The 3 pillars of the innovation economy

In his 1942 book, Capitalism, socialism and democracy, economist Joseph Schumpeter introduced the notion of innovation economics. He argued that changing institutions, entrepreneurs and technological changes were central to economic growth. But it is only in recent years that the “innovation economy”, based on Schumpeter’s ideas, has become a mainstream concept.

And since 2009, the economic innovation round tables of the Aspen Institute have validated that innovation, to be effective, requires a real leadership impact that stems from collaboration, vision and above all the desire to orient the progress for long-term growth. It is about how to harness the full potential of any organization through leadership mandates and actions for a sustainable future.

In this article, I wanted to highlight three key concepts from my next book:

1. The emotional intelligence of a leader

In a Forbes article, Keld Jensen writes:

“Research from the Carnegie Institute of Technology shows that 85% of your financial success is due to ‘human engineering’ skills, your personality, and your ability to communicate, negotiate and lead. Surprisingly, only 15 percent are due to technical knowledge.

In an economy driven by collaborative knowledge and synergistic ecosystems, “human engineering” requires leaders to be genuine and emotionally intelligent. They must :

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 “want to do their job” are two very different scenarios that will lead to two very different outcomes.

Create a community. A healthy ecosystem must be nurtured to achieve this long-term success. It is the structure that we form around our organizations – inside and out – to overcome difficult problems. It is this environment that allows us to associate with different individuals and groups who bring unique perspectives and skills. All of this allows for cross-border collaboration.

Think long term. In order to strive for and thrive in a creative and innovative economy, leaders must always aim for long-term goals. Balance sheets alone do not measure success, and operating on the basis of quarterly returns or short-term goals generally does not achieve sustainable innovation.

2. Cultivate a culture of cross collaboration

The most important responsibility of a leader is to prepare their organization for what lies ahead. It means change – including changes in workflow, breaking down organizational silos, building multidisciplinary teams, and preparing for the unknown.

An essential part of this transition requires both left-brain (analytical) and right-brain (creative) talent and cultivation. Leaders will need to address these collaborative challenges by defining cross-functional teams. The skills and behaviors of team members influence their interactions with others. Here’s one approach to understanding and building cross-functional teams:

Learning teams that prevent a business from being too focused on the inside and trapped in its comfort zone. Learners need to be humble enough to challenge their worldview and stay open to new perspectives every day.

Organize teams that serve to advance the innovation lifecycle. Even the best ideas must continually compete for attention, resources and time. These champions are adept at navigating the processes, politics and paperwork to bring an innovation to market.

Build teams create links between learning and organizational teams; they apply the ideas of the learning team and channel the empowerment of the organizing team to make things happen. Manufacturers are often very visible and close to the heart of the innovation action.

3. Establish repeatable processes

It’s one thing to wish for long-term change and innovation, but a very different story to practice sustained innovation across an organization. Leaders need to create a set of repeatable processes to identify opportunities for growth; design and improve future options; and manage to achieve lasting value. Some necessary steps to get you started:

Identify opportunities for innovation. A continuous process of identifying innovation requires:

Identify your most critical areas of opportunity – people, processes, markets and leadership

Knowledge of the capabilities, assets and processes necessary for success

Select the right long-term performance indicators to drive activities that create repeatable results

Design and improve future options. Options / scenarios with interconnected 360 degree operational plans should be created and changed regularly with ongoing dependency analysis which includes:

Operational models for growth concepts, business models and infrastructure that drive new revenue with repeatable and scalable processes

Risk / reward analysis and metrics that guide optimal investment decisions

Collaborative governance model that engages the participation of cross-functional teams from concept to value creation

Manage to achieve sustainable value. Ensure the achievement of value creation and preservation through continuous performance analysis that includes:

Ability to detect 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 quickly adjust resources, initiatives and investments to strategic goals and changing mandates

There is a global transformation underway. Innovative new business, economic and social models, coupled with access to new and rapidly evolving technologies, are enabling people to transform our world. Positioning your business for success in this transformational environment is not an option; it is imperative. This is essential for succession and survival – and it is the mandate of every leader to be part of this journey with intelligence, culture and process.

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