Magnus Penker, Director & Partner at Bearing Consulting Ltd.
Social Innovation and sustainable thinking is emerging, business leaders shifting focus using social and sustainable thinking sharpening their competitive advantages. Interested reading more? Have a look at our new trend watch at http://www.dfkompetens.se/trendspaning/veckans-entreprenorskap/2011-08-01_social/index.xml
Joseph Schumpeter, the guru of innovation, addressed the process of innovation with his theory of creative destruction and his definition of entrepreneurs as people who combined existing elements in new ways to create a new product or service. Social innovation is a new potential megatrend, however with roots back in the 60′s and related to strategies, concepts, ideas and organizations that meet social needs such as working conditions, education, community development and health that extend and strengthen the civil society. The term is used in many ways and related to innovations such as microcredit and internet based distance learning as well as social entrepreneurship.
However, recently business people and academics started to connect the dots bring doing well together with doing business, i.e. making the cake bigger before slicing it up. An example is the Canadian center for Social Innovation who clam on their web that ‘The Centre for Social Innovation is a social enterprise with a mission to catalyze social innovation in Toronto and around the world. We believe that society is facing unprecedented economic, environmental, social and cultural challenges. We also believe that new innovations are the key to turning these challenges into opportunities to improve our communities and our planet.’ Read more at http://socialinnovation.ca/
Moreover, Michael E. Porter the Harvard University professor, also recently published paper where he explain why business leaders must focus on shared value – creating products and services that benefit not only the company but also society. Or as like to put it, make the pie bigger… Responsible and smart entrepreneurs understand to create value through actions beneficial for all. Without a working society and environment there is not much business to do. See Porter’s movie in one of my older blog posts http://www.penker.se/michael-e-porter-sends-csr-back-to-the-stoneage-now-it-is-time-for-real-entrepreneurship/
There is also a new book published on the subject, Social Innovation, Inc. by Janson Saul. It is about five strategies for driving business growth through social change. According to Janson there are five key drivers for social capitalism and capital market
Janson also point out five key path to success,
Another interesting trend is place management, also a kind of social innovation, focused on reinventing places, societies as well as business clusters around the globe. There will be blog posts about this exiting topic, and I can promise a lot of interesting material. The international though leader in the subject is Christer Asplund, co-writer to Philip Kottler and senior adviser at Bearing Consulting, who is also launching his new book this autumn.
Last Friday we could read an interesting blog post by Scott Anthony. It was about four typical innovation pitfalls. Great article, and I like to comment upon it.
The first lie is that you can trust the feedback when asking customers, and instead go for what they do today or if they are ready to spend some money on a new idea (on an early stage). This is a very useful way of verifying the real need and according to my experience also to be combined with testing the market with different versions of the idea, of different markets and different prices will do the job even better. This is also how you build successful e-commerce solutions today.
The second lie is that you will ship in six month which do not happened often according to Scott Anthony which recommend to have a look at Scrum and go for incremental releasing. However, here I have some criticism. Many firms do actually have significant architectural issues due to this approach. Instead, put effort in building a sustainable and scalable architecture and then release increment by increment and in some cases even open up for external innovations as an accelerator of ideas and functionality. The architecture can also be released base upon a quick beta version without any forward-compatible promises and in stage two replaced with a stable long-term architecture where all old components are replaced.
The third lies it that the sales people say of course I can sell that. Could not agree more, no further comments needed.
The fourth lie is that executives are open to everything, they are not when i come to money. Always ask for a budget is Scott Anthony’s recommendation. Good point here, but I would actually give the recommendation to bring a client or customer to the meeting when the executives when presenting the idea.
It is a lot of buzz about green innovations and much talk about potential green washing. And we have seen it all before with pink washing and white washing. To understand whether green innovation is washing or not the question to ask is why it exists. To cover up? To gain short term winnings? To move the focus away from other issues? Or is it possible that it really might exist a long term market opportunity here?
Let’s start with low energy light bulbs. It reduces the consumption of energy, but it is also generating a number of new problems with ozone, dirty electricity as well as mercury. On the other hand, LED bulbs that do not have these problems, was probably invented as a result of the increased demand created by its predecessor. Moreover, it is interesting to notice how Philips, vendor of traditional low energy bulbs as well as LED bulbs, just announced that they will pump in 2 billon Euro into green innovation. Most likely due to past green success and increased demands.
Philosophically it is interesting to ask if it is ok to try to go green even if there are short term trade-offs that might even be worse than without it. Like with the case with low energy light bulbs. Or as with hybrid cars; which most likely increases the demand of green cars (now and in the future) but at the same time, considering the complete revolution and present technology, probably is worse for the environment then using the best available traditional technology.
Given above thoughts; How is it with the German stop of nuclear power. Will it, short term, create negative impact on the environment and business climate but long term impact and stimulate new innovations leading to a more sustainable society as well as a comparative advantage for a new green Germany industry? Time will tell.
Innovation is a way of getting competitive advantage which is well known and documented since ancient times, ranging from machinery, war equipment to the beauty industry and all trial building the perpetuum mobile. What´s happened lately is the paradigm shift of opening up the innovation process from being secret and closed towards inviting for collective wisdom and creativity. We call it open innovation or sometimes Innovation 2.0.
Open innovation, is a way to forge closer relationships, gain access to the best thinking and to quickly disseminate ideas and trends by ambassadors are on the rise. In recently blog posts, by me and other bloggers, you have seen examples with Google, Apple and Nintendo. In a recently published MIT article by the Open Innovation guru Henry Chesbrough, he states that Porter’s Value chain need to be extended; as the service interaction (Service Value Web) and innovation taking place between producer and consumer must be taken into account in a greater deep than just been seen as logistics.
Another interesting innovation observation is that there seems to be a dualistic relationship between profitability and innovation; characterized by kind of market structure.
In a market with perfect competition player gain the benefits of the innovations as following;
However, if there is an oligopoly, i.e. few players who compete in the market space, innovations tend to very quickly imitated by competitors, sometimes even gets launched before, often leading to long-term reduction in profitability as research and development budgets get astronomically high.
Now, if we add to this trend Open Innovation, say the mobile phone industry which is an oligopoly market structure, already suffering from shrinking margins and increasing R&D costs, it will be very interesting … in an open approach ideas and concepts will move fast between communities, so-called leakage between communities, that in turn means that knowledge, ideas and opportunities move even faster than before when the innovation space was closed. Oligopolistic players now not only has an eye on each other but also dancing with each other’s customers in one big open innovation square dance…
Right or wrong, opportunity or threat, but the world has changed and we with it …
For some time now have Area Of Excellence, where I have the privilege of being Chairman of the Board, developed a certified training program in Talent Management. The training program has been developed, and delivered in collaboration with the Swedish Computer Association. We collected a number of really sharp trainers (Swedish and international) as well as the latest scientific developments in Talent Management. Personally, I hold in the initial block … Will be really fun and challenging.
At its core, talent management is about following;
We want to strengthen Sweden’s competitiveness and be better able to attract, retain and develop our talents and you are welcome to help and spread the word by sending the link below through to HR executives, CEOs, directors, business development and perhaps a consultant managers who you think will benefit of this
http://www.dfkompetens.se/ledarskap/kurser/2111058/index.xml
As we speak there is a new trend rising providing us with opportunities or threats, depending on what side of the fence you are mentally located. Let’s first back the tape a bit. Take a moment and ask yourself “why are people launching apps on Android and iTunes in numbers close to impossible to believe”?
I think it is because it is possible, and the evolution takes care of the rest. But the most intressting is the consequence. The platforms used, Android and iTunes, are in practical terms nothing else that innovation frameworks moving Apples and Googles R&D departments to be carried out by their customers. For free. And the good part is that due to the number of downloads a self-correcting (evolutionary) process promote the best and strongest innovations at the same time as it is prototyped, tested, refined and commercialized. Actually, it is a perfect innovation process driven from outside and in – to no cost except from the platform. This is Innovation 2.0.
The Swedish Learning Award 2011 is completed and the winner selected. Guess if I am a proude chairman of Lexicon Interactive as they won in the category mobile learning. The winning contribution was a complete new kind of App for the Swedish Addison Society, and the motivation was “Addison is a serious fatal disease that requires constant attention to immediate life-saving measures if it would end up in an Addison crisis. This mobile application contains everything you need to know about this disease and the steps required for an acute Addisonian crisis; for healthcare professionals for information about how medication and for families there are both depth background information about the disease and a guide to what information you need to notify SOS Alarm in crisis mode.”
Congratulations!
At the moment many Swedish manufacture plants are bought by BRIC players which are an interesting phenomenon as the interest is increasing meaning that there are reasons beyond low interest here. Historically European countries like Sweden has had a low interest which has lead to investments in automated manufacturing plants competitive with labor intensive manufacturer in the BRIC area, we can find examples like Flextronics. However, in recently bought manufacturing plants it is different. Indian Bahra Forge bought Kilsta plants in Karlskoga, Sweden to manufacture crankshafts, Suzuki Metal bought wire manufacturer Garphyttan and Indian Kemwell bought two pharmaceutical factories in Uppsala. Why?
It seems like access to raw material, skilled operators, localizations as well as sustainability and environmental issues play a role here. Taking a financially point of view it seems like the interest gap between west European countries and the BRIC region plays a important part in the managerial decision making process as high tech plants cannot be replaced with low cost labors in BRIC, nether access to raw material, leading to comparative advantages in relative lower interest (even if it is increasing in absolute terms), skilled operators, knowledge workers as well as local and secured access to raw material in a stable region.
How can we use the comparative advantage as a west European nation? First of all, we can compete on the global market with high tech production, skilled operators and industrial knowledge workers. Internally within the EU market there is an opportunity for entrepreneurs here; Supply and development of global talents, training, R&D, as well as building and developing infrastructure.