Catalysts of Innovation

Flowers and plants have huge variety of successfull innovation, and come from intensely comptetive natural environments

As “Director of Innovation” is the title I currently hold – and bare like a heavy cross, not a badge of honor – I guess I should write something about my perspectives on the matter. James Albert Michener always started his books with the prehistoric background of the lands whose histories he grippingly portrayed, similarly I find speaking of successful innovation one should start with the big picture by looking at what makes a successfull Civilization.

For a guide to this, Niall Fergusson‘s “Civilization” book or BBC documentary gives you the ideal entry point. Summarized he identifies 6 catalysts of successfull growth for Civilizations:

1 – Competition

2 – Science and the scientific method

3 – Rule of law, in particular property rights

4 – Medicine

5 – The consumer society

6 – The work ethic

I will not delve into the what/how of these 6 from an historical perspective, Niall himself does and excellent job of this in his book, documentary and lectures, so I refer you to the source for the background and arguments behind the conclusions. I will however apply my own generalization of these terms so that it is easier to compare and apply them in a business context for the rest of this article. So the 6 catalysts of Civilation can be rewritten as follows:

1 – Competition (already well-defined and general)

2 – Objectivity (as in data-driven and provable as opposed to subjectivity/gut driven and not recreatable)

3 – Stable, transparent and fair rules

4 – Survivability – Niall’s argument is that Medicine helped more people survive and survive for longer, for businesses this is not necessarily medicine, but other factors that lead to longevity and growth

5 – A significant addressable market – In Niall’s perspectives the Consumer Society represents the opening up of the private market for the wims of the consumer as opposed to a minimalist state-controlled supply chain and the military/industrial complex – i.e. a huge increase in the addressable market

6 – Focus on the task at hand (as opposed to focus on enjoying the spoils)

Looking at the list above you can start recognizing the type of things you would read in any business journal article on how to succeed with innovation. Looking a bit closer at cities or hubs of innovation we could do worse than checking out the Economists article “A new atlas” on the dissemination and growth of innovation hubs around the globe from it’s April 16th – 22nd 2022 edition. In summary they point to 6 factors of successfull Innovation Hubs/Cities:

1 – Openness to new people and ideas – a variation on competition (allowing new people, companies and opposing/competing views to establish themselves and compete)

2 – Rule of law and political stability – reducing the risk of doing business in the area

3 – Connectedness, or access to markets and talent, both local and international

4 – Access to funding, both government and private

5 – Access to talent, for instance by being closely related to great universities and other research institutions

6 – Clustering of these elements (talent, funding, means of production etc.) creating economies of scale

You can probably aready see the prerequisits of success, but how does this filter down to the individual company? In most articles you’ll find on the issue of fostering innovation in your own company the wast majority will give you a set of individual tools/processes to implement, whether it be establishing incubators, growth hacking sessions, setting up dedicated teams separate from the main organization, 3 horizon model for capital allocation etc. All these and many more are great tools and ideas, and all work for certain goals. The challenge for most organizations is that they are individual tools, that outside of a broader understanding of innovation have little chance of success. For a better guide for individual companies you could do worse than looking at the works of Clayton Christensen but perhaps Harvad Business Review’s “How to foster innovation in the workplace” article gives a simpler overview to start with, identifying 3 more general pillars of innovation:

1 – Job To Be Done, originally coined by Clayton Christensen this ensures that you focus on what the customer actually is trying to achieve, and solve problems they experience, which might often not be the obvious ones

2 – Create Space for Innovation, whether in the form of time, money, infrastructure and more

3 – Embrace Experimentation and Change

Common for all the listed perspectives is that they don’t have a direct cause-effect relationship that most managers typically seek – something that can be applied directly and immediately – but rather that they work as catalysts for innovation and growth of new ideas, products and businesses. A catalyst (from chemistry) is a substance that increases the rate of a reaction without itself being consumed – it is this increased “reaction” without destroying the core that creates these reactions that is the very essence of successfull innovative organizations.

Your job as a manager is to facilitate this using a myriad tools and techniques that are readily available. How do you create this environment? My current conclusions are that you can summarize what you need to build in 4 points (feel free to disagree and critique in the comment field below).

1 – Identify your organizations targets for innovation – i.e. set the internal “Job to be Done” and then identify external Job’s to be done that align with that goal. Typically your existing strategic documents should tell you exactly what you are trying to achieve and you can simply use these as-is or slightly adapt them.

2 – Create a well regulated virtual or physical space for experimentation and competition – Set up the guidelines, rules and principles for innovation in your organization and make sure they are easy to understand and transparent. In this you should include basic rules and criteria for resource allocation, organization, ownership and partnerships.

3 – Don’t allow focus creep – Civilization’s need to be broad and can’t have a particular goal, but for businessses it is almost the exact opposite. There are many good ideas that don’t belong in your organization – kill them off or spin them off/out as separate external intiatives if they don’t adhere to your innovation targets – otherwise they will kill your ability to focus your resources on the successfull ideas that really do – i.e. those that will build on your strengths and lead to some form of economies of scale that continue to differentiate you from your competitors.

4 – Allocate resources, but let people and ideas compete for these inside the organization – i.e. don’t look for consensus upfront. Don’t expect everyone to agree that a particular idea is good or worthy. Check that it is within your organizations target focus, but other than that make it easy for individuals and teams to take the first steps on their own. Make sure you have the ability to allocate resources (money, people, physical space, processing time etc.) but don’t allocate equally to all initiatives, and differentiate between early stage and late stage investments. Allow your employees to compete for this – i.e. present their ideas, show their results, build on their strengths etc. Only ideas/teams with strong focus will succeed and that will be part or your company’s success formula.

So, if every business did this, wouldn’t that mean that all businesses end up being the same? No, point 1 ensures that, you have defined your unique scope and focus, and with that in place you could replicate the exact structures and methods of your competitors to ensure points 2, 3 & 4 and you would still get different results from your competitors.

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Never Give Up

Never give up

In 2001 I took my first proper job and joined a scrappy upstart in the tech sector.   How scrappy?  Well, the actual name of the company was “#onEDGE”.  This week, 20 years later, that same company, renamed to a more sensible “#dbWatch” paid out its first ever dividend.  The sum won’t make me rich, but it serves as a reminder of how important flexibility, patience and perseverance are in entrepreneurship and venture.  

The company I joined then consisted of the founding father and a newly appointed CEO – the only official employee at the time.  The founder was making a living selling consulting services at the time.  The business plan was literally written on a napkin, later supplemented by crumpled A4 lined paper (we considered framing them, but I don’t think we got around to it).  My first job was to improve the Java UX/applet – I arrogantly said “leave me alone for 3 months and I’ll rewrite the whole thing and make it better”.  They believed me and said yes.   I literally sat programming in my parents garden through summer.

That was the start of a long relationship with the company that gave me opportunities to test my skills within programming, sales, recruiting, management, international expansion, company board membership and investor.   Sometimes we fought, sometimes we cried, but most of all we had fun and challenged our own abilities, which is what startups are all about.      I remember fondly how we popped a bottle of fizz every time we signed customers in a new country.  There were many, somehow we got sales in the USA, UK, Australia, Taiwan, Spain and more….the bottles were put on display on a shelf in the office with a little plaque for the country name once emptied.  

#Helthjem, where I work these days, is also a startup, albeit one owned by Norway’s largest media conglomerate (#Schibsted).   We have grown so quickly that we are now a household name in Norway.  People who join us are served a similar amount of variety but with a slightly better safety net than a napkin as I did in my first job.   If you are wondering what to do after the summer, maybe joining us is just the right thing.

If you’re more of an entrepreneur in e-commerce, re-commerce or logistics I hope you will also check in on us.  We have a history of helping scrappy startups become something more.    One of Helthjem’s first customers was #Netthandelsgruppen , a company that has grown into one of Norway’s most successful e-commerce companies. Four years ago we launched our C2C service and simultaneously the first direct integration in Norway with #Bookis that just launched at the time, they just secured ca. 6 million dollars in funding.   A couple of years ago helped #Fjong, the startup with the largest number of female investors in Norway, move from a local to national customer base by leveraging our infrastructure. 

All in all, whatever your choice and path, just remember to be flexible, patient and don’t ever give up. And thanks to the #dbwatch team 🙂

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