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Sunday, April 25, 2010

Six Factors in Emergent Innovation

by Hutch Carpenter

Six Factors in Emergent InnovationIn discussing employee-driven innovation, having a technology platform to deliver on objectives is a key part of a company's strategy. Hard to get everyone tuned in when you rely only on email and conversations with your cubicle mates. But that's just one factor. There are many other considerations for companies seeking to vault to the top of their industries through greater innovation.

One set of characteristics are what I term factors of 'emergent' innovation. I use emergent here in the sense of conditions which let good ideas find their level inside a company, regardless of source. Think of this as an alternative to R&D-led innovation, or innovations decided solely in the executive suite and cast down for implementation by the troops.

Of course, there are more than six factors to emergent innovation. For instance, the actual process of turning someone's idea into an innovation project has several factors of its own. But these six are a good start.

This post is long. The links below will take you directly to a specific section.
  1. Healthy use of doubt
  2. Rough alternatives
  3. Experiments
  4. Resource margin
  5. Positive deviants
  6. Diversity of viewpoints

So what are these factors?

Healthy Use of Doubt

"In creative thought, doubt is good. Doubt produces creative efficiency."

David Kord Murray, "Borrowing Brilliance" (page 167)

Doubt is a word pregnant with different connotations. It can have a strong meaning of, "I don't believe you." In terms of working on innovations, that meaning has the potential to undermine collaborative work.

But in the quote above from David Kord Murray, it has a more productive meaning. 'Doubt' refers to continually challenging existing practices to determine how things can be done better. These may be company practices, or your own. As Murray explains it, without doubt you are implicitly accepting that current practices are the best they can be. You get locked in on one way to do things. Yet, as has been documented, the rate of change in global markets is accelerating. Locking into the one best way to do things becomes a recipe for a declining business.

In his book "Borrowing Brilliance", Murray relates that Albert Einstein had an apathetic relationship to his first Theory of Relativity. Why? He maintained a healthy use of doubt toward it, knowing there was more to be done. He didn't settle on his first theory, and eventually came up with his better second Theory of Relativity.

One note about the term 'healthy' here. Doubt is a mental framework in which you look at things and consider how they can be better. Doubt should not become a systemic condition that causes people to stop efforts on current projects, as in "we're doing this wrong, so why bother". It'd be wrong to assume everything a company does is poor and must be scrapped. Or that every individual opinion must be acted upon.

Rough Alternatives

"A Stanford study investigating quick executive decision making noted that fast decision makers (a necessary component of agility) operated as though they had a rotating radar antenna; constantly refreshing context and identifying alternative paths of action. Their speed came from having rough alternatives at hand if conditions changed."

Christopher Meyer, LinkedIn discussion

Intuitively, this concept makes a lot of sense. While it may seem obvious, it's not for those working in the trenches. The general approach is selecting the course of action, and execute like hell. Go big or go home.

And that 'execution' mentality is right. It is appropriate to aggressively execute on an initiative once a decision has been made. That's how companies get ahead.

Meyer's comment from the LinkedIn discussion above gets at an aspect of company strategy that's growing in importance. Be ready to pull the trigger on an alternative when conditions change. Which means having a set of rough alternatives ready.

The notion of 'doubt' in the previous section is useful here. Again, not 'doubt' in the sense of undermining efforts to see a particular course of action through to success. Rather, maintain a healthy perspective that even as you're working on one way to do something, there likely are better ways still, undiscovered.

Maintaining a set of alternatives is applicable to all parts of an organization. Senior level executives, mid-level managers, project leaders and anyone doing their job. I'd argue that people in the trenches are closer to the reality of how an initiative is faring, and have a sense of rough alternatives. Enable these individuals to share what they're seeing.


"The cost of experimentation is now the same or less than the cost of analysis. You can get more value for time, more value for dollar, more value for euro, by doing a quick experiment than from doing a sophisticated analysis. In fact, your quick experiment can make your sophisticated analysis better."

Michael Schrage, Research Fellow at MIT Center for Digital Business

Once a proposed idea has been identified as having merit, it needs to be put through its paces. This historically was challenging, due to constraints on building out prototypes or simulating new features. But the world has gotten more digital, and as such much more can be tested than historically has been possible. In a Wall Street Journal article by the quoted author above, Michael Schrage, Google is noted for its ongoing experiments with search results. This isn't surprising of course. Google exists in a digital world.

But what about non-digital firms? Wal-Mart regularly experiments with signage, displays and shelf layouts to gauge the effect of different ideas. Tesco experiments with different factors that determine when another checkout lane should be opened.

Even in the realm of healthcare, experiments are being conducted. Not drug trials, but improvements to processes. Kaiser Permanente operates The Sidney R. Garfield Health Care Innovation Center. The Center "brings together technology, architecture, nurses, doctors and patients with human-centered design thinking and low-fidelity prototyping and design to brainstorm and test tools and programs for patient-centered care in a mock hospital, clinic, office or home environment."

Experiments are a data-based method of testing potential innovations. But they differ from current practice for many corporations, which to rely less on your own experiments and more on the advice of well-paid consultants. Why? Dan Ariely observes the following in Harvard Business Review:

There's the false sense of security that heeding experts provides. When we pay consultants, we get an answer from them and not a list of experiments to conduct. We tend to value answers over questions because answers allow us to take action, while questions mean that we need to keep thinking.

Emergent innovation is better served by internally managed experiments, not advice from external experts.

Resource Margin

The concept of resource margin is a really good one. I came across this nice description:

"No matter how I see it, agility to me is much to do with introducing margin. What I mean by this is how much the necessary margin to have within your processes, knowledge base and human resources to allow for changes. You may have a norm for people to continuously question their processes and products, 'Only the paranoid survives', but if they have no room/margin for change, it's hard to get them to react with agility."

Jeevandra Sivarajah, LinkedIn discussion

This observation just makes sense. In a world of increased busyness, employees need that bit of flex in their schedules to explore improvements to something: processes, products, customer service, etc.

Google, of course, is famous for its 20% time. Employees have the freedom to set aside their daily work and invest some cycles on exploring something new. 3M has long had a similar policy.

Now for companies, I can see the math here... employees only working 4/5 of their time on core daily tasks needed. Means you need to hire 5/4 number of employees, or an extra 25% headcount. Economy is still wobbly, hmmm...

The reality is that innovation is a core part of companies' growth. Which company doesn't see that? Sure, there are firms devoted to be fast followers rather than innovators. But most companies thrive-or-suffer based on their innovation performance. Note, innovation is not just slick new products.

Employees should have innovation as part of their core jobs. In other words, sure they need to file their TPS Reports and process N number of transactions. But part of their day includes thinking about improvements and bigger ideas, socializing these ideas, researching them, figuring out experiments for them, etc.

Alternatively, companies can set up special ideation events. Maybe employees don't have the time or wherewithal to pursue an innovation all the way through. But others in a company will, and they will benefit from hearing the crowdsourced ideas of employees.

Resource margin plays an important role in emergent innovation.

Positive Deviants

I really love the juxtaposition of 'positive' and 'deviants'. Two words that are often at odds. But they work well together. What is a positive deviant?

"This initiative is an example of 'positive deviance', an approach to behavioral and social change. Instead of imposing solutions from without, the method identifies outliers in a community who, despite having no special advantages, are doing exceptionally well."

Rebecca Tuhus-Dubrow, The power of positive deviants

As someone who has worked in large organizations, the observation that there are people with different, smart approaches is one I wholeheartedly endorse. Seen it plenty of times, from my work with headquarters, in-store and warehouse personnel at Hecht's Department Store to my days of investment banking with Bank of America.

Here's a good example. The sales crew at Spigit do a good amount of outbound marketing to prospective customers. As anyone who has used email for this knows, it's hard to figure out what works in terms of email subject lines and email body. One of our sales guys came up with a totally different subject line, certainly different than anything I would have come up with. And it works. The open rate is much better for his subject line. No paid consultants needed - someone figured out a way that works.

What's particularly appealing here is that these innovations arise from the everyday work and problem-solving people do. This is the benefit of tapping this amazing resource: employees' ingenuity and problem solving acumen.

Leveraging the 'found' solutions inside an organization is part of emergent innovation.

Diversity of Viewpoints

Ideas benefit from a diversity of viewpoints. Professor Ron Burt studied something called 'structural holes', and employees who broker them. Think of structural holes as gaps between groups of people in an organization. These gaps prevent people from accessing one another's feedback, perspective and expertise.

"People with connections across structural holes have early access to diverse, often contradictory, information and interpretations which gives them a competitive advantage in seeing and developing good ideas. People connected to groups beyond their own can expect to find themselves delivering valuable ideas, seeming to be gifted with creativity. This is not creativity born of genius. It is creativity as an import-export business."

Professor Ron Burt, Structural Holes and Good Ideas (pdf)

Professor Burt's empirical analysis identified exposure to a greater range of perspectives as a key element of generating higher quality ideas. I particularly like this part of his observation: "diverse, often contradictory, information and interpretations."

That's right. Disagreeing perspectives are good for innovation. Not a chorus of 'amens'. Contradictory knowledge and perspectives as productive innovation friction.

For companies, these collaborative networks are a form of crowdsourcing. Sourcing ideas from around the organization, and more importantly letting others with interest provide feedback and ideas for refinement.

Emergent innovation benefits significantly from emergent perspectives gathered from around the organization. Note that email and over-the-cubicle-wall conversations are limiting factors on innovation. Hard to get a diversity of perspectives with those as your only sharing modes.

For companies seeking to accelerate innovation, those six characteristics are a solid beginning. What do you think?

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Sunday, April 18, 2010

Who are your positive deviants?

by Hutch Carpenter

positive deviants"The future is already here - it is just unevenly distributed"

The famous William Gibson quote above is generally considered in the context of advanced technologies. Makes sense, seeing as he is a science fiction writer. But I'd like to bring the concept down to a more tangible, prosaic level. One that has value for large organizations.

Specifically, Gibson's quote is a good way way to think about innovative practices that are present in a given ecosystem or community, but which are unknown to most people.

A few months ago, the Boston Globe ran an article titled, The power of positive deviants. It profiled a new way of thinking about innovation, "positive deviance". What is that?

"Positive deviance is an approach to behavioral and social change. Instead of imposing solutions from without, the method identifies outliers in a community who, despite having no special advantages, are doing exceptionally well. By respecting local ingenuity, proponents say, the approach galvanizes community members and is often more effective and sustainable than imported blueprints"

The article includes an example, in which authorities were seeking ideas to fight incidents of the MRSA bacteria, which cling to clothes for days and are thus hard to counteract. In canvassing hospitals for a solution, researchers came across the practice of a patient transporter, Jasper Palmer. He would ball up his hospital gown, and stuff it in his inverted hospital gloves. It turns out, this is highly effective in stopping the spread of MRSA. His technique has been widely adopted, and is now called the Palmer method.

See...the future of MRSA control was already here. It was just unevenly distributed.

There are two key concepts in positive deviance:

  1. Outliers as sources of innovative practices
  2. The power of a practice that emerges from a community, not one imposed from outside it

While the Boston Globe article focuses on efforts for improving humanitarian and social problems, the approach is a useful one to consider in the context of solving tough problems for any organization.

Which Organizations Benefit?

Well, any organization can benefit from looking for examples of positive deviance to solve problems.

Who are your positive deviants?
But perhaps the approach is best suited for companies with these qualities:

  • Large, with workers distributed geographically
  • Many employees engaged in similar tasks in these various locations

The distribution of the workforce has the effect of letting different ideas propagate independently. Each person has her own ideas for how to solve different problems that will inevitably occur. Consider this evolution in the realm of work practices. Multiple species of practices can emerge, and some are better suited for long term sustainability than others.

The similarity of activities means the positive deviances can be sources of value for others. Otherwise, these outlier practices are only of value to a limited set of peers.

Eliciting Those Positive Deviations

This is the challenge, isn't it? How can organizations surface the outlier, positive deviations of employees? This is a conundrum that has bedeviled the knowledge management industry for years. People do not simply record all the things they know and do. It's not in the flow of their daily work. There's no motivation to sift through all the different things they do to.

Rather, organizations need to go looking for their positive deviants, because they're out there. Two models exist for this:
  1. Organizations treat the mining of these positive deviations as a campaign
  2. Individuals post their call for examples of how others address a problem

The first model is great for generating a large set of possible solutions to a problem. It leverages the internal communication infrastructure, and the motivation that comes when senior managers are backing an initiative. Rewards can be included in the campaign, increasing the motivation.

But that doesn't have to be the only way. Individuals will face problems that colleagues have solved previously, perhaps in an unorthodox way (e.g. the Palmer method for MRSA). Letting individuals cast a call for ideas is necessary as well. Don't make them wait until a full campaign is undertaken.

Crowdsource the solution from one's peers. With today's tools, the process of crowdsourcing for solutions is easy, enriched with analytics, anchored with workflow, searchable by everybody, and provides the basis for generating reputation scores and rewards.

The great part of this is that solutions coming from others in the organization will generally get a warmer reception than a solution from a consultant. It's just the nature of us. We listen to those who face the same challenges we do first, before someone who doesn't know the business as well.

Go ahead, find the positive deviants in your organization. Make the future a little more evenly distributed.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Sunday, April 11, 2010

The Future of Social Software

"I still think that reputation and game mechanics are the future of social software."

- Tweet by Paul Pedrazzi, VP, Strategy & Innovation at Oracle Corporation

by Hutch Carpenter

The Future of Social Software - Reputation and Game MechanicsWhat an intriguing, and provocative, statement by Paul Pedrazzi. At first blush, I can hear your thoughts... "What? C'mon!" Which is exactly how most innovations start.

The reason it's provocative is that business is serious... business. And that goes for social software as well. Anything that smacks of addressing intrinsic human behaviors and motivations is suspicious on arrival for some. Just make my job efficient so I can get home.

But Paul's opinion is valid, and holds a lot of merit. The issue of creating collaborative tools has mostly been solved. Not solved as in finished in terms of innovation, but solved meaning the basics of easy posting, making content sharable and searchable, and connecting with others are done. These are the table stakes for any social software.

What's emerging on the social landscape is the notion of making contributions and sharing part of a richer, more engaging experience.

What Foursquare Is Teaching Us

Foursquare is a fast-rising social network site where users check-in from whatever location they're at. The table stakes aspect is the ability to find friends that are in a same location, and to be aware of where people have visited for future reference (e.g. when you need a recommendation). This by itself provides the core utility of the site. Similar to the core utilities of social software, as mentioned above.

But Foursquare is even better known for its game mechanics. The site has compelling attributes:
  • Points - vary by type of activity
  • Leaderboards - see who's on top
  • Badges - for a wide variety of activities
  • Mayors - the top person checking in to a location

News flash! Turns out people like lighthearted competition, status, recognition and earning awards. Integrating these as a part of the experience, not as the entire experience, is a powerful basis for increasing people's awareness and interest in a particular activity.

Game Mechanics 101

Indeed, Amy Jo Kim makes this very point. Kim holds a PhD in behavioral neuroscience, and is CEO of Shufflebrain, builders of smart games for social networks. She has helped design social games and social architecture for such companies as Electronic Arts, Digital Chocolate, Viacom, eBay and Yahoo!

In an interview on Mixergy, she makes the following observation about metagames:

"A metagame uses feedback like the kind of feedback you might see in games, statistics, a that kind of stuff. Plus rewards, which are badges and leaderboards and points and prizes and all different kinds of things that are carrots that you dangle in front of people to get them to continue to perform behaviors. Again, I want to emphasize, effective metagame design supports the reason people are there already. It doesn't distract them from it. It supports it."

This is not tacking on metagames for the sake of instantly being fun. It's metagames that are considered in the light of what the business objectives are.

Kim also discusses two types of points approaches:
  • System points
  • Social points

System points are those a user earns through direct interaction with the system. Straight activity incentives. These have their place in any social software.

Social points are where it gets more interesting. These "are points that you amass as people react to things you've done. A reputation system is based on social points-other people's reactions to what you have done." This approach is a terrific blend of rewarding quality activity, because the community is the one that determines the value.

There are rating systems in place with social software now, but few have formalized that into game mechanics.

Finally, Kim relates five game mechanics that are "particularly useful for social software and web services. They're useful, they're low hanging fruit, they're predictable. There's a lot more sophisticated things you can do, but these five are a great place to start."
  1. Earning points: anything that looks like points, smell like points, cracks like points, you know, is going to be points.

  2. Collecting mechanic: The game mechanic of collecting is very main stream. Very familiar to people. You amass collections.

  3. Feedback: Feedback keeps you on the road to mastery. It tells you if you're on the right track. It helps you get better like a great coach. That's what great feedback does.

  4. Taking turns: Taking turns or exchanges is the shorthand I use for that. So this fundamental feeling of taking turns, playing chess is taking turns, having a conversation is taking turns, many games have this back and forth of taking turns. What's important about this mechanic is that it can be implicit or explicit. And it creates social capital.

  5. Customization: Any time you have a rich profile you can decorate. Go look at people's profiles. They kinda look like games. There's badges you're collecting, they're very rich. All that kind of customization was really pioneered by games. And thinking about how to allow people to customize their experience is much more what's traditionally been in the gamer dynamic.

Some good thoughts on game mechanics and social software.

Mixing Fun with Achievement

MIT professor and Enterprise 2.0 leader and thinker Andrew McAfee wrote a post asking, "Should Knowledge Workers Have Enterprise 2.0 Ratings?" The focus of the article was on making measurement an integral part of the motivation for employees to use social software:

"And imagine further that the leaders of the organization are sincerely interested in pursuing Enterprise 2.0 and getting their people to actually use the new tools. What would they then do? What would be their smart course(s) of action?

Virtually everyone agrees that coaching, training, explaining, and leading by example would be appropriate and beneficial activities. But what about measuring? It's a technical no-brainer to measure how much each individual has contributed and to generate some kind of absolute or relative metric. Would doing so be helpful or harmful?"

In the graphic below from his post, you can see an example of how these measurement might look:

Andrew McAfee Radar ChartWhy not turn this into something fun? Or are dry Excel spreadsheet the only approach? McAfee's proposal is one of measuring and motivating. Well, as Amy Jo Kim notes above, game mechanics are terrific way to integrate such an objective into an engaging experience. For example:
  • Positive feedback = reputation score

  • Authoring = activity currency

  • Interacting = collaborator badge

Pedrazzi's tweet makes a lot of sense. We're naturally competitive, and achievements and recognition have always part of work life. Adding fun, social feedback and an achievement orientation becomes a key differentiator for companies. Integrating these dynamics into a collaborative, emergent, results-oriented culture is a clear winner.

We'll leave it with this perspective from Dachis Group's Bryan Menell:

"What better way to change behavior than to introduce elements of gaming and competitiveness? Think of the Foursquare leaderboard. Everybody wants to see their name in the Top 10...

Applications like Foursquare and Gowalla are in their infancy, but it is this type of technology, attention to culture and behavior change, combined with support for processes that will help organizations become more socially calibrated.

The way that we work, interact, and reward people in the enterprise of tomorrow will be very different. How likely is your organization to adopt similar concepts?"

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Friday, April 09, 2010

Employee Traits Hierarchy for the Creative Economy

by Hutch Carpenter

In his keynote for the 2009 Spigit Customer Summit, management guru Gary Hamel discussed the Creative Economy. What is the Creative Economy? Combining descriptions from this BusinessWeek article and Gary's keynote, here is a simple way of conceptualizing it:
  • Industrial Economy was based on physical capital
  • Information Economy was based on information
  • Creative Economy is based on ideas

Ideas around business models, products, improving existing processes. These define the basis of competition in the future. In a way, these economic cycles reflect Maslow's Hierarchy. As our society gets better at solving our basic physiological and safety needs, we see the economy tracking to higher order human needs.

In considering the Creative Economy, Gary put forth his own hierarchy of employee traits that will define the winners in the future. His representation of this hierarchy is below:

Employee Traits Hierarchy for the Creative Economy
The chart above depicts six traits that any of us can recognize in ourselves and others. Notice the line separating the bottom three traits from the top three. That's the separation of winners from everyone else in the Creative Economy.

The Line of Commoditization

As Gary observed, the bottom three traits are those that defined success in the Industrial and Information Economies. The Industrial Economy required the mass scaling of production and distribution. This required the design of systems for scale, and the ability to plug workers in to execute their specialized tasks. The Industrial Economy has been incredibly successful and beneficial to humanity.

The Information Economy has brought us new advancements, as workers have applied their intellect to solving problems with data. Information is used to uncover patterns, reduce the costs of production and consumption and find new solutions to vexing issues. The Information Economy continues to evolve and drive forward societal advancement.

The traits that defined success in these eras include obedience, diligence and intellect. All are valuable, and represent the expectations of modern work. That third element - intellect - is what a lot of us go to college and grad school to demonstrate.

As Gary Hamel sees it, though, these traits are becoming commoditized. Not that every individual has an abundance of these traits; but with a generation of expectations and a global workforce, they are easier to secure than ever. Note IBM's 2008 study found that corporations are conducting "global searches for sources of expertise".

These traits are valuable, they're indispensable... but they no longer represent a competitive advantage.

What Determines Leadership in the Creative Economy

Employees with these traits are best positioned to help their companies - and themselves - in the Creative Economy:

Initiative: Seeing opportunities to try something new, and actually following up on them. This is a marked contrast to the obedience trait.

Creativity: Designing something different than what exists currently, be it business, product or process. Contrast creativity with intellect. Creativity is less bound to the rigors of logic and proof, more responsive to our individual yearning for things that are new.

Passion: Our internal engines provide the fuel that spurs us to action. We pursue something because it answers an internal calling. Contrast this with diligence, which is the application of one's mind and efforts to a task or project. Diligence is a more mechanical effort, passion is an emotional one.

These are the traits that fuel advances in an economy based on ideas. And as Gary Hamel notes, they cannot be commanded. They are intrinsically persona. But when they are given full bloom in employees, they are the basis for competitive advantage in the Creative Economy.

The Creative Economy Traits are Advanced Enterprise 2.0

Gary Hamel gave some great examples of companies that are innovating in terms of management to encourage these traits in their employees. W.L. Gore is one such example. It has made the list of Best Places to work for the past 25 years. The Great Place to Work organization noted these four aspects of W.L. Gore's culture:

"People experience tremendous freedom at Gore: the freedom to talk with whomever they need or want to, the freedom to make comments and provide input, the freedom to bring who they are to work, and the freedom to make commitments."

Enterprise 2.0 ethos includes the traits of greater information visibility, tapping the emergent knowledge of employees and increased collaboration. Those characteristics are the fertile ground for growth in the Creative Economy.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Sunday, April 04, 2010

Avoiding Innovation Chaos

by Hutch Carpenter

Avoiding Innovation ChaosGreat news... you've established your innovation platform to solicit ideas, and gosh, did you get them! Hundreds of ideas. Wow!

Now what?

It just doesn't make sense to go into an innovation initiative with only half a plan. As in, a plan to market to employees and get the ideas, but not have nailed down what happens afterward. Do that, and you're going to regret the deluge. Employees will rightfully grouse, and become cynical.

It is vital to have a plan for soliciting ideas. It is also vital to have a plan for handling the ideas once they are submitted. This benefits both employees and management:

Innovation Governance Model
Before addressing the benefits, what exactly is a governance model?

Who Does What When

If you needed a headline for a governance model, that'd be it. Let's break it down:

Who: Companies decide who has a role in the process of evaluating, informing and approving ideas. It is a given that many, if not most, ideas will impact different areas of an organization. Ideas will also collide with other ideas and projects that need resources.

Ideas also generally, and properly, start out incomplete. It's important to reduce the friction to capturing good ideas. There will others inside an organization who are well placed to build out an idea with their authority, knowledge and experience in a domain. Companies should:
  • Identify internal experts for a given category
  • Identify decision-makers for a given category
  • Identify connectors for a given category

These are the people with roles to play in the process. Knowing who these people are beforehand is critical to getting the most from an innovation program.

This isn't a control on the front-end of ideas being posted, nor of the discussions that occur. Locking that down damages innovation. But it's important to recognize the basis on which resources are allocated inside a company, and integrate people with responsibilities into the process.

What: As an idea progresses from half-formed concept into full-fledged project, it receives plenty of feedback and refinement along the way. In terms of governance, it's important to have a sense of what these steps are.

As ideas vary in their scope and what they address, it can be hard to set a one-size-fits-all approach to what steps are needed to advance an idea. But there are some best practices here:
  • Have a connector follow up on posted ideas, and share it with others who may be interested
  • Get a recognized expert to write up a review of the idea
  • Have an expert provide additional input on a good idea to improve it
  • Have departmental heads provide reviews, as needed
  • Departmental heads approve ideas

Here's a key thing about the 'what'. Don't make everyone do all these actions for every idea! With limits on time and attention, getting experts, connectors and department heads involved should be reserved for ideas that have made it through an initial filter. This filter includes have the initial community suss out what ideas are most interesting.

Of course, as the case may be, individuals with an interest can track new ideas per category or by key word to augment what the crowd identifies as a top idea.

When: Pace is an important factor in the innovation process. Establishing a general "innovation tempo" keeps things moving. Ideally, companies create an atmosphere of quick decisions and little experiments.

As described in the 'what' section above, there will be a series of steps that an idea has to go through. It makes sense to sequence them. For instance, finance may need to provide a review and/or approval for an idea. But you don't need finance doing that too early in the process. So the 'when' for a finance review only happens after an idea has gone through several previous steps. At a point where the idea is "knocking on the door" to becoming a project.

The other aspect of 'when' is to set expectations for turnaround times. These need to be realistic in light of work people already have on their plates. But they can't stretched too far out, because ideas lose their attention, and the company's innovation tempo suffers.

Benefits for Employees and Management

As shown in the flow chart graphic above, establishing a defined innovaiton governance model benefits both employees and management.

Employees: Seeing the way the process of innovation is mapped out is a HUGE benefit for employees. Think about how innovation inside a company happens now. It's often ad hoc, and not entirely clear to employees where the buck stops, or how they can make a difference.

With a defined process - which includes flexibility for idea variance - people have a greater confidence an idea gets a fair heating. And they also know to whom they can talk if they just know the idea has merit. Having a highly motivated employee lobby for an idea is valuable. Even if the original idea must change, you want people to have a stake in it, and passion.

Management: As mentioned above, companies need to establish their innovation tempo. It's no good to say you want innovation (and its amazing effects on the company stock price), without putting in place the culture, process and technology to make it happen.The innovation governance model shouldn't be etched in stone. It needs to be adapted as companies learn what works and what doesn't in the process.

The other benefit of establishing the governance model is that you learn where your innovation bottlenecks are. As ideas flow through the governance model, see where they get hung up. Why do they get hung up? This learning process by itself is highly valuable.

Avoid innovation chaos. Set up your flexible, adaptable governance model.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Sunday, March 28, 2010

Three Models For Applying Customer Feedback to Innovation

by Hutch Carpenter

Listening to Customer Feedback for InnovationCustomers have always been core to companies' existence. An obvious statement for sure. Customers are the source of cash flow, and have historically been thought of in marketing and transactional contexts.

But in recent years, we've seen the rise of a new way to consider customers. As vital influencers of company activities and strategies. Two popular ways this is taking form are the social CRM movement, and the emergence of open innovation.

If you follow discussions in these developing strategies, you see that there are differing views as to the value of customer feedback. Understanding the different use cases of customer feedback helps organizations to set objectives and expectations appropriately, and to create effective frameworks for engaging customers.

Let's look at three models for applying customer feedback to innovation.

Customer Feedback and Innovation Objectives

The graph below highlights the three models for applying customer feedback to innovation:

Three Models for Applying Customer Feedback to Innovation
The three objectives on the graph are:
  1. Features - product or service requests
  2. Product's "job" - understand the deeper purpose your product fulfills
  3. Proposal - putting a new concept in front of customer's to understand its key value drivers

The X-axis measures the difficulty of getting feedback relevant to a particular objective. The Y-axis measures the impact on company results for the different objectives.

Some notes on the three models follow. For context, I'm including some ideas proposed by Starbucks customers on the My Starbucks Idea site.


Customers - hundreds, thousands, millions of them - are constantly using your products and services. This makes them well-positioned to suggest future product features and service enhancements. As a customer, you become intimately familiar with a product's utility, and what else you want to see.

You can see this on the My Starbucks Idea site. Some examples of customer product and service ideas:
  • Use dark chocolate in espresso drinks

  • More milk substitute options

  • Healthy food items

  • Mobile QR codes with payment info and drink order (scan-n-pay)

  • Separate lines for drip coffee buyers (during morning rush hour)

Often, I see this type of innovation pooh-poohed, as if it is not worth the effort. I fundamentally disagree with that position. This is the important, block-and-tackle work of serving a large market.

As the graph shows, these individual innovations won't dramatically change a company's fortunes. But in aggregate, they become a vital part of the product strategy for companies. Soliciting useful ideas for features is relatively easy.

It is important to remember that no company will blindly follow whatever ideas are suggested. Innovation here is customer-centered, but not majority centered.

Product's "Job"

The notion that customers hire your product to do a "job" is one I learned from Clayton Christensen. He stresses thinking of what customers need to accomplish, as opposed to thinking of product features or customer demographic segments. This frees your mind to address products differently than as a collection of features.

The challenge is to go deeper on what the customers are requesting. This is where customer feedback is not the final answer. Rather, it's an important clue as to what "job" your customers are hiring for. Take a look at these five ideas from the Starbucks ideas site:
  • I need a 24 hour Starbucks

  • Have late night locations near hospitals

  • Later Weekend Hours

  • More comfortable seating and extended hours

  • New/additional 24hr locations

  • Open late

Now as features go, the ideas above are pretty basic. Keep Starbucks open later. But rather than look at them that way, are they providing clues about the "job" customers hire Starbucks to do?

It's obvious customers are hiring Starbucks for more than a cup of coffee. Starbucks has consciously built out a more lifestyle-based experience. These requests for nighttime hours are indicators that Starbucks has an opportunity to address a new "job". Here's my interpretation of the "job" (yours may be different):

People want the solo intellectual pursuits of reading a book, creative writing, researching or getting projects done on a computer. They could do this at home with their own coffee brew or tea. But there's something social about being around others, even if you're not engaging with them. You're connected to the world, as you view it through the periphery of your mind's focus.

People want to pursue their individual interests, but do it in a way that let's them feel connected to larger society, be around kindred types and keep tabs on what is happening.

If you accept that as the "job" that customers hire Starbucks to do at nighttime, then the next activity in customer-centric innovation is to come up with other features of the experience that address the "job".

This is where Starbucks can suggest new features to customers, based on a better understanding of the "job". The new features can be put out to the customer community for their feedback.


Roberto Verganti describes a "proposal" in his book, "Design-Driven Innovation". A proposal is a product that is not a linear change in your offering, but represents a radical change in meaning. Many purchases - such as a Starbucks coffee - have meaning beyond the coffee. In fact, I'd argue Starbucks has successfully performed a radical change in meaning with its coffee varieties, 'baristas' and lifestyle experience. Much different than say, a Dunkin Donuts or McDonalds coffee.

Verganti also takes a fairly dogmatic position against customer-centric innovation. Rather, he argues for vision-centered innovation. The inspiration and sources for vision comes via learning from networks at the edge of societal change, within your industry and outside it. But it's not without a role for customers after all. As he wrote recently on the Harvard Business Review:

"They need to propose new unsolicited products and services that are both attractive, sustainable, and profitable. It is only within the framework of a vision-centered process that users can provide precious insights."

In this model, customers cannot tell you the new, unimagined things they want. Would anyone have suggested a need for Adobe Acrobat, Turbotax, Facebook or Twitter? But once a company has a new proposal for customers, they can become part of the development process. As Russell Ackoff and Herbert Addison wrote in the Little Book of f-Laws (pdf):

There is no point in asking consumers - who do not know what they want - to say what they want. Many new product and service introductions have been disastrous despite the extensive surveys conducted to show that there is consumer interest in, and intention to buy, such a product or service. These surveys have incorrectly assumed that most consumers know what they want.

Consumers can discover what they want in products and services by designing them. It is in design that people find what they want. Furthermore, consumer involvement in product/service design almost always gets creative results.

Engaging customers to get their ideas for something radically different holds great value here. This is not an exercise in determining market interest - although that might be a side outcome. Rather, it's a process of getting ideas to flesh out this proposal. Let customers help determine the radical innovation of meaning for a new concept.

Progress on the Open Innovation and Social CRM Fronts

The graph above is really more a spectrum, not a series of discrete models. For example, where feature requests leave off and become input about a product's "job" isn't a step function. More part of a continuum. But it's helpful for discussion purposes to describe three models, because there are differences at different points of the spectrum.

As both open innovation and social CRM progress, think about the implications of these approaches on integrating customer feedback into innovation.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Saturday, March 27, 2010

Is Crowdsourcing Disruptive?

by Stephen Shapiro

Is Crowdsourcing Disruptive?There was an excellent post by Hutch Carpenter on this website. In the article, he asked the question - "Is Crowdsourcing Disrupting the Design Industry?" He makes an excellent case for the value (and pitfalls) of crowdsourcing design work. As loyal readers know, I have used design crowdsourcing on several occasions.

In response to the article, I wrote:

I use crowdsourcing for some of my designs. And I have to admit, I do sometimes feel a little bad. It's clear some people put a fair amount of thought into their designs. Sadly, there is typically only one winner.

Having said that, as a consultant, no one feels bad for me when I spend days or weeks developing a proposal that does not get awarded to me. We recognize that it is the cost of doing business.

Let's face it... for some design work, it might be just as fast to develop a rough concept as it would be to develop a compelling proposal. Crowdsourcing can reduce the time and effort involved in selling design services.

And crowdsourcing, when done correctly, can give you (the 'Seeker') benefits that you would not get through conventional means.

Right now I am running a crowdsourcing competition for a design for my Personality Poker cards. The competition has been running for two days, and I received some amazing designs. Because I did a blind competition, everyone has to develop their own idea, rather than simply build on the idea of someone else. This is enhancing the level of creativity significantly.

The winner will get follow on work from me in fleshing out the concept and in future design work. [NOTE: The competition is over and I received 32 designs of which a half dozen of them were fantastic]

I used to use eLance (an eRFP site) for design work. But the results were not always great. Plus each designer has to submit a proposal and decide upon a fee. With 99designs, the designer knows the 'prize' and can decide if they want to invest any effort at all.

It's not spec work that is changing the rules. It is access to the masses. Personally, I would prefer to pay for a solution than a proposal.

I do think, if done well, design crowdsourcing can be beneficial to all involved.

Crowdsourcing has the potential to give designers a reach they have not previously had. Although their cost per design might go up, their cost of acquisition might actually go down. Proposals are a cost of doing business - and you don't win every proposal. Spending time/money on finding customers who want the proposal in the first-place is another cost - and you don't acquire every customer you target. Mailing marketing materials to potential customers is another real cost. The list goes on. The real cost/time associated with marketing/selling design services is not insignificant.

Crowdsourcing allows you to convert your marketing/selling time into design time. Your only cost is your time to develop the submitted designs. This feels like a much better use of design resources.

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Stephen ShapiroStephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.

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Sunday, March 21, 2010

The Two-Year Lag from Web 2.0 to Enterprise 2.0

by Hutch Carpenter

The Enterprise 2.0 sector draws heavy inspiration from innovations in the Web 2.0 world. Indeed, the name itself, Enterprise '2.0' reflects this influence. From a product management perspective, Web 2.0, and its derivations social networking and social media are great proving grounds for features before coding them into your application.

A fruitful area to review is how long it takes for a feature to go from some level of decent adoption in the consumer realm to becoming part of the mainstream Enterprise 2.0 vendor landscape. The list of features that have made the jump - forums, wikis, blogs, tagging, social networking, activity streams, status updates - is impressive. Let's look at three features that made the leap, with an eye toward how long it took.

Enterprise 2.0 versus Web 2.0
Here's the back-up for those dates.

Wikis: Wikis got their start back in 1995. From there they grew, and the application became popular with computer programmers. But it hadn't caught hold outside that culture. Wikipedia was launched in January 2001, and grew rapidly over its first two years. It wasn't yet mainstream, but it clearly had caught a wave among early adopters. As recounted on the history of wikis page in Wikipedia, 2004-2006 saw an explosion of interest in wikis from companies.

Social networking: Defined as enabling social profiles, and connecting with others. Facebook started in 2004, and grew very popular among colleges. In 2006, it opened up its membership beyond college students, and turned down a $1 billion offer from Yahoo! Clearly, the company was on fire (even then).

In April 2008, Jive released Clearspace 2.0, which was touted as Facebook for the enterprise. Socialtext 3.0 was released in September 2008, and it included Socialtext People, its social networking feature. And I can tell you that at BEA Systems, there was a second quarter 2008 release of a Facebook for the enterprise in the Aqualogic product line.

Microblogging: Twitter. The source of it all. Twitter actually was conceived as an idea back in 2000, and company was started from a 2006 brainstorming session at Odeo. But it really hit big with the early adopter set at 2007's South by Southwest (SXSW).

Microblogging broke into the Enterprise 2.0 world when Yammer won best-of-show at the September 2008 TechCrunch 50. But that doesn't count as mainstreaming into Enterprise 2.0. Yammer proceeded to grow strongly the next few months. And Socialtext introduced Signals in March 2009.

So there's some documentation backing my 2-year cycle for Web 2.0 innovations to move from hitting the early adopter set to the Enterprise 2.0 sector. Note that this doesn't apply to every Web 2.0 innovation. No one ever talked about "MySpace for the Enterprise" and there's really not a Flickr in the Enterprise 2.0 umbrella.

Which raises a question about today's hottest Web 2.0 trend...

Foursquare for the Enterprise?

Foursquare, and its up-n-coming competitor Gowalla, are all the rage these days. These location-based social networks are good for seeing what friends are doing. Foursquare also integrates features that reward participation (points), add a sense of competition (mayors) and provide recognition (badges).

Mark Fidelman recently wrote about Foursquare and Enterprise 2.0. And using our handy two-year lag calculation, somewhere in early 2012 the first mainstream Enterprise 2.0 will integrate Foursquare features. Actually, two of them.

Location check-ins

Employees will check in their locations from all around the globe. Sales meetings, customer on-site deployments, sourcing trips, conferences, etc. Sure, this info might be in the Outlook Calendar. But even if it is, Outlook Calendar entries aren't social objects. These check-ins will allow you to know where colleagues are, including those you don't know well. But wouldn't it be nice to know if some other employee visited someplace you're investigating?

These check-ins can be even more tactical. Folks who are part of a meeting in a conference room all check-in. Voila! Meeting attendance, which everyone can see. For an individual employee, these check-ins become a personal history of what you did over the past week.

Mayorships, Badges, Points

Foursquare makes it fun, and for many people, addicting, to check-in. You get points and *bonuses* when you check into the places you go. If you check in to the same place enough times, you get to be mayor of a venue and tweet it about it. You earn badges for accomplishing different things in the Foursquare system.

These features have had the effect of motivating legions of people to participate. It's fun to see your stats. It's fun to get a little competitive. It's great when you get that notification that you've earned a new badge.

Andrew McAfee wrote a series of posts exploring the question of whether knowledge workers should have Enterprise 2.0 ratings. This chart was from one of his posts:

Well, the Foursquare approach certainly takes us down this path, albeit in a fun way.

So what do you think? Personally, I'm looking forward to more Foursquare in the enterprise.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Sunday, March 14, 2010

Is Crowdsourcing Disrupting the Design Industry?

"This is an issue that I simply cannot wrap my head around. Spec work appears in the design field infinitely more times than any other industry. It absolutely floors me that people think that it is even remotely ethical to build their businesses by tearing down ours."

- Mark Hemmis' comment on AIGA policy statement on spec work

by Hutch Carpenter

Is Crowdsourcing Disrupting the Design Industry?The past couple years have seen an increase in the use of crowdsourcing by companies to procure design assets. It works like this:

  1. Requesting organization posts a request for submissions to a design crowdsourcing site (e.g. 99designs, crowdSPRING, MycroBurst, etc.)
  2. Interested designers review the request, and create their entry
  3. They submit their entry to the site
  4. Requesting organization selects its favorite, pays the winning designer the announced fee

These design requests are often for logos, but for a number of other types of initiatives as well. For example, 99designs' list of requests (to the right) gives some sense of the types of projects.

So far, so good, right? Well, a lot of designers think not. As Mark Hemmis' comment above shows, these open spec work contests have been raising the ire of the designer community.

Is crowdsourcing ripping their industry asunder?

Designers' Beefs with Crowdsourcing

Three aspects of crowdsourcing design raise concern for many in the design industry:

  1. Lack of compensation for designers whose entries are not selected
  2. Diminishes the design profession
  3. Not sustainable in the long term

Compensation: To be competitive, individuals will need to invest some time in designing a submission for a company. With a good number of entries, this equates to a decent number of hours invested. According to Pamela Pfiffner:

"The problem is, spec and crowdsourcing can lower your value and hourly rates so far that minimum wage looks like a fat paycheck."

Her statement takes things to a logical extreme - someone would have to do nothing but spend their time entering contests. But she does a good job framing the issue.

Diminishing the profession: The issue with crowdsourcing is that it says, "this stuff is easy!" A commenter on this post, How NOT to Design a Logo, baldly gives this concern legitimacy:

"Logo design contests are great, its the only way I go. I get my pick of 5-10 designs for less then $20. Designers these days are a dime a dozen, be happy you get the work."

The design industry has characteristics of being craftsman, as well as strategists. At least the higher end firms do. Sentiments like that are grating.

Not sustainable: The concern here is that over the long term, the economics of crowdsourcing will cause existing designers to exit the industry, and potential designers will opt for different careers. According to Jacob Cass:

"Design contest sites are not the future of graphic design... nor do I see a time when it ever will be, however, in the long term I believe spec work is going to be detrimental to the design industry... both devaluing design and designers as a whole."

The argument here is that rather than expand the pool of talent for design, crowdsourcing will ultimately reduce the industry.

So designers themselves are lining up against these types of crowdsourcing design contests. Which begs the question...

Why Are Crowdsourcing Design Contests Growing?

Jason Aiken has this to say:

"Truth is - 99designs is growing by leaps and bounds. We have record numbers of projects being launched and have needed to hire new staff to help us keep up with the growth.

The motivation of organizations seeking design work seem clear enough - tap a large network of creativity, manage expenses within budget. But what are those designers doing there?

It seems that not all designers are of the same mind about these crowdsourcing design contests. Some actually embrace them. Why?

Build your portfolio: Not all designers in the world have 10 years experience and a roster of paying clients. For those starting out in the business, the competitions provide great fuel for creating designs. If you want prospective clients to see what you're capable of, the design competitions seem to offer a chance to create that portfolio.

Benefits include:
  • You need to think not abstractly about design principles, but concretely about how a design project relates to a business
  • Competitions are great for elevating one's focus and creativity
  • You can benchmark yourself against other submissions, including those selected if yours is not

Personal interest: Some projects just pique the interest of a person. Maybe there's a day job with a paying company, and then a chance at night to do things "your way" on a project of interest. The project taps some areas you want to pursue, or maybe allows you to try something out without concern as to whether the client will ultimately want the design.

Extra business: Everyone is hustling in a weak economy. If your design business has some slack in demand, why not apply the available creative resources toward an occasional crowdsourcing project? If you're a professional shop, presumably your odds are better than most.

Access to high-end ad agencies: This was the case when Porter Crispin + Bogusky solicited logo designs for their start-up client Brammo, maker of electric motorcycles. They ran the contest through crowdSPRING. The contest sparked plenty of debate, but also saw 700 entries. One reason was that young up-n-coming designers wanted the chance to impress a firm of the caliber of PC+B, who can send many paying clients their way.

That's the designer participation set of motivations. I guess the best way to think about companies' motivation is this - Do they get results?

Since the number of requests from companies is growing, design crowdsourcing sites are working at some level. If they weren't, word would spread pretty quickly and companies would stop using them. This comment from designer Morgan Stone on Alex Bogusky's blog post about PC+B's use of crowdSPRING is illuminating:

"As a designer... crowdsourcing scares me. I think it has to do with the harsh reality that sometimes it doesn't take experience or a big title to design something truly amazing."

What's the staying power of the crowdsourced design contest approach? And will it disrupt the industry, in the Clayton Christensen sense?

Sustainability and Reach of Crowdsourcing Design Contests

Altimeter Group's Jeremiah Owyang wrote last year, "Without a doubt, Specwork (like crowdspring or 99 designers) is here to stay - economics will drive this forward." For the buyers, yes. But the supply side of the equation - the designers - is that here to stay?

I believe it is. The numbers say it is. Here's what I mean:

Crowdsourcing Design Contests
In a 2009 article, Forbes noted that there are 80,000 free lance designers in the U.S. alone. Add in the talent from around the world, and you can see that there is a large of pool of creativity. Maybe 200,000 designers globally? 99designs claims to have roughly 54,000 designers on its site.

Designers have some motivation to participate in crowdsourcing design contests, as noted for the reasons above. It's not like every designer will submit regularly. But every project reaches some new set of designers, and occasionally gets a repeat one as well.

All it takes is for a business seeking design work is maybe 30, 40, 50 submissions? As a percent of the global number of designers, that's not much.

40 / 200,000 = 0.02%

Here's what designer David Airey said about getting clients from crowdsourcing sites:

"I've had direct clients and also have been one of those in the crowd. Surprisingly, some of my best clients are the ones that followed me from these crowd sourcing sites. That's probably because they've already been through a working process with me, and they like what they've experienced, so there's no mismatch of expectations like a new client."

I do see the sustainability of the business. It's complex, but there are enough people who do see advantages to participating. Even if only for certain periods of their lives or only on occasion. I don't see entering crowdsourcing design contests as a full-time pursuit for someone.

Next question: how much can crowdsourcing chip away at the traditional areas of the design industry? Is there a gap that crowdsourcing addresses? (Erica's post, Bokardo's post):

Many designers in the debate note the importance of establishing a rapport with clients, and understanding their clients more deeply than a set of colors and fonts. A firm such as Nocturnal Graphic Design Studio appears to deliver value through deeper relationships and more strategic approaches with its clients.

But Erica's point above is well-taken. Sometimes, you're not in the market for that level of involvement. Small and mid-sized businesses do not need the full horsepower of high-end design firms. As one designer (snootily) commented on the PC+B blog post about using crowdSPRING:

"99 designs and their nefarious brethren have a client roster whose market recognition for the most part is similar to that of Joe's Morgue & Jerky Outlet."

Of course, this may not be contained to SMBs.

The Disruptive Potential

Have you checked out what Mountain Dew is doing with crowdsourcing (aka "DEWmocracy")? As Wired notes in a January article:

"Mountain Dew is asking consumers to choose three new sodas, from selecting the flavors to naming them, designing the cans and choosing the ad agency to promoting the product."

Not all of this is crowdsourcing design, but it is an edgy experiment in leaving the professional firms behind.

Right now, as Steve Douglas of the Logo Factory notes, the biggest chunk of business is for logos. Which you can see at the start of this post in the 99designs project list.

The U.S. Census Bureau had the graphic design industry generating $2.8 billion in revenue in 2002. It is a large, diverse, complex industry. My expectation is that design contest crowdsourcing will encroach more into large enterprises for tactical projects, as the smaller businesses continue to use them and get good results. Large companies' efforts, such Mountain Dew's DEWmocracy, Unilever's crowdsourcing contest for a TV campaign for its Peperami snack food, and Doritos' crowdsourced Super Bowl ads, add fuel to this.

Two things are needed for the crowdsourcing model to encroach further into the design industry:
  • Leaderboards/reputation
  • Smartsourcing

Leaderboards let prospective buyers know who the best are. We see them on Topcoder for programming contests. It's a way to establish visibility and credibility far beyond the recommendations you maintain on your own site. It will take some changes by the crowdsourcing sites, enabling recognition for designers who do well in contests, even if they are not picked. It also would need to have different bases for identifying top designers.

The other wrinkle is to allow a form of smartsourcing. Once the top designers are identified, they are invited for larger companies' design projects. This is pretty similar to the current state of things, except the basis for access changes somewhat. It's not just business relationships a designer/firm has established with the big ad/marketing/brand agencies. It's based on performance.

With these two elements, I can see how crowdsourcing becomes more important, more disruptive, in the world of business design.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Sunday, March 07, 2010

Distributed Idea Generation Outperforms Team Brainstorming

by Hutch Carpenter

"This has significant managerial implications: if the interactive build-up [of team brainstorming] is not leading to better ideas, an organization might be better off relying on asynchronous idea generation by individuals using, for example, web-based idea management systems."

Distributed Idea Generation Outperforms Team BrainstormingThat quote is from a report by three researchers from the INSEAD and Wharton business schools. They published a study, "Idea Generation and the Quality of the Best Idea", that analyzes a mainstay of corporate life: the brainstorming session.

Is it effective in generating quality ideas?

To find out, the researchers conducted a field experiment in which they compared two models of generating ideas:
  • Team structure: Group works together at the same time together in a room to generate ideas.

  • Hybrid structure: Individuals generate their ideas independently, then meet together in a group.

Their objective was to determine which of those two structures generated more ideas, ideas of higher quality and is better able to discern the quality of ideas. They found in all cases that the hybrid structure outperformed the team structure.

Extreme Value Theory

The success of idea generation in innovation usually depends on the quality of the best opportunity identified. For most innovation challenges, an organization would prefer 99 bad ideas and 1 outstanding idea to 100 merely good ideas. In the world of innovation, the extremes are what matter, not the average or the norm.

The researchers - Karan Girotra, Christian Terwiesch, Karl T. Ulrich - were interested in determining what methods generate the best ideas. They distinguish their approach from previous research which analyzed the quantity or average quality of ideas generated.

They use extreme value theory to understand the factors impacting the quality of ideas. Extreme value theory shows that the maximum value of an idea from a set of ideas is based on:
  1. The sheer volume of ideas generated
  2. Average quality of all ideas generated
  3. The level of variance in the quality of generated ideas

These concepts are put together nicely in this graphic:

Extreme Value Theory
Once you understand this framework for innovation, it becomes a matter of maximizing the values for each component. Watching, of course, for correlative impacts between them.

Field Research Experiment

The three researchers conducted an exhaustive experiment to determine which of the two methods - team structure or hybrid structure - generated the highest quality ideas at the top end of the scale. Here is the summary of their experiment.

Subjects: 44 juniors, seniors and grad students at the University of Pennsylvania

Challenges: They generated 443 ideas around two challenges.
  • You have been retained by a manufacturer of sports and fitness products to identify new product concepts for the student market. The manufacturer is interested in any product that might be sold to students in a sporting goods retailer.
  • You have been retained by a manufacturer of dorm and apartment products to identify new product concepts for the student market. The manufacturer is interested in any product that might be sold to students in a home-products retailer.

Idea generation formats: Subjects were split into four clusters. Half the clusters did the team structure first, half did the hybrid structure first. The clusters then switched structures for the different ideation challenges.

Idea quality: The quality of the ideas was assessed in two ways.
  1. Business value: Panel of 41 Wharton MBA students each assessed the business value of the ideas on a 1 - 10 scale
  2. Purchase intent: Panel of 88 college students (the target market for the ideas) each assessed their own likelihood of buying a given product proposal on a 1-10 scale

Experiment format: Subjects conducted idea generation exercises as follows.
  • Team structure: 30 minutes together in a room to generate ideas together. Then 5 minutes of assessing and selecting the best 5 ideas.
  • Hybrid structure: 10 minutes of generating ideas on their own. Then 20 minutes of discussing these and new ideas. Finally, 5 minutes of assessing and selecting the best 5 ideas.

Results: Hybrid Structure Tops Team Brainstorming

The results of the experiment are eye-opening. The researchers analyzed the two approaches on the three components of extreme value theory. They find hybrid is better on the individual components of the theory, and in the ultimate test: quality of the top ideas produced.

Number of ideas generated. Hybrid structure generates three times more ideas than does the team structure. Researchers attribute this result to three dynamics:
  1. Free riding: it's easy enough to ride the idea coattails of the group
  2. Evaluation apprehension: the fear of negative reaction when proposing an idea in front of a group
  3. Production blocking: participants have to wait while one person is speaking, limiting idea generation throughput

Idea quality: The average quality of the hybrid structure ideas was higher than that of the team structure. Specifically, 0.25 points better in business value, 0.35 points better in purchase intent. To put this in perspective, these differences translate into roughly a 30 point differential in percentile rankings. In other words, the difference between the 1st and 30th idea in a pool of 100 ideas.

Researchers attribute the decrease in idea quality for team structures to the same free riding dynamic that reduces the quantity of ideas.

Idea quality variance: The researchers found no discernible difference in idea quality variance between the hybrid and team structures.

What this means is that from extreme value theory, the quantity and average quality of ideas are the key drivers of generating the highest-ranked ideas.

Best ideas: Here's where the rubber meets the road. Which approach had the highest ranked ideas? Hybrid structure, by a landslide.

The researchers looked at the top 5 ideas, by quality scores, that emerged from the two approaches. The hybrid structure ideas were of much higher quality than those generated from the team structure. This finding held for looking at the top 3, 4 and 6 ideas as well.

To recap:

The hybrid structure produced:
  • More ideas
  • Ideas of better quality on average
  • Highest rated ideas

Ability to Select Best Ideas

Perhaps the one down note from the study is the ability of the group to select the best ideas. Remember that in both the team and hybrid structures, the group did a consensus selection of the top ideas. Participants weren't asked to select the top ideas individually.

The researchers found a small advantage in the hybrid structure group's ability to select the top 5 ideas resulting from their ideation exercises. But it wasn't material. Indeed, they note:

"The hybrid process may generate better ideas, but that due to the noisy selection process, its relative advantage is much diminished, to the point of becoming statistically insignificant for one of our quality metrics."

"Noisy selection process", indeed. Ever been in a brainstorming session where you're supposed to rank the ideas at the end? Imagine the dynamics of resolving differences of opinion, time constraints and the extraordinary influence of certain individuals that drowns out other opinions. This is not an optimal way to determine the ideas that define innovation for your organization.

What This Means for Companies Seeking Innovation

As we described previously in "Crowdsourcing Is the New Collaboration", there are many benefits to taking a new approach to idea generation, peer collaboration and integrating innovation more deeply into an organization's culture. Advanced innovation management platforms are ideal for this approach.

As this study confirms, distributing the idea generation process, as well as the idea selection process, results in higher quality ideas for organizations. This study dovetails well with another study by Professor Ron Burt, that found that employees with access to a wider range of viewpoints and feedback generate higher quality ideas.

Brainstorming does have its benefits in terms of face-to-face interactions. Perhaps the nature of what is brainstormed needs to change. Brainstorming can be valuable for project-oriented tasks and problem-solving. But don't consider it your go-to activity for the best ideas.

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Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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