Innovation: From Linear to Cyclic with the Human Factor in its Center

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LinkedIn is a social media platform where we can connect with professionals all around the world and share ideas and experience. Personally, I can find added value while reading, sharing and engaging in this platform. At the same time, I also aim to and try to create some added value for others. That is why, I have been writing LinkedIn posts which I also publish in my blog L.I.F.E. Recently, my intrinsic motivation to write has been positively affected by two of my readers who were very kind to get in touch. The first one shared that one of her students, a PhD candidate, was inspired by W.O.M.E.N. and decided to write a doctoral dissertation about women in management. The second one asked for a permission to include Why and How should Leaders practice Systems Thinking? in her lecture notes as a reading material for the MBA course which she has been currently designing.

I am so happy that I am able to create some added value to others by writing here on LinkedIn. It is really great to add value. However, it is very pitty that I have not been supported in my career aspirations, and now I am not given the opportunity to create added value in real life by working for an organization which can benefit from my competencies. Despite the fact that my competencies have been adequate and appropriate for positions and companies which I have been very passionate and knowledgable about, I have not been recruited.

Because of my persevering and learning and because of the two examples above, my intrinsic motivation to write has been ignited again, so I am writing this post. It is about my favorite topics that are people, innovation, systems and strategic thinking. As we all know, the business world today is characterised with constant changes and the need for continuous innovation. This post discusses the innovation concept as a framework for strategic analysis that should be used to assisst the strategy formulation process. It briefly considers different Linear Innovation Models, the Circle of Innovation and a more advanced innovation model called The Cycle of Innovation Model which can be implemented for strategy development since it has a number of advantages leading to more effective strategy formulation, implementation and strategic performance. It is also an essential part of a Leadership Circle which is a new business model that should be used by companies. By writing this post, I also want to emphasize the cenral role of the human factor in innovation with a hope that people will be finally given the chances to be creative and innovative.

The Linear Models and the Interactive Model of Innovation

interactive innovationCompanies engage in innovation activities because of two forces that are technology push and market pull. As a result, there are two types of Linear  Models of Innovation. Both of them are used as strategic tools for strategic analyses in order to develop strategies, yet they are insufficient because of the very short and limited linear thinking. That is why innovation is not possible in many companies. Moreover nowadays, there are more interactions, so the combination of these two models leads to the Interactive Model of Innovation which is a much better strategic tool. By using it companies make better strategic decissions by taking into cosideration the linear process from idea to commercial product. However, its disadvantage as strategic tool is that it also do not depict the complexities of our modern world today.

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The Innovation Circle Model

The Innovation Circle is a model that helps companies to manage the development, implementation an ongoing use of innovation. It is a step-by-step model which defines the major steps during the creation and deployment of a successful innovation that can be a new product, service, process, paradigm, business or company. As such, it also serves as a reminder of some of the things that should be done along the way to make sure the intended innovation leads to success. This indeed is the most useful feature of the Innovation Circle because it acts as a checklist to make sure that companies do not overlook an important part of the innovation process. The model also helps companies to ensure that their innovation adds value to customers.

There are several models that use the title “Innovation Circle”. The model that is being discussed now has been originally developed by Joost Krebbekx, Marcel van Assen and Wilma Schreiber. It is represented as a circle because this shows that innovation should be a continuous process, and should not stop once the innovation has been introduced. The outer part of the Innovation Circle identifies the three main phases that companies need to go through to manage an innovation effectively. These three main phases are Creation, Implementation and Capitalization. The inner part of the circle then identifies the steps that make up each of the main phases.

innovation circle

The Creation phase has three steps that are Incentive Identification, Idea Generation and Function Creation. In Incentive Identification step, companies identify the problems that they need to solve, and explore the reasons why they need to innovate. For example, they can ask the following questions. Have we identified a problem that we could solve for our customers? Why is our company losing market share? Are customers dissatisfied with our services? Step 2 is Idea Generation. In step 1, companies identified why they need an innovation. Now, they need to generate ideas to solve the problems that they have identified. Here, it is important to remember to focus on the people whom this innovation will serve. What will give them the most value? Also, it is essential to identify the resources that are available to make sure the generated ideas are feasible. In step 3, companies need to identify which of the ideas they will develop further, and think about how they will run the projects needed to deliver them.

Implementation is the second phase. Here, companies develop their innovation and introduce it to customers. There are two steps in this phase which are Product Creation and Market Introduction. In the Product Creation step, companies use the specifications they have developed in the Function Creation to move forward on development. A good way of doing this is to create a prototype or sample, and test and refine it repeatedly or iteratively. Step 2 is Market Introduction. Now, companies need to think about how they will introduce their innovations to the people who are going to use them. If a project or process for internal use has been created, identifing who will use it and who will be affected by it is essential. If the innovation is for external use, this is where companies need to think about how to market it.

Next is the Capitalization Phase. In this last phase, companies begin to create value with their innovation, and ensure that it continues to deliver value. There are three steps to Capitalization. These are Order Realization, Service Realization and Utilization. Order Realization Process is Step 1. Here, companies focus on the logistics of bringing the innovation to its target market, and it works to ensure that it delivers a good quality product in a reliable way while minimizing cost. Step 2 is Service Realization. In this step, companies develop any additional services needed to make their product rollout successful. Utilization is the last step, and it covers the value that the innovation creates. This is where companies must work to increase the revenues that the innovation generates, reduce costs and enhance the innovation’s competitiveness.

The Innovation Circle is a better strategic management tool than the linear models or the interactive one because it integrates more innovation processes, but it is still not sufficient because it does not contain the constant changes in technology, scientific research and societies. The lack of systems thinking results in ignoring the most central element which is the so called human factor. This is the strongest evidence that human intelligence and creativity have been always overlooked as the most essential elements for innovation. Although entrepreneurship, human resources, training and development and talent and leadership development are hot topics and their implementations are widely discussed, innovation and the human factor are not connected and managed well, so innovation is not the natural byproduct of companies and businesses. What might be a helpful solution?

The Cyclic Innovation Model

There are hard and soft aspects in science. Moreover, product development has both technical and social aspects. In innovation it is necessary that all of these aspects are integrated early in the process. This is exactly what Prof. Dr. A. J. Berkhout has proposed in his Cyclic Innovation Model (CIM), which provides a cross-disciplinary view of change processes and their interactions as they take place in an open innovation arena. According to Guus Berkhout, behavioral sciences and engineering as well as natural sciences and markets are brought together in a coherent system of synergetic processes with four principal nodes that are technological change, product development, market transitions and scientific research. Here, entrepreneurship plays an important role that is making use of those opportunities, and Berkhout’s clear message is that without the drive of entrepreneurs there is no innovation. Unfortunately, modern companies today do not support, on the contrary, they even block the creative potential of their employees. Professor Berkhout also underlines that the most important feature of the CIM architecture is not a chain but a circle: innovations build on innovations. Ideas create new concepts, successes create new challenges, and failures create new insights. All these mean that only people with ideas and insights can create and innovate.

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Berkhout’s Cyclic Innovation Model portrays a system of dynamic processes and presents the processes in innovation by a circle of change with four “nodes of change”. Changes in science and industry, and changes in technology and markets are cyclically connected. Nodes function as roundabouts, and entrepreneurs generate the driving forces only if they are given the opportunity, and if they are supported. More importantly, between these nodes there are “cycles of change” by which the dynamic processes in the nodes influence each other. In other words, they inspire, correct and supplement each other. This produces a system of linked cycles, which in turn also influence each other and in the beauty of the systems thinking innovation can be designed and generated.

As Berkhout emphases, the result is a more or less synchronized regime of highly non-linear dynamic processes that spark a creative interaction between changes in science and industry, and between changes in technology and market. Innovation resides in the world of self-organized chaos, steered by the ambitions of the entrepreneurs. At a lower level, CIM reveals that each cycle consists of a network with a high degree of self-organisation. Autonomous societal transitions manifest themselves in markets as changes in the need for products and services. On the other hand, autonomous technological changes generate new products and services. Stated shortly, it is the cyclic interaction of both autonomous innovation drivers, social and technical, that will create new business with a high value for society. Berkhout predicts that for the coming decades, quality of life will become one of the biggest drivers in innovation worldwide. This means that the transition node in the cyclic process model should be focused on the changing values in society at large or the so called “societal transitions”.

The left-hand side of the innovation circle is directed to research activities of the science community while the right-hand side addresses the innovation activities of the business community. In a productive innovation system, science and business will challenge each other continuously on technology-related and market-related issues. Sustainability is a critical topic, and the transformation to a sustainable society may be the biggest challenge mankind is facing nowadays. It requires changes in technology as well as in behavior, so the hard and soft sciences should work together with industry leaders to make this transformation happen. In terms of Berkhout’s CIM, moving to a sustainable society requires synergy of activities around the entire innovation circle.

Consequently, it should be stated that the Cyclic Innovation Model is a much more advanced strategic tool that should be implemented for strategy analysis, formulation and evaluation not only because it contains the synergy of all change processes around the innovation circle, but also it is a strategic tool for managing sustainability. What about leading sustainability?

The Leadership Circle

In 2008, Berkhout and Ridder developed the Leadership Circle. In their opinion, every innovation process needs to have a clear view of the future, and it must be shared by all companies in the network. The Leadership Circle combines an inspirational vision of the future with a differentiation strategy and sufficient social skills to realize the ambition. Images for the future that are connected with transition paths and process models are key components in generating successful innovation projects. As a result, the Leadership Circle shows that innovation processes should be embedded in a new business model.

leadership circle

Actually today, all companies around the world are in search of new business models, so the Leadership Circle might be very helpful. On one hand, it involves the Cyclic Innovation Model that is crucial for innovation. On the other hand, it puts the moral leadership in its center. Moral leadership is so important for corporate governance, business ethics, corporate social responsibility and the social, economic and technological sustainability, all of which are interesting topics to be discussed in my future posts.

In conclusion, the innovation models are beneficial strategic management tools, yet experience with the CIM shows that the key to innovation is the use of a shared mental framework, that would allow more creative and intense interaction between a large number of rather diverse players. The CIM can be instrumental in rethinking the innovation process within a company, industry or society, so in this respect, the CIM is a very advanced and multi-scale strategic management tool. From this perspective, it acts as an interdisciplinary communication and strategic model, connecting diverse people with diverse roles within and across different networks such as scientists and market specialists, and engineers and social experts. The CIM enables clear guidelines on how the innovation process should be designed and implemented. Moreover, it should be a considered as a part of the Leadership Circle which might be a strategic tool for designing new business models. Like CIM where entrepreneurship is in its center, once again and this time leadership is in the center of the Leadership Circle. In other words, the human factor should always be placed at the center of innovation. Don’t you agree that this is worth considering very seriously while designing and implementing people management and people development solutions?

(Posted also on LinkedIn Pulse)

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