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Bridges | Summer 2009

The Four Key Elements of Innovation: Collaboration, Ideation, Implementation and Value Creation

Innovation requires collaboration, ideation, implementation and value creation. Community developers actively engaged in innovation illustrated each of these elements during breakout sessions. They shared replicable concepts, programs and initiatives that are showing real results. The following is a sampling of those presentations. Read more at www.exploringinnovation.org.

Collaboration

Teamwork is essential to getting things done. In today's global and digital 24/7 world, challenges are more complex; it's becoming increasingly important to bring more, diverse minds to the table and to break down silos.

Collaboration is one type of group activity familiar to community development. There is no shortage of initiatives intended to be collaborative. Collaboration has never been easy, mostly because conflict and competition within and among groups dominates the landscape. As everyone tends to avoid tension, what we actually may be left with in communities is peaceful (or less than peaceful) coexistence, and not collaboration. It may be a good time for re-thinking collaboration.

The conference encouraged re-thinking approaches to strategy. How could new approaches to collaboration influence economic transformation of a community, state or nation? To begin, collaboration involves three basic aspects: relationships, process and outcomes. Collaboration means to work together (relationships) toward (process) something in common (outcomes).

There is a good chance that what community development needs may not be found within existing relationships. It is often repeated that collaborative relationships are important because it takes more than one person, group or organization to address challenges. Now, relationships developed across sectors, disciplines and areas of study and practice may yield greater returns. Interdisciplinary networks, especially those that include younger professionals and ethnic groups, can reveal answers to persistent challenges and new intersections where none were easily apparent.

Tangible goals of collaboration include building affordable housing, supporting enterprise creation and bringing high-speed Internet to rural areas. Many collaboratives seek to describe an issue or reach consensus. An important outcome of collaboration could be to create new measures of success in economic development. Re-thinking collaboration means finding how intellectual efforts, like mobilizing the creative capital of each individual, can generate value for the community.

Collaborative process is more than working together. It means the ability to think together and to act on complex projects. The traditional strategic planning process is not a model for the disciplines required to transform our economies. Rather, strategic "doing" offers a framework to achieve results. Thinking together is open innovation. Strategic doing guides open innovation. Strategic doing means:

Listen and explore—What can we do together?
Learn and adjust—How will we learn together?
Focus and align—What should we do together?
Link and leverage—What will we do together?

Strategic doing is based on important design elements. Design requires us to become more aware and intentional about creating spaces for important conversations on topics that matter to the community. Physical locations in the community can be created to model and mirror new collaborative behaviors. The place and space must be hospitable and intentional. This means conversations are open-sourced and carefully managed. Productive conversations require good listening skills. How much do we listen to another person only with the thought of what we want to say next? Good listening means inquisitiveness and curiosity drive conversation and not power, authority and political influence.

An example of strategic doing is the I-Open Education Global Network. It provides space, both virtual and real, for convening collaborative communities related to transforming regional economies. To learn how to create a new collaborative, visit: www.i-open.org.

Based on the session "Open Source Economic Development: Accelerating Innovation through Collaboration." Presenter: Ed Morrison, Purdue Center for Regional Development.

Ideation

Fresh, new ideas help your organization stand out. With intense competition for resources, organizations must differentiate in order to survive.

Mark Lange, executive director of the Edward Lowe Foundation, was the presenter for the breakout session "Accelerating Entrepreneurship and Its Impact on Community and Economic Development."

The Edward Lowe Foundation is using ideation to make the case for entrepreneurship as an economic development strategy. Lange says:

  • Local businesses have much more influence on job creation than companies headquartered out of the state.
  • Second-stage businesses are critically important to job growth and need to be nurtured more effectively.
  • Business expansion has a much larger impact on job creation compared to business relocation.

The traditional approach to economic development, economic hunting, emphasizes recruitment and retention, Lange says. It's all about movement. Expansion is secondary and related to industry clusters. Services are focused on infrastructure and incentives. The culture serves big businesses and small businesses. Business assistance is focused on business plans and operations succession.

Lange suggests a new approach to economic development: economic gardening. This approach embraces strategies to grow existing businesses in a community. It balances recruitment and expansion. It's all about growth. Expansion is primary and related to business-stage clusters. Services are focused on a full range of growth tools. The culture nurtures entrepreneurs. Technical assistance focuses on business intelligence, market dynamics, strategy and leadership. The idea of economic gardening is becoming the prototype for sustainable economic development as communities come to realize that the big plant is just not coming. The state of Florida passed the first economic gardening legislation in January 2009.

Lange demonstrated YourEconomy.org, a new idea and tool that he hopes will make his organization stand out. More importantly, this tool will help community leaders and business-support organizations illustrate the case for entrepreneurship as an economic development strategy.

The Edward Lowe Foundation developed this free, interactive research tool that allows users to explore business activity in their local communities and across the United States. It provides detailed, up-to-date information about the performance of businesses from a national to a local perspective. YourEconomy.org uses Dun and Bradstreet National Establishment Time Series (NETS) data to take a closer look at business activity through time. The NETS database is large, with 34 million records for the United States.

Statistics are first sorted by employer categories (noncommercial, nonresident and resident establishments). Then, resident establishments are subdivided into four stages that reflect different issues companies face as they grow. Detailed information is provided from a variety of views, including composition, which shows how establishments and jobs are distributed by the three employer categories and four growth stages; growth, which includes openings, closings, expansions, contractions, move-ins and move-outs; industry, where establishments are ranked and compared based on information found in the composition and growth section by industry; and rankings, where establishments in the 50 states and all metropolitan statistical areas are ranked by category and growth factors.

Organizations that support entrepreneurship can use YourEconomy.org to help com-munities see the value of shifting from economic hunting to economic gardening. Lange listed the following ways to develop a climate for entrepreneurship:

  • inventory and understand policies and programs that affect entrepreneurs in the community;
  • recognize the contribution of second-stage businesses;
  • make sure peer learning is plentiful;
  • serve businesses at all stages with expansion services;
  • build and enhance entrepreneurship support organizations; and
  • balance "hunting" and "gardening" resources.

Implementation

What good are new ideas if they are not put to use? Organizations must engage the best people to champion their ideas and keep those great ideas moving forward.

There is no shortage of conversations on how technology is changing lives and how technological innovations are being implemented at lightning speed. In the world of community development, one example is the work being done at Social Compact.

Technology and innovation are the fundamental underpinnings of John Talmage's projects at Social Compact. Talmage is president of the nonprofit organization, which is working to bring private investment to inner-city neighborhoods.

Under his leadership, Social Compact uses technology and innovation to document market strengths of communities throughout the United States. Collaborating with local leaders, community-based organizations and financial institutions, Social Compact uses new tools and innovation to conduct market analytics that "drill down" and extract important data often lost by high-level data-collection processes.

To date, Social Compact has used this technology in 20 cities and 350 underserved neighborhoods to find 1.2 million additional residents with additional buying power of $36 billion. Communities can use the data to:

  • prove that a neighborhood can sustain a grocery store and draw private investment to provide one;
  • identify small business and private investment opportunities that cannot be justified using traditional data sources;
  • determine the optimal location for a bank branch or product mix needed at an existing bank branch; and
  • conduct "what ifs" to help communities determine their best community and economic development strategies.

By using its DrillDown process, Social Compact is able to document individuals not counted in the census, as well as, their "informal income." Informal income is income derived from a secondary, unreported source, such as tips or other sources not reported on a W-2.

During the current economic crisis, Social Compact has helped communities identify and map pre-foreclosure, foreclosed and REO properties. Communities use this data to implement intervention strategies that help stem neighborhood decline. This data has been beneficial to communities experiencing a high number of foreclosures. They were able to document need and were prepared when funding sources, such as the Neighborhood Stabilization Program and the National Community Stabilization Trust, issued calls for proposals. With the short turnaround to apply for and commit these funding sources, communities that know which areas to target and that have already identified projects have an advantage over those still struggling to determine how to use the money.

For more information on Social Compact's DrillDown process, visit www.socialcompact.org.

Value Creation

You don't have innovation if your new ideas aren't creating value. Organizations must implement ideas and programs identified as most effective in delivering value
to stakeholders.

The failure rate of established companies has skyrocketed during the past year. However, there are companies still experiencing monumental success despite the economic downturn. These companies are thriving because they effectively deliver products valued by consumers.

The purpose of innovation is to create business value. Value can be defined in many ways, such as incremental improvements to existing products, the creation of entirely new products and services, or reducing cost. Businesses seek to create value because their survival, growth and ability to compete in a rapidly changing market depend on whether they innovate effectively.

Many companies develop experimentation brands, joint ventures or co-brands. This gives them the freedom to test new ideas and create value without the risk of damaging an established brand. Toyota's Scion brand is an example of an experimentation brand. During the "Creating a Culture of Innovation in Community Development Organizations" workshop at the conference, Innovation Lab's Langdon Morris presented Toyota's Scion as a case study. Toyota's application of four innovation tools during the innovation process helped develop creative insights into value. Those tools were: need-finding, framing, creative combination and prototyping.

Need-finding is a process of looking for new opportunities. To understand the customer's experience, researchers look for gaps in customer service because they may represent opportunities.

Toyota used an effective need-finding method that made a distinction between searching for the core and the edge. Core refers to markets, services, products and customers that are typical and well understood. Edge refers to those who are nonusers or whose needs are outside of what is considered typical.

The Scion brand was developed to appeal to rebellious members of Gen-Y instead of Toyota's typical mainstream baby boomers. Before launching the brand, the development team studied these new consumers in their own edge environment, like tattoo parlors. After introducing the Scion, the company reinforced its rebel positioning by becoming the only official sponsor of a major American tattoo festival, among many other promotional efforts.

In these times of rapid change, companies cannot afford to remain focused only on the core because the core can quickly disappear. The edge represents an opportunity for a company to target an innovation at an emerging market.

Framing occurs when you gather a set of observations and search for important patterns. The term "framing" is derived from the process of selecting the most useful frame through which to understand the customer's experience.

The process of creative combination happens when concepts are gathered together and the focus turns to developing the best options for meeting the needs identified by customers. At this stage, individual effort must expand to encompass a diversity of viewpoints.

Diversity is valued in discussions because a variety of viewpoints tends to result in more robust concepts and solutions, leading to stronger business opportunities.

Prototyping captures those ideas considered worthy of more detailed study. A business wants to prototype as quickly as possible because it accelerates the process of determining whether an idea should be pursued or discarded. Each idea considered for further investment goes through this process many times and will go through several stages of refinement. The first prototype is never the final one, but as the process continues, the nature of the inquiry results in finer levels of detail.

The innovation cycle used by Toyota is just one example of a creative process companies practice to bring new ideas to the market that ultimately create value.
Learn more about value creation at www.innovationlabs.com.

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