Innovative Enterprise Scale-Up Design
Getting innovation to scale can be divided into three main areas: Emergence, Networks, and Waves. This article is on Emergence, the first in a series of three. Through scaling, smart movers can quickly build substantial market shares – or define entirely new markets.
Our research draws on scientific approaches such as Complexity Theory, Behavioral Economics and Systems Theory. We have divided the topic into three main areas: Emergence, Networks, and Waves. Within these three areas, we have identified different tactics for leaders to benefit from scaling. We call these scaling frames.
- Emergence. As collective behavior, this frame refers to the phenomenon of patterns becoming apparent in complex systems of interacting agents. Innovation leadership can look to make use of emergent collective behavior by designing openness into a system and designing rules for interaction, which allow successful behavior to surface and spread. We have distinguished 13 separate tactics -or scaling frames- that we have clustered under Emergence.
- Networks. Innovation leadership can take advantage of the properties of networks, the structures and technology supporting networks, and the social conditioning that exists with network members to scale their innovations. We have identified six distinct network frames.
- Waves. Waves are a naturally occurring phenomenon in complex systems. It is one thing for innovation leadership to be prepared to watch for waves and catch them when they appear. It is another thing altogether to create, nurture and sustain waves that are steered in the direction of your entrepreneurial vision. We have six Waves scaling frames.
EMERGENCE HAS RULES, IF YOU CAN FIND THEM
Understanding collective behavior is becoming more important for innovation leadership as it faces increasing levels of complexity in the systems they operate in. This is fueled by the ever-increasing connectivity between members and the growth of available big data to inform feedback loops. In complex systems, top-down control is not an effective answer. It is much more effective to understand the rules that seem to govern the system. Collective behavior systems always have a set of behavioral rules, or the interactions in the system will be chaos. Such behavioral rules guide the system members’ capacity for linking and self-organizing.
There are some famous biological examples of system rules. Ants in colonies are apparently effectively working together without central command and control to feed the population. Computer simulations have demonstrated that such collaborative colony behavior occurs by the application of three simple rules:
- move randomly
- if you pick up a scent from another ant follow that upstream (ants leave a scent trail from the food source to the nest)
- if you find another ant struggling with a task, help him
It is unknown whether this is really what’s going on in the ants brain, but it does produce striking patterns of behavior. Similarly, a few simple rules seem to cause birds to fly in a flock, even when they don’t know about flocks.
An illustration outside the animal kingdom is the – in this case, unforeseen – effect from a change-over in taxi scheduling, starting in NYC. The earlier system consisted of central dispatching service, which was replaced by a system where the drivers where able to pick their next ride from a continuous broadcast of requests. The instruction of “only pick up a passenger as allocated to you by dispatch” changed into the rule “pick-up any passenger that appears to be close to you”. Apart from more efficient scheduling, this had the consequence of creating a collective awareness of demand patterns, and drivers started to position themselves closer to hubs of demand, creating hotspots of taxis circling around relatively busy areas. Taxi waiting time was reduced, and taxi loads increased.
In a similar way, rules in sport govern the “solution space” in which players have to interact with each other. Subtle changes in such rules might change the whole system’s innovation, market shares, scientific approaches, entrepreneurial vision and collective behavior.
A successful attack play leading to a goal in a football match might emerge from following few rules (e.g., keep team possession of the ball, pass immediately after receiving the ball, seek depth in moving forward), rather than a detailed play-by-play instruction from the coach.
Another example is the working of roundabouts. During the best part of the 20th century, mainland Europe established the “give way to the right” and the “keep on the right side” laws combined to a system rule where cars had priority when wanting to get on the roundabout, because cars driving on the roundabout had to give way to cars entering the roundabout from their right.
In the UK, however, a different system rule emerged. The “keep on the left” and “give way to the right” laws combined to a system rule where you had priority when you are already on the roundabout. This time the cars on the roundabout came from the right, they had priority over those wanting to get on and thus could clear the roundabout quickly. The differences in efficiency and safety were substantial, basically the system rule created efficient self-organizing traffic flows within a wide range of conditions. It took a long time to understand the benefits of changing the system rules to make it work in the rest of Europe. By using signage to clarify the priority on mainland roundabouts from “priority when wanting on” to “priority when already on”, the desired system outcome of fluid traffic flowed with fewer accidents emerged. The impact is huge, as many crossings that used to be controlled by traffic lights are now equipped with roundabouts with “priority when already on” rules. You can take away the expensive top-down control mechanisms of traffic lights because the self-organizing system with the right rules works better.
HOW TO READ AND USE THE FRAMES
The scaling frames have been designed to help creative leaders and innovation leadership at all stages of development, from raw idea to established organization. The frames can help start-ups or those in the early stages of concept development to embed scaling tactics into the concept design, so that it has the potential to scale. For more established ventures, the frames can help accelerate uptake, and from a corporate perspective, can be instilled into strategic thinking to continue successful growth.
The frames are applicable for business-to-business and business-to-consumer companies, non-profits, and other social causes. The logic of the frames can even be applied to internal change and transformation projects, as these too need to scale positive change in a non-linear fashion.
Each scaling frame can stand on its own, yet they will be better understood when overseen as a whole.
1. SET TARGETS
2. ALLOW EMERGENCE
3. BALANCE CONTROL
4. FOSTER AN ECOSYSTEM
5. EXPAND TO ADJACENCIES
6. HARNESS FOLLOWERSHIP
7. ENGAGE THE CROWD
8. USE POWER LAWS AND LONG TAILS
9. SEED OPTIONALITY
10. EXPERIMENT TO IMPROVE
11. EXPLOIT DATA
12. DESIGN CHOICES
13. INTRODUCE A CURRENCY
|To scale effectively, develop a vision of how far and how fast you would like to scale. Define targets for key performance indicators, focusing on progression over time. Use these targets to direct the network, and expose your assumptions of how things will progress to form a learning loop.|
2 ALLOW EMERGENCE
|Give your system some freedom of action by creating conditions that allow opportunities to emergence, be winnowed through exposure and use, and then either spread or disappear. Use the crowd or other used-based mechanisms to highlight those concepts that are most likely to scale.|
3 BALANCE CONTROL
|Define the core features of your offering that you believe you must provide and control. Enable configuration and personalization for the other areas in a way that can scale without inhibiting efficient growth. Modularize the process steps and allow third parties to hook into your functionality.|
4 FOSTER AN ECOSYSTEM
|Leverage other people’s assets and resources to scale exponentially. Give others an incentive to support you, by designing your concept as a platform with hooks for the products and services of third parties. Aim to create a beneficial environment for many individuals and organizations.|
5 EXPAND TO ADJACENCIES
|Start in a well-chosen niche, while developing the potential to quickly atop into adjacent markets with offerings that draw on and support the core capabilities of your organization. Ensure that your solutions can be scaled up with as little need for redesign as possible, and develop a robust repeatable program for entering new markets.|
|To change behavior patterns, design spark activities surrounded by groups of followers, or watch out for relevant sparks generated by others. Carefully manage the immediate following behavior to visibly replicate the actions that you would like people to adopt. You do not need to be concerned with the viewpoints of every individual whose behavior you wish to influence. Concentrate primarily on a select few who will be followed by others.|
7 ENGAGE THE CROWD
|Harness the power of the crowd, internally and externally to you reorganisation, to scale your business or concept in many ways by implementing a crowd mindset across all aspects of your venture. Technology allows us to reach out to many people at the same time, to focus human energy on all kinds of activities, and to gain benefits from having thousands of pairs of eyes looking at an initiative.|
8 USE POWER LAWS AND LONG TAILS
|Use power always to identify and focus on those items that exhibit by far the highest activity, allowing you to get to scale faster. Apply the long tail concept to develop a highly sustainable and scalable business across niches. Design a platform that adapts so that it can meet and aggregate various long tail needs.|
9 SEED OPTIONALITY
|Increase the chances of your business achieving outsized results by being open to serendipity and new approaches. Deliberately seek out low-probability, high impact options and nurture a highly diverse portfolio. Allocate little investment to those activities, but be ready to execute and act at scale as soon as an option has turned into a major new business opportunity.|
10 EXPERIMENT TO IMPROVE
|Implement a continuous prototyping approach, combined with appropriate metrics, immediate feedback loops, and corrective action that leads to the high frequency deployment of incremental changes. Institutionalized processes for rapid improvement allow you to react faster to changing patters and emerging opportunities.|
11 EXPLOIT DATA
|Use a broad range of data and analytics to uncover trends, correlations, and opportunities, and then test and validate candidates’ scaling potential. Success requires a data-collection mentality and capability, a sense of where to look for patterns, and a willingness to recognize the results.|
12 DESIGN CHOICES
|Design structured choices that steer users towards those options that allow your offering to scale, whilst giving them the freedom to make choices in their own interest. Choice architecture nudges people towards the best option most of the time, with the least amount of effort and risk of disengaging.|
13 INTRODUCE A CURRENCY
|Facilitate scaling by giving users a community currency or loyalty points, in order to signal and amplify individual users’ priorities along with the collective needs of the community. A virtual currency enables users to self-organize, allowing optimal solutions without requiring central control.|
These Scaling Frames inspire innovation leaders to consider different mechanisms and tactics at their disposal, to favorably influence the emergence of successful outcomes in situations that are characterized as complex systems. As emergence is fundamentally a non-linear phenomenon, small design efforts of how individuals behave in a system can have an outsized aggregated impact at a system level.
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