Reverse Knowledge Management

by Stephen Shapiro

Last night I went to a seminar. On the whiteboard, the seminar leader drew an oft-used framework:

There are things you "know." - For example, I know I can speak English.

There are things you "know you don't know." - I know I can't speak Chinese.

And there are things you "don't know you don't know." - Obviously I don't have any examples of this.

But it got me thinking. There is one dimension that is never mentioned...

There are things you "don't know you know."

Inside of organizations, there is so much untapped knowledge. To combat this, over the past two decades, companies have invested millions of dollars in knowledge management systems. The objective has been to capture the company's knowledge.

The problem is, the knowledge management databases usually become so large and unwieldy that they are unusable. I can attest from experience that these systems often end up becoming digital piles of untapped information. Finding what you want can be like finding a needle in a haystack. Or, more accurately, it is like finding a specific needle in a stack of needles.

What's the solution?

You might call it, "reverse knowledge management."

Instead of posting knowledge which sits passively in a database waiting for someone to find it, you post your question to your "community" so that it can be answered at the time of need. Of course, asking the world for an answer to your question is not new. Yahoo/Google Answers did this a few years back.

But internally, especially when you have already invested in knowledge management systems, the dynamics can be quite different.

If you are using an internal collaboration tool like InnoCentive@Work, you might find that reverse knowledge management is an unintended benefit. When you have a challenge you want solved, the odds are, someone else within your organization has already solved a similar problem. But you probably don't know who knows the solution or where to find the solution.

Sometimes the solution can be sitting in your knowledge management system... and you don't even know it because it is too difficult to find.

Interestingly, "requests for information" posted on internal collaboration tools are sometimes solved not by the individuals with the expertise, by rather by the knowledge management team. When a question is posted, the knowledge management team masterfully scours their databases to find a solution. The advantage of this approach is that those with expertise in navigating the knowledge management systems do what they do best, thus freeing the rest of the organization to focus on what they do best. And it has the added benefit of breathing new life into your old knowledge management initiatives.

So, what is it that you organization doesn't know what it already knows?

P.S. I have to admit that I am a bit surprised. If you Google "reverse knowledge management" (in quotes) you will see that the only place this term is used on the entire internet is by me.


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

Is Open Innovation a Tournament?

by Stephen Shapiro

A magazine asked me to write a book review of "Innovation Tournaments" by Christian Terwiesch and Karl Ulrich. The book arrived in the mail yesterday and I immediately turned to the index to see if InnoCentive was listed. Sure enough, we are mentioned in several places in the book.

This got me thinking: Is InnoCentive a tournament?

The word tournament is derived from the French word for "medieval sport" and is now used to describe a wide variety of competitions.

Most competitions/tournaments are quite entertaining. And by their very nature, there is always a winner. One could argue that tournaments are "spectacles designed to find a champion."

Given this widely held point-of-view, using the word tournament as a descriptor of InnoCentive seems to be inaccurate.

The NCAA basketball championships are a tournament. The "World Series of Poker" is a tournament. American Idol is a tournament. With each of these, there is always a winner. The purpose of the tournament is to find that winner while (usually) providing entertainment value.

InnoCentive is not interested in finding a winner for the sake of naming the champion. The objective is to find workable solutions to real business problems. Their approach is one I call a "contingency-based, value-driven pricing model." Admittedly, that does not sound as sexy as calling it an innovation tournament.

Here's how it works. A company has a problem they want solved. They decide the "value" of finding a workable solution and they offer a "bounty" to anyone who can provide one. The bounty is only paid when they get what they need. This "pay for solution" model outsources the risk associated with complex problem solving.

Here are other examples that illustrate the key difference between the bounty-based approach with the tournament-based approach.

The NetFlix Prize was not a tournament. They only paid the team that improved the recommendation engine by 10%. This makes is a bounty-based approach. You only pay the bounty when you get a successful solution.

In contrast, The Cisco iPrize, can be thought of as a tournament. According to their website, they will "select up to 32 semifinalist teams that will work with Cisco experts to build a business plan and presentation... Up to eight finalist teams will present their business ideas to a judging panel to compete for the grand prize: a $250,000 award shared equally by members of the winning team." The LG Electronics competition (read my article on it here) was also a tournament-based approach.

The key difference is the way the challenge is articulated. With the bounty-based approach, the success criteria is clearly defined and you know if someone provided a successful solution: Did you improve the recommendation engine by 10%? Did you find a chemical compound that has specific properties? Did you develop a mathematical model that optimizes solves a specific problem? The "winner" of the bounty is determined by this success criteria. If the criteria is not met, the bounty is not paid.

With the tournament-based approach, the success criteria is not defined. The winner is the "best" of the submissions. Although these types of competitions can yield excellent solutions, I know from inside-information that the results are often less than stellar. One company that uses this type of tournament described the results as a "PR success yet a commercial failure."

Both approaches can provide value to any organization. It's just important to recognize that they are useful in different ways. Tournaments can be great to get a broad set of ideas for an undefined space. Bounties are great for when you are hunting down usable solutions.


Related articles:

• Innovation Tournaments Interview - Christian Terwiesch
  
• Book Review - "Innovation Tournaments"

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

Part 1 - Three Innovation Distinctions

by Stephen Shapiro

Last week I was with a group of extremely successful entrepreneurs in Las Vegas. I was a bit of an outlier as my background is mainly with large, multi-billion dollar businesses. Everyone else in the room came from the start-up world. Also, nearly everyone in the room worked exclusively with speakers and authors. Although I too am a speaker and an author, it was clear that my perspectives were a bit different than everyone else in the room. Or as one entrepreneur said, "Steve, you have distinctions in innovation that we don't."

So they asked me to share my point of view. What I shared were three simple distinctions on innovation.

1. Challenges not Ideas


2. Process not Events


3. Diversity not Homogeneity

In today's blog entry I will focus on the first point. Subsequent blog entries will address the last two points.


CHALLENGES, NOT IDEAS

Signal-to-Noise Ratio

One of the most important, yet under-considered measure in the innovation process is the signal-to-noise ratio. The signal-to-noise ratio is the ratio of a signal power to the noise power corrupting the signal. In layman's terms, it is the ratio between what you want and what you don't want. For example, in audio recordings, it is the ratio between the music and the background noise.

Organizations do not have a shortage of ideas. They have a shortage of good ideas that matter.

In innovation, the signal is comprised of the good ideas. The useful ideas. The ideas that can and will ultimately be implemented in such a way that they create value. The noise is made up of all of the other ideas. Useless suggestions. Solutions to problems that don’t matter. Ideas that will never come to fruition.

To increase innovation's your signal to noise ratio the first thing you want to do is stop asking for ideas.


Drowning in Ideas

Suggestion boxes are cluttered with noise. The amount of time required to sift through the chaff to get to the wheat is huge. And even when you do find a good solution, the amount of effort required to rally to troops to implement the problem is huge.

The innovation team of a large retail bank implemented a major suggestion box program. They received thousands of ideas. Evaluators looked at every idea. In the end, none were implemented. In the aftermath of their efforts, they asked me for my observations. In hindsight, the submitted ideas could have been categorized into 3 groups:

1. Duds: A large percentage of the ideas were clearly not worth pursuing. These ideas were not new, or were unlikely to show a positive ROI. However, even with these, there might have been a nugget of usefulness that was missed. However the energy to nurture these nuggets was probably not worth it.


2. False Negatives: There were, from my perspective, many ideas that were indeed good. But for whatever reason, the evaluators dismissed them. Part of it had to do with biases of the evaluators. Sometimes it was due to a lack of knowledge on the part of the evaluators. And often, it was because the ideas were not fleshed out enough making it difficult for them to be properly judged.


3. Good, But No Home: This was the most disconcerting category. These were ideas that were good ideas that the evaluators liked, but sadly they had no organizational home. As a result, the ideas withered on the vine and were never implemented. They never got the resources or funding necessary to move them to the next level.

The company's innovation program lasted a total of 18 months. It was shut down and deemed a huge failure.

I have seen similar results in other organizations. One large company I know has a competition each year where employees submit new product ideas. The winner gets a large check and the company implements the best idea. I asked the person responsible for this program if it was viewed as a success. The answer was, "It was a PR success but a commercial failure." The competition generated buzz in the media, but none of the products have yet to generate a positive ROI. Contrast this with their more focused efforts on creating or improving specific product lines. In nearly every case, these were commercial successes. Their idea-based programs did not generate good bottom-line results, while their challenge-based initiatives did.

The other issue with ideas is that there is no level of accountability. Because people tend to develop ideas on their own time, there are no time tracking methods that can keep tabs on how much energy is invested in idea generation. If you encourage ideas, I suspect that you are spending a lot more money on those initiatives than you could ever imagine. You might be able to measure the ROI of a winning idea. But I doubt you can determine the ROI of your overall ideas-based program. There is no way to know how much time was spent on the thousands of duds that never see the light of day.


The Power of Challenges

Contrast this with challenges. With challenges you assign owners, resources, evaluators, evaluation criteria, and funding up front. We know that the solution to a challenge will be relevant to the needs of the organization, so if a solution is found we know it will be valuable. Also, because of the nature of challenges, we have better tools to evaluate the amount of time spent on finding solutions. We can truly measure the ROI of each challenge and the overall challenge-based program.

Some of you may see a loophole in my logic. You might think, "Ok Steve, why not just post a challenge that asks for new ideas. This would seem to be a challenge-based approach. But of course all you are getting back are ideas." This is true. And this is why it is important to discuss the construction of challenges.


The Goldilocks Principle

Good challenges must adhere to the Goldilocks Principle. That is they can't be too big (broad, novel, abstract - e.g., asking for new ideas) or too small (overly specific). They must be "just right." As Dwayne Spradlin said in his InnoCentive blog entry on the topic:

For example, the big problem is not the need for a new drug for a neglected disease, it is the elimination and/or minimization of the human suffering caused by the disease. The right questions might include: How do we limit transmission? How can we cost effectively produce treatments that comprehend market based economics to ensure a sustainable model? How do we distribute treatments in the developing world? Even these questions require further decomposition until we get to well formulated challenges (e.g., Can we get 5X more vaccine into the hands of those that need it in the context of real world economic, cultural, and political constraints in Sub-Saharan Africa?).


The key is good challenges. The right challenges.

A lot more could be said on this topic. But I will close with a quote from Albert Einstein, who in 1938 said:


"The mere formulation of a problem is far more often essential than its solution, which may be merely a matter of mathematical or experimental skill. To raise new questions, new possibilities, to regard old problems from a new angle requires creative imagination and marks real advances in science."


I couldn't have said it better myself.

P.S. The next blog entry in this series will be on process versus events.

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

Is Collaboration or Competition Better for Innovation?

by Stephen Shapiro

At the Open Innovation Summit last week, I had a lively conversation with a few individuals. The debate was about which model of open innovation is most effective - competitive or collaborative.

Kevin Boudreau and Karim Lakhani wrote an excellent article earlier this year in the MIT Sloane Management Review on this very topic. They looked at the merits of each form of open innovation. I encourage you to read the article as it addresses factors like intrinsic and extrinsic forms of motivation.

InnoCentive uses both forms of open innovation in different environments.

Their 'marketplace' model is competitive. That is, when posting challenges to their network of 185,000 experts, the solvers cannot see any of the other solutions. One reason for using this model is that the intellectual property needs to be protected.

This is in contrast to InnoCentive's @Work product which is used to broadcast challenges internally to employees. With this product, solutions are provided in a collaborative fashion where solvers can see all responses. Given that only employees are participating, intellectual property issues are not as critical.

The competition/collaboration debate reminds me of the Miller Lite commercials - "Tastes Great...Less Filling."

It also reminds me of the hand dryer versus paper towel debate (in terms of efficacy - not impact on the environment, which is a different debate).

After much experimentation, I have the long awaited answer: Use paper towels first followed by the hand dryer. The paper towel gets off most of the water so that the hand dryer can quickly evaporate the remaining liquid. The best solution for drying your hands is not one approach, but a combination of the two... in the right order.

I believe that the answer is the same for the competition versus the collaboration debate. It is not an either/or proposition.

From my experience, you start with competition followed by collaboration. Here's why:

If you start with collaboration, you end up with "group think" very quickly. That is, as soon as the first idea is thrown out, it tends to influence the thinking of the other contributors. This narrows the set of ideas that are typically generated. Therefore, if you start with a competition, you get the broadest set of ideas possible.

Then, after selecting the winners of the competition, you take the best ideas and allow a collaborative community to flesh them out. This gives you get a much richer solution in the end.

This approach models the most effective way of running brainstorming sessions. It works best when you first have each person independently write down their own creative ideas. Only after everyone generates their own list does the group come together. Then they share ideas, select the best ones, and expand upon those best ideas collaboratively. Individual thought followed by group throught. Competition followed by collaboration.

IMHO, the same is holds true for open innovation.

Of course there are a variety of factors that may require the use of one approach over the other (e.g., intellectual property protection), but there are even ways to address that. But more on that in another blog post.

P.S. I'm serious about using paper towels first followed by the hand dryer...
P.P.S. If you are not aware, I am InnoCentive's Chief Innovation Evangelist.

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

Video Interview with InnoCentive Founder and CEO

I had the opportunity to interview InnoCentive founder Dr. Alpheus Bingham, PdD and InnoCentive CEO Dwayne Spradlin at the incentive2innovate conference this week at the United Nations in New York City. You can see the video interview here:





Here are the questions I asked them:

1. In your view - What are the greatest strengths of the open innovation movement?


2. Do you feel that open innovation will face its own s-curve of declining interest and decreasing submission quality over time?


3. Where do you think the greatest opportunities lie for open innovation in the future?

Open innovation is a fascinating topic, and it will be interesting to see whether or not companies are able to adapt to expanding innovation beyond their own payroll. Doing so will require companies to master a new competency, and potentially organizations that do not adapt to the new potential of partnering to innovate will be disrupted by new entrants who do.


What do you think?


Braden Kelley (@innovate on Twitter)

Interview - IdeaConnection CEO - Scott Wurtele

I had the opportunity to meet interview Scott Wurtele, CEO of IdeaConnection when he was down from Canada this week. I also had the opportunity to meet his lovely wife Wendy Wurtele, VP of Design for the company.

They started IdeaConnection part-time a couple of years ago and began focusing on it full-time about eight months ago when they sold their last online business LawyersandSettlements.com. Scott and Wendy also started and sold WorldBid.com - which counted Alibaba.com as a competitor.

I sat down with Scott to discuss his latest venture, IdeaConnection, a company looking "To give businesses access to the world's most creative and innovative minds, who work collaboratively to solve problems and develop innovations."

IdeaConnection offers individuals the opportunity to sign up to solve problems for pay, and corporations the opportunity to submit challenges to hand-picked teams of diverse experts. At the same time IdeaConnection is also using crowdsourcing to build up a directory of innovation-related resources and information, with listings for conferences, blogs, consultants, etc.


What inspired you to start IdeaConnection?

IdeaConnection is one of the many ideas I've had over the years, and it just started to make more and more sense as I continued to stress test it with myself and others.

What does IdeaConnection offer that nobody else does?

We're providing a lot of free services including buying and selling of ideas. Nobody is doing what we are doing.

Here is how it works:

Companies give us problems or challenges, they set the price, IdeaConnection chooses the group of problem solvers and invites them to the challenge. At this point, they've already signed one level of NDA, and they are showed the first level of the problem and are shown what the solution seeker will accept. Problem solvers only get paid if the solution seeker accepts their answer to the challenge.

People tell us why they are interested and are evaluated against previous performance and we select a very diverse group of 4-8 people. We also have a pool of 75 world-class facilitators to choose from for facilitating each group. They then select another level of NDA and rights assignment and the challenge begins.

Group members can go into a patented ThinkSpaceTM (you can see part of this online), and can either work alone or as a group. Each time they come back they can see what is new. Features include: audio, video, thinking tools, and a whiteboard (launching soon). The final part of the solution is a wiki where the group presents their solution. During the challenge they can ask questions of IdeaConnection or the solution seeker.

We are currently exploring having teams with a mix of solution seeker employees and our problem solvers. Or potentially the solution seeker could use ThinkSpaceTM for internal use.

How is IdeaConnection different from Innocentive?

Innocentive will issue a challenge and get lots of people working on it. We know a bit about Innocentive because we have two advisers that came from there. Innocentive goes for the Fortune 500, and Idea Connection is going for the other 99.9% of businesses.

Our competition is focused on personal relationship selling, and we are focused on internet selling. We are attracting our problem solvers at probably 25% of the cost.

Innocentive also makes the challenge public, we don't. This gives our clients a greater degree of confidentiality - companies can even come in blind if they want to hide who they are.

One final way we are different from Innocentive is that we only have one group working on the challenge. Innocentive could have 100 groups working on a challenge, but only one gets paid. We think we can attract a higher quality of problem solver.

How do you sell against true crowdsourcing like MyStarbucksIdea?

Sites like MyStarbucksIdea are great because they are educating people on the concept, which makes it easier for us to recruit problem solvers and solution seekers.

Why should a CIO (Chief Innovation Officer) choose IdeaConnection over Innocentive, one of your other competitors, or running their own crowdsourcing effort?

My advice would be for Chief Innovation Officers to try them all and see which ones work best for their organization. The proof will be in the results. We are less expensive and faster. Innocentive asks for $25k up-front and takes a long time to run a challenge. We have experience doing things fast.

Along those lines, we also just started offering something called Rapid Response on the site to serve clients that have urgent needs. Clients e-mail in their challenge and we will send out to 10-20 people who have registered to be “on call” and they all get paid if they answer within the tight deadline

Is crowdsourcing a fad?

I think it is not, and I think the growth will happen very fast.

What is the future of crowdsourcing?

Crowdsourcing can be used in politics, market research, and of course problem solving. This type of activity has always been happening, but now it is internet-enabled and the internet will facilitate its growth. It is now going to happen on a bigger scale, especially as smart phone and ad-sponsored phone usage spreads.

For example - Imagine receiving a message on your phone "Do you like the new Starbucks Via design? Yes/No"

Do you see evidence of companies cutting their innovation budgets?

No. Companies are increasing their focus on innovation. Their budget may be down, but probably in a smaller percentage than the rest of the budget.

What advice do you have for companies out there trying to innovate?

Get rid of any arrogance. Be infinitely curious.

We need a new word for "failure" - there is no such thing - it is more data - more education. The real failure would be the failure to learn.

What is your favorite innovation book? Why?

Any book that stirs my curiosity is my favorite. There is no book that I re-read. I read a lot of different things (probably two books a week).

People throw around the word "innovation" a lot. When it comes to innovation, what is the biggest misconception?

It is not necessarily pleasant. It can hurt to innovate. It is a change. It takes work. It means structural change. It means entertaining ideas you've rejected.
We want to see companies start to understand that they can throw out a section of a problem to us for solving. We recently had a consulting company of 25 people sign up with us. We are exploring relationships with larger consultancies too. Consultants might have 90% of the answers. Why shouldn't they throw us the other 10% of the problem to solve?

Conclusion

Thanks again to Scott for making time for this interview.

If you are a corporate innovator or Chief Innovation Officer and would like to be interviewed in print for Blogging Innovation or on video for Innovation Interviews (launching in April), please contact us.


What do you think of what Scott Wurtele of IdeaConnection had to say?

@innovate