The Crisis is a terrible thing to waste


It is often said that an economic crisis creates the highest number of entrepreneurs. It appears that people are most creative when faced with harsh constraints and limited resources. If so, then a “crisis is a terrible thing to waste”; a quote credited to Stanford professor Paul Romer at the beginning of the crisis in 2008.

The biggest crisis is yet to come
The recent EU Innobaromenter reveal that Danish companies are being split into an A and B team of innovation. The Bs are companies that have reduced their investments on innovation (see my post). Companies of this B team are steering through the financial crisis opting for crisis management. However, they still need to face the biggest crisis yet. The loss of competitiveness to the A team, which is still investing in innovation. And to face the competition from China, India, Brazil etc.

Managing innovation: a matter of change management
I am often faced with the question of how to manage innovation during crisis. I believe innovation management is a question of effective change management. The majority of definitions of innovation contain an element of some degree of “newness” within a relevant context. Anything new will almost always imply some degree of change of the status quo. If so then successful innovation management will have an important element of effective change management.

The trick is effective ideas management
Financial crisis will lead to more constraints being put on innovation – even in succesful companies. If creativity flurrish when faced with constraints, then the trick for Company leadership is to balance the level and mix of constraints while managing the ideas and flow of creativity.

A common mistake in ideas management is only to evaluate the singular idea. I recommend evaluating ideas in terms of:
– time: should the idea be pursued today or after the crisis? Has the time passed for this idea?
– context: is the idea appropriate for our business context? Should or could we partner up to exploit the idea?
– combination: could the idea be combined with another idea(s) to become more promising? Which elements are missing for making the idea a blockbuster?

It’s personal
If managed properly leadership will experience a pool of creativity as employees will rally to help the company out of crisis. They are fighting for their jobs and the future on a personal level. This is a force that few companies cherish or leverage.

A crisis is a terrible thing to waste, so don’t waste it. It is possible to be effective and successful in innovation during crisis, but Company leadership plays a more prominent and important role in times of crisis than during prosperous times. It becomes an option game, where the trick is to invest in an option of the future while managing the present.

Stratety2Tactics facilitate Company leaderships to become more successful in the option game. We translate your strategy into tactical plans and operational innovation targets that can be implemented by the organization.

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Innovation Management or Leadership: A difference? | InnovationManagement.se


My first article as Guest Editor on InnovationManagement.se. Read it directly at http://www.innovationmanagement.se

The countdown has started; the last bilateral negotiations are becoming frenzied as we approach the opening date for the 2009 United Nations Climate Change Conference in Copenhagen. A pattern is emerging where countries are embracing this opportunity to show leadership and managing the event as a contingency. The pattern is one of A and B teams of countries, a pattern similar to that in Danish companies investing in innovation.

[From Innovation Management or Leadership: A difference? | InnovationManagement.se]

Privat forskning øges i EU


Interessant læsning om hvilke danske virksomheder, som trods krisen fortsat holder investeringer i innovation i gang, men knap så interessant er det at læse, hvor de så placerer deres forskning henne. Artiklen henviser til uddybende kilde på engelsk og anden baggrundsmateriale.

Privat forskning øges i EU 19-11-2009 Ny oversigt over de mest forskende virksomheder i verden viser et EU, der ruster sig til fremtidig vækst. Meget forskning placeres dog udenfor EU, hvilket kan give en uheldig udvikling.

[From Privat forskning øges i EU]

Aligning strategy: Looking back at 2009


Year 2009 was a dreadful year
I believe most senior management would agree that 2009 will stand as the worst year in recent history. As we are preparing to close the fiscal year, we look to 2010 with caution in search for signs of optimism. However, we should not forget to look back on 2009 and reflect on how we handled the challenges of the year.

It has been said several times over that the current crisis is not a market crisis in the textbook meaning of the term. The current crisis is or at least started as a financial crisis, where in spite of business opportunities, liquidity was not available or difficult to get at. However, reflecting on the predominant reactions to the crisis, many companies defaulted to actions of past times. Defaulted to crisis management instead of change leadership (see my previous post on this topic).

The issue of strategy execution
If the current crisis is predominantly a financial crisis then the existing corporate strategy may not be wrong by assumption. However, the strategy will require alignment to new external factors. If the strategy is robust then changing external factors ought not necessarily change the strategic goals pursued, merely the path towards them. The reaction of many companies to continuously change or reformulate their strategy may be indicative of another problem. The problem of executing the strategy.

Higgs and Rowland, 2005, conclude in their research of strategy implementation in international companies that 70% of all change initiatives fail to produce expected results. Norton and Kaplan, the authors of The Balanced Scorecard, claim this number to be closer to 90%. Regardless of the exact figure both studies paint a gloomy picture of the challenges of implementing a corporate strategy.which highlights the problem of strategy execution.

Implementing strategy in uncharted waters
I have during the past months spoken to executives in companies of varying sizes, industries, and complexities. Most recognizes the issue of strategy implementation. Summarizing the key two current reasons behind the issue, the predominant reason is the difficulty of translating the strategy into tactics plans and subsequently specific projects. As many companies has downsized their organization during 2009, the same companies now face the lack of resources and competences to execute and implement the strategy. And senior management simply does not have the time or spare focus to undertake this task amid dealing with the crisis.

The second reason is related to the organization context. The severity and speed of the crisis has forced many companies to react swiftly and dramatically. This after a period of growth and prosperity. The many downsizing of companies have created a misalignment in how organizations perceive themselves. Successful strategy implementations require a solid grasp and understanding of the change context; hence the issue when designing the optimal path for pursuing the strategic goals.

A hybrid approach to change management
One remedy is to bring in outside assistance, which has its benefits and drawbacks. The benefits are the influx of required competences, resources, and insight to implement the strategy. The drawbacks are the associated cost and the fact that outside consultants are external to the organization, which can result in a lack of organizational commitment to the change program. Another remedy is to sit the crisis out, which is likely to result in loss of competitive edge and market shares.

I propose a hybrid approach, where external assistance is brought in only to address the two key issues mentioned previously.

The external consultants represent the extra resources required to bridge the step from strategy to tactical plans, where they because of their external perception of the company are able to provide the critical insight of the “new” organization as input to designing the change program. Their involvement would then only be in the early phases of the strategy implementation like catalysts of change.