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What Enterprise Social Networks Do Well: Produce Higher Quality Ideas

Idea generation at some point involves someone moving knowledge from this group to that, or combining bits of knowledge across groups. Where brokerage is social capital, there should be evidence of brokerage associated with good ideas, and vice versa.

Professor Ronald Burt, University of Chicago, Structural Holes and Good Ideas

Allow me to note a top-down benefit for companies that excel at innovation. Boston Consulting Group (pdf) calculated that leading innovators generate 430 basis points more in shareholder return than do average companies. Put another webinar-051309-registrationway, if an average company were to return 7.7% on your investment, leading innovators would return 12.0%. As an investor, that’s pretty attractive.

And  as an employee, being part of an innovation culture must be immensely satisfying.

On Wednesday, May 13, Oliver Young of Forrester Research and I will host a one-hour webinar, Tapping Communities to Accelerate Corporate Innovation. The session will cover strategies, practices and findings with regard to what leading companies are doing today to accelerate innovation. You can register by clicking the graphic to the right.

A topic we will address is the role and value of communities in increasing the number of good ideas generated for companies.

Which brings me back to Professor Burt, whom I quoted above. In his article, he discusses in-depth research he conducted on the Supply Chain Group for a major American electronics company. The results are eye-opening, and are compelling evidence for creating a common way for employees across a company to share ideas, knowledge and perspectives with one another.

Before discussing his findings, let’s go right to one of Professor Burt’s conclusions:

Thus, value accumulates as an idea moves through the social structure, each transmission from one group to another having the potential to add value. In this light, there is an incentive to define work situations such that people are forced to engage diverse ideas.

Brokerage Across Structural Holes

Professor Burt speaks in terms of “brokerage” and “structural holes”. The sociogram below depicts a typical social network structure:

burt-sociogram

There are essentially three nodes in this social network: A, B, C (+D). The structural holes exist between A and B, B and C & A and C. Notice the two actors. James is relatively “network constrained”. His social world really revolves around a tight core that all know one another. Robert is not constrained. He has ties into different groups, allowing him to tap non-redundant sources of information. Reaching across these social nodes is known as brokerage.

Professor Burt describes for levels of brokerage for which a person could create (increasing) value:

  1. Make each side aware of the other’s interests and difficulties
  2. Transfer best practices
  3. Draw analogies between groups ostensibly irrelevant to one another
  4. Synthesize beliefs and behaviors that combine elements of both groups

From simple to complex brokerage, there is value in making connections. Specifically, value in terms of the quality of ideas produced.

The High Correlation Between Idea Quality and Brokerage

The study of the supply chain group involved 673 managers. Professor Burt was given detailed access to the employees’ backgrounds, job titles, salaries, and performance reviews. He constructed the sociogram for the workers through online surveys, giving him information on which workers were network constrained, and which ones spanned structural holes.  Basically, he had a wealth of variables to test.

And what did he test? The quality of the ideas submitted by these 673 workers. He asked each of them to answer this question:

From your perspective, what is the one thing that you would change to improve [the company’s] supply chain management?

Let each employee provide their idea for how things could be approved. These ideas were then evaluated by two senior-level executives who had gained prominence for running the respective supply chains of their business units.

These rated ideas were then statistically analyzed against all those variables. What Professor Burt found was that there were general patterns to idea quality:

  • More senior managers provided better ideas
  • More educated managers provided better ideas
  • Managers in urban centers had better ideas

Yet within these variables that correlated to idea value, there was an overall trend that held true across the board. Those managers who were network constrained consistently scored lower in the idea evaluations. So even though the more educated employees had better ideas on average, within their ranks, there was clear difference between those who span the structural holes, and those who do not.

Bottom line: Connecting with those outside one’s closed network results in higher average quality of ideas.

Wrapping Up

I wrote earlier about the revenue advantage accruing to employees with more diverse internal social connections. That study looked at the revenue per employee generated, and was fundamentally a productivity measurement. This field research by Professor Burt introduces a new benefit for creating an enterprise-wide view of ideas proposed by employees. The ability for others to know about an idea, and to see the value and the application of that idea in their own realm.

By enabling communities to post, critique, collaborate on and refine ideas, companies are certain to reap the benefits of accelerated innovation. As Professor Burt puts it:

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. An idea mundane in one group can be valuable insight in another.

There’s a lot more where that came from. Oliver Young and I look forward to seeing you at the webinar (registration link) on May 13 at 1:00 pm Eastern.

I’m @bhc3 on Twitter.

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Think Companies Can Do More with Ideas? Me Too – I’m Joining Spigit

spigitlogo

I start a new job today, and I’m quite excited about it. I’ve joined Spigit as  the Director of Marketing and Online Communications.

Now it’s possible you might be saying…”Spigit? Never heard of them.” Well, let me help you there.

Spigit provides idea management software for the enterprise in three modules:

Anyone is free to add any idea that occurs to them, and others can view, rate, and suggest changes to an idea. Ideas are categorized. The platform includes blogs and discussion forums to refine and clarify ideas.

The Spigit platform incorporates game theory into the process of identifying promising ideas and individuals who are good at seeing them. People can “invest” in ideas they believe in. If the company picks up the idea, everyone who invested in the idea earns incentive rewards.

As one finds with enterprise requirements, it includes role-based stages through which an idea must be approved. This process of graduation allows the top ideas by category to emerge.

A recent write-up on TechCrunchIT noted that  Spigit has lined up a number of significant customers, including IBM, Sun Microsystems, Intel, WebEx, Walmart, Sam’s Club, and Southwest Airlines.

Market’s View

Gartner: This past December, Gartner’s Anthony Bradley wrote up his thoughts about Spigit. He noted five key points:

  1. Spigit is a great example of the evolution of the social software market from best of breed tools to social software suites to technologies addressing horizontal business needs (idea management and prediction markets in Spigit’s case).
  2. Spigit exemplifies the need for some technology structure to enable community emergence. Spigit is rich with functionality (e.g. structure)  specifically targeted at mining the community for innovative ideas and then empowering that community to advance those ideas.
  3. It is clear when examining Spigit that significant effort has gone into designing an experience tailored to idea management. It is quite detailed in the intricacies of facilitating an idea marketplace. This is not something the usual enterprise could or would want to build into a general purpose suite.
  4. Spigit heavily employs gaming theory to make the experience fun. I see more and more gaming theory applied to enterprise 2.0 implementations to enhance community participation. All enterprises implementing E2.0 should strive to make a participants experience as fun as possible.
  5. A focus on analytics is also a critical capability. Growing, nurturing, and guiding the productivity of a community is no trivial exercise and it is important to have the tools to know how the community is functioning and where it needs help.

BearingPoint: Nate Nash of consulting firm BearingPoint has written about Spigit. Nash noted that his “consulting tires have really been rotated by one of the sponsors, Spigit.” Here’s the one-sentence version of his view of Spigit

Simply put, Spigit allows you to tune the impending barrage of systematized social interactions toward the vetting and implementation of innovative ideas.

TechWeb: On its Internet Evolution site, TechWeb recently wrote a great article Can Enterprise Social Networking Pay Off? The post included this customer’s quote about Spigit:

Another [Spigit] event for store managers focused on cutting costs and improving customer service. One idea from that event will save the company $8 million. “IT and senior VPs ask how we measure ROI for Spigit,” the director says. With numbers like that, the answer is easy.

A Few Personal Thoughts

Everyone has ideas. Everyone. The hardest part for employees is finding an engaged venue to air those ideas, get feedback and see them catch on if they have merit. Think about your own work. How easy is it to float ideas and get discussions going on them? Providing a defined location where ideas are expected to be added, found and advanced strikes me as a great use of social software. Spigit starts with a clearly defined use case and value proposition.

Another thing I like about Spigit is that anyone can participate in this social software initiative. My previous work at BEA Systems and Connectbeam focused on the knowledge worker, which is a consistent theme in the industry. Note how Dion Hinchcliffe describes Enterprise 2.0 in a recent article:

The Enterprise 2.0 story is primarily aimed at knowledge workers engaged in complex, collaborative projects which have had few effective software tools until recently, in other words strategic business activities.

But with idea management, anybody can have flashes of insight or creative solutions to everyday problems. The R&D group. Field consultants. The facilities manager. An hourly employee working the floor.

I really like that the addressable market for Spigit includes not just knowledge workers, but employees from throughout the company.

I’m also finding that Spigit is relatively unknown in the Enterprise 2.0 world at large. Indeed, Spigit doesn’t really go up against IBM, Microsoft SharePoint, Jive Software, SocialText and other more well-known collaboration vendors. Instead, you’ll find it mentioned alongside Salesforce Ideas, Imaginatik and Brightidea. This informs some of my work ahead.

Commute

If you’re not familiar with the Bay Area, Pleasanton is a bit of a haul from my home in San Francisco. Here’s a map that shows the commute:

bart-map

The nice thing is that  I’ll be able to take BART to work. And I will use that hour-long commute to get things done. Now if only BART would hurry up with installing wifi throughout the system. In the meantime, I’ll look at an EVDO card or the iPhone 3G tether.

Feel free to reach out to me if you’re interested in hearing more about Spigit.