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Haydn Shaughnessy
This article is more than 8 years old.

Three Steps (Photo credit: Pavan Chavda)

One of the oddest aspects of innovation writing is how little time gets devoted to how innovation itself changes. I think there are 3 key shifts going on and each requires a different response from innovation leaders - heck from strategists, CEOs, CIOs, CMos and just about everyone. This is urgent.

First - how do we think about innovation? It's either incremental or disruptive, right?

Well, no. These two terms in fact polarize innovation into business as normal and business torn apart.

My sense is most people are in a different place - business as scrambling to keep up.

In the background, longer term transformation in the economy and the technology base is forcing companies to re-open the long term strategy book.

So it's not about incremental vs disruptive. It's about pervasive, it's about process and it about a new long termism. By the way  will be talking about these trends at the Amplify Festival in Sydney in early June. I've also suggested here that one company fits this model closely.

Change #1. The very long term innovation environment

Strange to think of the very long term again. We're used to companies emerging in a blaze of light, Facebook-like, growing to a billion users before a decade has barely passed.

But there are four good reasons for saying companies will have to focus on the 10 - 30 year time-frame.

The first is the financial climate and the superabundance of capital. Bain recently reported that global aggregate financial assets will increase from $600 trillion to $900 trillion between now and 2020. That means continued very low real interest rates for years to come.

Companies need to make use of this by investing in long-term far horizon project as part of a balanced approach to their businesses.

But it also means that asset bubbles will continue to inflate around us - so they must hedge through the long term.

And I think there is another reason for taking the long-term - enterprise transformation. Enterprises are thirty years in to a long term transformation of themselves from manufacturing to post-service platforms. They must become conscious of this and create leadership and vision of the change rather than being reactive to it.

Finally there is the technology base. We have only begun to understand and experience the impacts of technologies like connected mobile computing. Like the PC itself there is a 50 year journey here.

So long term re-imagining humanity and how we create wealth. The context for the long-term is a total transformation of how people work and spend their time. This is uncertainty of a new order, particularly as the new global middle class is born.

Change #2. Innovate everywhere, always

The innovate everywhere moment is already upon us and it is driving companies nuts. I did a series of interviews recently where CIOs were telling me their biggest problem is finding people who can adapt to this environment, of monthly innovation.

This is really running to keep up stuff and it is made worse by SaaS platforms that do good lean, regular updates that clients then need to adapt to.

Add in these other facets of change - social media, social business, BYOD, Cloud, big data, digital payments, customer ecosystems, real-time ads, new ways of funding business, open innovation....

Fortunately there have been several varieties of lean innovation around for a decade now, to help with this. I spoke recently to Matt Kingdon at Whatif? whose innovation methods seem to predate those in The Lean Start-Up, which of course is catalyzing lean methods. Check Matt's Book The Science of Serendipity here.

Lean gives us multiple, small ways to adapt to change. It's just-in-time.

Change #3, Innovate the processes

Finally as I said earlier enterprises are in the throes of a transformation that began in the mid-1980s.

I want to avoid saying this is a from-to transformation I used to think of it that way, as a move from a production-oriented structure to an elastic one, via service-centric business.

But the path of transformation can also be cyclical, taking companies back to long term strategic research.

However I think there is a trend line, and that is towards the externalization of enterprise functions.

At one end of this we will see very advanced companies becoming conduits of innovation with no internal capacity for production or marketing but with a very high capability in relationship-engineering and data applications.

The big platform companies will be those that nurture a key part of the future technology base - like Google with Glass. And the bigger champions, still like Google, will be the ones that can combine this with data.

But around them will be smaller platforms that each play a role in the ideation - to realization - to sales continuum, for example Bango who provide pay-to-bill services that link mobile activity with a payment source.

We will see organizations with far fewer employees that we can imagine now but we will see far more organizations.

The important point for now is to stress that enterprises need to be innovating all their processes and they need to do this in the light of that 10 - 30 year model that the Bain research says is so necessary.

More later.

Follow me on Twitter @haydn1701


