Sourcing Innovation

This week I participated in a small group discussion with business and IT leaders who are focused on innovation. It was an interesting discussion that touched on these topics:

  • The scope of innovation. Yes, innovation is on everyone’s minds, in business publications and is the hot topic du jour. However, what exactly is innovation? What is the scope of innovation? Is it at the product or customer experience level, the business model level, the business process level, or at the departmental level? When talking about innovation, it’s critical to identify what level within the organization or the addressable market you are focused on and the scope of your desired innovation. That helps determine the sponsors and participants, the skill sets required, the change management approach, the timeline, and many other critical components of the engagement.
  • Sustainability. One of the biggest problems in innovation is sustainability — maintaining momentum over time. Often a senior executive comes in, shakes things up, gets people to buy into innovation, and then moves on in a couple of years. If leaders up and down the organization haven’t fully embraced the innovation efforts as their own, the effort gets orphaned and dies when the executive champion and thought leader leaves.
  • The industry sector. Most participants in the discussion felt that innovation almost always happens at the industry level — that industry expertise trumps technology expertise when coming up with strategic, game-changing ideas. They also thought that cross-training innovation leaders in IT if they are industry experts (and vice versa) is crucial. This means that CIOs may face a high hurdle when trying to get the business technology organization plugged into innovation initiatives.
  • Professional services. It’s possible to use outside organizations to help identify and execute innovation, but the results are mixed. The feeling among this group was that outside service organizations with the best track record in innovation are companies like McKinsey, Accenture, and Capgemini, although one believes that McKinsey is losing its edge. Business process outsourcing (BPO) companies are now striving to move into innovation, but their heritage of cutting costs and focusing on efficiency makes it a high hurdle — although one participant gave Cognizant high marks for innovation. Overall, when bringing in an external organization, make sure it has a broad and deep number of innovation consultants so that you actually get the people on the project that you are counting on. This is one of the problems the BPO firms have.
  • Business development partners. One way to bring in innovation from the outside is to look to the external consultant’s business development partners that manage the overall relationship with your firm. In the top firms, these business development partners often bring innovative ideas to you, free of charge, as a way to expand their relationship with your firm. Use this to your advantage.

I’ve heard some of these points before, particularly how important it is to scope innovation at the strategic level and sustain innovation so that the departure of the key champion doesn’t bring everything to a halt. These days — in the age of the customer — innovation has to rise above efficiency and cost savings. Those aren’t enough on their own. Efficiency isn’t seen by most execs as innovation, and doesn’t hit the bull’s-eye for discovering new business models and driving unparalleled customer experiences.

But what do you think? Which points do you agree or disagree with, and why? We’d like to hear them.

Comments

U. of Washingston ComSci Group Sourcing Innovation

This "Sourcing Innovation" post is timely. I suggest readers also consider defining their "Scope of innovation" beyond the boundaries of their functional units and/or organizations. As an example a recent post by Sandy Carter, VP, Social Business, IBM at http://socialbusinesssandy.com/2012/02/29/the-oscars-baseball-protein-fo... describes the University of Washington's innovative use of crowd-sourcing to accelerate answers to a very complex bio-medical problem. I've extracted the relevant part of Sandy's blog post below.

The University of Washington Department of Computer Sciences was looking for new way to solve a problem that has challenged life sciences researchers for many years: examining and figuring out the right shape and the right function for proteins to try to cure diseases. The problem itself had millions of possibilities and many nuances that created a problem that was simply too difficult to solve with computer algorithms alone. It really needed human ingenuity. Some problems have point solutions that are fairly obvious to people but not so for software.

To tackle the problem however, they needed many people to first understand how to solve the problem and try different permutations, without requiring an extensive scientific background to do so. What the University of Washington team created was a serious social game with simple rules on how to fold different shapes of proteins. Using a mass group of 57,000 players from a variety of educational backgrounds and locations on this game, they were able to solve in 3 weeks a problem that vexed scientists for years. It simply took the social collective intelligence and effort of many individuals to deliver effective solutions in at least one fiftieth the amount of time. The Solutions that resulted from the analysis of the game play provided important insights into development of new retroviral drugs.

Seek revolutionary approach to innovation, not incremental

Interesting to read observations about innovation from what are presumably large organizations challenged with executing innovation, and as you say the larger ongoing challenge of maintaining high levels of innovation. One clue may be the prescription in seeking other large global organizations to assist with innovation. That immediately reveals a red flag of misunderstanding about the type of people who are drawn to large organizations and why, among many other issues--careerism, security from old innovations, comfort zones in working with similar cultures--when precisely the opposite is called for, etc.

Way back when I published our white paper 'unleash the innovation within' - 2008 if memory serves-tens of thousands of downloads representing every major organization in the world--in some cases hundreds each in global brands, the Economist Intelligence unit had just issued a strong report on innovation based on a survey in large companies. I took part in the survey but most of the participants were leading brands with interviews of the senior most individual in quite a few companies actually responsible for innovation--their response was no surprise to smaller, often more creative companies--they reported just the opposite of the marketing departments who claim to be the most innovative companies. Those actually responsible for the activity reported enormous challenges and conflicts, and they included some of the most famous brands for innovation. While many of us in the trenches have been acutely aware of the challenges for decades, this was a rare admission of truth in quasi public.

In contrast to conventional wisdom in our increasingly herding environment with networked computing and social networks, highly creative people who have disciplined themselves over long periods of time to have proven to overcome difficult challenges are actually quite rare, and they don't tend to do well in large organizations for a variety of reasons, not least of which is bureaucracy, resistance to internal cannibalization that stifles creative thinking, and generally many more conflicts along a similar trajectory to size and lines of businesses and products.

Industry experience trumps technology experience for a reason -- mature companies and industries are generally not in the innovation business frankly--the rare exception is a Steve Jobs and Apple in a large company -- the norm is a culture of people drawn to mature companies for security, meaning protectionism, not innovation--those that try are often very frustrated. When I was a VC the majority of enormous numbers of BPs were coming from those frustrated innovators. Then take a look at the impact of fame in our culture, including the big names in innovation, and compare with actual track records--here again ignorance usually rules--my experience actually demonstrates that the really smart folks avoid fame, but they do want to be compensated fairly and have their work protected--not exploited by the masses lining up to take credit. That exploitation has a honeymoon period but also has a term limit that quite often leads to brain and creativity drain (shall we call it innovation drain?).

What's also interesting that rarely makes it to a publication is how many companies are going external to small, exceptional consultants protected by NDA as execs obviously don't want either external or internal communications to report just how challenged they are relative to executing innovations. If only the world knew.

Open innovation, crowd sourcing, etc. is really more of a low cost direct consumer market research activity, which of course is part of the process especially with consumer products, but nowhere near as important to the best as it is with the most. Steve Jobs and others have offered much wisdom on this issue -- by the time customers know what they want the opportunity has passed, but fear, security, apathy, and culture make for a challenging toxic stew relative to innovation.

The truth is that major brands have almost always followed rather than led with innovation, primarily due to cultural resistance to change until forced to change by market forces, which of course is often too late--see recent articles on the average life of the corporation for good representation of this in action--40 years I believe--the corporate graveyard business is booming.

We've been working on a rethink of the information workplace relative to these challenges for quite some, relative to macro economic change, technology architecture, and alignment of interests between the knowledge worker and organizations. I am quite confident that our patented system represents more of a revolutionary leap than an incremental step. Trust me it was much, much, much more difficult than the efforts I have observed in crowd sourcing, open innovation and lean venturing, or indeed most corp innovation. Most of the easy problems were solved long ago -- the really tough ones require an appropriate effort -- very few have or are afforded the patience.

Mark Montgomery
Founder & CEO
http://www.kyield.com