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Lego Serious Play and Strategy: An Interview with Co-Inventor Johan Roos

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10 Punkter for Kapital i Klynger

Av Christian Rangen
Founder, CEO at Engage // Innovate & Strategy Tools – the Modern Strategist’s Toolkit

Investorkapital, business angels & corporate venture avdelinger; stadig flere klynger begynner arbeidet med kapital. Men hvordan skal egentlig en klynge gå frem for å utvikle sin kapitalstrategi?

De siste fire årene har vi jobbet tett med klynger, klyngeledere og nasjonale klyngeprogram. De fleste av disse er solid forankret i Triple Helix logikken; bedrifter i nettverk må kobles mot forskningsdreven innovasjon, støttet av offentlige myndigheter. Dette var den opprinnelige ideen bak Triple Helix på tidlig 1990-tallet.

Men, verden forandres.

Stadig raskere global innovasjon, flere digitale forretningsmodeller og et stort antall velfinansierte vekstbedrifter gjør nå at både bedrifter og klynger beveger seg bort fra Triple Helix til fem-punkt, eller Pentagon modellen. Plutselig sitter klynger med entreprenørskap, akseleratorer, børs-noteringer og privat kapital på kartet. Hos stadig flere klynger dukker nå spørsmålet opp, hva gjør vi med kapital?

Det siste året har vi jobbet tett med flere klynger for å besvare nettopp dette spørsmålet. Hva bør være klyngens kapitalstrategi?

Fra Solklyngen i øst til havklyngene i vest, fra reiseliv til internasjonale drone, mobilitet og fintech klynger har vi nå gjort erfaringer, observasjoner og sett klyngenes kapitalstrategi utvikle seg i praksis.

Vi har nå samlet disse erfaringene i ti punkter for klyngens kapitalstrategi. Vi tror disse er like anvendbare i Bilbao og Bergen, eller Zagreb og Sandefjord. Hver innovasjonsklynge, stor eller liten, må finne sin kapitalstrategi, men her er våre ti punkter.

1.     Styret

Velg en ansvarlig for kapitalområdet i styret. Dette kan gjerne være en kapitalaktør (investor, fond) som velges inn med det mandatet.

Uten forankring og kompetanse på plass i styret kan man nesten bare la være å starte arbeidet i organisasjonen.

Vår observasjon er veldig få klynger har definert kapital som et eget område for styret og få av styrets medlemmer er kjent med at dette er viktig for klyngens utvikling.

2.   Ledelsen

Daglig Leder har et overordnet ansvar for utvikling og implementeringav kapitalstrategi, men er ikke pålagt å ha inngående teknisk kunnskap.

Daglig leder må derimot ha god kjennskap til medlemmenes behov og ønsker knyttet til kapital.

I flere av klyngene vi har jobbet med, har Daglig leder ikke vært i forklare relevans, behov eller betydning for klyngens medlemmer (Se også punkt 5)

3.    Investor Relations Manager

Utvikle rollen «Investor Relations Manager» (IRM). Dette kan være en deltid (%) eller fulltidsstilling. IRM må ha hands-on erfaring med tidlig-fase investeringer, venture fond og vekstkapital. Dette betyr blant annet at en tradisjonell bankleder neppe er riktig profil.

Ideelt er dette en person med flere års erfaringer med tidlig-fase investeringer, bredt kjennskap til investorlandskapet i sin del av verden (Europa, Sør-Øst Asia, Latin-Amerika) og selv deltatt i etablering og drift av venture fond.

Litt for ofte ser vi rollen som IRM fylles av personer med ingen faglige kvalifikasjoner eller relevant erfaring. Da blir også resultatet deretter.

4.   Innovasjonsgruppe

Utvikle en dedikert Innovasjonsgruppe på kapital-området. Denne ledes av IRM, men består av gründere, investorer, venture fond, business angels og etablerte bedrifter.

Innovasjonsgruppen kan være aktiv i de neste punktene.

5.    Kartlegg

Kartlegg dagens kapitaløkosystem for klyngen, enten det gjelder digital helse, Havbruk eller Fintech. Det vil være ulike investorer som dukker opp med ulike mandat og investeringsområder. Sørg for å forstå ikke bare hvem de er, men også deres investeringsmandat, historiske track record og aktive portefølje.

Start med lokale investorer, men kartlegg ut av egen region og eget land. Det er åpenbare investorer som kan kobles på fra land som Tyskland, Japan og USA.

Kartlegg disse inn i et strukturert format og verktøy. Benytt gjerne Kapitalstrategikartet (finnes også i skybasert digital løsning).

 

6. Kartlegg kapitalbehov i klyngen

Kartlegg medlemmene i klyngen, i forhold til deres modenhet og kapitalbehov.

Kartlegging bør avdekke hvor stort kapitalbehovet hos medlemmene er, samlet sett, over en periode på 18 – 24 måneder.

Bruk gjerne Klyngens Medlemmer til å bistå denne kartleggingen.

Erfaringer fra slike kartlegginger er meget positive.

I de tre siste gjennomføringene vi har deltatt i, har det blitt avdekket et kapitalbehov blant klyngens medlemmer på mange hundre millioner kroner; et behov som var nærmest ukjent for klyngeledelsen.

 

7.   Utvikle en Kapitalstrategi

Når informasjonsgrunnlaget er på plass (punkt 5 og 6), jobb med flere stakeholdere (Styret, Innovasjonsgruppen) for å utvikle en konkret og målbar Kapitalstrategi.

Denne bør inneholde et langsiktig målbilde og konkrete steg på veien med KPI’er på år 1, år 3, år 5 og år 10.

Bruk gjerne Klyngens Kapitalstrategi som et utgangspunkt.

8.   Kompetanseløft (felles)

Lanser kompetanseprogram for alle medlemmene i klyngen, samt viktige samarbeidspartnere.

Et slikt kompetanseprogram kan gjerne strekke seg over ulike nivå og mot ulike målgrupper. Et forslag kan være:

  • Grunnleggende Kompetanse for kapital i klynger (1/2 dag)
  • Investorkapital i klynger (2 dager)
  • Engelinvestor i klyngen (1 + 1 + 1 dager)
  • Startups: Investor Readiness Level? (1+1+1+1 dager)
  • Corporate Venture Capital (2 dager)

Disse kan kjøres lokalt, med få eller mange deltakere.

For «Advanced users», vil vi kanskje anbefale

  • VC unlocked (fem dagers kurs, USA, Asia)
  • Executive Venture Capital (fem dagers kurs, USA)

 

9.   Start med de store bedriftenes behov

Dette er ikke et åpenbart punkt for mange klynger, men vi tror det kan være et helt sentralt suksesskriterie.

Ved å kartlegge de store bedriftene, klyngens medlemmers, behov, kan klyngen identifisere strategiske investeringsområder (investments areas) og deretter utvikle særskilte investeringsprogram rundt disse.

Strategiverktøyet, Klyngens Startup Porteføjle kan være et bra utgangspunkt (finnes også i skybasert digital løsning).

Dette arbeidet, med å utvikle klyngens portefølje av oppstartsbedrifter, er forbeholdt veletablerte klynger, da det krever både innsikt, kompetanse og ressurser. For de klyngene som har kommet skikkelig i gang, ser vi allerede et veldig godt resultat av arbeidet.

10. Aktivitetsplan (felles)

Etabler en 18 måneders handling- og aktivitetsplan.

Velg ut noen få områder. Prioriter bort de andre.

Tenk partnerskap, samarbeid og utvikling sammen med andre.

Inngå partnerskap med internasjonale akseleratorer, utvikle program sammen med andre klynger og ikke minst, lytt til hva investorene i klyngen din ønsker seg.

Evaluer og juster underveis.

Først og fremst; Quick Wins

For klynger og kapital er det mye som skal løftes. For de fleste er dette et helt nytt område. Begynn med små seire. Sikt inn på noen raske suksesshistorier. Det er bedre å bidra til 1 million til ett selskap nå, fremfor 100 million om 15 måneder. Jobb frem et lite antall startups og scale-ups som er investment ready. Hjelp dem bygge investor syndikat (grupper), og dra emisjonen i havn.

For både fremvoksende, vekst- og superklynger vil kapital være en viktig del av strategiarbeidet fremover. Spørsmålet er bare hvor og hvordan man ønsker å starte.

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Strategiverktøyene i denne artikkelen kan lastes ned på norsk – gratis – på www.strategytools.io.

Leadership in the Age of Innovation Superclusters

Leading up to the 2019 Drucker Forum we will be exploring leadership, strategy and policy in and around Innovation Superclusters. This is the first publication. Next, Building Innovation Superclusters (the report) is out mid-June.

The world is learning to innovate faster. Companies are increasingly looking to collaborate across ecosystems, networks and innovation clusters. Visionary governments are trying to build future growth industries and national innovation superclusters. But what do these shifts mean to leaders in these innovation superclusters? How do cluster leaders lead in the age of Innovation Superclusters?

By: Christian Rangen, Founder, CEO Engage // Innovate, & Strategy Tools, business school faculty @chrisrangen    
Design by: Jolene Foo-Hodne, CMO, Engage // Innovate, VP Design, Co-Founder, Strategy Tools

 

Over the past four years we have had a chance to work closely with policymakers, visionary governments, national transformation leaders and innovation cluster leaders in Asia, Europe and the Nordics. Our work has taken us to Prime Ministers, remote cluster outposts and inside more than 40 innovation clusters, all intent on building new industries for the future. While the underlying principle of an innovation cluster largely remains the same, there is a small, but growing category of larger, stronger, globally-oriented clusters. We call them Innovation Superclusters.

In this article we explore the leadership traits and behaviors we have identified in interviews, observations and in-depth conversations with formal and informal cluster leaders across countries and industries.

This article is taken from the upcoming book, Innovation Superclusters – a New Playbook for Economic Growth – due late 2020.

“The leader is a networker”

Merete Daniel Nielsen was firm in her statement. “the leader is a networker”. We were halfway into our conversation with Merete, as she repeated the statement. Merete, President of the global cluster network, TCI, and co-founder of Danish Cluster Excellence Denmark, has observed cluster leadership for over a decade.  Working across the Danish and global cluster landscape, Merete has had a front row seat to the development over the past decade.

The leader, in any cluster, today, is first and foremost a networker, a facilitator and an influencer. Merete’s statement completely echoes our findings in interviews and observations.

As we shift from a company-based leadership perspective to a cluster-based leadership perspective, a fundamental shift occurs. The leader no longer holds the formal role of leadership, with its traits, perks and formal decision-making authority. Instead, networked, influencing and shaping becomes key traits. These findings also go far beyond the notion of servant leadership and challenge us to rethink how we describe leadership at the ecosystem and cluster level.

 

“Cluster leadership is nothing like ordinary leadership”

Arild sighed, with a big smile. As a long-time IBM sales manager, he had grown his leadership skills within IBM’s Big Data Analytics unit. With a deep passion for the intersection of technology, society and healthcare, Arild had found a unique opportunity to build and lead the emerging cluster, Norwegian Smart Care Cluster. Under Arild’ s leadership, the cluster had grown from a handful of companies and academically minded research projects, to an internationally-oriented growth cluster with over 120 members and active business development projects in Europe and North America.

A thriving startup community, a growing investor network, successful market entry collaborations and the Norwegian Smart Care Lab were some of the early wins for the cluster.

But one thing was clear in observing the rise of the smart care innovation cluster; leading and building an innovation cluster across sectors, domains and stakeholder groups was nothing like traditional leadership in action.

Network, influence and a razor-sharp member-focus were suddenly key drivers and key leadership traits for Arild and his team. (Initially, most members don’t know what an innovation cluster is, or how they can benefit from it, so building a new innovation cluster from the ground up is a little bit like Henry Ford’s statement about customers and horses….)

 

 

From Five to Eight Leadership Levels

Long-time faculty and leadership expert Morten Emil Berg at BI Norwegian Business School is a national brand in the field of leadership. His books, easily accessible and focused on the reader (i.e. the leader), not fellow researchers, have underpinned the leadership development and training of thousands and thousands of Nordic leaders over the past twenty years.

Central in Berg’s writing is the five levels of leadership. Berg defines this as:

Visionary
– the leader as shaper of the long-term vision, mission and key cultural pillars of the company and its narrative internally and externally.

Strategic – the leader as a strategist, thinking ahead, seeing strategic moves, disruptive industry changes and building new transformational business models for the future.

Administrative – the leader’s role in building processes, workflows, administrative systems and internal policies.

Operational – the leader as a coach, people developer and manager

Self-Leadership – the leader’s ability to lead herself, manage time, handle pressure, use positive language and deal with self-weaknesses.

Building on Berg’s framework, we find leaders in Innovation Clusters work across not five, but eight levels of leadership.

The Eight Levels of Supercluster Leadership

 

 

VISIONARY

The leader must build a large coalition of industry leaders, government leaders, politicians, ecosystem builders and unite them around a strong vision for the cluster. With the distributed decision making across cluster landscapes, the leader has to build a massively compelling vision to a large number of different stakeholders, all with different needs, wants and agenda.

The visionary cluster leader will be able to unite these behind shared ambitions and shared problems they are trying to solve, problems that can only be solved by working together.

NETWORKED

In our research, we find all successful cluster leaders to emphasize the importance of the network and having access to the right networks. Either directly, or through their key stakeholders (often, the Board of Directors at the cluster level), the leader fully recognized the critical importance of working in and across personal networks to build and scale the cluster.

A great cluster leader will focus on building and expanding her personal network to cover both cluster members, policy makers, international partners, investment community, accelerators, national innovation agencies and a number of organizational entities far outside the bounds of the cluster’s operational membership.

The Chairman of an emerging global energy Supercluster spent the first six months of his role working in and across his personal network, rekindling relationships, connecting with fellow industry chairmen and CEOs to build interest and support for the emerging Innovation Supercluster.

STRATEGIC

“A good cluster leader has to be strategic – always”. The statement came from the CEO of one of Norway’s largest innovation clusters. The cluster had a roadmap to 2050, with a target to 5X the industry’s value impact. To achieve this mission, the CEO knew that strategic thinking, sensing the landscape across the entire industry, from CEOs, policymakers, educators, researchers, startups, investors, corporate innovators and regulators was of the outmost importance.

But with limited organizational resources, staff and funding, a cluster CEO will always struggle with the balance between short-term and long-term focus. In our research, we generally find that most cluster CEOs easily get sucked into a busy, operational role, neglecting or at least struggling with the strategic leadership role. This is a fundamental challenge that must be addressed by boards and national cluster programs.

A great cluster will develop a bottom-up long-term strategy, define strategic areas and targets, future business models (critical), KPIs, roadmaps and a culture of execution at all levels.

 

INFLUENTIAL

How strong influence does the cluster leader have in her network? With hundreds of members, many of them industry CEOs, Professor and policymakers, the leadership role changes fundamentally from “boss” to “influencer”. Soft power, diplomacy, nudging and invisible influence can be far more important than any formal decision making.

In our research, we found that few cluster leaders were fully aware of this area, acting rather like they were operating within formal, hierarchical leadership structures. Our findings are very clear; they don’t.

ADMINISTRATIVE

Fully in line with Berg’s writings, we find that the administrative leadership tasks simply “must get done” within the innovation clusters. Most leaders struggle through this, experiencing an overload of reporting, systems and reviews, often caused by the financing and requirements by the national cluster programs. Surprisingly, a number of cluster leaders do not use the administrative supporting tools and reporting platforms, designed to ease their job.

MEMBER-FOCUSED

“We work to serve our members”, is a common statement found in our interviews. While this is obviously true, it is also a dangerous trap to fall into. If the cluster leader overly spends his time and resources on serving the existing cluster members, he is unlikely to achieve the larger, strategic goals of the cluster.

 

A successful innovation supercluster will have hundreds of members, spread across capital, entrepreneurship, academia, industry and government. Any leader, too member focused, will easily be running himself to the ground trying to please everyone.

 

The right Supercluster leader will focus on the architecture and structure, building an organization that can serve the members, not trying to do everything himself. This proves to be a challenge, as few clusters have a professional organizational model in place and understood across its key stakeholders.

Working closely with the Norwegian Innovation Cluster Program, we have developed Supercluster Structure 2.0, as a visual strategy tool to help innovation clusters design better cluster organizations.

Supercluster Structure 2.0 – get it at www.strategytools.io

 

OPERATIONAL

In traditional companies, business units, departments and teams, people are organized in a hierarchical and largely formal manner. We expect to find mostly full-time employees and clear manager-employee relationships.

This is not the case in most innovation clusters.

On average, an innovation cluster will often have a CEO and 3-4 employees.
In our data set, the range is from 0 FTE to 45, with a single outlier with 85 employees.
With our definition of EC (Emerging Clusters), GC (Growth Clusters) and SC (Superclusters) we generally find 10 – 45 people in the Supercluster segments.

But, we find that most cluster leaders lead, organize and mange a large number of employees, interim staff, interns, part-time project managers, working groups, special projects, research initiatives and business development groups.

While the number of formal employees tend to be small, the number of people and staff that fall under the operational management is large, and in some cases very large. This creates highly complex leadership structures and challenges.

In our interviews, we find a clear and repeatable pattern that management has clearly shifted from hierarchies to managing ecosystems. Our observation is clearly, for clusters, the age of traditional hierarchical leadership is over.

Yet, few cluster leaders have the tools, training or deep understanding of how to navigate and succeed in this new world.

SELF-LEADERSHIP

The importance of self-leadership has been on the rise since the 1980’s. The ability to set goals, focus on personal performance, strengths-based development, self-imposed positive psychology in practice and a positive developmental belief system are all key pillars of self-leadership.

They also echo many of the criteria cluster leaders mention in their own talks about leadership and leadership challenges in clusters.

Many cluster leaders describe a situation where they mostly work alone, have to set their own goals and targets. They describe a situation of both being busy, but at the same time experiencing a sensation of everything taking much longer than expected. Despite having a large number of members, stakeholders and board members, most describe a sensation of “working alone”.

These findings fall in the category of self-leadership, or rather leaders applying self-leadership to navigate their new leadership paradigms.

 

Assessing Your Leadership in Innovation Superclusters

Based on our early findings and the shift from five to eight leadership levels, we have developed the Cluster Leadership Map (1.0). It is now being applied to leadership development, coaching and training of leaders in clusters and ecosystems.

The Cluster Leadership Map – get it at www.strategytools.io

The tool allows cluster leaders, clusters or even national cluster programs to assess, measure and develop stronger cluster leadership.

Recently introduced to a cohort of new cluster managers, the tool is showing strong signs of being both relevant and powerful to help innovation clusters and ecosystems evolving better leaders.

 

Moving Towards an Emerging Understanding of Cluster Leadership

In our work we have been privileged to gain access to board rooms, national transformation leaders, cluster leaders, academics and well-respected industry CEO’s. Through observations, surveys, interviews, conversations and reflections, we continuously attempt to make sense of new social structures. We believe a growing number of countries will move towards building innovation superclusters and national cluster programs. But we are also aware that the overall understanding of key leadership traits in these cluster structures is generally low to non-existing. Rather, a traditional, top-down, hierarchical mindset is applied to what fundamentally requires a new perspective on leadership.

In our work, and in collaboration with leading academics and experts in the field, from California to Copenhagen, from Singapore to Vienna, we hope to contribute to an emerging understanding how we develop a generation of new leaders, leaders that naturally thrive and succeed in the age of ecosystems, networks and Innovation Superclusters.

As we move closer to the 11th Global Peter Drucker Forum we invite you to join the conversation and explore the rapidly evolving leadership challenges across ecosystems, networks and Innovation Superclusters. These topics will be covered in depth at the Forum this coming November.

Building Innovation Superclusters – the report (Mid-June 2019)

This article draws inspiration from the upcoming report, Building Innovation Superclusters.
Sign up at www.engage-innovate.com/reports for special preview to the upcoming report on how to build Innovation Superclusters.

The Book – Innovation Superclusters – a New Playbook for Economic Growth (late 2020)

This article is taken from the upcoming book, Innovation Superclusters – a New Playbook for Economic Growth – due late 2020
Register your interest and sign up for special early access at www.engage-innovate.com/books/innovation-superclusters

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Engage // Innovate Expands to Latin America

Due to a growing interest and need to change how Strategy and Innovation programs are conducted, Engage // Innovate is expanding its global footprint by opening operations in Latin America. Under the leadership of Roberto Chaverri, the global Strategy & Innovation consulting company will serve an increasing number of clients across the region.

“Latin America is a diverse region with fast growing economies, successful local and regional enterprises and a strong emerging innovation ecosystem. Our belief in the region’s potential makes our expansion to Latin America a natural step for us,” says co-founder, Christian Rangen.

According to the The Global Competitiveness Index by the World Economic Forum and The Global Innovation Index by WIPO, there are only two Latin America countries within the top 55 in both Rankings, Chile (33, 47) and Costa Rica (47, 54).

“Latin America remains one of the most promising regions in the world, but at the same time, it continues to lag in terms of competitiveness and innovation,” says Roberto Chaverri.

“What we strive with Engage // Innovate‘s presence in Latin America is to support the entire business ecosystem by engaging with all its members (corporations, entrepreneurs, academia, capital markets and government) and providing them with a new framework and tools that can leverage the existing capabilities while learning from the best practices of regions and countries like the Nordics, Switzerland or Malaysia,” added Chaverri.

“We are very excited to have Roberto joining us and leading the build-up of our client base in this exciting region. His deep knowledge of the challenges and opportunities organizations face in operating in a dynamic but complex region, is quite important for us.” says Rangen.

Roberto Chaverri brings more than 15 years of experience as a Senior Executive in multinational companies such as The Clorox Company, British American Tobacco, The Coca-Cola Company and leading regional ones like Dos Pinos and Ingenio Magdalena. Most recently he has been working as an independent Consultant both in Germany and Costa Rica, where he will be residing after 7 years living abroad.

“In Engage // Innovate we believe that serving our clients requires a local understanding as well as a global perspective. With Roberto on our team, we will be able to serve our clients with such a mindset.” added Rangen.

“Due to its strategic location, we have selected Costa Rica as our Latin America base, out of which we will be coordinating the entire region”, concluded Christian Rangen.

To engage our services or explore a partnership with Engage // Innovate in Latin America, please email Mr. Chaverri at roberto@engage-innovate.com.

ENGAGE // INNOVATE INICIA OPERACIONES EN AMÉRICA LATINA

Debido al creciente interés y la necesidad de cambiar la forma en que se llevan a cabo los programas de estrategia e innovación, Engage // Innovate está expandiendo su presencia global al abrir operaciones en América Latina. Bajo el liderazgo de Roberto Chaverri, la compañía global de consultoría de estrategia e innovación atenderá a un número creciente de clientes en toda la región.

“América Latina es una región diversa con economías de rápido crecimiento, empresas locales y regionales exitosas, y emergentes ecosistemas de innovación. Nuestra convicción del potencial de la región hace que nuestra expansión a América Latina sea un paso muy natural para nosotros “, dice el fundador de la consultora noruega, Christian Rangen.

De acuerdo con el Índice de Competitividad Global del Foro Económico Mundial y el Índice de Innovación Global de la OMPI, de América Latina sólo dos países se ubican en el top 55 de ambos rankings, Chile (33, 47) y Costa Rica (47, 54).

“América Latina sigue siendo una de las regiones más prometedoras del mundo, pero al mismo tiempo, sigue rezagada en términos de competitividad e innovación.”, dice Roberto Chaverri.

“Con la presencia de Engage // Innovate en América Latina buscamos proveer a todos los participantes del ecosistema de negocios (corporaciones, empresarios, instituciones académicas, mercados de capital y gobierno) de un enfoque novedoso en cómo hacer estrategia y desarrollar programas de innovación, así como de herramientas prácticas que permitan aprovechar las capacidades existentes y aprender de las mejores prácticas de regiones y países como Escandinavia, Suiza o Malasia.”, agregó Chaverri.

“Estamos muy contentos de que el Sr. Chaverri se una a nosotros y lidere el desarrollo de nuestras operaciones en esta región emergente. Su profundo conocimiento de los desafíos y oportunidades que enfrentan las organizaciones al operar en una región dinámica pero compleja, es muy importante para nosotros.”, dice el Sr. Rangen.

Roberto Chaverri cuenta con más de 15 años de experiencia como ejecutivo senior en compañías multinacionales como The Clorox Company, British American Tobacco, The Coca-Cola Company y líderes regionales como Dos Pinos e Ingenio Magdalena. Más recientemente, ha estado trabajando como consultor independiente en Alemania y Costa Rica, donde residirá después de 7 años viviendo en el extranjero.

“En Engage // Innovate creemos que servir a nuestros clientes requiere una comprensión local y una perspectiva global. Con Roberto en nuestro equipo, podremos servir a nuestros clientes con esa mentalidad “, agregó Rangen.

“Debido a su ubicación estratégica, hemos seleccionado a Costa Rica como nuestra base en América Latina, desde donde coordinaremos toda la región.”, concluyó Christian Rangen.

Para contratar nuestros servicios o explorar posibles alianzas con Engage // Innovate en América Latina, envíe un correo electrónico al Sr. Chaverri a roberto@engage-innovate.com.

The Best Insights of 2018

Chief Strategy Officers, The Shifting Energy Arena, Strategy Traps and learning from ex-Cisco Innovation Director. Here are our five most popular insights from 2018:

The Four Roles of the Strategy Officer

It is critical for companies to understand how their specific strategy function works and how they can improve it in the face of rapid change, does yours?

Click here to read article.

 

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The Shifting Energy Arena

The energy industry is changing — and with the right mindset, leadership and capabilities, this change offers incredible opportunities.

Click here to read report.

 

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Five Strategy Traps for 2018

We look at the top five strategy traps CEOs and management teams might stumble into during their upcoming strategy processes. It’s fast becoming one of our most widely read articles ever.

Click here to read article.

 

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Five Mistakes to Avoid When Planning Your Innovation Program: An Interview with Harvey Wade

We talked to long-time innovation leader Harvey Wade, who shares the lessons he’s learned from the numerous innovation and change programs he’s led so you can avoid making the same mistakes in your next innovation program.

Click here to read article.

 

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Why Superclusters are Engines of Future Growth

The world is learning to innovate faster, and Innovation Superclusters are playing an increasingly important part. In this short piece, we look into what Innovation Superclusters are, what’s driving them globally, and how you can get started building them.

Click here to read article.

 

Ramez Naam: The Energy Industry Must Take the Speed of Disruption Seriously

How should energy look like in future societies?

This was the main topic at this year’s Offshore Northern Seas (ONS), where the world’s oil and gas executives and sustainability leaders converged to discuss energy, security, technology and environmental issues.

We had many interesting conversations during our time at ONS 2018, and it’s reassuring to see that the oil & gas world is certainly waking up to the disruption that’s quickly descending upon the industry. Among the people we met included prominent speaker, futurist and award-winning author Ramez Naam, who took the stage on the first day of ONS 2018.

Having spent 13 years at Microsoft, where he led teams developing early versions of Outlook, Internet Explorer, and Bing, Ramez now dedicates his time to clean energy. Besides co-chairing the energy and environment program at Singularity University, Ramez also actively invests in innovative energy startups and speaks across the globe. His work has been featured in The New York Times, The Wall Street Journal, and numerous other leading media.

Engage // Innovate and Strategy Tools co-founder Christian Rangen caught up with Ramez during the conference for a quick chat about disruption in the energy industry today.

Listen to the podcast and read the interview below:

This interview has been edited and condensed for length.

Christian Rangen: You gave an opening talk a lot of people followed on Day 1. If you’re going to summarize, what was the essence of your talk?

Remez Naam: The essence of my talk was that technology disrupts existing industries. It disrupts dominant players, just as Kodak was disrupted by the digital camera even though they were the ones who invented it. In the energy sector we’re seeing massive disruption. First, solar and wind plunging in cost, batteries plunging in cost. And then a really almost existential threat for the oil industry is this combination of electrification and autonomy of transport and the switch to fleets, to buying rides rather than vehicles. That disruption that could easily be 10 or 20 million barrels a day of demand wiped out this decade. While that is not the end of the oil industry, it is a massive, massive change. It’s a contracting demand for oil that could start within five years and that’s a big deal.

 

Christian Rangen: So we’ve had we’ve had several executives from the oil gas industry including Equinor come visit Singularity, have some heated debates and then leave again. How do you see the industry mindset move closer to exploring some of these new areas?

Remez Naam: I think you have to hear it at this conference. Equinor and Total both had a really big presence. They are probably the two most progressive and forward-looking of the oil and gas majors when it comes to clean energy. And yet even so, I think they may be underestimating the pace of change. It’s not to say that they should give up all oil and gas investments because we’re going to have demand for oil 10 and 20 years from now, at least for things like aviation and so forth. But I think they could re-balance their portfolios to invest even more than a fraction of their investments into clean energy. That really is the growth factor.

Christian Rangen: One of the speakers this afternoon coming from the capital side said when he looked at the energy transition, the capital allocation process was going to be a core skills for energy companies. What do you see in other types of energy companies in terms of investing in this shift?

Remez Naam: I think that the investment for the shift is really from seeing a guaranteed return or at least a high likelihood of of a good return. And investors have become more and more comfortable with the financial modeling around whether renewables make sense.

You see a lot of money continue to flow into solar and wind, and now into batteries and you’ll continue to see money flow into this sort of electric autonomous transport future. General Motors bought this company Cruise, which makes autonomous vehicles on the Chevy Volt electric car platform that GM owns. They paid a billion dollars for a one-year old start up. About a month ago, Softbank put another two and a quarter billion dollars into Cruise, with a valuation at over 30 billion U.S. dollars. We’re starting to see the automotive companies, and I would say the Gulf states being really interested in the future of transportation and putting money into that.

 

Christian Rangen: That’s a good point – the role of of investors. One of the trends we’re watching is who’s going to lead the shift? Existing corporates or new startups and scaleups that are coming in? What do you think?

 

Remez Naam:  It’s some mix. The companies really implementing on the power side on solar and wind are neither a startup nor traditional in that space. There are some traditional ones; for example G.E., Siemens, those have both done a good job in the wind category.

In batteries, Panasonic is a leader.  Solar has seen a whole lot of new companies but they are no longer startups! They have scaled up to be multi-billion dollar companies.

In that transport future – which is really what disrupts the oil industry – it’s all companies we would’ve called startups a few years ago.

It’s Google – Google is in the lead for autonomous vehicles. They have autonomous vehicles in Arizona now with no safety driver being tested out as a form of collective transportation, said to be commercially available by end of the year. And Google’s not a transport company. I wouldn’t call it a startup either but that’s that’s their roots.

It’s GM with Cruise, so it was a startup that was founded and GM was wise enough to make that acquisition. A billion dollars is a very big acquisition, but I think GM saw they were behind and had to do something. GM and Cruz are now saying that by 2019 they’ll have an autonomous taxi service – all electric – running. So that’s a big deal.

And there’s Tesla that says they’re going to release full autonomy to vehicles from 2017 and later in the next few weeks. We’ll see. Maybe it’ll underwhelm slightly but I don’t think it’s going to be that far off.

It’s important to understand that the intention of the acquisition of Cruise really came from someplace outside of the automotive sector. I think the oil and gas companies need to be looking for that, looking for the startups, the new players that are the acquisition targets or the partnership opportunities for them.

 

Christian Rangen: So you you’ve mentioned GM, Cruise mobility technology software, Tesla, Google, Waymo, Softbank. I mean these represent fundamentally different capabilities than traditional energy companies. Now if we just play around a little bit and fast forward 10 to 20 years, which for a technology company might be a long time, but for an energy company at least a legacy energy company, it is very short time. What are some of the scenarios that could play out if these trends keep accelerating?

Remez Naam: If you look at oil demand – ninety some million barrels a day today – if you add up passenger vehicles, cars, buses and then light commercial and medium trucks that never go on more than 150 miles a day. All of that could be electrified quite rapidly. That’s 30 – 35 million barrels a day. That’s one third of oil demand.

And how fast could that go? That could go in ten years, most of it. 70 percent of it could go in ten years. You know maybe 10 percent will go in 20 years. But that’s a loss of 20 – 25 million barrels a day of demand. That means peak oil demand in those scenarios happens almost in the next 10 years and quite possibly in five years.

 

Christian Rangen: There’s a term that’s been growing “stranded assets” and increasingly also “stranded infrastructure”. Large parts of Asia including China have significant investments and value chains on coal; coal plants and coal factories. Equally, you have large investments in offshore and onshore installations for drilling. A lot of the decisions that are being made today might have 50 to 60 year time horizons. How should senior management think about resource allocation differently in light of these events?

Remez Naam: Last year China canceled more than 150 coal power plants that haven’t been planned to be built. 40 of them had already started construction. You call that a stranded asset or wasted capital. In the U.S., we’ve shut down about a quarter of the coal fleet in the last eight years and the rest, I mean Trump is not slowing it down at all. It’s just going to be shut down because they’re no longer economical. The cheapest solar in India is probably cheaper than the operational cost of a quarter of India’s coal fleet even though India’s coal fleet is quite new. So those become stranded assets and they are not paid off even.

The analogous thing for the oil and gas industry to do, oil especially, is to think about whether the drilling platform whether is still NPV positive in a scenario where oil demand peaks in 2025 and is down to 75 million barrels a day by 2035. In that scenario does this rig make sense? Yes or no.

We heard Patrick Pouyanné of Total say that his whole focus is on lowest break even, the lowest cost of production. Which makes sense if you’re going to make a new investment. But walk down the production cost curve of the cheapest and most expensive oil, with the Saudis being the cheapest and the Canadian tar sands being the most expensive, we’re going to walk a quarter or third way down that curve. And so even the stuff that you think is pretty cheap might be on the wrong side of that line.

Christian Rangen: You mentioned Softbank – world’s biggest VC fund close to 100 billion under management now raising their latest fund. What role do you think someone with the muscles like Softbank can play in this shift?

Remez Naam: I worry a little bit because there’s almost too much money floating around the world. There’s a lot of capital out there which is is primarily good but what it means is that when you really have a cost attractive and economic basis to switch to new technologies, we’re not limited by capital on how quickly we can scale them. The world can deploy a solar at a pace that’s not really constrained by capital if solar is cheaper than the operating cost of a coal plant in a place. You can imagine that it would get deployed quite fast. But a company like Softbank can go even further than the capital markets that are debt financing, in that they can make more visionary bets.

And so that’s what I think you see happening – visionary bets being made in the future of energy, the future transportation that have not the economics of a project, not the economics of funding, really attractive gigawatt scale solar field, but that the scalability of software, the scalability of technology to build this new thing that you can then replicate everywhere in the world within a few years. The venture money drives the proving out, building, technology and the business model, and then the debt-financing drives the replication of the implementation deployment.

Christian Rangen: If you are a senior strategist, young executive or board member within the energy space today and you’re stuck with some of these habits and legacies and investments but you’re seeing these new things, what would be your advice? What should strategists at any level do to really get to grips and make the right decisions in this landscape?

Remez Naam: The first thing is to take disruptive trends seriously.

The International Energy Agency (IEA) has been providing medium- to long-term energy projections since 1993, and yet every single year in the history of their existence, they’ve undershot their forecast. The 2017 report underestimates what’s going to happen in 2017 by one third. That’s how bad it is. And so you just can’t depend on that. You have to look at the reality and start, not even the actual deployment but start first with the cost reduction trend. That’s the key. And you should take it seriously.

People will tell you “oh, it’s impossible. Solar will never drop below x price. Wind will never drop below x price, batteries will never get below x.”

Maybe. But do the math. Take a moment. It’s not hard to plot out the numbers. See what the trend actually suggests and then ask yourself if batteries, electric vehicles, solar and wind gets to this cost, what business could I build with my current business model? What is the business I would build if technology really does continue on its exponential trend the way that it has been for the last few decades?

If you don’t do that, you’re being irresponsible because you’re ignoring the reality of the exponential improvement of performance of technology.

 

Christian Rangen: Closing question. You’ve been having many conversations here at ONS. How do you see the audience that you’ve been meeting understanding and grasping these things?

Remez Naam: Well I’d say I was apprehensive. Pierre Bang of Total, who was on the board of ONS invited me to join. I told him “you don’t want me, what I’m going to say is going to be very frightening for your audience,”

He told me “that’s exactly why I want you.”

So I was trepidatious before I came. But I’ve not seen any negative reactions. I’ve seen people being excited, people in the oil and gas majors, people and service providers have been walking up to me all three days and saying it was a terrific talk and it opened their eyes and that the industry needs shaking up. Some selection bias there, people who hated my talk are not coming up and saying hello. But it was really refreshing and heartening to see that people did take the numbers I showed seriously and were eager to think about being part of the next stage of the industry’s evolution.

 

Christian Rangen: Wonderful. Well we’re speaking on behalf of at least parts of the audience very thrilled to have you. You did bring very different perspective and I think the work that you’re doing is incredibly important. So thank you for coming and thank you for talking.

Remez Naam: Thanks so much Chris. This is fun.

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Download our free report The Shifting Energy Arena, which explores in depth the shifts that are now upon us in the energy arena, and how we should tackle them.

Interview with Richard Straub: Global Peter Drucker Forum 2018

In two months, Engage // Innovate will join business leaders across the globe at the world’s leading management conference — the Global Peter Drucker Forum — to discuss a critical topic in today’s increasingly digital society: the human dimension in management.

The GPDF was founded on the management philosophy of Peter Drucker, often hailed as the father of management thinking. Despite the transformation in technology and society, Peter Drucker’s work still remains extremely relevant in guiding today’s management challenges.

Leading up to the conference, Engage // Innovate founder Christian Rangen had a chat with founder of the GDPF and our friend Richard Straub to discuss the theme of 2018, as well as the development of the Forum since it first began 10 years ago.

 

 

CHRISTIAN RANGEN: How do you see the GPDF being different from other management events and conferences?

RICHARD STRAUB: The strength of the Drucker Forum is that we look at management in its broadest sense. Management is an instrument that you can use – a set of methodologies. We take into account three fundamental questions, while most companies look at only two.

Many management conferences have plenty to say about  the “what” and “how” of management, ie theories and concepts, and methods and tools respectively, but few of them concern themselves with the “why” questions.

That’s something that the Drucker Forum brings to the table – we are dealing with the bigger “why” questions to do with society and values: the larger purpose that business leaders should be thinking of.

 

 

I’ve been coming to the Drucker Forum for a few years now and I’m deeply impressed. It’s in my view the number one platform in the world. You’ve been able to attract really luminary speakers like Clayton Christensen, Gary Hamel, Bill Fischer, and Rita McGrath – but you also have The Economist, The Financial Times, Harvard Business Review and other notable business publications – what do you think is the reason all these leading academics, practitioners, and writers are attending the Drucker Forum?

I have to say that this has developed over time. Of course, we had a good platform with the name – the Drucker Forum – which gives us legitimacy by tasking us with representing Peter Drucker’s ideas. That is immediately attractive to the media.

However, we needed more than just Peter Drucker’s name. We needed to prove over time that we could deliver. We had Peter Drucker as a foundation but at each conference, we didn’t only bring up these questions – the how, what, and why – but we put them into practice.

If you look at the program for this year, you will see how the sessions go beyond the standard management perspective. The theme – the human dimension – goes beyond technology and big data to put the human being at the centre. And that was always Drucker’s concern.

 

 

What do you expect to be some of the big topics and discussions that will emerge both in advance and during the Forum?

A key driving factor in the changes that we’re seeing is technology and the speed at which it’s happening. I think this is one of the factors.

The issue is the tension between this seemingly irresistible technology tsunami and how it affects human beings who are much more than algorithms, equations and data.

When you listen to the discussions around us they often revolve around the idea that if you can analyze the data sufficiently well you can know everything, and that that will determine the future. However, people understand that what makes us special as human beings is something completely different – omething that you can never ever get close to just with pure data, analytics and AI. I think this is the big discussion of our time, and it directly impacts the way we perceive management and leadership.

 

In recent years, the Drucker Forum has always brought in diverse guests, speakers and journalists. Are there any special guests this year that you’re personally excited about? 

It’s hard to name just a few. We’ve always attracted some very important thought leaders. But I think what’s remarkable this year the way our list of leading global CEOs has grown.

Just to name a few, we have the CEO of Unilever,Paul Polman, who’s deeply engaged in the discussions I’ve just mentioned; the CEO of Michelin,Jean-Dominique Senard, with whom I’ve been debating the face of business in society; Isabelle Kocher, the CEO of Engie, who’s one of the world’s leading thinkers in terms of what should the organization of tomorrow look like and what role it can play in society.

James P. Keane, the President and CEO of Steelcase, is very engaged in the question of how to operate the workplace for the human being. Xavier Huillard, the CEO of VINCI Group, is thinking about how to preserve humanity in his company and himself, despite all the constraints.

This year we have the strongest representation of big players from large organizations yet.

 

 

One of the challenges that we’re seeing is the shift in politics both in the US but also in Europe (Brexit) – the rise of far right wing parties. How do you see the political dimension coming into the Forum?

In this aspect we also stay faithful to Peter Drucker’s philosophy.

Peter Drucker was against all extremes, be it the right or the left. He was certainly one who showed the dangers that extremists bring with them. Intolerance has a tendency to lead to creeping authoritarianism. Drucker’s ideas were based on long-term values, not =short-term ones. He was not one who jumped on every new thing that came up – he based himself on fundamental values that have evolved over millenia.

We wouldn’t have direectlypolitical discussions at the Drucker Forum –that is not our mission. What we want to contribute to is understanding the role that business, business executives, and top thinkers play.

We want to create a world where we have people – many ,many active people – who are able think for themselvesy, not as part of any extreme movement, but who can view the world in a critical, constructive way.

What we can contribute is to put reason, a degree of rationality and humanism into the discussion. It is not our purpose to discuss Brexit, Trump, or Venezuela. Instead, we want to talk about creating the foundations of well-functioning society for the future.

 

Another thing that I’ve noticed, and this has been apparent in the work by Bill Fischer and some of the other guests that you had, is the rise of China. What are your thoughts on china in the context of the Forum?

Asia is really well represented at the Forum this year, through both China and Japan.

The CEO of Haier Group, Zhang Ruimin, will be with us in November. China is one of the rising powers, no question about it. They have made enormous efforts in the field of education. While they have been accused of imitating others for a long time, I think they’re now in the process of becoming innovators in their own right.

 

 

The Forum functions really well as a platform – a lot of discourse, writing, publication. When you look ahead, how do you see the Forum evolving in the coming years? 

It is evolving to become more of a community. Not a huge community per se, as that can be challenging with thousands of people. Instead, we are looking at a community consisting of clusters dealing with certain subjects. We can already see that happening.

We have a significant focus around the theme of innovation, obviously, and there we have key players from around the world coming together and discussing specific topics, for example the Innovation Leadership Forum.

Then we have something similar happening around business education, leadership education, leadership research, due to the involvement of the EFMD and the international business schools. We see a discussion developing around what is needed in the future for leadership and management – the type of education, support, skills, competencies, and how we can create them in a more effective way than we currently do.

I see clusters around subjects where top thinkers, leaders in this subject, are converging to do things not only at the forum, but throughout the year. And we provide the platform to keep this network of clusters – this broader community – going.

That would be the vision for the future. The forum itself would be the crystallizing event where these discussions are brought forward and these thoughts expressed.

 

One thing that we’ve observed is the role of government, and how government can help shape innovation and economic development. What are your thoughts on the role of the government feeding into this narrative?

One of the focus areas will be the government and the private sector and the way they function together. One of the sessions this year is called “Beyond Market Failures: How the State Creates Value” – with Mariana Mazzucato, who is Director of the Institute for Innovation and Public Purpose, University College London, along with Martin Wolf, associate editor and chief economics commentator from the Financial Times, a member of parliament from Germany, Thomas Sattelberger, who has been an executive for 30 years, and Hermann Hauser, who’s a serial entrepreneur and Chair at the European Innovation Council.

Also important in the context of the government and the private sector, and something we don’t understand sufficiently, is how to manage beyond individual organizations.

We have learned a lot about organizations and have learned to deal with organizations expanding beyond their business model, but when we talk about ecosystems, innovation clusters – there are new challenges for leadership. I don’t believe they are sufficiently understood.

These challenges include the role of the state. Because to create this ecosystem and these clusters, you need the state to play a role, but how far do you want to go with this? Here, we get into a discussion with Mariana Mazzucato, where she argues for an entrepreneurial state, while others debate whether the state really has skin in the game as the entrepreneur has.

We are now entering the second decade of the Drucker Forum, and I see this as one of the big subjects for the future. Not only managing people in organizations but managing in ecosystems, clusters and beyond organizations. Finding ways to do this in a positive and collaborative way – a win-win approach – which becomes more and more important with the challenges we face in society.

 

 

I’ve been fascinated by some development we’ve seen recently. So you know the transformation of the energy industry, where utility and oil and gas companies are shifting to renewables. The role of ecosystems, where we are actually seeing right now the world’s largest solar project in the Middle East being funded by the Japanese Softbank working with governments in the Middle East. The governments are actually inviting foreign capital to accelerate the role of innovation in the shift to renewable energy. Ths role of the government in managing beyond the organization is big. 

One of the principles of Drucker’s that we apply is to do with continuity and change – it’s not revolution. Drucker was not an advocate for revolution, which he saw as bringing chaos and problems rather than sustainable transition.

One of the biggest challenges in management is how to manage this balance between continuity and change. And that applies perfectly in the case of energy.

If you have a fanatical approach where you try to throw everything oveboard overnight, which some have tried to do with very bad results, it’s a management issue about not understanding how big systems work.

Energy is an example of a huge complex ecosystem. You cannot just go and say “now everything will be renewable” – it just doesn’t work like that.

You need a very intelligent, long-term strategy which takes account of the constraints. You need to apply caution and reason – enthusiasm and faith on their own are not enough. Management must be better than that. Big energy projects are a perfect illustration of the need to find a balance between continuity and change –  and this is where Drucker’s idea is still valuable.

 

 

When we look at the energy landscape and technology landscape – there’s a cause to champion disruptive innovation business models,  but you need an intelligent progress rather than disruptive progress.

You can’t mandate disruption. The idea that the role of the state will now be to mandate disruption – that’s not what the reality is. The big disruptions of the past weren’tt mandated by the tate –they just happened and it was only later that we discovered it was a disruption.

The misconception currently is that the tate decides and mandates what the next disruption is. The tate can create certain conditions in certain directions, but if it goes so far as to say this is the only future, the only scenario we see as a state, then I think we need to start talking seriously about the state’s role .

Drucker would say that there should be a mix – you should create the conditions, but then let the market, the customer, the ecosystem in to decide who the winners will be. You can’t determine it. Because then we are baked into planned economies, which to put it mildly are not the most successful entity we saw in the 20th century.

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Meet us at the Global Peter Drucker Forum on November 29 – 30, 2018, at the Vienna Imperial Palace. Partner Christian Rangen will be spending the full week in Vienna, working with the challenges on leading in disruptive times and building broad innovation superclusters.
Join us. Learn more about Forum and get your tickets here,

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5 Mistakes to Avoid When Planning Your Innovation Program: An Interview with Harvey Wade

In 2004, an e-commerce company engineer named Charlie Ward submitted an idea to the company’s digital employee suggestion box.

He proposed a fast-shipping service club where members could gorge on as many online purchases as they liked and get their goods delivered at record speed – all for a fixed monthly fee.

Other employees really liked the idea and started responding to it. The action caught the CEO’s attention, who pounced on the idea and set an executive team working on it.

At the first work session in November 2004, he told the team that they could have any resources they needed to make the idea a reality by their next earnings report, a mere three months away.

They launched the service in February 2005, with naysayers and skeptics speculating about the loss the company would incur with such a high-cost service.

Amazon Prime is today one of the biggest drivers of Amazon’s growth. There are about 90 million paying Amazon Prime subscribers in the US today who spend more than four times what non-members spend. According to some estimates, Prime accounts for 60% of the total dollar value of all goods sold on Amazon.

 

 

Planning a Successful Innovation Program

As companies realize the importance of innovation as a future driver of business, more and more leaders are setting up innovation programs that they hope will lead them to the next big thing.

However, these programs often fall short – not because of a lack of ideas, but because they’re often vague and haphazardly put together.

Charlie Ward’s little idea would not have seen the success it has today if it didn’t have a conducive environment to thrive in.

So what are the biggest pitfalls that companies often face when they plan an innovation program?

We spoke to a close friend of Engage // Innovate’s and experienced innovation leader Harvey Wade about the lessons he’s learned from the numerous innovation and change programs he has led.

Five Mistakes to Avoid When Planning Your Next Innovation Program

Having kick-started innovation programs across some of the world’s largest companies like Citibank, J&J, Cisco and Allianz, Harvey has seen his fair share of flops and has through experience, uncovered the ingredients to an innovation program which yields actual results.

According to Harvey, here are top five mistakes you need to steer clear of:

1. Leaders leaving innovation to others

If innovation is not on the top of the boardroom agenda, it’s not going to happen. As innovation is too fragile to survive on its own in the beginning, it needs a leader to visibly drive it.

In my experience, when a leader or CEO is personally involved in driving an innovation effort, innovation will be given time in the boardroom and leader discussions, as well as awareness and the lever to get action when needed; it makes them accountable.

I’ve worked with organizations that try to run an innovation program which is driven by middle management or lower down in the organization. While some of them achieve good results, they very rarely get to the point of a transformational success, which in my opinion can happen if the top leadership are involved. To drive a sustainable approach to innovation that keeps your company on the leading edge, you’ll absolutely need the buy-in and personal sponsorship of those at the top.

 

To-Do: If your leaders are on board your innovation program, consider how you can make them more visible and think about what role you need them to play. If they’re not involved, you’ll need to understand why that is and start to consider what will get them involved. You know your leaders best and decide the best way to get them invested in the program – be it through board influence, external advice, or some good old shock treatment of what will happen if they don’t support innovation.

 

2. Thinking innovation is just the outcome

Rather, it’s an enabler of a better performing organization.

You often hear people saying, “I need ideas, I need innovation!”

But why do you need that? Because you need a better performing business, or maybe you’ve got problems that you need to solve, but don’t know how.

As soon as innovation becomes the outcome, what you’ll get is what I like to call “an island of misfit toys”. You’ll get all these really cool things done, but you don’t quite know whether they’re aligned to creating a better performing organization.

It’s harder for people to get involved in “random” innovation, because they’re thinking about what the strategic objectives of the business are, while innovation is running on a separate track.

Innovation should not be the goal, but the enabler to drive more business and organizational value, and enable you to be in a better place as an organization than where you were without innovation. It must be aligned to your organization’s strategic objectives to be truly embedded.

 

To-Do: Understand what your organization is looking to achieve, identify the gaps where they’re either not performing or don’t know how to close. Ensure innovation aligns with those strategic imperatives and the stakeholders of those imperatives. Start focusing on innovating around those needs and problems, and consider how you can bring that back to the business.

 

3. Thinking strategy will trump culture

Clients often come to me saying that they have a fantastic innovation strategy. Then you ask, “so what’s your innovation culture like?”

Answers usually range from “it’s OK, but nothing special,” to, “oh, it’s really negative and we have low engagement.” Some even say, “we’ve just gone through some restructuring, it’s tough at the moment.”

You can’t ignore culture because innovation is all about people. They need to care about the organization and its purpose to want to make it better.

If your company has a culture where the employees aren’t really invested or engaged, why would they dedicate their time and effort towards an innovation initiative that is looking to make the company better?

If you have a workplace culture where employees are overworked, feel unappreciated and not encouraged to challenge the status quo, they will not be responsive to your requests to get involved in the innovation program.

If you’ve got a culture where everything revolves around politics, you’ll have employees who are more concerned with climbing up the career ladder than explore something like innovation.

To-Do: Culture change is hard because it means changing behaviors and habits. It’s going to be hard, so you’ll need to start small. Consider your program and what behaviors are needed to bring greater success to your innovation program. Taking that one behavior, how could people change this, what would encourage or incentivize them to make a change and stick to it. You may have to talk about the big picture, or talk about who else is doing it, why it’s needed. You may need to find people that are displaying the desired behavior, and celebrate them. It will take time, but start somewhere.

 

4. Not making time or space for innovation

Organisations can normally find the budget for innovation projects, but what they struggle with is finding the resources to make it happen.

Everyone’s opening labs and nice spaces where people can “innovate”, and of course the right physical environment is important and good to have, but it’s essential to give people the time to work on innovative experiments.

Taking someone away from their day job will probably cost you in the short term, but to have a future, you have to invest in it. This investment will pay off in the long run. Consider the risk of not doing anything versus trying innovation ideas. It might be that there’s more of an opportunity to drive change when you actually invest the time.

Many of the world’s leading companies subscribe to this belief. 3M employees get 15% of their work time driving experimental projects that they’re really interested in, which in turn often lead to new products. Cisco’s internal innovation program – the Innovate Everywhere Challenge – awards the winners with mentorship, access to Cisco’s global Innovation Centers and labs, Cisco partnership in their venture, funds, and time off to work on their project.

 

To-Do: You have to not just find resources, but develop ways to create time for innovation to happen beyond just the voluntary giving of time, otherwise the day-job always gets in the way. Consider how much you can invest in disruptive innovation, maybe that’s 5% or 10%, and then find ways of giving both money and time to that desire. There is always a risk involved, so consider it the cost of future-proofing your business, the same way you train employees to be better at their job.

 

5. Not creating individual performance metrics that encourage individuals to support and practice innovation

When an employee does good work at their day job, they usually get a bonus and maybe even a raise. Whereas in some innovation projects that I’ve experienced, people normally don’t have a well-defined reward. You usually get a pat on the back and people telling you you’ve done a good job. You may get a raise or a big bonus if lucky, but it’s often not structured and people don’t know for certain that their efforts in innovation will feed into their overall performance.

This is why people always focus on their day jobs, because that’s where they will be recognized and rewarded for good work. People are generally supportive of innovation, but are hesitant to get involved because they don’t feel they can invest in it if it will cause them to perform worse in their actual job. Looking at this in another way, if people can get a fantastic job review and a large bonus while completely ignoring innovation, you’ve got a problem that needs to be fixed.

Making this change is going to take careful navigation of the organisation and you may need to invest in a flak jacket! Changing personal performance metrics is not going to be easy, which takes you back to ensuring you have leadership buy-in and backing before you start on this journey.

 

To-Do: This is not going to be easy, so start small. In terms of KPIs, instead of the usual performance metrics, think about bringing in an improvement metric. This starts to create a conducive environment for innovation to thrive. For example, asking people to show how they have supported someone in their team who had an idea, how they got involved, helped them make it better and most importantly, supported the implementation. As this begins to get accepted, step it up to the next level, and don’t forget to get HR involved and on–side!

 

Questions? Reach out to Harvey Wade on Twitter, LinkedIn, or his company website.

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Sources: 

https://www.seattletimes.com/business/amazon/10-years-later-amazon-celebrates-primes-triumph/

https://www.forbes.com/sites/louiscolumbus/2018/03/04/10-charts-that-will-change-your-perspective-of-amazon-primes-growth/#7493c8563fee

https://www.fastcompany.com/3067455/why-amazon-is-the-worlds-most-innovative-company-of-2017

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Engage // Innovate Welcomes New Partner Ian Pallister

Seeing an increasing client demand for  a tailored approach to strategy and innovation, Engage // Innovate is expanding its team to welcome new Partner Ian Pallister – who comes armed with more than two decades of experience helping top management across the globe on strategy, innovation, and transformation.

 

“It’s a great privilege to have Ian Pallister join the team, bringing on board deep expertise from his time at renowned strategy firms Strategos (with Gary Hamel) and Palladium,” says Engage // Innovate co-founder, Christian Rangen.

Residing in Munich, Ian Pallister has a 25-year track record of working with clients across a broad span of industries – from telecommunications, government, to energy and Fast Moving Consumer Goods – to solve their most complex strategy, process and people challenges.

“With Ian on the team, we will be able to serve a wider variety of clients and create even stronger impact.” added Rangen.

We sat down with Ian and a cup of coffee to understand what he brings to the table.

 

Tell us a little bit about your work in strategy and innovation

 

For the last 20 years I have been working in advisory roles, working within well known consulting firms to help clients with their strategic and innovation challenges. And I’ve been fortunate to work with some great people and clients around the world, from whom I have learnt a huge amount.

At Strategos, I worked with clients to formulate robust strategies that were based upon a solid ‘foundation’ of strategic insights. The resultant strategies were focused upon opportunities for growth that took account of what the company was uniquely good at, and where it could out-compete others; but also unique insights into current and potential customers and markets.

As well as strategy formulation we always emphasised the need to design strategies that could be implemented and that lead us to develop Migration Maps that clients could use to guide their strategy implementation.

Our work in innovation built upon a similar approach – we focused upon developing new innovative concepts but also emphasised in-market experimentation for ultimately greater launch success. So, in summary the work was about creative design and rigorous implementation.

At Palladium I was able to continue that work, helping clients with both their strategy and innovation challenges. Palladium is known as the world’s premier strategy execution firm and its work in that area is based upon the ground-breaking work of Prof Kaplan (from Harvard) and Dr Norton who developed the concepts of the Balanced Scorecard and the Strategy Map.

At Palladium, I helped to bring more of a front-end strategy formulation aspect to their work, whilst also developing a comprehensive approach to innovation which was called the Innovation Impact Framework. This framework was very comprehensive, starting with the strategic role of innovation through to the measurement and management of innovation.

Could you highlight a couple of the more interesting projects you’ve worked on?

Some of the most interesting projects are those where clients are facing big challenges that they have never faced before and you are able to come in and reassure them as to how they should move forward.

A recent strategy project saw me helping a company adjust to a completely new set of strategic challenges that had come about through a change in their Group strategy.

They no longer had a protected ‘internal provider’ status and had to go into the external market and compete for both external customers and internal business.

This was a huge disruption for them and required a completely different approach to strategy, one that actually required them to be more innovative in their thinking and a lot more focused upon extrernal trends and customer needs.

Helping them to make this very difficult strategic adjustment and develop a really strong strategy was very satisfying.

A recent innovation project saw me asked me help a leading Telco firm develop new innovation spaces in the areas of IoT and Big Data.

This was especially interesting due to the leading edge content matter of the project itself but it also reinforced my belief that disruptive innovation as well as more incremental innovations can be brought to market by the application of a thorough innovation process, that involves the right participants from both within and outside of the company.

 

‘Based on your experience, what do you think are the key building blocks for developing an innovation proficiency?  

The key here is to be able to develop an approach to innovation that fits well with the existing organisational culture. And this requires a bespoke approach.
Of course it is advisable to start with an existing proven approach and a set of tools, and the guidance of experienced practitioners. It is all about adopt, adapt, and embed.
This involves adopting a framework/system/process and through some practical application to real business challenges, adapting these processes/tools to your organisation. And finally you need to embed the approach by extending it to as many parts of the organisation, and as many people, as possible.

 

‘You’ve worked on projects where you helped teams look out and capitalize on long-term trends – what are the things you think we should look out for?’

Well, in terms of the process that you should adopt to help you look for the trends, I think it does help to take a broad view and by that I mean to look at trends in many different categories – technology, markets, customers, socio-economic etc.

The key thing here is not to focus upon individual trends but to be able to look for the intersection of trends and the reinforcing of separate trends that have the potential to drive discontinuous changes that can result in large scale market disruptions.
At present, we see a lot of disruption that is technology-led and this will continue but we also see a lot of disruptions to business that come from political and market changes, so being able to predict those changes, and perhaps model the impact of those changes through some form of scenario planning is a useful exercise.

 

What are some of the key issues you see that CEOs are struggling with currently?

Building upon the answer to the last question, at present I think the key issue CEOs are facing is the level of uncertainty and rapid change in the world and this has only been magnified by recent political changes i.e. Brexit, President Trump and his leaning towards trade tariffs etc. The world was complicated enough without these additional drivers of uncertainty.

So, I see CEOs struggling to develop long-term strategies that set out a vision and direction for their firm and stakeholders, but are also practical and implementable in more than just a short 3-6 month execution horizon.

Of course, the solution to this is to work on formulating longer term strategies that are based upon a robust and broad set of strategic insights – the Strategic Foundation – and consider different strategic options and scenarios as part of that formulation process.

And then to implement rigorously in a short to medium term time frame (12-24 months) using tried and tested management tools such as those I mentioned earlier, Strategy Maps, Scorecards etc. and build the management and reporting of strategic success into the culture of the organisation. Implementation then becomes more than just a reporting of numbers and allows for greater organisational agility to ‘course correct’ as necessary based upon changing conditions.

 

How do you see the intersection of strategy and innovation changing in the years to come?

I see the intersection of these two areas as being vitally important and strategy and innovation are becoming inextricably linked. And in many ways strategy formulation is all about innovation i.e. identifying new market spaces, developing new concepts, and bringing them to market; whilst also ensuring that existing product/services/business models remain relevant to changing customer preferences.

For example, The Innovation Impact Framework that I mentioned earlier was designed to ensure that all innovation activity was 100% aligned with the business strategy and that any outcomes from innovation efforts were completely aligned with the vision of the business. If there is any disconnect between the two, then innovation effort and budget is wasted.

Finally, let me say that what I love about Engage//Innovate is their focus on both strategy AND innovation. I think you are leading the way in helping clients to bring these two vital areas of management together and I look forward to working with the team in the future.

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Christian Rangen: Why Superclusters are Engines of Future Growth

 

The world is learning to innovate faster – and innovation superclusters are playing an increasingly important part.

Sillicon Valley (tech), Boston (healthcare), London (fintech), Tel Aviv (tech) are famous clusters in today’s global economy. They attract talent, capital, R&D investments, corporates and create a strong collaboration model across a large ecosystem.

Countries and regions are now learning to actively build and grow future-oriented clusters on a massive scale. They are designed to accelerate regions and countries into the future. We call them Innovation Superclusters.

Not many across the globe have an in-depth understanding of what it is and what exactly it entails. We sat down with Christian Rangen, who is doing an increasing amount of work within Innovation Superclusters, to get a better overview of what Superclusters are and how they are shaping the future.

 

Listen to the podcast here:

 

What are innovation superclusters?

Innovations superclusters are large system-level government-led initiatives to drive and accelerate national innovation programs.

While a lot of governments do have quite active innovation policies, very few governments have put together the building blocks and all of the pieces for what we call Innovation Superclusters.

Innovations Superclusters can best be understood by looking at bringing together the five pillars of the innovation ecosystem. So, you have the academics, you have the governments, and you have the corporates. That’s traditionally the triple helix.

Recent research from MIT also adds the entrepreneur and the capital. Now we see that this is really the five pillars of the innovation ecosystem . What is new is that governments can really build and actively design these.

 

So are there different types of clusters?

You know that’s a good question. It’s actually a great question.

We’ve identified and mapped out what we call three types of clusters, where you have EC (Emerging Cluster), GC (Growth Cluster), and SC (Supercluser). We rank them on some of their size and scale versus the impact.

Now the first level of clusters is the Emerging Clusters. They can be found all over the country or all over the region. They’re probably quite incomplete in terms of being an ecosystem and they’re quite local by design. Typically they’ll have between 20 to 25 and have 100 members.

Next you have the more powerful, the more impactful Growth Cluster. Growth Cluster is really a high potential area that the government should look closely at and definitely keep developing.

As a cluster it already has strong value creation and it might actually cover a region, looking beyond just national borders. And so you can have a Growth Cluster at the border around Hong Kong and mainland China, you can have them growth cluster between Singapore and Malaysia.

Now what’s really interesting is the third level – the third type of cluster – which is what we call the Superclusters. Superclusters really compete globally.

They have a large share of export value creation and they really have a disproportional value creation in them. One country might sustain several but probably no more than 10 Superclusters.

When you’re really analyze them, it takes easily 10 years+ to fully develop. These clusters are large, they have a large number of players and they can easily have 500 plus members covering government representatives, entrepreneurs, investors, academics, and of course large companies all coming together to form and develop the Supercluster.

 

What does this mean to them?

Well first of all, it means governments can take a much more active role than – perhaps at least in some regions – they traditionally have. The example in Canada shows that governments can really go in and design and lead Superclusters. I think that this is a revelation. Governments, even in a global competition, can take a much more active role than they traditionally have.

 

What are some examples of Superclusters today?

The best example that we have right now is actually Canada. Canada has this new government which I’m sure you are familiar with, and led by its new innovation minister, is really driving a lot of great work around Innovation Superclusters.

They just announced almost a billion Canadian dollars to be invested over the coming decade.

Their program aims to create 50 billion Canadian dollars of value and more than 50000 jobs. Now what’s interesting is that these jobs are all built around what we call the industries of the future.

So there are jobs around AI and jobs around the ocean space, the ocean economies, and Canada is doing this really thought-through well-developed government programs. If you want to look to the best examples you want to look to Canada.

It’s worth mentioning that Malaysia – and this is a project we’ve been involved with – Malaysia has also invested significantly in trying to understand, map out and start developing superclusters.

This work is still early but we’re very optimistic to see what’s going to happen in Malaysia and the Southeast Asia region in the coming decade.

 

What is driving superclusters globally?

That’s a great question and it’s also something that I know government leaders and political leaders are discussing. I think, to quote the great book The World Is Flat, I think that countries and regions are competing, they’re locked in the global innovation race.

Israel, Shanghai, Shenzen, Silicon Valley, of course Boston. These are all regions that are attracting outsized investment, outsized talent, and outsized value creation. Governments want that. Governments want to attract this, probably much more than they have so far.

So global competition, global innovation, the global race and Superclusters is just good government policies for creating economic growth.

 

How do you expect Superclusters to evolve in the coming decade?

Superclusters as a phenomenon is still fairly new. They’ve been partially in the literature and in the research but really developing them on the massive scale that we’re now starting to see, I think there’s a lot of work that’s going to happen here in the next decade.

Now some argue that Superclusters are really emergent by design. That means that they grow and develop by themselves. Government don’t have a big role to play.

Now we would argue that the opposite is true. Governments can actively shape – by good policies of course – what Superclusters should look like.

So what I expect to see in the coming decade are three things:

One, I think we’ll see more aggressive government policies for innovation. Naturally China, we’re seeing that already. But also the other economies across Asia will invest more, will lead more when it comes to developing Superclusters.

Number two is I think the speed of the development of Superclusters will pick up. Canada has spent some time doing this. I think as governments learn the tools that we have developed, as they learn the policies that’s working well let’s say in Canada, the speed of Superclusters are going to pick up significantly.

The third thing that’s going to evolve in the coming decade is simply value creation. I think that as more and more startups attract capital, get exits, reinvest in the ecosystem, governments will realize that they need to actively attract not only capital per se, but the ecosystem and the Superclusters that support capital and startups at a faster scale.

So there’s a lot of forces speaking for and supporting and driving Superclusters globally.

 

How can governments get started on Innovation Superclusters?

The answer to that is they need political leadership and they need political will.

If you look at Canada, it has really been a top down effort and that’s gotten the country to where it is right now. You do need a burning soul to lead this, you need somebody with passion and a big capacity to actually lead this.

So governments can get started by having a strong political leader or a strong agency leader in in driving this.

In Malaysia, a lot of this work has been on the leadership of the Ministry of Finance, but also the CEO of the Malaysian Global Creativity and Innovation Centre, Ashran Dato’ Ghazi. Governments need that leadership in place.

Second is governments need to assess what they currently have in place. I think most governments will say “we have several of the building blocks but we’re of course missing some”.

So after doing that mapping, the governments can say “OK, what do we need to improve?”, “What are the tweaks that we need?”, “What are the upgrades that we need?”, and “What are the investments and the policies that we need?”.

The third – start running programs on the ground. Start engaging the ecosystem by town halls, by dialogue workshops, reach out to key players across media, corporate, startups, investors and the ground level and the grassroot engaged.

So you need leadership, you need an assessment of where you are, then start tweaking and you need to engage the wider ecosystem.

 

Final question: what are the top three pieces of advice you would offer anyone looking to get started on building Superclusters?

Well, three pieces of advice I would offer is:

Number one – the government can have a much more active role than perhaps many governments have had, with the right tools, with the right frameworks in place. The government can genuinely lead national transformation through building Superclusters. So the first one is yes and governments actually can.

Second we need to understand what we call the industries of the future. The industries of the future are the potential, quite likely growth industries, that your country or your region will see and we need to start shaping policies around that. Most governments regretfully have policies to protect the industries of the past. They might have regulations in place, they might have funding programs in place, they might have taxation schemes in place to support old industries rather than shape new ones.

So the second advice is really to understand what are the potential industries of the future in our country or in our region.

And then the third advice is to really just do it. This is not rocket science, it’s complicated it’s complex, it’s system level thinking, but building, shaping, scaling Superclusters is fully within the grasp of virtually any government worldwide.

It does take political will, it does take political leadership and it probably takes a 10-year horizon. But with those things in place, any country or any region can successfully build Innovation Superclusters around industries of the future.

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Download strategy tools for building Innovation Superclusters free here.