I was thinking about my talk from yesterday, and one bit that I just spontaneously threw in is probably worth expanding on. I spent a lot of this week marking assignments from my MBA students (who were an exceptionally good bunch this year). For the major assignment this year, I had them analyse their own firm or organisation using the Innovation Value Chain model developed by Morten Hansen and Julian Birkinshaw.

There are two key points with this model. The first is that there are three stages in the process of innovation: idea generation, selecting & developing ideas, and diffusing ideas. The key part, however, is that all three parts of that process have to be working well in order to innovate.

Both John and I have talked about the dangers of over-focusing on idea generation at the expense of execution, so we find this to be an extremely useful model. In particular, we have frequently observed organisations decide that they have to improve their innovation, and then sinking all of their resources and effort into idea generation.

This approach is flawed, and my MBA students demonstrated why. They came from a wide range of organisations – huge multinationals, small start-ups, government departments, and educational institutions. Despite these different backgrounds, their findings were remarkably consistent – only 3 of the 60 organisations that they work in are ideas-poor. The other 57 (that’s 95%!) have problems with either selecting or diffusing ideas.

So when firms focus on improving their idea generation, it is a mistake for two reasons. The first is that this is almost certainly not where their problem lies. They’re probably worse at execution. The second is that it does not take into account the entire innovation system. I just saw this quote from Russell Ackoff (via Venessa Miemis):

Improving the performance of the parts of a system taken separately will necessarily improve the performance of the whole.
False. In fact, it can destroy an organization, as is apparent in an example I have used ad nauseum: Installing a Rolls Royce engine in a Hyundai can make it inoperable. This explains why benchmarking has almost always failed. Denial of this principle of performance improvement led me to a series of organizational designs intended to facilitatethe management of interactions: the circular organization, the internal market economy, and the multidimensional organization.

Innovation within an organisation is a system. It is much more than simply idea generation. And if you focus only on improving your ideation, there’s a pretty good chance that your overall innovation performance will actually get worse. The hardest part of innovation is idea execution, and we simply must get better at it.