This knowledge is brought to you by expert in accelerating digital transformation, Philip Muehleck, one of the thousands of top management consultants on Expert360.
Table of Contents
- Collective Innovation Accelerating Digital Transformation In The Corporate Landscape
- Objectives of crowd-sourced innovation
- Benefits to organisations
- Challenges during implementation
- Building blocks & work-streams of crowd-innovation programs
- Key findings
Executive Summary: Collective Transformation
In today’s marketplace, customer expectations are high, and demand needs to be met with better and less expensive products, delivered through a delightful experience. This shift in down-stream consumer power makes it ever more challenging for companies to differentiate themselves from the mainstream, particularly when competition is only ‘one on click away’. The frequency of new product launches shortens development cycles and it is harder for companies to keep up with changing demands. Innovation and Digital Transformation programs, when implemented thoroughly, provide companies with a significant opportunity to leverage this to their advantage and build a competitive advantage. There are numerous innovation models. The best ones for any particular company will depend on its corporate culture, its market, its products and services, and its business model. How innovation is managed must evolve together with the business. Open innovation. Hackathons. Collaboration. All innovation buzzwords, and all important. Common to these are they tap into the collective brain power of their target audience. Crowd-innovation is about harnessing the collective intelligence of employees, partners, external subject matter experts and customers to accelerate the digital transformation journey and the innovation process with the goal to generate better ideas more often to obtain a sustainable competitive advantage. Corporates applying a systematic innovation process enabled through a sophisticated ideation management framework and solution see significant returns on their investment. To better understand the benefits, costs, and risks associated with this investment it is essential to baseline what innovation exactly means to an organisation and its customers and then align towards this goal. Whatever innovation paradigms are adopted, concrete KPIs will need to be developed by formalising the (crowd-) Innovation pipeline. Common to top-performing companies is they define innovation as a strategic priority. Where low performing organisations have no clear discipline in soliciting participation and following through on ideas, top-performers engage innovation more holistically with ideation management programs substantiated through a systematic framework. Which in turn are designed to reach across departmental silos and cultures, soliciting diversity of thought and generate a continuous stream of high-quality ideas.
Illustration based on '9 Types Of Innovation' graph by leanventures.se
Dozens of idea management platforms exist but the differences are significant. The better ones enable organisation in finding and elevating the best ideas with minimal effort. Employee engagement is generated in the form of guided conversations, voting (also gamification) and as a consequence enriching ideas and graduating the most promising ones through the innovation funnel for implementation. This report provides a top-level, experience, and literature-based, perspective on the benefits and building blocks of successful crowd-innovation transformation strategies as well as what pitfalls to be aware of. It is a qualitative view.
Collective Innovation To Accelerating Digital Transformation In The Corporate Landscape
Some terminology for the purpose of this report. Ideation or Idea Management is about generating and cultivating new ideas by using crowd-sourcing methods and technologies and through accessing an organisation’s collective intelligence. Innovation Management is about creating a viable business case around an idea and unlocking value where it did not previously exist. In other words, ideation is about filling the innovation pipeline with ideas and developing them, whereas innovation management is about commercialising the best ones.
Organisations That Tap The Collective Knowledge Innovate & Transform Faster
All industries and business functions are experiencing a disruption of their traditional business models, motivating companies to invest in innovation as a way of staying competitive. While the traditional approach to innovation via research and development remains valid for predominantly material and product-based corporations, top-performing companies have evolved in the way how they innovate, growing revenues, saving costs and re-inventing their business models. Leaders with a forward-thinking mindset found a way to successfully tap the collective intelligence of their employees, suppliers, partners, and customers cultivating the idea management process as a core capability of their organisation.
Ideation Management Frameworks Encourage More Effective Innovation
During client projects and working closely innovation teams, we have discovered that ideating well means including all organisational units into the programs as early as possible. Top-performers understand that distributed ideation encourages diversity of thought and invites non-conventional thinking, which in turn significantly increases the number of quality ideas generated and bypassing biases and organisational blind-spots. Successful innovators have also broadened the scope of their innovation strategy. Over time, ideation management becomes closer to the core of how companies innovate by developing better products, offering complementing services and business models as an ecosystem and reducing costs through inefficiencies. As a very welcome side-effect these companies create an inclusive culture of innovation and employee engagement with direct and measurable impact on the bottom-line results. Ideation programs offer promising benefits in making innovation an aspect of everyone’s job description, creating an organisation of intrapreneurs. Methods including Design Thinking, Lean Start-up and others are applied to sharpen commercial awareness and focus of employees across the organisation to unlock their full creative potential. Nonetheless numerous corporate ideation initiatives fall short of addressing the key building blocks necessary for successful implementation and corporate-wide rollout of ideation programs with a positive bottom-line impact.
Illustration 1a: The crowd-innovation value chain.
Experiences show that ideation tools hold great promise in facilitating these projects by engaging employees and stakeholders in problem solving and identifying opportunities within the organisation. However, this can be hard to achieve given that ideation tools vary greatly in functionality and sophistication. It is not uncommon that a fast-moving and early adopter business unit within an organisation trials an ideation management tool with the objective to ascertain how it may support the innovation process. Many organisations have not yet figured out the best practices and often do not have the necessary senior executive support during the implementation process. This report seeks to contribute in filling this gap.
Illustration 1b: Managing the ideation process:
From idea to business value. Ideation is the perfect approach to keep the innovation pipeline filled with a constant stream of new ideas, encourage collaboration between departments, accelerate the velocity and frequency of the innovation process, which contributes to accelerating digital transformation. Business outcomes, such as improved operational efficiency and better customer experiences are also core to successful ideation programs. It is vital to the longevity and credibility of any idea management program that efforts are tied to clearly measurable business objectives. Mature, successful organisations focus more on expanding the scope of the ideation programs deploying their ideation platform in more than three strategic business units. Expected benefits from crowd-innovation programs can largely be classified into three distinct benefit domains: Business Model; Organisation and Product. And within these innovation domains distinctions can be made between opportunities to solve specific problems, continuous improvements and ground-breaking innovation.
Objectives Of Collective-Mind Innovation In Accelerating Digital Transformation
Through crowd-innovation employees who previously never had a chance to share their perspective are offered an opportunity to contribute. Employees with similar ideas have a place to collaborate on those ideas through virtual channels or communities, when previously they didn’t have a method for finding each other. This bottom-up approach allows colleagues from different backgrounds and with different skill sets to work on the same problem, leading to more diverse and innovative solutions. Another, more common, approach is the top-down use of challenges with a clear objective and problem statement addressed to a distinct group of employees and/or subject matter experts. These challenges have a pre-set duration of usually four to ten weeks. Typical challenge briefs can include for example “How can waiting times in customer contact centres be reduced by 50%?”.
Illustration 2a: Types of ideation management: Communities vs challenges.
When tapping into their organisational collective, organisations can produce thousands of ideas per year during timed challenges and continuous communities. Even if these crowd-ideation programs are temporarily halted, the database of previously generated ideas can be mined for implementation and people who were interested in a topic can be engaged. This direct access to idea generators and collaborators enables a huge head start for down-stream idea evaluation and implementation. The ultimate objective of the most effective crowd-innovation programs pertains to generating as many high-quality ideas as possible, evaluating their potential through different perspectives and implementing the most promising ones whilst properly engaging the entire workforce and by providing quick feedback loops.
Reaping Value From Crowd-Innovation Through Effective Idea-Pipeline Management
Illustration 2a: Exemplary idea management stage gate funnel[/caption] When pursuing the ‘only what is measured can be improved’ maxim during the implementation of a successful ideation management program, the effective design of the stage gate funnel is as important as setting up adequate governance structures. The credibility of the program and the business impact of generated ideas relies on its design quality. Ideas are graduated through the various stages and the key questions for effective evaluation depends on the number of gates as much as the composition of their gate-keepers. Benchmark stage-gate funnel management includes:
- Capture, validate & develop ideas
- Manage stage gate workflow
- Prioritise and track evaluation
- Route ideas & close feedback loops
- Connect stakeholders
- Measure business impact & ROI
The motivation to introduce and re-invigorate corporate ideation management programs are manifold. Among the obvious motivating factors is the aspiration to develop new or better products or services or improve customer experience. Among other key reasons why companies decide to implement crowd-sourced ideation management programs are:
- Build a culture of innovation and intrapreneurship
- Increase employee engagement
- Cultivate innovation skills
- Improve the current innovation process
- Accelerating the development of better products and services
- Reduce organisational inefficiencies, costs and waste
Benefits Of Accelerating Digital Transformation Through Collective Innovation
While there are promising benefits to ideation management programs, making innovation an integral part of everyone’s job description is very hard to achieve in practice. For the purpose of this section, ideation management is defined as the life-cycle model to systematically solve specific problems, obtain continuous improvements or identify ground-breaking innovation, where ideas can be of all shapes and sizes.
Quantifiable vs Intangible Benefits
Potential benefits of corporate ideation management programs can be divided into two categories, quantifiable and intangible benefits. Quantifiable benefits include, but are not limited to:
- Business growth (better products, enhanced services)
- New revenue streams (new products and services)
- Cost savings (productivity increases)
- Process efficiencies (waste elimination)
- Problem solutions (product, service, customer, organisation)
- Fault reduction (process)
Intangible benefits include, but are not limited to:
- The culture of innovation (Intrapreneurship)
- Increased employee engagement
- Contributes to continuous improvement
- The sense of being ’in the know” (two-way communication)
- Cross-departmental collaboration
- Team empowerment
Measuring Success & Business Impact
The art of accurately measuring the business impact and ultimately the value of ideas and ideation lies within the sophistication of the stage-gate funnel management process. Putting a hard dollar figure to an idea is difficult at the top of the funnel but becomes more and more refined as it graduates to the bottom. Measuring the success of ideation management strongly relies on comprehensive organisation-wide impact scoping and a genuine baseline of the status-quo and of course the time-to-value over the which investment is amortised. Given that ideation management tools and programs are still fairly new, organisations are still learning best practices and often do not know what to expect during the implementation process. Some of the most important criteria companies use to identify the best crowd-sourced ideas include for example, but are not limited to:
- Alignment to the business strategy
- Feasibility and probability of success
- Estimated value in terms of return or savings
- Expected Costs
- Evaluation by subject matter experts
- Assessment of impact to market and customers
Challenges During Implementation
In part, due to limited experience and exposure, many organisations are yet to develop a sound understanding of how best initiate and sustain employee-driven ideation management programs. Important challenges, issues, and risks are associated with the adoption of ideation management programs for successful challenges and contests. Crowd-sourcing based ideation programs are becoming pervasive in top performing organisations. In light of the fast development of corporate social media and other related cloud solutions these programs will become more technologically sophisticated, and they are here to stay to reap the crowd’s expertise and translate it into a business benefits. There are numerous challenges associated with a successful adoption of ideation programs. They can be identified through employee and even management comments, as per the listed examples. Among the most severe challenges are:
- Lack of executive program sponsorship
“New ideas don’t get up around here.”
- Organisational culture that is not conducive to employee-driven innovation
“We can’t afford the risks of new ventures.”
- Resistance from existing innovation groups and cooperation between groups
“We need to focus on operational improvements.”
- Lack of business owner and resources to carry out the implementation of an idea
“We have plenty of new ideas, but we can never action them.”
- Lack of budget for idea implementation
“When times get better we might.”
- Insufficient business planning capacities
“Every time we try to action a new idea something else comes up and shifts our focus.”
- Challenges in measuring both quantifiable and intangible benefits of ideation
“We can’t start risking new ideas when we’re dealing with reduced margins and revenue”.
- Unintended negative consequences such as decreased productivity
“We don’t have the resources or time to undertake innovation.” Particularly important to overcoming these challenges is to be aware of their existence within the organisation. It is conducive to isolate and identify the roots of the challenges, only then can a promising implementation strategy be formed to address and overcome the same. The following section provides a framework to systematically address and overcome them.
Keys To Accelerating Digital Transformation Through Crowd-Sourced Innovation
The strategies to successfully introduce and sustain a crowd-sourced innovation program include several building blocks that can be grouped into six distinct building blocks. Strategic-level building blocks help to create an overarching strategy, governance structures and corporate culture to promote establish the foundations for ideation programs. On the other hand, operational-level building blocks pertaining to people, process and systems categories help address more tangible challenges that are bumps rather than big barriers to the successful implementation of the ideation programs. Nonetheless, these operational-level best practices can often save substantial time and cost and boost employee engagement. When applied to the phases of the ideation management funnel the six building blocks have a varying level of impact to each phase from idea generation, evaluation, selection to idea implementation. Each of the building blocks encompasses some core activities, as listed:
- Set a clear, specific innovation strategy
- Create an ‘Innovation Playbook’
- Articulate scope & objectives
- Assign metrics to measure success
- Establish an operating model e.g. Ideation Management Centre (IMC)
- Create entity, its role & competencies
- Identify funding and resources
- Define success, measures, goals, timeframe
- Leaders are critical role-models
- Enable open communication
- Improve agility & encourage learning
- Share & celebrate wins (also small ones)
- Invest into capabilities (leadership tool)
- Develop, train & empower diverse teams
- Recognise & reward innovative behaviour
- Include in annual performance framework
- Manage ideation life-cycle
- Embed IMC within organisational processes
- Establish roles and responsibilities of stage gate process
- Connect to implementing business units
- Provide guidance during all ideation stages
- Support idea structuring & value articulation
- Categorise & evaluate ideas
- Manage portfolio of ideas
5a. Crowd-innovation program building blocks.
There is no ‘one size fits all recipe’ for success when implementing ideation management programs. It is a matter of properly understanding the finer organisational nuances as a starting position. Then it is critical to take the entire organisation along on the change journey by adapting and calibrating each of the building blocks to the specific needs of the company. These activities then manifest themselves as implementation work streams.
Experiences from a variety of projects and organisations validate that effective engagement of the management and workforce in generating and implementing innovation management programs is critical to accelerating digital transformation programs. Using the information from this report, organisations may effectively strategize and plan for their ideation programs, minimize trial and error, and not have to reinvent the wheel. Ideation programs based on the concept of crowd-sourcing are becoming pervasive. Many corporations and medium-sized companies have been embracing these tools and launching ideation programs to boost employee-driven innovation as part of their digital transformation journeys. However, numerous daunting challenges and issues remain to be addressed for sustainable implementation with a clear and quantifiable economic impact. In addition to incorporating the best practices and based on the details as laid out in this report, the following key findings will enable organisation to better launch and sustain ideation management programs and speed up the learning curve to be prepared for the future:
Key Finding 1: Crowd-sourced innovation management is not a fad but a vehicle for digital transformation and a source for continued innovation.
Key Finding 2: Ideation management programs with broad executive sponsorship outperform those without, significantly.
Key Finding 3: Institutionally embedded ideation management within a strong core team and organisationally embedded evangelists generate a continuous innovation momentum.
Key Finding 4: Measurement of financial impact enables sharing the return with the employees through meaningful rewards and drives engagement.
Key Finding 5: A culture of innovation thrives through celebrating innovation success and ‘ideation heroes’, organisation wide.
Key Finding 6: Careful selection and implementation of a sophisticated ideation management solution with ease of use holds great promise in enabling ideation management programs.
The content of this report is based on the professional experience of the author and various academic and practitioner literature including the following sources: qmarkets.net, (2018). Qmarkets’ Official Website. [online] Available at http://www.qmarkets.net/ [Accessed 08 Jan. 2018]. Spigit, (2017). The 2017 Business Innovation Report. [online] Available at https://www.spigit.com/resource/whitepaper/2017-business-innovation-report/ [Accessed 16 Aug. 2017]. Schat, H.-D. (2017). Erfolgreiches Ideenmanagement in der Praxis. FOM-Edition. Stuttgart, Germany: Springer. Erickson, L.-B., Trauth, E.-M., and Petrick I. (2012). Getting Inside your Employees’ Heads. In Thirty Third International Conference on Information Systems. [online] Orlando: https://pdfs.semanticscholar.org/b413/f22eed9e5053818a86907953ff1e7ca48009.pdf Lee G., Ph.D., (2013). Federal Ideation Programs: Challenges and Best Practices. Washington D.C.: Center for IT and the Global Economy, Kogod School of Business, The American University. Available at http://www.businessofgovernment.org/report/federal-ideation-programs-challenges-and-best-practices [Accessed 14 Aug. 2017].
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