Posted on: Wednesday 31st of August 2011
Innovating out of stagnation is the only way out of our current economic situation. Utilising and capitalising on the vast untapped wealth of information now available is one of the key areas for focus argues a succession of business thinkers. Enter the Control Shift.
One can look at the global economic situation and think that there is no hope for creating new opportunities and just to knuckle down, keep your head down and keep doing the same but with less. Or worse, to respond with the complacency that a few fiscal cuts and shoring-up the banks will be enough too weather the storm. But getting realistic one has to take a look over the horizon and see how far out into the future the current situation will stretch. The Radio 4 programme ‘In Business: Crunching the Crisis’ last Sunday (listen again here) pulls no punches on that front. It was interesting listening.
Professor Richard Florida of Rotman School of Management and author of ‘The Great Reset’ predicts that we are facing a 25-30 year period of stagnation. If that feels depressing then it shouldn’t. Richard argues that innovation is the way out. During the programme a succession of business thinkers table what summarizes into three routes for innovation.
Just to be sure that a period of so called stagnation is not to be feared but to be embraced, Richard has looked at previous similar periods where some people predicted the end of innovation and the end of growth. The 1930’s was one such period but when Alexander Field (Professor of Economics, University of California) looked at the figures he found that the 1930’s were the most technologically progressive period in the 20th Century. And similarly during the recession of the 1870’s and 80’s innovation was rife with new developments such as electric power, telegraph systems, subway systems and more. These periods provide some indication of what is needed now to pull the economy out of the dulldrums.
One of the forms of innovation discussed on the programme is innovation in society. This is interesting but the other two areas of innovation are the ones that really struck a chord on the Control Shift front: innovation in products and services; and innovation in the way that we run and manage our businesses.
There was much talk about new products and services developed as a result of new information technology and leveraging the huge amounts of information that humans have developed. This takes us directly to innovating new services in and around data, personal data and developing services such as Personal Information Management Services (PIMS) (see our ‘PIMS: A market poised to disrupt’ report here) and decision support services (new research due later this year in that space but in the meantime see earlier Blog entries by Alan). Data, personal data and information are talked of a lot and there is much value to be created just there, see our Volunteered Personal Information (VPI) report here predicting a VPI market or £20bn in the UK by 2015. Alongside both of these there is also the opportunity that new information / data approaches opens up in driving operational and business efficiencies enabling business to align their business processes to new services and drive down existing cost.
That takes us neatly to innovation in the management of our businesses. Professor Roger Martin also of Rotman School of Management and author of ‘Fixing The Game’ had some very interesting and disruptive thoughts on that front. He proposes that the old thinking of management reward based on share price is mistaken and creates a system of ‘gaming’, where management focus on driving up shareholder value without delivery of value to other stakeholders such as customers or employees. Roger argues that the reward mechanism must change and compares it to that beloved game of football where indeed players are not allowed to bet on the games in which they play. If that is the case says Professor Martin, why do we allow business leaders to do that very thing through their share ownership – thus the name ‘Fixing The Game’.
For the Control Shift innovation of products and services and innovation in metrics and reward mechanisms for business go hand-in-hand. Alignment of the two will be the only way that businesses can be successful in the uncertain future (see our report ‘The Metrics Challenge: The way to redefine value and innovate’ here.) Far from being down heartened by the reality thrust under my nose by this programme, I found it inspiring and certainly worth a listen if you didn’t catch it first time around.