I had a meeting last week with an organization in the desert at the foot of a mountain. Just a plain brick building in a small office park. But inside, there's a hotbed of innovation. And they’re facing a challenge I see more and more in effective companies today: they’re really good at what they do and they are trying to figure out how to scale it. Their core business involves community mental and physical health services. They do that well and can’t help themselves—they are always thinking of new ways to solve problems faced by their staff, their medical partners and their patients. A software, an electronic wheelchair accessory, a simple robot. There are some amazing things going on in that desert. But what to do with all these ideas?

I’ve seen this dilemma before. At the staffing company that was so good at training their own people that their clients wanted them to offer training services. At the software company where their clients wanted them to provide high-level services to solve their biggest challenges. At the equipment repair company whose clients wanted them to teach them how to use the equipment more effectively. In each of these cases, the combination of smart, engaged people and an innovation-friendly culture naturally lead to new opportunities. This isn’t new. Humans have been inventing and innovating throughout our history. But with information technology, it’s getting easier and easier to create innovations today. The pace and the scope of the opportunities is growing. At the human services firm, the problems they solve are almost universal. A good idea could change the lives of millions of people. But how to reach those millions?

In other words, how to scale these innovations? It takes more than good people and good ideas. That’s where intangible capital thinking can help. What are the basic needs of an organization that wants to commercialize and scale their innovations?

  • Human Capital – Employees with mastery of the core competencies key to the organization’s area of focus. Management with an understanding of the business and how to nurture innovation. A board supportive of the ups and downs of innovation.
  • Structural Capital – Some kind of innovation process. A balanced approach to intellectual property that protects key ideas while encouraging open collaboration. Marketing and sales processes to make the crucial connection with customers for the innovations.
  • Relationship Capital – Access to a good customer base. Links with partners that can help develop and/or commercialize new ideas.
  • Strategic Capital – A healthy culture. A market opportunity. The right business model to sustain and fuel the growth of the core business and new innovations.

We call this collective system the Knowledge Factory. It really should be thought of as a system. Each component is important. If you want to create your own hotbed of innovation, or scale it, think systemically. Identify the pieces you have and/or need. Then measure it, manage it, scale it. Where to start? Check out the ideas at Graph My Firm.

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