Summary of Variables affecting the Speed of Innovation in and across Innovation Webs

The research method used by ENTOV-HVM to examine the speed of innovation is Value Network Analysis (VNA) in combination with Process Analysis (PA), Social Network Analysis (SNA) and Organizational Network Analysis (ONA). The key metrics of VNA, PA, SNA and ONA are applied to a series of archetypal value networks identified in previous research which describe the diffu-sion of innovation process across a variety of industries. The choice of the research method is based on the hypothesis that these archetypes represent an optimum pattern of collaboration in respect to speed of diffusion for ideas through them and that they are best understood using complex adaptive systems principles. It is furthermore assumed that these metrics are interdependent with a unique set of values for stable and transitory behavior of the archetype. The following metrics are integral to the dependency model which is then used to assess the overall innovation speed in and across innovation webs.

The image depicts an exemplary scoring of the metrics in respect to their ability to master generic challenges to innovation speed and is the basis for the generation of an overall performance / speed estimate, including relevant uncertainty rainges and for forecasting future propogation without interventions.

The key quantitative metrics chosen for describing innovation speed in and across innovation webs are:

1. Resilience: This refers to the ability of an innovation web to return to its archetypal state after a stressful incident such as the loss of participants. Resilience is calculated by dividing the number of intangible transactions in the innovation web archetype by the number of tangible transactions in the innovation web archetype. The declared axiom is that the greater the number of intangible transactions in relation to the number of tangible transactions, the stronger the memory of the innovation web regarding its archetypal state and the more like it is that it will use that memory to return to that state through emergent properties. The higher the resilience the faster the sequence of transactions in the innovation web are achieved and the faster the thresholds for transitioning to the next innovation web archetype are arrived at. An easy thumb-rule for assessing resilience is to determine the number of web weavers active in the innovation web (i.e. the number of individuals sending emails) since it is pri-marily their activity which maintains and grows the intangible transactions – the more the faster transactions will occur.

2. Reciprocity: This refers to the degree that transactions between roles result in “return” transactions. Reciprocity is calculated by dividing the number of tangible and intangible deliverables offered by roles by the number of tangible and intangible deliverables received by roles. The declared axiom is that the greater the reciprocity for intangible and tangible transactions the more inten-sive the relationships between roles and their participants are and hence the faster the exchange of deliverables will be.  An easy thumb-rule for assessing reciprocity is the extent to which roles confirm the receipt of deliverables from the sender (i.e. the amount of “thank you” emails sent) – the more the faster transactions will occur.

3. Agility: This refers to the ability of the innovation web to adapt to changing external conditions such as a change in scenario the purpose of the innovation web addresses. Agility is calculated by determining the average number of tangible and intangible connections (therefore role pair relationships) needed to cross the innovation web. Agility is based on the concept of degrees of sep-aration and the declared axiom is that the lower the number of intangible and tangible connections is the easier it is for adaptation information to diffuse across the system and hence the faster the re-alignment of the innovation web will be to these changing external conditions. An easy thumb-rule for assessing agility is the extent that participants are “connected” on social networking platforms (i.e. LinkedIn) – the more the faster transactions will occur.

4. Structural Integrity: This refers to the availability of alternate intangible and tangible paths for value creation if central roles and / or exchanges fail to function. Structural integrity is calculated by determining the average intangible and tangible centrality of roles in the network and the declared axiom is that the lower the tangible and intangible centrality the less dependent value creation is on specific roles and / or exchanges. An easy thumb-rule for as-sessing structural integrity is to determine who participants go to for guidance before sending or receiving deliverables (i.e. emails between only two individuals) – the less the faster transactions will occur..

5. Structural Dependency: This refers to intensity of intangible and tangible exchanges in the innovation web. Structural dependency is calculated by divid-ing the number of actual intangible and tangible connections between roles by the potential number of potential intangible and tangible connections. Structural dependency is based on the concept of network density and the declared axiom is that the denser the intangible and tangible connections are, the more intensively they occur. An easy thumb-rule for assessing structural dependency is the amount of group communications that occur (i.e. the number of re-cipients in emails) – the more the faster transactions will occur..

6. Complexity: This refers to the expected amount of collaboration between par-ticipants. Complexity is calculated by determining the average number of par-ticipants per role and is based on the assumption that the more participants, the more collaboration needs to occur by each participant and that this grows exponentially. The declared axiom is that there is a maximum amount of col-laborative relationships a participant can efficiently maintain so that exceeding those leads to a deterioration of exchange quality. An easy thumb-rule for assessing complexity is to determine the number of individuals co-authoring a deliverable – the less the faster transactions will occur..

7. Emergence: This refers to the degree to which emergent behavior can be expected within the innovation web. Emergence is calculated by determining the actual dispersion of the dependency model of all qualitative and quantitative metrics divided by the maximum dispersion of the dependency model based on the concept of information entropy. The declared axiom is that emergence is an entropic phenomenon which is enabled by high degrees of information diffusion and is a significant accelerator of value creation. An easy thumb-rule for assessing emergence is the granularity of an explicit plan – the lower the faster transactions will occur..

8. Maturity: This refers to the average length of relationships of participants in the innovation web. Maturity is calculated by determining when participants first became aware of each other (which often pre-dates their assumption of roles in the innovation webs). The declared axiom is that the longer participants have known each other, the more likely it is that they will rely on intangible exchanges for decision making and such exchanges occur significantly faster than tangible ones. An easy thumb-rule for assessing maturity is the amount of organizational and regional similarities in the life-time of partici-pants (i.e. members of the same company) – the more similarities the faster transactions will occur.

The key qualitative metrics chosen for describing innovation speed in and across innovation webs are:

1. Perceived Value: This refers to the benefits participants (qualitatively) attrib-ute to deliverables offered and received. Perceived value is calculated on the basis of a qualitative assessment participants conduct for each of the deliver-ables they offer and receive. The declared axiom is that a deliverable will only be consumed if the recipient perceives value in doing so and that a deliverable will only be provided if the sender perceives it to be valuable enough to be consumed by the receiver. An easy thumb-rule for assessing perceived value is  the time needed by a participant to convert a received deliverable to an of-fered deliverable (i.e. the lack of further activities needed before consuming) – the lower the faster the transactions will occur.

2. Value Creation: This refers to the degree to which each role generates measur-able intellectual and financial capital. Value creation is measured using estab-lished intellectual capital scoring schemes / monitors which typically allow for the assessment of structural, relationship and competence capital along with financial capital. While seemingly quantitative at first sight, the assessment of the intellectual capital indicators is by default highly qualitative. The declared axiom is that it is value creation which provides the resources potentially needed by participants to take part in the innovation web. An easy thumb-rule for assessing value creation is the amount of participants participating in the innovation web on a voluntary basis (i.e. without financial compensation) – the more the faster the transactions will occur.

3. Value Consumption: This refers to the degree to which each role consumes measurable intellectual and financial capital. Value consumption is the opposite of value creation. Value consumption is measured using established intel-lectual capital scoring schemes / monitors which typically allow for the assessment of structural, relationship and competence capital along with financial capital. While seemingly quantitative at first sight, the assessment of the intellectual capital indicators is by default highly qualitative. The declared ax-iom is that it is value consumption which describes the resources actually needed by participants to take part in the innovation web. An easy thumb-rule for assessing value consumption is the “span of attention” of participants par-ticipating in the innovation web on a voluntary basis (i.e. the steadiness of contributions) – the more the faster the transactions will occur.

4. Cost Benefit: This refers to the degree to which roles create and consume measurable intellectual and financial capital. Cost benefit is the difference be-tween value creation and value consumption. The declared axiom is that in-novation webs will create more value than they consume (they are “exother-mic”). As easy thumb-rule for assessing cost benefit is the priority of the con-versation task for the receiver (i.e. the degree it “jumps the queue” of tasks re-quiring completion) – the higher the faster the transactions will occur.

5. Sequence: This refers to the speed with which deliverables are transferred be-tween roles. Basis of the assessment is a clearly sequenced series of transac-tions whereby participants will qualitatively assess their relative speed. Quanti-tative time-series measurements do not apply because they cannot capture the speed of intangible deliverable exchanges. The declared axiom is that the higher participants rate the speed of transactions, the faster these actually occur and the faster the innovation web will generate value. An easy thumb-rule for assessing the speed of sequences is to examine the amount of intangibles “flanking” a tangible deliverable, since they are typically significant accelera-tors of the exchange – the more the faster the transactions will occur.

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