Basics of Innovation Process

An innovation process is not necessary for all innovations. Hopefully, many innovations will happen incrementally through continuous learning. But for bigger ideas, you will want to have a process. Just as there are many definitions of innovation, there are also many different views on the best components of an innovation process. They all essentially address the need to capture ideas and track their progress through a succession of steps to develop and test them and guide the worthy ideas to commercialization. But, as with any process, there is lots of room for interpretation and design adjustments based on your organization’s needs and experience.

The main components of an innovation process include: Read more

The Dual Challenges of Innovation Management

A number of years ago, a manager in charge of implementing a balanced scorecard system shared his organization’s strategy map with us. One of the organization’s “learning and growth” goals was “to become a more innovative organization.” We asked how he was going to do that. He had no idea.

This was one of the catalysts that got us interested in the field of innovation. We actually did a research project where we interviewed Chief Innovation Officers (CIOs) in American companies. The project, in late 2006, was one of the earliest research projects of this group. We did it because we were curious about the people taking on this task. We were also trying to understand the intersection between innovation and intangible capital. Read more

Intangible Capital in Mergers

In follow-up to my posts last week about the importance of structural capital and process, I would like to address a story from the press earlier this year (in the Boston Globe, IT Business Edge and IT Knowledge Exchange)

It involves an IT consulting firm that was acquired by EMC. The founders of the firm worked for EMC for awhile and then started up a new firm that EMC says does the same thing as the original company. I won’t comment directly on the case because I don’t have enough information but I would like to comment as background to the issues around buying intangible capital as part of corporate acquisitions. Read more

New Superpowers – Emerging Frontiers for Process

This week I have been talking about structural capital–the superpower of today’s organization. And process is one of the most important and least understood in terms of its importance and its sustained value to an organization.

Most internal processes in today’s organizations already have been automated to one degree or other. There are software programs for accounting, enterprise resource management, risk management, human resources management, performance management, and many, many others. That doesn’t mean that this automation is complete. Quite to the contrary, companies at every level still have a multitude of opportunities to standardize, automate and optimize most internal processes in today’s organizations.

And there are also new horizons where automation has only just begun: backward through the supply chain and forward in customer-facing systems. Read more

The Superpower of the Knowledge Era: Process

Process is not new to business. In fact, process in the form of production lines was a critical driver of the growth of the industrial economy. In a factory, you could see the physical movement of raw material as it moved from the warehouse into a series of production lines with finished goods coming out the other end. The movement of goods, and the productivity of the machines and the output of the entire factory could be tracked. Accounting and operational systems made it possible to measure everything from the purchase of the land to build the factory down to the last widget being put onto a truck. It also, by the way, made it easier for bosses to identify the best way to do a task and mandate the work patterns of their workers.

Much of what is today views as “best practices” in management comes from the factories of the industrial era.

But today, a lot of process occurs inside of people’s heads, their computers and networks of computers spread across a building or across the globe. Read more

The Holy Grail of the Knowledge Economy: Structural Capital

If you understand human and relationship capital, you can start a business. If your business creates value for your customers, you can earn a good living. But you will never grow large or particularly rich with just these two kinds of knowledge assets. This is because the real promise of the knowledge economy comes in the creation of structural capital, that is, knowledge that gets captured and institutionalized in an organization.

When people say that “all our assets walk out the door at night” they are showing their ignorance of structural capital. Read more

Your invisible, intangible production facility

What if one day your phone rings, and it’s a colleague who wants to talk with you about a company. This company has been around for decades and has grown steadily in recent years. It has good people. Although it has had a rough time in the last recession, it is holding its own and believes that it will be able to benefit from a strengthening economy. Its market holds promise of innovation and growth…Would you take the call? Does this sound interesting enough that you would recommend a deeper look to you as a potential partner, investor, board member or employee? Read more

The Enduring Value of IT and Process Investments

Yesterday, I had a meeting with some consultants who told me the story of a group of IT and accounting people from one of their clients screaming at each other because they could not find common ground to communicate about the cost and ROI of IT investments.

Then, last night, standing in the parking lot outside the Boston KM event, I had a long chat with an engineer who has been around tech and business for decades. He was very active in the Y2K adjustments (yes, that was a decade ago?!). He volunteered to me that people still don’t have a disciplined way of tracking their IT and processes.

This is one of the big reasons that IT and accounting people end up screaming at each other. It’s not that the individuals are at fault. It’s that they are working in a broken system. Read more

Smarter Accountants and Lawyers

Here are a couple of interesting follow ups to my post on legal business models:

The first is from the Journal of Accountancy here. It profiles accounting firms that are looking to create models based on value rather than time. The article profiles four firms that are blazing trails in this endeavor because, although my title implies otherwise, most accountants are in the same boat with lawyers–they are selling time, not value. Read more