Understanding Innovation Execution Complexity

dimensions capabilities 'execution complexity' simplifications justifications 'portfolio management' 'enabling innovations'

The Big Picture…

Do you know the Innovation Execution Complexity of your innovation(s) in your enterprise?

It’s great having ideas. Even better if you can evolve that idea into a value proposition (an innovation) that whoever holds the funding can understand. And perhaps you’ve done that by iterating through a lean business canvas.

But, this doesn’t help us understand how easy/complex it is to execute an innovation. And that likely depends on your enterprise’s current set-up; differing per enterprise. If you can’t execute an innovation, then you’ve just been performing innovation theatre.

This is where we can leverage Den Hertog’s model of services (or any extension of it, such as my Services Model for the Modern World).

And the idea is quite simple. These types of model have two components, as shown on the left of the diagram below:

  1. dimensions describing the new proposed service (i.e. changes we will make to service concept, client interface, delivery systems)
  2. capabilities relating to your enterprise (i.e. technology, data, organisational, HR, Marketing)

For any innovation, we can determine how complex it will be to execute, for a specific enterprise, by dividing the size of the change by the capabilities of the enterprise. Simplistically, we can score:

  1. the size of the change by each dimension, say between 1-10, and sum them up (Change_{size}).
  2. the strength of your capabilities, again, say between 1-10, and sum them up (Capabilities_{strength})
  3. divide those two figures gets us an execution complexity score.

Execution_{complexity} = \frac{Change_{size}}{Capabilities_{strength}}

In reality you may wish to have a more detailed determination. But that simply is an implementation detail of this simplistic view.

Implications

Once we can determine an execution complexity level for an innovation idea, we can use it in several more ways. For example, to:

  • search for simplifications in the innovation, i.e. minimise size of change
  • justify investing in improving enterprise capabilities, i.e. maximise the change capability
  • justify enabling activities, e.g. data cleansing

Additionally, if we have a set of innovation ideas and we determine execution complexity level ideas for them all, then we can use those scores in our management of that innovation portfolio

The idea

We have an innovation problem. And the default way enterprises, and usually the innovation consultants that advise them, attempt to solve that is by focussing heavily on ideation.

But there are two challenges with this. Firstly, innovators rarely describe their ideas in a meaningful way to sponsors, or within the context of the enterprise. This we can attempt to fix by using the lean canvas in an iterative manner.

Secondly, enterprises can find it challenging to execute ideas – or worse, not even know how simple or difficult an idea is to execute. And so either set off on execution and fail, or fail to set off. Both lead us down the path of innovation theatre – performing innovation activities that ultimately lead to no discernable benefit to the enterprise (or beneficiaries).

How can we address this? Well, I propose that we can leverage den Hertog’s model of service innovation (or any similar enhancement). These type of models include two relevant components, sets of:

  • dimensions – that can be used to measure the size of change an innovation means
  • capabilities – that can be used to measure the ability of an enterprise to make changes

Any innovation is a combination of changes in one or more dimensions and/or capabilities. And I hypothesise that the innovation execution complexity is a measure of the size of the change compared to the enterprise’s capability to make the change. Simplistically:

Execution_{complexity} = \frac{Change_{size}}{Capabilities_{strength}}

Principle of using den Hertog's model to determine Innovation Execution Complexity
Figure 1: Principle of using den Hertog’s model to determine Innovation Execution Complexity

Increasing capabilities strengths should make executing an innovation easier. Decreasing the size of the change should make executing the innovation easier.

Let’s first quickly recap the concepts in a den Hertog style model. And then look again at this idea of complexity.

Recap of Models of (service) innovation

Both den Hertog’s original and my enhanced model of service innovation share a couple of aspects. Here in Figure 1, you can see my enhanced model.

Figure 2: A den Hertog type model for service innovation

Den Hertog style models have 3 characteristics:

  • dimensions, such as technology, new service concept, data etc
  • capabilities, such as HR, partnership etc
  • comparisons of the dimensions (not shown in Figure 1)

Any innovation can be described as some combination of changes in dimensions and capabilities. We might, for example, implement a new client interface. Doing so will most likely rely on the enterprise’s HR and marketing & distribution capabilities, in den Hertog’s original model. And in my enhanced model, we would also consider technology, data exploitation and ecosystem.

Armed with such a model, I hypothesise we can measure the size of changes and determine an innovation execution complexity score for an innovation. It would be specific to a particular enterprise (or perhaps unit of an enterprise if that is how capabilities are contained).

Execution Complexity of an Innovation

What is the complexity of execution for an innovation? It is a relative way of understanding how complicated it would be for an enterprise to execute an innovation. Even without a den Hertog style model, we could guess this is some measure of size of the change that makes up the innovation compared to the capability to make that change. That is to say:

Execution_{complexity} = \frac{Change_{size}}{Capabilities_{strength}}

We can benefit from using a den Hertog style model in that it guides us further on what the changes and capabilities are.

Size of Change

For each dimension, we can assign a value to represent the size of change due to a particular innovation. Let’s say this will be on a scale of 1-10. We would then assign a score for each of the dimensions in the den Hertog style model we are using.

Figure 3: An example of determining the relative size of changes on dimensions for an innovation

From personal experience it is best to guide the scores with relatively concrete examples. Otherwise, one persons 3 is another persons 8. And you end up with inconsistencies.

In Figure 3 you can see such an approach. For example, a score of 0 would typically indicate no change is required. And for the new service dimension I have defined a further three points, a score of:

  • 2 – indicates we think this is a relatively simple incremental change to the service concept compared to the existing concept
  • 5 – indicates we are combining existing services together to create a new service. This is often slightly more complicated than incremental change
  • 10 – is a completely new service concept, which naturally should attract the highest score on this scale.

You would do this for each of the dimensions. And I’ve shown a sampling in Figure 3. And you may need more than one interpretation for each dimension. New Client Interface, for example, probably needs to look at the change from a client (beneficiary) perspective as well as your own enterprise.

Capability Strength

Similar to scoring size of change in dimensions for an innovation, we score the enterprise’s capabilities strengths. Or if the enterprise is large, we score the strengths of the executing unit. Unlike previous, this is not innovation dependent, i.e. does not change for different innovations.

As you can see in Figure 4, we score each capability in out den Hertog style model. And similarly we pick a scale of 1-10.

Figure 4: An example of Determining the relative capability strengths for an enterprise

Experience also tells us to provide guidance on what scores mean. So, 0 we mark as indicating we have no capability. And 10 as we are experts. In a real implementation we would provide guidance for the other scores as well.

Innovation Execution Complexity

With scores for innovation change size and the enterprise’s capability, we can determine an execution complexity for that innovation in this enterprise.

A simplistic approach is to divide one score by the other. As shown in Figure 5.

Figure 5: Determining execution complexity for a particular innovation in a particular enterprise

In real life it might be the case that a more comprehensive algorithm is required. Perhaps line items are weighted to reflect varying impacts of size changes and capability strengths. That is something that would be determined by practical implementation of this approach.

Wrapping Up

We have seen that we can use den Hertog style models to determine execution complexity for an innovation. It helps if we provide guidance for the scaling, i.e. what does a score of 1 or 7 or whatever mean. And this guidance could vary between enterprises. However, it is advisable to keep the same guidance within an enterprise (or unit if that is more appropriate).

Determining the execution complexity can simplistically be done by dividing the size of the change by the strength of the enterprise’s capabilities. It might be that more sophisticated algorithms are needed in real life. Something that will become clear on further use.

The benefit of determining execution complexity is that we can now work through how to reduce the size of the change and/or improve the enterprise’s capabilities; if required. And hidden here is the notion of executing enabling changes. You might execute changes that themselves do not bring direct returns, but make the execution of innovations simpler. For example, master data cleansing is rarely a glamorous task, but doing so might reduce future size of changes for data dimension.

Finally, as we can score one innovation, we can score many. This opens up the opportunity for feeding scores into portfolio management.

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