Intelligent Economy

Innovation is no longer about quality and cost. Now, it's about transforming organizations to drive growth. "There are a lot of different things that fall under the rubric of innovation," says Darmouth professor Vijay Govindarajan in a recent issue of Business Week profiling top innovators. "Innovation does not have to have anything to do with technology."

In a survey conducted with Boston Consulting Group, the magazine ranked the 25 most innovative companies. The top 3 in America are Apple, Google and Procter & Gamble. In Asia, 3M breaks the top 3. In Europe, Nokia does.

One of the key elements in innovation is coordination, according to the survey. It's about more than transcending silos. In fact, the top innovators "reroute reporting lines and create physical spaces for collaboration," the magazine contends. They reward innovation and build innovative cultures. "You have to be willing to get down into the plumbing of the organization and align the nervous system of the company," says James P. Andrew, who leads the innovation practice at BCG.

One company that is profiled is Procter & Gamble Co. It has introduced an open-source innovation strategy it calls "connect and develop." The idea is to leverage the best thinking from all over the globe. In fact, the company has an objective of generating 50% of its new products from outside its own R&D labs. How? "Tap networks of inventors, scientists, and suppliers for new products that can be developed in-house," the pub states.

The company was forced to reinvent and redesign its R&D operation to meet these goals. "It created new job classifications, such as 70 worldwide 'technology entrepreneurs,' or TEs, who act as scouts, looking for the latest breakthroughs from places such as university labs," according to the article. "TEs also develop 'technology game boards' that map out where technology opportunities lie and help P&Gers get inside the minds of its competitors."

Larry Huston, vice-president for innovation and knowledge, is leading the connect-and-develop initiative. Managers in every business unit are now responsible for driving culture change. They communicate with Huston who is leading the company's innovation networks. "You want to have a coherent strategy across the organization," says Huston. "The ideas tend to be bigger when you have someone sitting at the center looking at the company's growth goals."

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Geographic intelligence is an increasingly important element in today's strategic plans, supply chain operations and consumer products. The popularity of programs such as Google Earth and Microsoft Virtual Earth, which employ satellite imagery and aerial photography to generate spatial information, is reflective of this trend.

Indeed, geographic intelligence is becoming easier to use and vendors are starting to incorporate it into their enterprise software solutions, explains Joe Francica in Intelligent Enterprise. "As a result, C-level executives are asking about ways in which they can integrate their corporate data with location technology and get a bird's-eye view that may provide a better understanding of customer locations, as well as proximity to other geographically important features — such as competitors."

Expect greater corporate investment as the benefits become more clear. "Corporations that need to leverage location-based information can now more efficiently expose geographic relationships to a broader group of business process managers and executives, who never knew they were missing key information," the author writes. "From customer relationship management to enterprise resource planning, maps complete the dashboards so familiar to many decision support tools."

One company now focused on "geographic enablement" in business intelligence is Oracle. Indeed, it now "delivers its database with the ability to manage, store and query geospatial data. The company offers enterprise database users a way to manipulate data with a location attribution and take advantage of the product's inherent security and indexing features. Oracle Locator provides support for simple feature management, map projections and visualization, while Oracle Spatial delivers geocoding, routing and spatial analysis."

BI providers such as Hyperion Solutions, Information Builders Inc., MicroStrategy and SAS Institute are working with geo-intelligence software specialists like ESRI, MapInfo and others to "integrate location technology with their platforms." Atlanta-based Cox Communications has deployed a solution jointly developed by MapInfo and MicroStrategy solution to analyze markets and support field sales activities.

This may change the way we think about geography. As companies and consumers increasingly identify the value of being location-aware, our demand for geo-intelligence can only be expected to grow.

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One of the first positive steps that enterprises can take to encourage more boundary spanning, analytical intelligence is to internally encourage greater and wider financial intelligence. It's surprising how few knowledge workers actually have a direct, line-of-sight understanding of the relationship between their work and the bottom line. Similarly, few people have a direct understanding of the relationship between the analytical work done in the backroom and their own work on the front lines of the business.

If we are to bring about greater analytical competitiveness, we probably should start with financial literacy. There's a clear correlation between such literacy and the performance of organizations, contends Dr. Karen Berman, Founder, President and Co-owner of The Business Literacy Institute and co-author of the book Financial Intelligence. When employees understand how success is measured financially, they are more able to contribute to those results, according to her research.

But that's not the only benefit of higher financial literacy. "Motivation also increased, commitment increased, and turnover decreased and people felt better about where they worked," she says. "They realized that they were an important part of the organization and its success; that the leadership team trusted them, considered them important and included them by sharing the information on the business."

Berman focuses on teaching non-financial managers about key financial matters such as understanding an income statement, a balance sheet and a cash flow statement. As she explains, "it is not complicated, although maybe the finance people in your organization present it in a complicated way."

It's a bigger challenge than one would expect. "I think one of the problems is that as you are moving up the ranks in the organization, at some point you are expected to know this stuff," Berman says. "In many cases there is no formal training and it is very hard for people in a management meeting to raise their hands and say, 'Wait a minute! I don’t understand what you are talking about.'”

What's the payoff of a financial literacy program? The same payoffs we can expect by promulgating operational analytics programs that help people understand and act on the numbers from their front line positions. "By understanding the numbers, people at all levels can make better decisions," concludes Berman. "They can understand how their actions and decisions impact the bottom line."

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If you have a head on your shoulders and you are using it, you are not -- repeat not -- about to lose your job to an A student in China or India, argues Larry Prusak in a recent issue of Harvard Business Review. He argues that flat earthers such as Tom Friedman -- who think white collar workers in the developed world are in big trouble -- are confusing information with knowledge.

As Prusak puts it, information is that "one dimensional and bounded" stuff -- like an x-ray, a recipe or a powerpoint presentation -- that we are sending every day via email all over the globe. Knowledge, by contrast, "results from the assimilation of and connecting of information through experience, most often through apprenticeship or mentoring. As a result, it becomes embedded in organizations in ways that, so far, have largely evaded codification...And while the cost of obtaining, storing and moving information has plummeted, the cost of doing so with knowledge hasn't dropped much at all..."

Why? Because it still takes virtually the same amount of time to acquire knowledge or learn a skill that it did before the arrival of the Internet. People can't produce a drug, design a new product or provide strategic advice just because they have access to information. As Prusak concludes, "Most of the people in the world remain out of the knowledge loop and off the information grid...But simply giving everyone access to email and Google will never in itself flatten the earth. Until our governments, NGOs, schools, corporations, and other institutions embrace the idea that knowledge -- not information -- is the key to prosperity, most of the world's people will remain a world apart."

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