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Rethinking Capital: Beyond the Financial Dimension

Beyond Money: Exploring the Multidimensional Nature of Capital

In a thought-provoking conversation on the evolution of capital, this podcast episode challenges the traditional focus on financial capital and explores the power of serious capital, the kind that truly drives value and impact. Greg Galle, Solve Next’s CEO, introduces the concept of “Serious Capital” — a more robust and multifaceted approach to value creation that transcends mere financial metrics.

From Silly to Serious: A New Paradigm in Capital

The episode kicks off with a compelling anecdote about Muhammed Yunus, the Nobel Prize-winning founder of the Grameen Bank, illustrating that some of the most transformative organizations think beyond financial gains to foster social capital. This sets the stage for a discussion about "Silly” versus “Serious” Capital, where "Silly Capital" refers to a narrow focus on financial outcomes that often leads to fragile solutions. Greg argues that true innovation requires a broader lens, considering five other forms of capital: social, intellectual, human, political, and reputational capital.

Expanding the Framework: Six Forms of Capital

Greg introduces listeners to six forms of capital that organizations should consider:

1. Human Capital: Impact on people and skills development.

2. Intellectual Capital: Proprietary knowledge and innovations.

3. Political Capital: Ability to influence policy and regulation.

4. Reputational Capital: Brand strength and credibility.

5. Social Capital: Community ties and societal impact.

6. Financial Capital: Traditional monetary assets.

Each type is discussed in the context of its relevance and potential for driving sustainable, long-term success. For example, Greg highlights how companies like Patagonia have invested in environmental and social capital, which in turn enhances their financial outcomes through increased consumer loyalty and brand strength.

Practical Insights: Applying the Serious Capital Framework

The conversation also offers practical advice on how organizations can shift from a myopic focus on financial results to a more holistic view of capital. Greg suggests starting with a structured framework to redefine organizational goals and strategies. He emphasizes the importance of experimenting with this model on a small scale to gather evidence and gradually persuade stakeholders of its efficacy.

Engaging All Sectors: The Role of Every Stakeholder

Importantly, the podcast addresses how individuals across different organizational roles can contribute to this expanded capital framework. From HR professionals focusing on human capital to PR teams building political and reputational capital, the discussion underscores the importance of each department in enhancing the overall value creation process.

The Worth It Tool

The ⁠Worth It Tool⁠, by Solve Next, helps executives and innovation leaders assess and prioritize these diverse forms of capital within their projects and innovation opportunities. It is designed to help Leaders of Next navigate the complexities of capital allocation efficiently.

Through a straightforward process, the tool allows leaders to examine the six-dimensional impact of their assumptions, providing a clearer understanding and validation of strategic decisions that balance immediate gains with long-term benefits.

This structured approach aligns with strategic goals and ensures that every form of capital is optimized to contribute to the organization’s sustainable success.

Want to learn more about our Worth It tool?

Check it out ⁠here⁠ or ⁠book a demo.⁠

Navigating from Uncertainty to Certainty: The Blueprint for Serious Capital Building

Unpacking Innovation: It's More Than Just Great Ideas

In this enlightening episode, we journey through the transformation from mere ideas to structured, impactful innovation with Greg Galle. Daniel, our host, kicks off the conversation by reflecting on a common misperception in innovation—that it's all about generating unique ideas. Greg counters this by sharing insights from the field, underscoring that while ideas are the seed, disciplined execution and systemic thinking are the soil and water that nurture these seeds to fruition.

The Shift from Idea Generation to Execution

Greg reminisces about a pivotal moment with Brian Fugere from Deloitte, who challenged the value of ideas without execution, shaping the philosophy behind Solve Next's approach. This anecdote leads into a broader discussion on the necessity of a disciplined system to transform ideas into tangible outcomes. Greg emphasizes that innovation is not the realm of the few inspired geniuses but should be an institutionalized process where ideas are rigorously tested and refined.

The Role of Discovery-Driven Development

Further exploring the concept of discovery-driven development, Greg shares how this methodology, akin to the scientific method, involves hypothesis testing and learning from failures. This approach is crucial for navigating the uncertainty inherent in innovation, allowing organizations to pivot and adapt based on empirical evidence rather than speculation.

Building an Innovation System

The core of the discussion drives into the creation of robust innovation systems. Greg outlines the "Next Cycle," a process where each stage of innovation must earn the right to progress by validating critical assumptions. This cycle not only helps in making ideas resilient but ensures they are continuously aligned with real-world demands and organizational goals.

Learning from Investment (LFI): A New Metric for Success

Greg introduces "Learning From Investment (LFI)" as a pivotal metric, advocating for a culture where learning is valued over mere financial return. This perspective is vital for organizations aiming to build serious capital—where the focus shifts from financial outcomes to creating multifaceted value across human, intellectual, and social capital.

Why the Next Lab is Your Next Step

To begin your journey from ideation to execution, the Next Lab offers an unparalleled platform. Helping innovators and leaders test their hypotheses, refining their strategies, and learning effectively from each iteration, moving confidently from uncertainty to certainty. By engaging with the Next Lab, you gain access to the tools and processes that embody the discovery-driven development approach.

• Manage your innovation portfolios.

• Keep track of your capital building.

• Collaborative creative thinking for strategic decision-making.

Innovation in Practice: Lessons from Kodak and Beyond

Reflecting on the story of Kodak, Greg illustrates the consequences of ignoring emerging innovations and clinging to outdated models. This example serves as a cautionary tale for today's leaders on the importance of embracing systematic innovation processes to avoid obsolescence.

Harnessing the Power of Discovery-Driven Development

Thank you for tuning into our deep dive into transforming innovation from an art to a science. We invite you to join the conversation and share how you are applying these principles in your journey towards building serious capital.

Ready to turn your groundbreaking ideas into reality? Explore our Next Lab and start making Next happen today

From Ideation to Execution: Building a System that Makes Innovation Work

In today’s fast-paced business environment, innovation is a key driver of success. However, many organizations struggle to build a culture of innovation, mistakenly believing it should be the starting point. In our recent podcast episode, we explore the concept of the “Next System”—a framework designed to harmonize performance and innovation systems. Let’s dive into the critical insights and practical steps that can help your organization build a system that makes innovation work, with a focus on the transformative Next Cycle.

The Misconception About Innovation Culture

A common question we encounter is, “How do we build a culture of innovation?” The answer might surprise you: a culture of innovation is not the starting point but the outcome of a well-established system. Think of culture as the end result of various factors, including belief systems, rituals, tools, and processes. If you change one of these factors, the culture shifts. Therefore, to foster a culture of innovation, you need to build a robust innovation system first.

Performance System vs. Innovation System

Most organizations have strong performance systems focused on optimizing efficiency and minimizing risk. These systems are designed to execute known solutions to known problems, emphasizing stability and predictability. On the other hand, an innovation system embraces experimentation, risk, and the unknown. The goal is to transition from the current state “Now” to a future state “Next”, which inherently involves uncertainty and discovery.

Introducing the Next Cycle

The Next Cycle is a proven framework that integrates both performance and innovation systems within organizations, enabling a seamless transition from ideation to execution. This structured approach ensures that innovation is not a sporadic effort but a continuous, repeatable process.

Building an Innovation System with the Next Cycle

To build an effective innovation system using the Next Cycle, consider the following components:

1. People Layer: Identify the right people with the necessary skills and roles. Ensure you have dedicated innovation roles rather than asking employees to innovate alongside their regular duties. The Next Cycle emphasizes the importance of having a team focused on both current performance and future innovation.

2. Process Layer: Develop processes and methods for innovation, such as the Next Cycle for moving from ideas to solutions. Establish clear decision-making criteria to guide which projects move forward. The Next Cycle provides a roadmap for navigating the complexities of innovation, from initial idea generation to final execution.

3. Platform Layer: Create a supportive platform with soft elements like vision, values, and language that promote innovation. Additionally, ensure you have the necessary tools and technology to facilitate the innovation process. The Next Cycle framework includes tools and techniques that help align your organization’s culture and goals with its innovation efforts.

Metrics and Evaluation

Traditional performance metrics like ROI are not suitable for innovation systems. Instead, focus on metrics that measure learning and discovery. Examples include the number of assumptions tested, the outcomes of experiments, and the Learning From Investment (LFI). These metrics help you track progress and make informed decisions about where to allocate resources.

Case Study: Tesla’s Gigafactory

Tesla’s Gigafactory exemplifies the successful integration of performance and innovation systems. Tesla has optimized the production of electric vehicles, making them affordable and efficient. Simultaneously, the company continues to innovate, reducing battery costs and improving production capabilities. This balance between the “Now” and “Next” systems allows Tesla to maintain its competitive edge while driving significant advancements in the industry.

Conclusion

Building a culture of innovation starts with establishing a robust innovation system. By harmonizing your performance and innovation systems using the Next Cycle, you can create an environment where new ideas thrive and drive your organization’s growth. Start by focusing on the people, processes, and platforms that support innovation, and use appropriate metrics to evaluate your progress. With the right system in place, you’ll be well-equipped to turn visionary ideas into capital-building realities.

Ready to start building your innovation system? Learn more about the Next Cycle and how it can transform your approach to innovation by visiting Solve Next. Join us for the next podcast episode, where we’ll dive deeper into practical steps for getting started. Embrace the challenge, and go out and make the next happen!

In today’s ever-evolving business landscape, innovation is crucial for sustaining growth and competitiveness. However, the challenge lies not just in having groundbreaking ideas but in creating a system that turns these ideas into tangible outcomes. In our recent podcast episode, we delve into the “Fantastic Five” components that form the bedrock of a robust capital-building innovation system. These elements are designed to streamline and enhance your organization’s approach to innovation, making it repeatable and scalable.

Beyond Ideas: The Real Work of Innovation Leadership

Innovation is often romanticized as a series of brilliant ideas and eureka moments. However, real innovation leadership goes beyond ideation—it requires the grit, discipline, and effort to turn those ideas into reality. In our latest podcast episode, we dismantle the myth of the lone creative genius and highlight the true essence of innovation leadership: hard work and strategic execution.

The Myth of the Creative Genius

When people think of innovation, they often picture visionary figures like Steve Jobs or Pablo Picasso, whose creative ideas seem to materialize effortlessly. But the truth is, even these icons relied heavily on rigorous processes and disciplined efforts to bring their visions to life. Innovation isn’t just about having great ideas; it’s about rolling up your sleeves and putting in the work to transform those ideas into tangible outcomes.

The Role of Leadership in Innovation

To make innovation work, you need strong leadership more than money or time. Leaders must embrace the rigorous and disciplined approach required to manage innovation effectively. As Greg noted in the episode, it’s the leaders who are willing to put in the hard work and who understand the necessity of structure and process that truly drive innovation forward.

Lessons from Apple and Pixar

A perfect example of this dual approach to leadership can be seen in Apple. Steve Jobs was the visionary, but it was Tim Cook’s operational genius that turned Apple's innovative ideas into a global success. While Jobs focused on design and user experience, Cook optimized production and distribution, ensuring that Apple’s groundbreaking products could be manufactured and delivered efficiently.

Similarly, Pixar’s success can be attributed to its blend of technological innovation and compelling storytelling. Steve Jobs’ vision for Pixar’s headquarters was to create a space that fostered serendipitous interactions among employees, encouraging collaboration and creativity. This strategic design, coupled with a disciplined approach to production, helped Pixar become a leader in the animation industry.

Overcoming Resistance to Change

Innovation often faces resistance, primarily due to the changes it demands. Leaders must address this resistance by making the hard work of innovation manageable and breaking it down into controllable pieces. This is where frameworks like the Next Tools and an effective innovation system come into play.

Leveraging the Innovation System

An innovation system is a structured approach that helps organizations manage the complexities of innovation. It consists of three main layers:

1. People: Identifying and developing the right talent.

2. Process: Establishing clear methods and rules.

3. Platform: Providing the necessary tools and resources.

Utilizing Next Tools

Next Tools provides practical solutions to manage the innovation process effectively. These tools help in areas such as:

• Discovery: Identifying new opportunities and validating assumptions.

• Development: Creating prototypes and testing solutions.

• Deployment: Implementing and scaling successful innovations.

By using Next Tools, organizations can ensure their innovation efforts are systematic and aligned with their strategic objectives.

The Fantastic Five: Essential Components for Innovation

To further simplify the innovation process, focus on these five key components, the Fantastic Five:

1. Portfolio Management: Organizing innovation efforts into different portfolios to manage risk and align with strategic goals.

2. Next Development Process: Following a structured process like the Next Cycle to move from ideation to execution.

3. Decision-Making Criteria: Establishing clear criteria to guide innovation decisions.

4. Operating Principles: Defining rules that differentiate innovation activities from regular operations.

5. Next Funding Model: Adopting flexible funding approaches that cater to the uncertainties of innovation.

Conclusion

Building a culture of innovation requires more than visionary ideas; it demands a structured system and committed leadership. By focusing on the Fantastic Five components and leveraging Next Tools, organizations can create an effective innovation system that transforms ideas into impactful realities.

What it takes to be an Innovation Leader: Fostering Skills and Continuous Growth

Imagine you're the coach of a championship basketball team. Your players are talented, but if they don't keep up with the evolving game, your team will start to lose. This was the fate of the Detroit Pistons, once dominant but left behind as the game changed. In the business world, the same principle applies: If you don't cultivate talent and embrace continuous learning, your organization will fall behind.

Welcome to our latest podcast episode, where we dive deep into developing the talent and capabilities that drive innovation in organizations through exploration, experimentation, and continuous learning. We had the pleasure of hosting Greg, who shared invaluable insights and stories that resonate deeply with the challenges many leaders face today.

The Detroit Pistons: A Cautionary Tale

Let’s start with a story about the Detroit Pistons. In the early 2000s, the Pistons were a force to be reckoned with. They reached the conference finals six times and won championships. However, as the game evolved, the Pistons didn’t. They stuck to their old ways, and it cost them. Their once packed arena dropped from 22,000 seats being sold out to about 15,000 by 2010. Their rigid approach not only hurt their financial standing but also their social and reputational capital.

This story isn’t just about basketball; it’s a metaphor for any organization that fails to adapt. The business landscape is constantly changing, and if you don't upskill and reskill your human capital, your company will face the same fate as the Pistons.

Building a Culture of Continuous Learning

Innovation isn’t just about big ideas; it’s about creating a culture where learning is continuous, and experimentation is encouraged. Greg emphasized the importance of cultivating a Learning From Investment (LFI) culture. It’s about shifting the focus from failing fast to learning fast. Here's how you can foster such a culture in your organization:

1. Invest in Training: Equip your teams with the necessary skills to navigate new technologies and processes. Continuous learning should be part of your company’s DNA.

2. Encourage Experimentation: Create an environment where hypotheses can be tested without fear of failure. Celebrate the lessons learned from unexpected outcomes.

3. Share Knowledge: Ensure that the knowledge gained from experiments and projects is shared widely across the organization.

The Think Wrong Methodology

Greg highlighted the Think Wrong methodology, which encourages small bets and fast movement. This approach minimizes risk while maximizing learning. It’s about taking calculated steps that represent affordable losses, ensuring that even if a project doesn’t succeed, the organization gains valuable insights.

Creating the Right Environment

To build a thriving innovation culture, you need more than just a corporate value statement. Here’s what you should focus on:

1. Vision and Purpose: Align your organization’s vision and purpose with a commitment to innovation and continuous learning.

2. Values and Rituals: Foster values that celebrate curiosity, creativity, and learning from failure.

3. Frameworks and Tools: Provide clear frameworks and the right tools to support innovation efforts.

4. Collaborative Spaces: Create environments that promote serendipitous interactions and team collaboration.

Dyson: A Beacon of Innovation

Dyson, the company known for its revolutionary household products, is a prime example of an organization that gets it right. Spending £7 million a week on R&D, Dyson is committed to continuous innovation. Their approach isn’t just about creating cool gadgets; it’s about asking the right questions and fostering a culture that celebrates learning from failure. For instance, Dyson’s exploration into electric vehicles might have seemed like a costly misstep, but the insights gained were applied across their product lines, driving further innovation and growth.

Conclusion

Becoming an innovation leader requires a deliberate focus on fostering skills and continuous growth. The lessons from the Detroit Pistons and the successes of TechCo and Dyson illustrate the power of a culture that prioritizes learning and adaptation. By investing in training, encouraging experimentation, sharing knowledge, and creating the right environment, you can build a thriving innovation culture in your organization.

Now, it’s your turn. Reflect on your organization’s approach to innovation. Are you fostering a culture of continuous learning and growth? Are you providing the right tools and environment for your teams to thrive? Remember, building a culture of innovation starts with you, your leadership, and your commitment to making continuous learning a cornerstone of your organization.

Next Funding: The art of investment for innovation. Replace outdated funding models to make innovation work.

Replace Outdated Funding Models to Make Innovation Work

Welcome back to another episode where we explore the transformative power of Next Funding. Today, we dive into how innovative funding models can revolutionize investment in your organization. Let’s break down the insights shared by Greg, illustrating how to replace outdated funding models with a more flexible and effective approach to drive innovation.

The Problem with Traditional Budgets

Traditional budgeting processes are designed for stable, performance-driven environments. Think of it as running a well-oiled machine where everything is predictable. But innovation is a different beast altogether—it's unpredictable, experimental, and full of uncertainties. The conventional annual budget process simply doesn’t fit.

Let’s look at a real-world scenario. Imagine a company with 50 innovation opportunities in their portfolio. Each idea is in the early stages, needing validation before more significant investments are made. If they split the budget evenly across all 50, they risk over-investing in projects that might not pan out, wasting precious resources.

Next Funding: A Smarter Approach

Next Funding shifts the paradigm from rigid annual budgets to a more flexible, venture-capital-like model. Here’s how it works:

1. Create a Fund: Instead of setting a static budget, establish a dynamic fund dedicated to innovation. This fund can encompass financial capital, human capital, intellectual capital, and even political capital.

2. Stage-Gate Funding: Release funds in stages as each project meets specific milestones or thresholds. This way, you only invest heavily in projects that have demonstrated potential.

3. Celebrate Stops: Not every idea will succeed, and that’s okay. Projects that don’t meet criteria should be stopped early to conserve resources. Celebrate these stops as victories in protecting capital.

Business Case: The Air Force's Innovation Hub

To illustrate the power of Next Funding, let’s consider an example from the United States Air Force. They needed to develop a rescue package that could be dropped from a C-130 transport plane into active combat zones. The team proposed a concept with an initial prototype cost of $1.5 million.

Instead of validating the basic requirements first, they jumped straight into building the prototype. A year and $1.5 million later, the package didn’t fit in the plane. A classic case of over-investing too early. They could have spent a fraction of that amount to build a scale model with cardboard and foam, ensuring it met basic requirements before committing to a full prototype.

The Super 7 Criteria

Greg highlighted the importance of the Super 7 criteria in the Next Cycle, ensuring projects align with strategic goals at each stage:

1. Strategic Fit: Does the project align with the organization’s overall strategy?

2. Portfolio Fit: Is there room for this project within the current portfolio?

3. Market Need: Is there a significant demand for this innovation?

4. Feasibility: Do we have the technical know-how and resources?

5. Worth It: Will this project deliver the expected capital returns?

6. Affordable Loss: Is the next stage of investment manageable within our budget?

7. Option Value: Does the project offer potential flexibility or future benefits?

Google X and the Airship Example

A great example of applying the Super 7 criteria is Google X’s airship project. The next development stage required a $200 million investment to build a working prototype. Google X decided it wasn’t worth the investment, even though there was a market need and strategic fit. On the other hand, the Air Force saw value in continuing similar research and acquired a blimp factory for $150 million, which fit within their budget and strategic goals.

Implementing Next Funding in Your Organization

To adopt Next Funding:

1. Analyze Current Budgets: Identify funds allocated for new projects and reclassify them under the Next Fund.

2. Set Benchmarks: Define funding benchmarks for each stage of the innovation cycle, ensuring flexibility and clear guardrails.

3. Promote a Culture of Flexibility: Encourage teams to embrace the fund model, understanding that unused funds can roll over to the next year.

Conclusion

Next Funding is more than just a financial strategy; it’s a mindset shift that encourages flexibility, strategic alignment, and smarter investment in innovation. By celebrating early stops and only heavily investing in validated opportunities, your organization can drive sustainable growth and innovation.

Now, reflect on your current funding models. Are they flexible enough to support innovation? Are you investing wisely in the right opportunities? It’s time to embrace Next Funding and make innovation work for your organization.

Building a Thriving Innovation System with the Right Tools and Platform

In today’s fast-paced business world, innovation isn’t just a nice-to-have; it’s a must-have. But to truly foster innovation, organizations need more than just good ideas—they need the right tools and platforms to turn those ideas into reality. In our latest podcast episode, we explore how the Next Platform enables sustainable capital building by empowering more people to innovate effectively. Let’s dive into the insights shared by Greg and discover how you can build a thriving innovation system.

The Foundation: People, Process, and Platform

Before we get into the nitty-gritty, let’s revisit the basics. An effective innovation system stands on three pillars: People, Process, and Platform. While many organizations focus heavily on people and process, the platform often gets overlooked. Yet, it’s the platform that underpins everything, ensuring that people and processes work seamlessly together.

The Importance of a Solid Platform

Greg emphasized that the platform is foundational. It aligns an organization’s vision, purpose, values, and goals, creating a belief system that drives behavior. Think of it as the bedrock upon which your innovation house is built. Without a solid platform, even the best ideas can falter.

Case Study: The Tale of Two Companies

The Bad Example: A Multinational Bank

In his book, How to Conquer the Status Quo and Do Work That Matters, Greg recounts a visit to a well-known multinational bank. The lobby boasted massive screens proclaiming, “Nurturing a culture of innovation.” Yet, when he met with the innovation leaders, they had no idea what the screens displayed daily. Their version of innovation was maintaining regulatory barriers to keep new entrants out—a clear case of lip service without substance. This bank had all the appearances of innovation but lacked the foundational platform to support it.

The Good Example: Dyson

On the flip side, let’s look at Dyson, a company synonymous with innovation. Dyson invests £7 million a week in R&D, constantly pushing the boundaries of what’s possible. They revolutionize everyday products, from vacuum cleaners to hair dryers, by asking, “What can we do better?” Their commitment to innovation is built into their platform, which includes robust data and knowledge management systems, clear frameworks like the Super Seven Criteria, and an environment that encourages experimentation.

Key Elements of an Innovation Platform

So, what makes an effective innovation platform? Here are the key elements:

1. Vision and Purpose: Align your vision and purpose with a commitment to innovation. Make sure everyone in the organization understands and buys into this vision.

2. Values and Rituals: Foster values that celebrate creativity, curiosity, and learning from failure. Create rituals that reinforce these values.

3. Data and Knowledge Management: Collect and share knowledge widely across the organization. Ensure that insights from experiments and projects are accessible to all.

4. Frameworks: Establish clear frameworks to guide innovation efforts. The Super Seven Criteria, for example, help teams evaluate whether a project aligns with strategic goals and is worth pursuing.

5. Tools and Technologies: Provide the necessary tools to support innovation. This includes software for tracking projects, tools for prototyping, and platforms for collaboration.

6. Environment: Create spaces that encourage serendipitous interactions and experimentation. Think of Pixar’s headquarters, designed to foster creative collisions.

Business Case: Building Momentum

Consider the work of Building Momentum, an organization founded by ex-military personnel that teaches leadership and team building through making. They’ve created an environment equipped for welding, wood fabrication, robotics, and drone building. This setup allows participants to fully engage in the process of innovation, using the right tools in a conducive environment. It’s a perfect example of how the right platform can empower people to innovate.

Conclusion

Building a thriving innovation system requires more than just a corporate value statement or a list of innovation opportunities. It demands a robust platform that aligns vision and purpose, fosters the right values, manages knowledge effectively, and provides the necessary tools and environment for innovation to flourish.

Reflect on your organization’s platform. Are you providing the foundation your people need to innovate effectively? Are you equipping them with the right tools and creating an environment that encourages experimentation and collaboration? If not, it’s time to rethink and rebuild your platform.