Tapping Communities to Accelerate Corporate Innovation

Jim Collins related a story back in 1999 that well-describes the problems with and opportunities for innovation inside organizations. In a Harvard Business Review article, he wrote about Phil Archuleta, a materials manager at a U.S Marines recruiting depot in San Diego.

The Marines would issue new enlistees a uniform on their first day in the service. After two weeks of intensive training, these recruits needed a new uniform because the initial ones no longer fit. Marine policy was that the recruits original uniforms were to be destroyed. That’s right, thrown away.

Archuleta thought that policy was daft, and that the uniforms could simply be washed and used for the next class of recruits. He asked his superior, and was told, “No. It’s against regulations. Forget about it.” Eventually, Archuleta got a new supervisor who thought he had a good idea, and promoted it up the military chain. The idea was well-received at the higher levels, and implemented across the Marines. It resulted in annual cost savings of half a million dollars.

How many ideas by the likes of a Phil Archuleta are buried inside organizations?

Tapping Communities to Accelerate Corporate Innovation

The presentation below is one that I gave for recent webinar with Oliver Young of Forrester. The webinar focused on deriving ideas from organizations’ communities: employees, customers, partners.

The presentation is built around four themes:

1. Strategic importance of innovation
2. Email <> community
3. Corporate innovation is more than a popularity contest
4. You can’t manage what you can’t measure

Strategic value of innovation

Certainly this qualifies as an obvious notion. Innovation is important to companies. It’s the source of organic growth. But in many ways, companies are not treating it as important as other processes, such as supply chain management and cost accounting. Thus, it is important to reiterate the obvious.

Boston Consulting Group analyzed the shareholder returns for companies in its Top 50 innovators list. It compared these returns to markets averages, and found that best-in-class innovators generated 430 basis points more in returns than did the market. Aberdeen Group surveyed 280 manufacturers, and characterized their innovation capabilities as best-in-class, average and laggard. Best-in-class innovators, who far more consistently hit new product revenue targets and launch dates, were 4.7 times more likely to create specific processes for idea generation.

No surprise then that senior executives rank innovation as a top 3 priority.  Accenture well-describes the goals and aspirations of companies: create repeatable and ongoing improvements in business performance.

Key, of course, is to consider innovation among the disciplines in which a company should excel. And create a program for it accordingly.

Email <> community

I’ve worked for large companies. I know how it goes when you have an idea. Jot it down somewhere. Talk it out with someone. Then email someone else about it. If you’re lucky, someone in that email will pick it up. Maybe.

More often than not, interesting ideas just sort of lie there, buried in the minutiae of the daily grind or not catching the interest of a particular individual. Which is what happened to Phil Arhuleta’s idea about the Marines’ uniforms.

Rather than rely on ad hoc, siloed forms of communicating ideas (like email), social networks provide a new way to tap communities. The diagram below shows the process by which innovation is fostered with a social innovation platform:

Ideas are the social objects for community interaction

On the top left, it’s important that companies understand: ideas can come at any time, in any form. They’re rarely subject to scheduling. Once you have an idea, there’s needs to be an easily accessible, and easily usable,  site for the posting of those ideas. No more silos!

Creating a common site is critical aspect #1 of creating an innovation program. Employees, customers and partners should have a single place where each community can go to post the ideas that occur to them.

Critical aspect #2 is the ability of the community to provide feedback on an idea. Separating the good from the bad, and refining ideas to help them take shape are the heavy lifting of emergent, social systems.

In the upper right, the refinement of good ideas takes shape. This includes the feedback from the community, as well as offline activities around the idea, such as design work, marketing plans and financial analysis. Finally, in the lower right, the company selects an idea based on community feedback and refinement.

Aside from the benefit of actually knowing about a lot more valuable ideas, there’s another benefit to community-driven innovation management: ideas get better when they’re subject to diverse points of view and knowledge. See the earlier post What Enterprise Social Networks Do Well: Produce Higher Quality Ideas to understand that effect.

Finally, the graphic below describes the community innovation cycle:

Bottom-up innovation requires top-down support

I think the concepts of expand community and pipeline of ideas are relatively self-explanatory. And I just discussed the engage, access, refine, select part of the cycle. The other two are the top-down support needed to ensure the community feels their efforts matter.

Keep in mind that when people suggest ideas to companies, these aren’t just conversation starters with their fellow community members. People want to know that companies listen to good ideas and take action. That’s quite clear to a community when its ideas are actually implemented, and there is a reward and recognitions for its members.

Executives go a long way, particularly with employees, when they make the company innovation program a focus point. Employees will take their priorities from senior management, and executive sponsorship is an important factor for creating an ongoing, sustainable innovation program.

Corporate innovation is more than a popularity contest

The most common notion of community innovation is the principle of: one person = one vote. An idea that receives a lot of votes clearly is more useful and valuable than an idea receiving fewer votes. This “rule” works well with products that exhibit these characteristics:

• End buyer requests
• Lower complexity features
• No concentration of buying power

That last bullet needs a little explaining. Dispersed buying power means that basically you can consider each vote to be the equivalent of one product purchase. If you have a few customers that generate a significant amount of your sales, their votes should carry more weight.

There are going to be plenty of ideas that require stronger stuff than basic popularity. I like the way Microsoft’s Haddow Wilson put it:

There are times when the collective wisdom is what we need. But what about those times when we need to make a strategic decision and only a few in the crowd have the necessary background and insight to help? How do we separate the knowledge from the noise? How do we know to whom to listen? How do we find them?

Innovation communities need a way to identify those whose opinions should carry greater weight. They essentially need reputation systems to identify members with greater standing among the community. This stature can be assigned or earned.

You can’t manage what you can’t measure

The ethos and value of Enterprise 2.0 focuses on the emergent, authentic nature of employee contributions. It’s historically been hard for employees to apply knowledge in a timely fashion. In this culture, “management” is often a loaded word, with connotations of over-processing and controlling the ways in which employees collaborate.

But that should not stand in the way of measurement. You can have measurement of outcomes, and inputs, and use that to guide the community generally in the direction you’d want to take an innovation program. On the flip side, if a community continues to generate ideas that aren’t squaring with the company’s vision of where it wants to go, it’s porbably wise to listen to them.

Either way, measurement provides a view into the health of the community (posts, comments, views, etc.), the sources of the ideas (groups, categories, product lines, etc.) and the traction that ideas put on the platform are getting (stages, implementations).

Measurement is also the basis for analytics used to surface the best ideas from the rest. One other thing measurement does is this: it positively affects the culture of companies.

Breed performance, change culture

The transparency that measurement on an innovation management platform provides is healthy. Everyone can see the bases by which ideas advance. Everyone knows how their own ideas are faring, and can do something about it. This happens because of measurement.

It’s about creating ongoing, sustainable innovation

Companies will benefit greatly once they establish an ongoing program of innovation. It’s too often takes phenomenal acts of heroism to get an idea through the ad hoc channels and processes that dominate corporate innovation today.

Time to treat innovation as a discipline worthy of its own resources and focus.