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Atlas of Knowledge Innovation: Beyond Business Planning
by Debra M. Amidon and Darius Mahdjoubi
Abstracted from an article that will appear in the Year 2000 Handbook of Business Strategy: A Comprehensive Resource Guide to Strategic Management to be published in September 1999, by Faulkner & Gray.

"I saw the earth without any borders
Without any fighting, without any fear;
So, captain, give the order,
We're going to the next frontier."

earth.jpg (19646 bytes)

recollections of Apollo commander Eugene Cernan
   as written in a song by Paul and Ralph Colwell

Shortly after the astronauts of Apollo 17 reached the moon, the world awakened to a new perspective of bringing a vision into reality. It required more collaboration and faith than anyone previously dared to dream. Results were wondrous - beyond expectations. Similarly, executives today are caught in a quandary. They can continue to utilize the tried-and-true methodologies (unsuited for today's economic environment) or they can experiment with the unknown and venture forth with management initiatives that project innovation, creativity and responsible risk.

Integration of knowledge as an interdependent variable into conventional business methodologies creates a dynamic no less dramatic as the shifting from a flat earth view of the world to a global view. Initially, the world was seen as 2-dimensional - similar to how many business managers perceive their business environment today. Design a market matrix, create a balance sheet and manage the process in a simple methodical linear mode. Build the better mousetrap and the market will beat a path to your door.

In contrast, a 3-dimensional global view capitalizes upon the dynamics of the multiple compounding effects of what we might describe as a kaleidoscopic economy. It is not the speed of change of a variable, or the speed of change of multiple variables. It is the compounding effect of the speed of change of multiple variables creating a business environment that is difficult to understand, much less manage. The challenge is not to make existing businesses bigger; it is to create new businesses. It is not to evolve existing technologies as much as it is to envision products and services, which meet the unarticulated needs of customers or an unserved market and to do so ahead of the competition. Today, the market operates with a systems dynamic we do not yet understand.

THE INNOVATION ATLAS - AN ANALOGY
We use the analogy of the Atlas (i.e., system for depicting and measuring world views) and the metaphor of road maps to illustrate the migration from business planning to a knowledge-innovation strategy. We are discovering the increasing need for story telling, simulation, and sense making as a way to understand the enormity and complexity of the transformation.

Analogy, in logic, is the name of an inductive form of argument, which asserts that if two or more entities are similar in one or more respects, then a probability exists that they will be similar in some other respects. Ikujiro Nonaka and Hirotaka Takeuchi (1995 ) further indicate:

Dr. Nonaka, Global Knowledge Leadership Map A metaphor or an analogy is a distinctive method of perception. It is a way for individuals grounded in different contexts and with different experiences to understand something intuitively through the use of imagination and symbols. No analysis or generalization is needed. Through metaphors, people put together what they know in new ways and begin to express what they know but can not yet say. As such, metaphor is highly effective in fostering direct commitment to the creative process in the early stage of knowledge creation.

A geographic Atlas provides a systematic presentation of the World - or part of it - on a flat surface, although the earth is a globe. It provides a methodology needed for planning and implementing travel. It is generally considered a comprehensive resource of the world, as we might know it today. Usually, it consists of three distinct, albeit interrelated, parts:

(1) Mapping for organizing commonalties,
(2) Scaling to provide measurement and relational information, and
(3) Compass for direction.

Similarly, Business Planning is the current representation of the process and plans necessary to position a particular enterprise with competitive advantage in a particular industry or region of the world. It provides a methodology to define business plans usually based upon a product/market portfolio. It includes a similar set of techniques for

(1) Mapping according to organization capabilities and financial investments,
(2) Scaling based upon external market share measurements and technology positioning, and
(3) Compass to allocate internal resources to specific project plans.

A solid innovation strategy consists of the same three parts utilized in a different way.

(1) Mapping considers all the resources - human, financial and technical - to be integrated as a continuous learning system,
(2) Scaling measurements consider the intellectual capital of an enterprise - often described as the difference between book value and market value, and the
(3) Compass provides a coherent, common vision within which internal and external variables are leveraged to optimal value, including the flexibility to capitalize upon unexpected market changes.

Innovation strategy, by definition, assumes an explicit role for knowledge and is more of a synthetic process based upon vision and uncertainty.

Geographic Atlas Business Planning Innovation Strategy
Is a systematic representation of the World, albeit on a flat surface. Is a representation of the process and plans necessary to competitive positioning of an enterprise. Is a comprehensive, systematic process to integrate the financial, behavioral and technological aspects of the firm.
Provides a methodology needed for planning and implementing travel. Provides a methodology to define business plans based upon a desired product/market portfolio. Provides a methodology to articulate a leadership business, subsequent related business plans and desired learning systems.

Consists of Three Parts:

Mapping (classification) Organization capabilities and financial investments Resources – human, financial and technical
Scaling (measurement and relational information) Measurements based upon external market-share Measurements for intellectual capital
Compass (direction) Technology positioning and specific project plans designed to build competitive advantage Coherent shared vision and common language to build sustained collaborative advantage

THE NEW KNOWLEDGE VALUE PROPOSITION
A new knowledge economic dynamic is operating that creates a management environment in which the old traditional policies and practices are not sufficient. Most companies are operating on a value proposition based upon Cost, Quality and Time.

However, as...
the marketplace becomes hyper-competitive…
the performance metrics become more complex and intangible,…
the organization becomes more networked,…
people become more empowered and energized,…
process becomes boundary-less...
The enterprise will become increasingly reliant upon technology.

As enterprises become more reliant on technology and its attendant complexity, they will become more dependent upon the knowledge and behavior of employees as well as other stakeholders - both inside and external to the firm.

Simultaneously, performance metrics will become more hidden, intangible - related to what leading management philosophers have defined as intellectual capital.

Therefore, the traditional value proposition of cost, quality and time - although still very important - is just not enough.

These elements create a framework for analyzing innovation effectiveness: Performance, Behavior, and Technology. The new knowledge value proposition emerges to balances these complex, interdependent factors. A focus on one aspect will have an automatic effect on the other elements. Only a balance among the three will enable an enterprise to be centered and capable of managing forward toward sustained prosperity.

MIGRATING FROM PLANNING TO INNOVATION
Migration from business planning to innovation strategy is inevitable and challenging because it is related to changing the dominant mindsets. Migration implies a sense of journey over time and space, as well as challenge and change. Elaboration of innovation strategy is not a matter of size or scope of the enterprise; it is more a matter of defining an explicit role for knowledge in the business endeavors.

The whole organization must be engaged in the process of developing of their Atlas of Innovation, including the mapping, scaling and compass for the enterprise. Compared to financial analysis, there are no 'generally accepted innovation principles.' Although structures for innovation can be developed, they are usually too generic to be useful. Instead, they must be custom-made according to the specific needs of each business. Managers should create procedures and enable stakeholders to take part in this process.

The first step in the articulation of an innovation strategy is the mapping of the organization structure of the entire process. Although such structure may seem arbitrary, an innovation architecture must: 1) facilitate the migration from business planning to innovation strategy, 2) expedite the application of knowledge-sensitive external and internal evaluation methodologies, and 3) elucidate the specific nature of the given business. In this context, a possible mapping of innovation may be organized under four main headings as follows:

Technological Innovation
Social (Human) Innovation
Market (Customer) Innovation
Organization (Leadership) Innovation

The above classification is consistent with Drucker's statement (1974) that "innovation is an economic and social term. Its criterion is not science or technology, but a change in the economic and social environment, a change in the behavior of people, as consumer or producer."

IN CONCLUSION
Just as with the Egyptians, Persians, Minoans, Greeks, Abassynians, and Europeans of times past, the future belongs to those who have the willingness to venture into the unknown. They used their intuition, imagination, sense of adventure, and tools they innovated to explore the environment beyond the limits.

Moving beyond traditional business planning practices will not be easy; the rewards will be great. Today we measure what we can measure, rather than measuring what is important. Now we underestimate the true potential of information technology, knowledge processing and worldwide communications. Today we have little sense of how to measure the true value of social capital, which is far more a function of interaction, interdependence and collaboration. To do so - and understand the relationship among the three requires multi-dimension visioning and courageous leadership.

The Knowledge-Innovation Atlas scopes the new classification schema, the scaling and measurements systems and the compass to chart new directions. Because something hasn't been done before is no reason not to innovate. We must learn to create the business plans for emerging markets. Thus, we will unleash the bountiful opportunities afforded the next millennium. We will do so systematically and with renewed purpose.

Although much has been written on knowledge management and the knowledge economy, the reality is we know very little about the real implications of this inevitable transformation. One thing is certain, the journey into the next frontier will bring forth new value for knowledge and the innovation processes in ways unimagined.

For further details and publication information contact Debra M Amidon, debra@entovation.com, and/or Darius Mahdjoubi, darius@workmail.com.

 

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