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Innovation Capability Maturity & Complexity

Innovation Capability Maturity & Complexity

| On 08, Mar 2020

Darrell Mann

To paraphrase Leo Tolstoy, ‘all happy enterprises are alike; each unhappy one is unhappy in its own way’. About six months ago now (time flies!) we assembled our first version of the Complexity Landscape Model (CLM) (Reference 1). The article has since spawned a number of others, notably – at least as far as this article is concerned – one describing the ‘Resilience Zone’ area of the Landscape (Reference 2) – Figure 1.

Figure 1: Complexity Landscape Model, ‘Resilience Zone’ & Golden Triangle

The big idea behind the Resilience Zone is that any organisations positioned within the Zone possesses sufficient ability to change to accommodate the possible range of changes that might be expected to occur in their surrounding (market and societal) environment. The best place of all for an organisation to be is in the ‘Golden Triangle’ part of the Resilience Zone, since this is a place where the people within the organisation understand and possess the requisite skills to deal with the innate complexities of the surrounding world in which they live (Reference 3). The most usual place for an organisation to target, on the other hand, is the Simple-Simple ‘Operational Excellence’ triangle. Keep It Simple, Stupid… because thereon lays maximum efficiency. Or so says F. W. Taylor and any efficiency consultant that stepped in to his wake.

So much for theory. What we know from preliminary measurements (we still owe readers the article on how to measure where they sit on the Landscape!) is that the large majority of enterprises do not sit within either the Golden Triangle, the Operational Excellence triangle or the Resilience Zone. Rather, they sit in the big triangle below the Ashby Line, ‘The Fragile Zone’ (Reference 4). This is, for the most part, not a good place to be. It is, however, the almost inevitable outcome of a management philosophy that puts too much emphasis on efficiency (‘Operational Excellence’) and not enough on innovation.

Taken in this context, ‘building Innovation Capability’ inside any enterprise is not just about building the capability to generate successful step-change solutions, it is also about the ability of the enterprise to survive external step-changes that happen to it. We did in fact joke at one point about wishing we’d actually named ICMM, ‘RCMM’, the ‘R’ standing for ‘Resilience’. The reason for the joke being that it has typically been easier to convince senior leaders of the need to build resilience than it has been to convince them they need to get better at innovation.

Anyway, that aside, if we stick with the ICMM label and in particular the step-changes that need to occur in order to successfully complete the Journey from one Level of Capability to the next, it becomes possible to plot each Journey onto the CLM. When we do that job, it looks something like this:

Figure 2: ICMM Capability-Building Journey

Let’s examine the significance of each of the five Levels in the context of where Figure 2 places them on the Landscape:

Level 1 (Seeding):

From an innovation perspective, Level 1 is all about generating some tangible innovation-related success stories. Most likely, these success stories will come through within-silo changes to internal processes and methods, and is largely built around the need to build trust from the Senior Leadership Team that those tasked with conducting ‘innovation’ activities have the ability to successfully execute and deliver. From a ‘resilience-building’ perspective, thanks to the CLM, we might now see Level 1 as being about getting the enterprise into the Resilience Zone, and doing so by being able to deal with external complexities by effectively filtering them out. A Boeing 737 is a highly complicated piece of machinery, but, prior to the Max grounding (Reference 5), a primary goal of Boeing was to constrain the operation of the aircraft such that as much of the complication as possible was embedded in the aircraft’s design and their operating procedures so that in turn what the outside world saw was something that was both operationally excellent and extremely safe to operate. A Level 1 ICMM enterprise knows how to achieve these goals: it operates ‘simple’ systems with the requisite capability to deal with the limited range of ‘simple’ outside environment changes that have been deemed relevant by the leadership team.

Level 2 (Championing):

The step-change from Level 1 to Level 2 can be seen, from the CLM perspective, as being about developing the ability to deal with ‘Complicated’ problems. Again thinking about the Boeing 737 and Reference 5, a big part of what ‘complicated’ means here is possessing the requisite skills to reveal and resolve contradictions. As in contradictions associated with technical systems rather than ‘business’ systems…

Level 3 (Managing):

The step-change from Level 2 to Level 3 is all about developing innovation processes that are capable of reliably creating step-changes within the constraints of the current business. Toyota, for example, makes for a good example of a Level 3 innovator – they can reliably innovate ‘cars’, but they are currently incapable of offering customers ‘mobility’. Reliable innovation at the ‘car’ level demands that the silos that typically exist between different functions of the enterprise are to all intents and purposes dismantled. What this in turn means in effect is that the internal management of the systems embraces the idea that as soon as two or more human beings are involved in the system, it has become complex. And that shift from managing the internal system as one which is ‘complicated’ to one that is inherently ‘complex’ is what the Journey from Level 2 to Level 3 effectively boils down to.

Level 4 (Strategising):

In many ways, a Level 3 organisation has become a more resilient organisation than one sitting at Level 2, in that what the Journey to Level 3 has done is increased the Ashby Margin of the business (i.e. climbed vertically up the CLM). Toyota might be seen as a resilient ‘car manufacturer’, but if customers decide en masse to stop buying cars and start using mobility-providers more, Toyota will very quickly find itself dropping below the Resilience Line. A Level 3 organisation has effectively designed itself to eliminate as many of the innate complexities of the real world as is possible. The Journey from Level 3 to Level 4, therefore, is all about – finally! – acknowledging that a real world inhabited by real people is inherently a complex one, and that in such an environment it is incumbent upon people within the enterprise to acknowledge and embrace that complexity. A true ICMM Level 4 enterprise now finds itself in the ‘Golden Triangle’.

Level 5 (Venturing):

The step-change involved in getting from Level 4 to Level 5 is, in the context of the CLM graph, somewhat more subtle. Both Level 4 and Level 5 enterprises sit within the Golden Triangle. The primary difference is that the Level 5 enterprise has achieved ‘antifragility’ capabilities. It is able to operate in ‘edge of chaos’ worlds (and ones that they know will periodically tip into chaos), safe in the knowledge that whatever bad things the world might throw at it, it will come out the other end stronger.
Except for the fact that there are still, to the best of our knowledge, only two entities on the planet that possess Level 5 Capabilities (W.L.Gore and Silicon Valley), the Figure 2 picture is intended to be a call to everyone else that the need to build ‘innovation’ Capability is as much as anything about building requisite resilience. This is something that start-up businesses know quite a lot about. Fairly soon after we first published the ICMM model, we realized it needed a ‘Level 0’ category. This being the unique position any start-up business almost inevitably finds itself in. Whether it likes it or not, the start-up has no alternative but to embrace the complexities of the world. It has to learn to experiment and try different things. It has to learn to pivot when it discovers potentially more attractive new directions. And it has to do both of these things with barely enough resources. Start-ups instinctively have to understand being agile and adaptive. Their primary job, however – particularly if they are to attract investors at least – is to show that they can ‘scale’ and can become ‘operationally excellent’. Operational Excellence means efficiency means – traditionally at least – profit. At least in the short term. The Journey from Level 0 to Level 1, in other words, when drawn on to the CLM looks something like this:

Figure 3: ICMM Capability-Building Journey- Including Level 0

Or, maybe, what it should be telling us, is that rather than squeezing as much of the ducking-and-diving capabilities of the innovator’s mindset out of start-ups as possible in order to create ‘efficiency’, it ought to be harnessed in such a way that a Level 0 enterprise leap-frogs directly to Level 2. Or Level 3. Or, heaven forbid, even Levels 4 or 5.

References

    1. ‘A Complexity Landscape’, www.darrellmann.com, 31 March 2019.
    2. Systematic Innovation E-Zine, ‘The Resilience Zone’, Issue 205, April 2019.
    3. Systematic Innovation E-Zine, ‘The Innovation ‘Golden Triangle’, Issue 206, May 2019.
    4. ‘The Fragile Zone’, https://darrellmann.com/the-fragile-zone/, 6 May 2019.
    5. Systematic Innovation E-Zine, ‘Case Study: Boeing 737 Max’, Issue 207, June 2019.

 

 

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