Reports from the Knowledge Labs about our recent findings, research topics, and interviews with lifestyle leaders who are creating their own futures.
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How to stimulate your own powers of foresight. Consider the following thought provokers. Ask yourself, in these categories what are the brand new trends and forces? Which are the ones growing in importance? Which current forces are loosing their steam? Which have peaked or are reversing themselves? Which are the "wildcards" about to disrupt us in the future? POLITICAL AND TECHNICAL thought for food: Electronics, Materials, Energy, Fossil, Nuclear, Alternative, Other, Manufacturing (techniques), Agriculture, Machinery and Equipment, Distribution, Transportation (Urban, Mass, Personal, Surface, Sea, Subsurface, Space), Communication (Printed, Spoken, Interactive, Media), Computers (Information, Knowledge, Storage & Retrieval, Design, Network Resources), Post-Cold War, Third World, Conflict (Local, Regional, Global), Arms Limitation, Undeclared Wars, Terrorism, Nuclear Proliferation, Weapons of Mass Destruction, Governments (More/Less Power and Larger or Smaller Scale), Taxes, Isms: Nationalism, Regionalism, Protectionism, Populism, Cartels, Multinational Corporations, Balance of Trade, Third Party Payments, Regulations (OSHA, etc.) Environmental Impact, U.S. Prestige Abroad. SOCIAL AND ECONOMIC Food for thought:
Labor Movements, Unemployment / Employment Cycles, Recession, Employment Patterns, Work Hours / Schedules, Fringe Benefits, Management Approaches, Accounting Policies, Productivity, Energy Costs, Balance of Payments, Inflation, Taxes, Rates of Real Growth, Distribution of Wealth, Capital Availability and Costs, Reliability of Forecasts, Raw Materials, Availability and Costs, Global versus National Economy, Market versus Planned Economies, Generations: Y, X, Boomers, Elderly, Urban vs. Rural Lifestyles, Affluent vs. Poor, Neighborhoods and Communities, Planned or Organic Growth.
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The Journal of 2020 Foresight
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Thursday, June 19, 2003
Knowledge Creation, Innovation and Organizational Learning
Chapter Two: The Ridge
By Steve Howard, CKO
The Knowledge Labs
Table of Contents
Chapter One: Basecamp
Chapter Two: The Ridge
Chapter Three: The Outpost
Chapter Four: The Tribal Territories
“If we apply knowledge to tasks we already know how to do, we call it productivity. If we apply knowledge to tasks that are new and different, we call it innovation.”
Peter Drucker
J2020F: You’ve said the future belongs to companies that can create competitive breakpoints by drawing on the talent and commitment of their people.
TB: That’s right. It’s much better to be in an organization forcing other competitors to react to a new breakpoint, than to being blindsided in a sudden radical change.
J2020F: We’ve covered some internal assignments (innovation and efficiency) and in our last conversation some externally focused assignments that would prepare talent in a company. So are these development roles only for top executives?
TB: Not at all. Top, middle manager, and front line leaders all have a vital role to play in mobilizing for radical change. Remember, we’re describing an organization competence -- one capable of triggering breakpoints at a later date.
J2020F: Walk us through the opportunities.
TB: Sustained excellence requires nothing less than the capability to create breakpoints by developing and positioning managers. Those on the front line can improve and innovate. Those in the middle can develop new business from strategic options, and those at the top can change the corporate direction when they sense a major turning point in the forces of change.
J2020F: And, we already talked about how intrapreneurs and improvement team leaders drive the engine of continuous change that allows a company to take continuous and spontaneous advantage of strong industry trends.
TB: Right. They are on the frontline of the intelligence, improvement, innovation, and networking capabilities. Since few companies have all of these properly in place, those that do create breakpoints by continuously outperforming the competition.
J2020F: You describe a vital role for middle managers – developing new business from strategic options.
TB: They manage the company's portfolio of strategic options that is so crucial to the creation of breakpoints when industry trends are uncertain. Middle managers have to bridge the gap between the vision of top management and the uncertain reality of the marketplace.
J2020F: So, working together with frontline managers, they decide which options to pursue?
TB: Yes, and with top management, they decide which options to convert into a full-scale corporate commitment -- and when. With timely implementation, strategic options lead to outpacing of the competition.
J2020F: What about top management’s role?
TB: Top management has to provide the strategic goal and shape the corporate culture within which the frontline and middle managers can pursue continuous and sporadic change.
J2020F: To deal with major trend reversals in the business environment that make existing bottom-up change counterproductive, top management has to realign the organization from time to time, right?
TB: That’s right. A new business direction may be needed to trigger a competitive breakpoint, together with a reallocation of resources, redirection of effort, and possibly a redistribution of the value created.
J2020F: So, in addition to learning by experience, managers can learn to anticipate breakpoints.
TB: Yes, by identifying the forces of change, assessing the resistance, and building scenarios based on a limited number of ways in which the balance between these forces might change.
J2020F: And this organizational learning – the best of hindsight and foresight—better equips them?
TB: Yes. Remember, what we’re doing is closing the competence gap over time.
J2020F: How do you assess the competence gap?
TB: An audit of existing resources and competencies, relative to the key anticipated success factors is needed to estimate the size of the competence gap.
J2020F: So, you size up both the stock of resources and competencies and the organizational capability available to develop them?
TB: We’re analyzing the tangible and intangible resources together with the functional competencies.
J2020F: Which tangible resources?
TB: Human skills, finance, supplies, technology, and information.
J2020F: Which talent quadrants does an organization need to have in place? Most if not all of the Agents and Athletes left long ago.
TB: You need to have 4 unique blends in place to master the internal innovation and cost reduction initiatives, while at the same time to cultivate the external partnerships necessary to fill competence gaps.
J2020F: These must be the remaining four – ASSOCIATE-Agents, ATHLETE-Academics, AGENT-Associates, and the ACADEMIC-Athletes.
TB: That’s correct. The ASSOCIATE-Agents – with less organizational affiliation needs and faster mastery skills than the other associate talent clusters – serve as change agents. They reduce resistance to skunk works, fundamental innovation, re-invention initiatives and continuous innovation implementations.
J2020F: How about the ATHLETE-Academics?
TB: With a unique blend of less affiliation and less extreme speed, they champion both the internal efficiency and cost reduction initiatives, as well as, manage some of the external relationships. They’re the experts at operational excellence – streamlining processes, eliminating inefficiencies, incrementally improving the application of new emerging knowledge, and outsourcing the non-essentials.
J2020F: How do the AGENT-Associates differ from their opposite talent sub-quadrant, the ASSOCIATE-Agents?
TB: You’ve asked a great question. As, you’ll recall, moving along the knowledge or innovation dimensions produces the most amount of resistance.
J2020F: From Agent to Associate and back – along the disruptive to sustained innovation dimension, and from Athlete to Academic – along the emerging to embodied knowledge dimensions, right?
TB: Right. And, yet in order to create a breakpoint you have to manage the innovation and knowledge dimensions significantly better than anybody else in your market or industry. Very few organizations, for instance, have figured out how to simultaneously master incremental improvement and fundamental innovation.
J2020F: But, those who do make everyone else march to their drumbeat? That’s what the developmental assignments and organizational learning is all about – figuring out ways to minimize resistance along these dimensions with these unique talent, right?
TB: If it were easy, everybody would be doing it. But, back to your question. The change agents (ASSOCIATE-Agents) lower the resistance to the product breakthroughs from fundamental and incremental product innovations that AGENT-Associates produce. AGENT-Associates borrow ideas and approaches from the extreme agent’s (AGENT-Agents) inventions, but focus on applied R&D in a more commercial laboratory setting.
J2020F: So, they’re advocating a new s-curve just as the current high growth s-curve begins to capture more of the mass market – say at the 50% turning point.
TB: Exactly. It’s all about timing. Remember what Dent says. The time to complete the innovation phase is equal to the growth phase, which is equal to the maturity phase. So, you’d better be in the second innovation phase while in the first growth phase, or you’ll miss the reinvention path after maturity and decline, instead.
J2020F: But, Joel Barker says when you do that, you’re competing with a highly successful product that grows more successful day-by-day. You can’t get the mind share you need, and more importantly the resources for an untested new idea.
TB: That’s what makes these talent combinations so unique and so valuable. They can trigger breakpoints that leapfrog the competition.
J2020F: Now, what about the fourth blend, the ACADEMIC-Athletes?
TB: They’re faster paced and more affiliated to an organization than the extreme academics. Not only do they focus on the emerging knowledge as content, but they develop the process for capturing, transferring, and supporting the innovation process, as we’ll describe a little later.
J2020F: What about the intangible resources and the functional competencies?
TB: We’d audit customer loyalty, corporate image, employee motivation, supplier and stakeholder relationships. For functional competencies: R&D, technology know-how, purchasing, production, marketing distribution, service.
J2020F: You mentioned organizational capabilities. What are they?
TB: They are:
Environmental scanning (which affects access to information);
Management of stakeholder relationships (which affects access to resources); and
Management of internal learning (which determines ability to develop competencies).
J2020F: So, over time they can create competitive breakpoints by drawing on a limited number of organizational capabilities, each appropriate for capitalizing on a different configuration of change forces and resistance?
TB: Yes. The key to creating breakpoints is an organization that can capitalize on the change patterns available for creating a discontinuity. Intel comes to mind in the tech arena.
J2020F: Let’s say a management team’s developed that capability in their organization. How do they execute a breakpoint strategy?
TB: The main steps involved in mobilizing for radical change are: Selecting an implementation style from the following: committee, cultural, collaborative, or commander.
J2020F: And once you do, what happens next?
TB: Motivating key stakeholders for the change, triggering the organizational leap, effectively dealing with status quo advocates, and aligning with multiple change forces.
J2020F: We already covered the rapid, decisive style of the commander needed to implement restructuring.
TB: By contrast, the all-encompassing, delegating, cultural style fits revitalization. Any attempt to use the commander style on a revitalization path, or the cultural style for restructuring will doom the intervention before it starts.
J2020F: And we also said, the committee and collaborative styles are more versatile and more frequently found in a variety of settings.
TB: Ideally, the committee style is more suited to a path of resistance, whereas the collaborative style is more suited to renewal.
J2020F: So, let’s say we’ve got our plans in place to proactively build the capability we need to trigger a breakpoint. How do we go about it?
TB: The first test of implementation style is building the organizational energy needed to implement radical change, especially later on in the change process when the initial motivation may have dissipated.
J2020F: We need some way to get people to recognize the need for change?
TB: Communication and education can be used to make an analytical appeal for recognition of the strength of the change forces and the threat of a breakpoint.
J2020F: I imagine this is especially important if your starting point is in organizations with closed attitudes to change.
TB: True. The intervention paths for dealing with strong resistance call for variations in this motivating theme; more communication when the forces of change are strong and more education about the need to change when the forces of change are weak.
J2020F: So, begin with the analytical appeal. How do you develop the emotional motivation to change?
TB: Facilitation, participation, and delegation to encourage a response to the tension between where the company is and where it should be to deal with the discontinuity. Emotional ownership of the response generates commitment to its implementation.
J2020F: Doesn’t this come most naturally in organizations with low resistance, where the collaborative and cultural styles can be used?
TB: Yes, but the wave of motivation and excitement created by successful change during the initial phases of the change process can be dashed on the rocks of submerged resistance. So, just because nobody rocked the boat in the beginning, doesn’t mean you’ll have easy sailing.
J2020F: So, by organizational learning together with development assignments requiring the practice of the appropriate leadership behavior, an organization can build its capability?
TB: So far, we’ve been addressing reactive responses. But proactive change capabilities, or organizational behavior patterns, can give the company the opportunity of creating a competitive breakpoint.
J2020F: You’re talking about an organized method for anticipating the forces of change.
TB: That’s right. We’re describing the need for a knowledge creation function – an information and intelligence capability to gather and evaluate the information for sensing the forces of change.
J2020F: Spend a little more time on this point. Aren’t there different approaches emerging today that align with resistance, revitalization, renewal, and restructuring?
TB: Yes. Remember, Academics are the keepers of embodied knowledge. They’re the status quo advocates resisting fundamental and unproven innovation. They favor committees since they have a vested interested in the old game.
J2020F: So they favor tangible, explicit information and data. They emphasize existing knowledge.
TB: Typically, in old game strategies, the knowledge has been embedded in well-established policies and procedures. Unfortunately, over time, all knowledge becomes a commodity. What had been accessed by only a few in benchmarked databases becomes broadly accessible and readily applied.
J2020F: How so?
TB: Obviously the rates of obsolescence differ by industries and professions, but Academics acquire that knowledge directly from suppliers, ex-employees, publications, professional organizations, meetings and trade associations.
J2020F: And easily over the Internet?
TB: Even more so. Remember the saying that information wants to be free?
J2020F: What about in terms of revitalization?
TB: Here, the emphasis is more on the process of knowledge creation, rather than on existing knowledge content.
J2020F: What’s the difference?
TB: Well, for old game organizations the focus is on minimizing risk by finding out what they already have and then holding on tight before it’s too late. In the second instance, the focus is on efficiently making what has been learned available to others.
J2020F: The first would reside in some sort of an information system – a data warehouse or a rules-based system?
TB: Yes. The assumption is that data leads to information that leads to knowledge. In the second case, the intrapreneurs and the improvement teams generate new competencies.
J2020F: They generate new knowledge from either a fundamental innovation or an efficiency process that could be valuable to others. Or, is it the knowledge that comes out of the integration of a merger?
TB: On the renewal track with step-wise changes limited to certain parts of the organization, the knowledge focus shifts to finding new uses for existing knowledge.
J2020F: So, these initiatives are launched to search for new knowledge being developed throughout the organization, as well as the existing knowledge held by individuals and groups.
TB: Right. The main goal is to transfer and share experiences and emerging best practices throughout the organization to achieve some cost advantages capturing the byproducts of innovation or cost cutting task forces – or special partnerships and alliances.
J2020F: How so?
TB: By avoiding the costs associated with the redundancies and inefficiencies of knowledge creation.
J2020F: What about for breakpoint situations. What’s the knowledge approach for triggering breakpoints?
TB: Really a combination of the earlier approaches – both new knowledge content and new knowledge processes – but tied to fundamental innovation.
J2020F: An information and intelligence capability to gather and evaluate the information for sensing the forces of change?
TB: Rather than extracting or data mining, the focus is on how technology can facilitate the cross-fertilization of ideas required for spontaneous and structured innovation. It performs an enabling function.
J2020F: Knowledge creation through collaboration and communication?
TB: Yes. Support for both a disruptively innovative capability and the process of fundamental innovation.
J2020F: Please elaborate.
TB: The capability develops from the alignment of innovation skills, the knowledge technology support, the appropriate management behaviors, and innovation metrics.
J2020F: What about the process?
TB: Innovation as a process is all about building a portfolio of ideas. All the half-baked idea fragments circulating in a virtual water-cooler waiting to be combined with someone else’s. Those that pass a screening, advance to experiment status to be evaluated.
J2020F: And then what?
TB: The small percentages that pass become new disruptive ventures.
J2020F: So, you’re describing a knowledge bank. Thousands of ideas feed into hundreds of experiments, into tens of ventures and a couple of disruptively innovative businesses?
TB: The on-going fundamental innovation process is enabled by monitoring and scanning systems to trigger new thinking.
J2020F: What do you mean?
TB: Monitoring only covers known driving forces influencing the organization's future. But, the knowledge system needs to address four issues:
Establishing formal and informal systems;
Targeting relevant information;
Processing and evaluating the data; and
Basing actions and decisions upon the conclusions.
J2020F: Pretty straight forward.
TB: Straightforward in concept, perhaps, but difficult to manage.
J2020F: Why?
TB: While it can be operated by one person the scope is usually too much for even a single component within a unit. Decentralized operations make control difficult and produce gaps or overlaps in info.
J2020F: How do organizations resolve the issue?
TB: Well, remember computers can’t innovate. Only people can. So we rely on the human element. Gatekeepers, who monitor change outside of formal system frameworks, supply missing information resources to colleagues from a variety of sources.
J2020F: Such as?
TB: External media: public press, competitors' publications, investment analysts reports, and research companies reports. Internal reports: technology and market analyses. Feedback: vendors, customers, trade shows. Networking: Exchanging ideas within and outside the organization
J2020F: What about scanning systems?
TB: Scanning is an early warning system which detects cues and signals of new trends of probable importance to the organization. Using both systems alternative future scenarios can be developed.
J2020F: The knowledge system has to be capable of supporting the scenario building process?
TB: Scenarios identify what environmental factors to monitor over time. When the environment shifts, you can recognize in what direction it is going in time to course correct profitably.
J2020F: So, like the two learning expeditions we’ve profiled, breakpoint-triggering organizations use knowledge creation systems to enable scenario scanning?
TB: Yes. They follow the same process.
J2020F: You mean:
1. State the specific decision to be made
2. Identify the major environmental forces impacting the decision
3. Develop four plausible and qualitatively different possibilities for each force
4. Assemble the alternatives for each force into internally consistent stories
5. Construct both a matrix and a narrative
6. Identify opportunities and scenarios focusing on links and synergies.
7. Rehearse the future: play out the original decision.
8. Pick relevant signposts and indicators to monitor -- translate shifting indicators into specific implications?
TB: The one and the same. Steps 7 and 8 continue in the Outpost.
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Copyright ©2002 - 2006 Aarnaes Howard Associates. All rights reserved worldwide.
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