Innovating in a Fast Changing world

A business which is serious about competing in fast changing markets with fast changing technology must make things happen – it must innovate. If it does not innovate it risks being overtaken by competitors. Sometimes a business underestimates the competitive challenges it faces. The risk of this happening is high when competitors react to potential challenges in much the same way. It is then – just when traditional industry players feel comfortable with each other – that a business faces the risk of competition from non- traditional suppliers. Non-conventional competition is more and more common. Once stable and regulated industries, such as insurance for example, have in recent years become fragmented by new players such as banks, brokerage firms, retailers, telecommunication and computer services firms. Many of the new entrants in the insurance industry and also in other once stable industries have used market innovation to achieve startling novel results. Before considering market innovation in detail, it is useful to consider briefly the two other main types of innovation which contribute to organic business development – product innovation and process innovation.

In times of fast changing markets and fast changing technology, businesses which want to safeguard their future must innovate. If they want to be proactive and develop further by organic means they must engage not just in occasional bursts of innovation, but in continous change. Three main types of innovation can be pursued for this purpose. First, market innovation – improving the mix of markets and how these are served. Second, product innovation – improving the mix of offers. Third, process innovation – improving the mix of internal operations.

In order to achieve and maintain competitive success in today’s turbulent marketplace, top management must spend at least as much time thinking about customers’ needs and how these might be met innovatively as thinking about internal operations. The assertion “experience is becoming irrelevant and even dangerous” is probably a deliberate exaggeration. But, to compete effectively in the future, a business needs to focus beyond the markets it serves presently and to concern itself with market innovation and the “total imaginable market”. Aggressive suppliers from other industries are adopting this wider approach. This is why retailers, brokerage firms, telecommunication and computer services businesses have entered financial services markets.

Not to be surprised by new competitors, incumbent suppliers in all industries need to concern themselves with market innovation. All businesses need to understand the changing needs of their customers. They must develop accurately targeted offers quickly and cost-effectively. Market innovation can help guide this quest by combining product line management with market opportunity analysis. When market innovation is bold and imaginative it provides not just a means for developing new business, but a revolutionary means for safeguarding existing business.

 

How Social Business Software (SBS) captures and integrates end user knowledge into improved business knowledge

Dynamic and Highly adaptable organizations today have been blurring the lines between strategic decision and operations. Here employees are generally expected to understand the organizations goals and strategies. Due to the pace of change businesses have to react, change and adapt these strategic goals frequently and do so rapidly.

If employees understand the visions and strategies and are in a well-designed social business software framework they can assist organizations achieve these goals.

Social Business Software aims to capture end-user tacit knowledge and integrate it within the existing knowledge of the business process models therefore forming a decentralized knowledge management framework. Thus the business processes that are designed are done with the participation of the organisational community aligned with the businesses strategic goals. Hence knowledge management through the use of SBS is created in two ways. Firstly current knowledge that exists within the organisation can be shared through the platform and secondly end-users can contribute to the existing knowledge with their own tacit knowledge.

Social Business Software allows for both a top-down and a bottom-up view of knowledge creation to occur through collaboration within their own business environment. One could argue that the top-down view of knowledge is very structured and compliant while the view on knowledge as ideation from the bottom-up can be seen in a less structured paradigm. Businesses that have fully embraced SBS have the ability to integrate formal and informal knowledge which allows to environment to adapt and change in order to achieve the strategic goals and vision of the enterprise.

The diagram below illustrates the Causal Loop of the Social Business enterprise commnity and knowledge capturing process.

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In conclusion, the distance between business strategy and business operation is becoming shorter. Organizations can no longer rely on crystallized procedures, though they strive for optimized business operation. Businesses today have to constantly adapt to environmental changes. Therefore SBS allows an organisation to emphasize standardization and optimization and pair it with adaptation and the achievement of needs. Overall it creates an environment, which integrates the formal knowledge described in business operation with tacit human knowledge and is able to constantly allow for the reinterpretation of business strategy in the face of business environment changes.

Moving from Closed Innovation To Open Innovation

In the mid twentieth century, key technologies were developed by large enterprises within their Research and Development departments and were always applied to a firms own products. It was the vertical integration within those companies that provided their competitive advantage. Furthermore, the economies of scale of these large companies set them apart from their smaller rivals. This is seen as the traditional setting for closed innovation as the innovations are produced and commercialized only within a companies boundaries.

So what do we do when our highly skilled, highly mobile, knowledge employees are coupled with a world of rapid change and alternations in consumption and production functions are ever shortened? Well, we have to make an R&D paradigm shift. We need to shift to an Open Innovation Paradigm.

R&D needs to start enhancing technology and out-sourcing. By out-sourcing I mean incorporating a larger pool of your companies brain capacity, resourcing your customers to crowd-source better product development and incorporate your suppliers into your decision making processes. This provides the sum of collaborative Innovation and is in essence the Open Innovation Paradigm. As organizations we need to thrive and in order to do so we need to find new ways to access knowledge through technology in an ever-increasing world of complexity and uncertainty.

I have written frequently about how Social Business Software (SBS) can reform and assist businesses into becoming more openly innovative. So consider the following: an effective deployment of SBS will allow your business to improve in the following innovation Performance areas namely; new products, new methods of production, new sources of supply, exploitation of new markets and even new ways to organize business.

On the one hand an organizations ability to improve the effectiveness of what it does is greatly increased and by incorporating other stakeholders namely Customers into the process product options, design and even aesthetic, symbolic or emotional meanings of products can be enhanced. Another stakeholder group to incorporate into the open innovation transfer is that of the suppliers. Suppliers are able to assist and streamline supply chain management processes as well as assist with new product development.

The ability of an organisation to innovate with the cooperation of different stakeholders during the R&D processes will improve the firm’s absorptive capacity to recognize the value of these stakeholders and make use of them.