Herding Cats: Innovation Management in an Unpredictable World People can be creative without being innovative. Ever met those people who have great ideas but nothing ever actually happens? Innovation, however, produces something demonstrably new. Whether it’s a new product or a new process, innovation brings it into being. From a business perspective innovation is a primary means by which organizations reinvent and reposition themselves and what they have to offer. Commercially, as someone once said, innovation is the ability to convert ideas into invoices.

1. Innovation Day "SAP Internet of Everything“
29th September 2015 (Heidelberg, Germany)
Herding Cats: Innovation Management in an
Unpredictable World
Dr. Michael von Kutzschenbach
University of Applied Sciences and Arts Northwestern Switzerland
michael.vonkutzschenbach@fhnw.ch

2. Challenges to “Internet of Everything”
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In the old economy, the
challenge for management is to
make product. Now the
challenge for management is to
make sense.
- John Seely Brown

3. Overview
(1) Changing context and challenges
(2) Approaches to innovation
(3) Organizational implications
(4) Implications for herding cats
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4. The changing context
 Market forces
(e.g., the 2008 financial crisis)
Sources of organizational change
Organizational and managerial evolution,
in response to the above issues, as well as the changes in individuals
 Institutional changes
(de-regulation and restructuring as a result)
 Technology changes
(e.g., IT)
- (1) changing context and challenges -
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5. Key question – where are your ideas
coming from?
 Innovation
“… can be defined as the creation of either a
new process […] or a new product or service
[…] that has an impact on the way the
organization operates.”*
- (2) Approaches to innovation -
Creating/Transforming Adapting/Planning
Innovation continuum
*(Clegg, Kronberger, and Pitsis 2011)
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6.  … is about bridging ideation towards
operation
Innovation Management
Ideation
Generate new ideas
Operation
Realize business value
- (2) Approaches to innovation -
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What can be done to make the processes
more effective and efficient??

7. Managerial Thinking
Causation processes take a particular effect as
given and focus on selecting between means to
create that effect.
Given
GoalM1
M2
M3
M4
M5
Adapted from Sarasvathy (2001)
Causal logic
- (2) Approaches to innovation -
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8. Entrepreneurial Thinking
Effectuation processes take a set of means as
given and focus on selecting between possible
effects that can be created with that set of means.
M1 M2
M3 M4
M5
E1
E2
E3
E4
E5
Given
Means
Imagined
Ends
Adapted from Sarasvathy (2001)
Effectual logic
- (2) Approaches to innovation -
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9. Managerial vs. entrepreneurial thinking
Attribute Causal logic frame Effectual logic frame
View of the future Predictive Creative
Basis for action Goal-oriented Means-oriented
Predisposition toward
risk and resources Expected return Affordable loss
Attitude toward
outsiders
Competitive analyses Partnerships
Attitude toward
unexpected
contingencies
Avoiding surprise
Leveraging
contingencies
Comparing causal logic vs. effectual logic
(Dew, Read, Sarasvathy, and Wiltbank 2009)
- (2) Approaches to innovation -
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10. “We can’t solve
problems at
the same level
of thinking used
to create them.”
- (3) Organizational implications -
Options for “Thought Leader” organizations
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11. A Necessary Managerial Paradigm
Shift
… a different way of seeing the world - a different way of thinking,
speaking and acting in the world.
- (3) Organizational implications -
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12. Ways to view the organization
View
Advantages with
respect to ideation
Advantages with
respect to operation
Stability
Predictability/Control
Self-Organizing
Flexibility/Variety
Picture Source: doctormacro.com
Organizations
asMachines
Organizations
asLiving
System
- (3) Organizational implications -
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13. Fostering innovation across the firm
and its value chain
“You can take a horse to the water, but you
cannot make him drink. The drinking is his business.
But even if your horse is thirsty, he cannot
drink unless you take him. The taking is your business.”
Gregory Bateson
- (4) Implications for herding cats -
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14.  Effectual logic for
divergent thinking
The need for a combined approach
 Causal logic for
convergent thinking
and closure
- (4) Implications for herding cats -
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15. Combining the elements...
What we
can do
Interact
with other
people
Effectual
stakeholder
commitment
Who we are
What we know
Who we know
New
goals
New
means
New Markets and
other effectual
artifacts
Available
means
Goals/courses of
action possible
Expanding cycle of resources
Converging cycle of
transformations of the artifact
Adapted from Sarasvathy (2008)
- (4) Implications for herding cats -
+
(Effectual Logic)
-
(Causal Logic)
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16. Places to intervene in a system
Leverage points (from D.H. Meadows)
9. Numbers (subsidies, taxes, standards).
8. Material stocks and flows.
7. Regulating negative feedback loops.
6. Driving positive feedback loops.
5. Information flows.
4. The rules of the system (incentives, punishment,
constraints).
3. The power of self-organization.
2. The goals of the system.
1. The mindset or paradigm out of which the goals,
rules, feedback structure arise.
IncreasingLeverage
- (4) Implications for herding cats -
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17. Making innovation happen
RoutinesFrameworks
Individual
MentalModels Individual Learning
Assess
Design
Observe
Implement
Organizational
Routines
Weltanschauung
Shared
Mental
Models
Individual
Action
Organizational
Action
Environmental
Response
Double-Loop
“Effectual Logic”
Learning
Single-Loop
“Causal Logic”
Learning
Routines
(adapted from Kim 1993)
Challenges to co-innovation
Connecting
minds
Developing
critical thinkers
- (4) Implications for herding cats -
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18. Shape the future
What we
can do
Interact
with other
people
Effectual
stakeholder
commitment
Who we are
What we know
Who we know
New
goals
New
means
New Markets and
other effectual
artifacts
Available
means
Goals/courses of
action possible
Expanding cycle of resources
Converging cycle of
transformations of the artifact
-
+
Dialogue:
reflection, inquiry,
and advocacy
Vision Systems modeling:
assumption surfacing,
seeking high leverage
options, communication,
and advocacy,
Mental models:
reflection and inquiry
Adapted from Sarasvathy (2008)
- (4) Implications for herding cats -
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19. Herding Cats: Innovation Management
Causal Logic
(Organizations as Machines)
Effectual Logic
(Organizations as
Living Systems)
Ideation Operation
(-)Freedom(+)
(-) Control (+)
Innovation
Management
Herding Cats:
Balancing freedom and control!
- (4) Implications for herding cats -
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20. Herding cats
Develop
employees’ minds
Implications for managers
 Foster synergy
- (4) Implications for herding cats -
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21. Thank You
For further information please contact:
Email: michael.vonkutzschenbach@fhnw.ch
Twitter: @MvKutzschenbach
If innovation is risky, not innovating
is even riskier!