She uses these metaphors to help leaders understand polarities, balance and strategic fit.

I therefore thought that I should write up two metaphors that I often use when helping leaders to decide where to focus their strategic innovation attempts. When leaders have to decide on what to focus their attention, they can either strengthen their base, which is focusing on where they can improve what already exists, or they can build bridges, which is focusing on the future, exploring beyond the horizon.

Let me explain these two metaphors.

Strengthening bases. From an innovation perspective, strengthening the base is all about using current resources, infrastructure and people in a more optimal way. This process need not only be inwardly focused, but could also apply to improving interaction with suppliers and relationships with clients, or improving access to existing markets. In the base-strengthening mode there is a strong focus on getting the basics right, on becoming more efficient, and on measuring progress and performance. In a base-strengthening strategy there will be a lot of efforts aimed at improving current products and services as well as  processes and internal systems.

Building bridges. From an innovation perspective, building bridges is about reaching out into adjacent or new territories. These territories could be either technological innovations or markets or even new business models. While the direction may be clear, the exact approach may not be immediately clear. A few pioneers, typically with a broader skill set, are sent to scout for possible beachheads or footholds and then help the organisation to establish anchor points across uncertain territory. The mindset of management is flexible, targets are negotiable, and performance is measured more in terms of potential than actual performance. In a bridge-building strategy there will be a lot of attempts to try new ideas, to experiment with new marketing methods, technology and even partnerships, both in terms of product/service and process/system innovation and business model arrangements and management systems.

After explaining these two different mind sets I like to ask leadership teams according to which metaphor they are operating You won’t believe how often teams cannot agree on whether they are building bridges or strengthening bases. This usually leads to an interesting discussion. Ultimately it is not about choosing one or the other, but the organisation must be clear about which area it is focusing on: base strengthening or bridge building.

I don’t want to overdo the metaphors, but I’d like to make one last point. These two metaphors require different mindsets and skills. Base strengthening is more operational, can be more accurately managed and measured, and deals with a lot of knowns. It is complicated, but it can be planned, results can be compared, and adaptations can be made to try and improve results. Bridge building on the other hand is riskier – it is less operational and more exploratory. There are lots of new challenges, new learning and unexpected requirements that could delay progress. It would be unwise to focus on bridge building when there are dangerous cracks in the foundations.

When leadership teams discuss their current strategy they quickly realise that while they are striving to build bridges they are in fact mainly busy strengthening the bases. Employees feel frustrated when their leaders are mainly talking about bridges to new opportunities when it is clear that there are many basics that are not receiving attention that are required for a strong base require. Think of the broken window theory and how quickly we become conditioned or used to things that are out of shape or incomplete -we just aren’t aware of what’s happening. Furthermore, strengthening the base could also consume so much of their resources that organisations can lose touch with the real world beyond the organisation. Leaders have to find ways of balancing attempts to reach into the unknown with attending to the basics that makes a base a stable, reliable platform from where the organisation can build its portfolio of strategies.

Instigating innovation inside organisations and networks

For the last four years I have been working on this idea of catalysing or instigating innovation (take a look at my “thinking out loud blog“). It is about what leaders at different points in organisations or networks can do to improve their systems, products, environments and structures.

Central to innovation is the generation, recognition and exploration of knowledge. This knowledge can be trapped in the minds of individual staff, customers, suppliers or users, or it can be explicit. It can be latent, or it can be in your face but not used.

Another central pillar to innovation is dialogue. By this I mean not just a conversation, nor do I mean communication systems. I mean an ongoing and ever expanding process of change through dialogue – the exchange of ideas, the exploration of concepts, the identification of mental maps, attractors and emergent properties, the breaking down of aggregates and boundaries and the construction of new concepts. Dialogue spans many levels, it functions throughout the organisation and even spills over the boundaries of the organisation into other organisations, cultures, systems and networks.

By combining our research in Mesopartner on complexity and evolutionary thinking, and our experience and practice in promoting innovation within and between organisations, I came up with four frames to instigate innovation.

I describe the four frames in more detail below the diagram. In the diagram the activities are on the left hand side, and the documented strategies and how they are connected are on the right side. You have the read this diagram from the bottom up.

The Instigating Innovation Framework

The first frame is about the interaction between the strategy of the organisation, the business, the unit or the team and the innovation strategy. Many organisations have a business strategy and then a separate innovation strategy. Or they have only a business plan used mainly for financial reasons, and do not spend sufficient time tracking technological change, market change and new paradigms. Ideally the business strategy and the innovation strategy should be tightly interwoven, with the one strongly shaping the other. The more your team innovates in products, processes and business structures, the more innovative your business strategy will be.

The second frame is about how the organisation recognises, generates and leverages knowledge. This is about creating new organisational and personal habits about generating, testing, combining and stretching the use of knowledge. It enables organisations to become more thoughtful, more intentional about learning, exploring and the leveraging of knowledge to become far more innovative. In this this frame the organisation activates its resources and systems to become more knowledge intensive. The result of this frame is a knowledge, dialogue and learning strategy that feeds into the innovation strategy outlined under the first frame.

The third frame is about developing a portfolio of improvement activities that spans different time horizons, technologies, markets and functions. Many companies already have improvement activities, but because the first two frames are not in place, these projects are often isolated, project driven and to some extent even disruptive. Every opportunity to change something small, to replace something, to move something or to install something should be an opportunity to strengthen the cultural traits that are healthy, and to dampen the organisational habits that are not supporting the business strategy. From this frame we develop operational and functional or unit-level strategies that operationalise and feed back into the two earlier strategies.

The fourth frame is about networks that connects the inside of the organisation with broader knowledge, technology and societal networks. It is about developing and strengthening the knowledge networks and flows within the organisation and to external organisations. Here the organisation intentionally builds the technological capability of external knowledge partners. It is from here that the organisation can support research and development and longer-term scientific thinking. Here the organisation also purposefully engage in trans and multidisciplinary research, where the thinking and knowledge base of the organisation gets stretched. From this frame we develop a network and research strategy that feeds into the earlier strategies.

Over the years I have assisted many organisations to embark on this journey. I have seen at first hand how organisations and teams that have purposefully improved the way they talk to each other have shifted from being followers to becoming innovative leaders. I have seen the power of simple frameworks that allow deep reflection on perspectives, a continuous process of a calibration of ideas that are mixed, re-mixed and tried. I have also seen how managers at all levels and individuals grow in confidence as they feel more acknowledged, valued and fulfilled.

I hope you will take your team on this journey!

There is a subscription button on the right of this blog page if you want to receive two updates a month on how you can unleash the creativity of your organisation.