The 3 Pillars Of The Innovation Economy

In his 1942 book, Capitalism, Socialism and Democracy, economist Joseph Schumpeter introduced the notion of an innovation economy. He argued that evolving institutions, entrepreneurs, and technological changes were at the heart of economic growth. But it is only in recent years that “innovation economy,” grounded in Schumpeter’s ideas, has become a mainstream concept.

And since 2009, Aspen Institute’s Economic Innovation roundtables validate that innovation, to be effective, requires a real leadership impact that stems from collaboration, vision, and above all the will to direct progress for long-term growth. It is about how to harness any organization’s full potential through leadership mandates and actions for a sustainable future.

In this post, I wanted to highlight three key concepts from my forthcoming book:

1. A Leader’s Emotional Intelligence

In a Forbes article, Keld Jensen writes:

“Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in ‘human engineering,’ your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge.” 

In an economy that’s driven by collaborative knowledge and synergistic ecosystems, ‘human engineering’ requires leaders to be authentic and emotionally intelligent. They need to:

• Inspire and Influence. A strong leader must be able to inspire everyone with a clear vision. This results from the effective communication of a leader’s vision. Making people “do their job” and people “wanting to get the job done” are two very different scenarios that will lead to two very different outcomes.
• Create a Community. A healthy ecosystem must be nurtured to achieve that long-term success. It’s the structure we form around our organizations--inside and outside--to get through tough problems. It’s that environment that allows us to partner with differing individuals and groups who bring unique perspectives and skills. All this enables cross-boundary collaboration.
• Think Long-Term. In order to strive and thrive in a creative and innovative economy, leaders must always set their sights on long-term goals. Balance sheets alone don’t measure success, and operating based on quarterly returns or short-term goals usually does not work for achieving sustainable innovation.

2. Cultivating A Cross-Collaborative Culture

A leader's most important responsibility is to prepare his or her organization for what lies ahead. That means change - including changes in workflow, breaking down the organizational silos, forming multi-disciplinary teams, and preparing for the unknown.

An essential part of this transition requires both left-brained (analytical) and right-brained (creative) talent and culture. Leaders will have to approach these collaboration challenges by defining cross-functional teams. Team member’s skills and behaviors influence their interactions with other people. Here is an approach to understanding and forming cross-functional teams:

• Learning Teams that keep an enterprise from being too internally focused and trapped within their comfort zone. Learners need to be sufficiently humble to question their worldview and remain open to new insights every day.
• Organizing Teams that serve to move the innovation lifecycle forward. Even the best ideas must continuously compete for attention, resources, and time. These champions are skilled at navigating processes, politics, and red tape to bring an innovation to market.
• Building Teams create the connections between the learning and organizing teams; they apply insights from the learning team and channel the empowerment from the organizing team to make new things happen. Builders are often highly visible and close to the heart of the innovation action.

3. Establishing Repeatable Processes

It is one thing to wish for long-term change and innovation, but a very different story to practice sustained innovation throughout an organization. Leaders need to create a set of repeatable processes for how to identify growth opportunities; design and enhance future options; and manage in order to realize sustainable value. A few required steps to get you started:

Identify Innovation Opportunities. An on-going process to identify innovation requires:

• Identification of your most critical opportunity areas--people, process, markets, and guidelines
• Knowledge of the capabilities, assets, and processes needed for success
• Selecting the right long-term performance indicators to drive the activities that create repeatable results

Design and Enhance Future Options. Options/Scenarios with interconnected 360o operating blueprints should be created and modified regularly with continuous dependency analysis that includes:

• Operating models for growth concepts, business models and infrastructure that generates new revenue with repeatable and scalable processes
• Risk/Reward analysis and metrics that guide optimal investment decisions
• Collaborative governance model that engages cross-functional team participation from concept to value creation

Manage in Order to Realize Sustainable Value. Ensure realization of value creation and preservation through ongoing performance analysis that includes: 

• Ability to sense and respond in order to manage risk and support the delivery of committed long-term value metrics
• Centralized visibility, control and calibration of program and investment decisions
• Ability to rapidly adjust resources, initiatives and investments to strategic goals and to changing mandates

There is a global transformation underway. Innovative new business, economic and social models, coupled with access to rapidly advancing new technologies, are empowering people to transform our world. Positioning your company to succeed in this transformational environment is not an option; it is an imperative. It is essential for succession and survival - and it is every leader’s mandate to take part in that journey with intelligence, culture, and process.

FastCompany