Connecting the Dots in Idea Markets
A Study of Inventor Diversity and its Implications
for Idea Development
Copenhagen Bus...
Executive Summary
This% thesis% examines% the% abili.es% of% online% idea% markets% to% support% idea% genera.on% and%
scr...
Acknowledgements
The author would like to thank the Three Wise Men for the contributions to
this thesis.
Professor Finn Va...
! 1!
Table of Contents
List%of%Figures%and%Tables%...........................................................................
! 2!
3.3%Growth%Bets%2011%...................................................................................................
! 3!
5.2.2.1!Geographical!diversity!of!commentators!.........................................................................
! 4!
List of Figures and Tables
!
FIGURE!1:!DISPOSITION!OF!THESIS!...........................................................
! 5!
!
!
!
!
!
!
!
!
!
“Innovation is all about making new connections. Most
breakthrough innovation is about combining kn...
! 6!
1. Introduction
The!digital!revolution!is!opening!the!world!making!knowledge!widely!accessible.!It!is!
only!a!few!hun...
! 7!
An!effort!to!support!idea!generation!by!means!of!an!online!tool!was!recently!explored!in!
the!Research!&!Development!...
! 8!
1.1 Problem Statement
The!present!thesis!studies!the!abilities!of!idea!markets!as!a!tool!for!idea!generation!and!
fil...
! 9!
School.!During!these!years,!I!have!obtained!knowledge!of!and!interest!in!organizations!
and! their! pursuit! and! man...
! 10!
1.3 Disposition
The!disposition!of!this!thesis!is!illustrated!in!Figure!1!below:!!
!
Figure!1:!Disposition!of!thesis...
! 11!
!
!
!
!
!
!
!
!
!
“Although ideas are formed in the minds of individuals,
interaction between individuals typically ...
! 12!
2. Literature Review
In!this!chapter,!I!shall!review!the!literature!relevant!to!the!study!of!idea!markets.!I!set!
ou...
! 13!
(organizational! processes,! and! administration! systems)! innovations! (in! Hine! &!
Kapeleris,! 2006).! According...
! 14!
constitute! innovations.! According! to! Hagedoorn! (1996),! Schumpeter! did! not!
demonstrate! a! great! interest! ...
! 15!
knowledge! triggered! a! vast! amount! of! subsequent! research,! which! built! upon! the!
arguments!of!knowledge!cr...
! 16!
occurs! through! language,! which! renders! it! possible! for! tacit! knowledge,! held! in! the!
individual,!to!beco...
! 17!
details! of! how! ideas! are! generated,! developed! and! filtered.! This! argument! is! also!
supported!by!Poetz!an...
! 18!
screening.! Maturation! typically! involves! further! elucidation! of! technical! feasibility,! IP,!
and!customer!ne...
! 19!
articulation!of!more!novel!solutions!by!participants.!An!idea!market!arguably!legitimizes!
the!presentation!of!‘wild...
! 20!
from! idea! to! idea! and! is! arguably! a! subjective! measure! bound! to! the! nature! of! the!
problem.!It!is!the...
! 21!
or! ‘unpolished’! ideas! in! idea! markets! is! argued! to! be! low! because! of! the! reduced!
familiarity! and! so...
! 22!
2012).! However,! there! are! limits! to! the! applicability! of! the! wisdom! of! the! crowd!
technique!for!knowled...
! 23!
A! recent! study! by! Poetz! and! Schreier! (2012)! found! that! crowdsourcing! might!
complement! the! work! of! a!...
! 24!
market! will! be! described! in! greater! detail! in! Chapter! 3;! this! section! will! thus! be!
delimited!to!provi...
! 25!
following! section,! I! shall! therefore! draw! on! diversity! theory! to! gain! insights! of! the!
implications!for...
! 26!
with! a! higher! risk! of! dissatisfaction,! misunderstanding! and! lack! of! cohesiveness!
(Milliken!&!Martins,!199...
! 27!
invertedSU!shaped!relationship!between!cognitive!distance!and!innovation!performance.!
As! cognitive! distance! incr...
! 28!
2.5.1 Geographical Diversity
Multinational!organizations!depend!on!people!throughout!the!world!to!carry!out!their!
o...
! 29!
2.5.2 Functional Diversity
Functional!diversity!refers!to!the!differences!in!skills!and!competences!acquired!from!
w...
! 30!
2.5.3 Hierarchical Diversity
Hierarchical! diversity! refers! to! employees’! job! classifications! and! ranks! in! ...
! 31!
harmonious,! however! the! performance! of! such! teams! is! limited! by! the! relative!
redundancy! of! members’! p...
! 32!
may!have!potential!to!support!organizations!with!activities!in!the!fuzzy!frontSend!of!the!
innovation!process.!It!ha...
! 33!
!
!
!
!
!
!
!
!
!
“[GB11] is a much more efficient way for idea generation than
traditional ideations where you are ...
! 34!
3. Company and Case Profile
In!this!chapter,!I!shall!provide!a!short!description!of!the!case!company!Novozymes!and!
...
! 35!
starch!into!different!kinds!of!sugars.!This!also!includes!enzymes!for!the!textile!
industry.!
3. Food!enzymes!–!enha...
! 36!
workforce!is!spread!throughout!the!world,!much!time!and!resources!are!being!spent!on!
travelling.!!
!
A!second!idea!...
! 37!
ideation!uniting!employees!who!nonShabitually!work!together!to!share!ideas,!developed!
each!other’s!ideas,!and!addit...
! 38!
3.3.1.1 Mobilize People
The!first!phase!involved!recruiting!people!to!participate!in!the!game.!Two!teams!were!
forme...
! 39!
entirely!new!industry.!It!can!therefore!be!argued!that!this!category!is!the!farthest!
away!from!the!core!business!in...
! 40!
value!of!the!ideas!where!based!on!the!value!of!the!shares!bought!and!not!on!the!amount!
of!investors.!!
!
3.3.1.3 Sc...
! 41!
the!TopS5!ideas!for!further!maturation!and!pitch!for!R&D!Management!eight!weeks!later.!
According! to! one! of! the!...
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development
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Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development

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A Master's Thesis from Copenhagen Business School on innovation management in Novozymes A/S.

This thesis examines the abilities of online idea markets to support idea generation and screening in the fuzzy front-end of the innovation process. Idea markets – spun out from the present digital revolution – is a growing phenomenon that may have potential to facilitate innovation, greater participation, development of knowledge, and increased diversity. The proliferation of interconnectivity of diverse and geographically dispersed individuals enabled by the refinement of the Internet is hypothesized to offer opportunities for the development of creative and novel ideas. Due to the embryonic stage of the idea market concept, further research is considered relevant for both practitioners and scholars. This thesis thus attempts to provide empirical evidence of the implications of diversity for the development of ideas. The research is embedded in a case study of Novozymes A/S (NZ) – a leading biotechnology company in the industrial enzyme industry – and an idea market conducted in the fall of 2011. For the analysis in this thesis, I use statistical measures of quantitative data collected from (i) the external consultancy firm NOSCO who specializes in idea markets, (ii) the HR department in NZ, and (iii) the Screen Team in NZ. The findings from the analysis support the hypothesis that the quality of ideas emerging from online idea markets increase with the diversity of inventors involved in developing the ideas. This finding may support NZ and other organizations when designing forthcoming idea markets. Furthermore, to support the notion of combinatorial innovation, one could argue that idea markets facilitate new connections of skills and disciplines by engaging a diverse crowd of participants. By implementing the idea market tool in NZ, R&D Management was able to mobilize and connect a large crowd of organizational members, provide a channel that could leverage ideas, and increase the quality of go/kill decisions in the idea screening process. The fact that NZ has scheduled nine other idea markets in 2012 is considered an indicator of the success of the tool.

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Transcript of "Connecting the Dots in Idea Markets: A Study of Inventor Diversity and its Implications for Idea Development "

  1. 1. Connecting the Dots in Idea Markets A Study of Inventor Diversity and its Implications for Idea Development Copenhagen Business School Cand. merc. (SOL) Strategy, Organization, and Leadership September 2012 Maria Carlsen Advisor: Prof. Finn Valentin Dept. of Innovation and Organizational Economics Std. Pages: 79.9 (STUs: 181.791)
  2. 2. Executive Summary This% thesis% examines% the% abili.es% of% online% idea% markets% to% support% idea% genera.on% and% screening%in%the%fuzzy%front:end%of%the%innova.on%process.%Idea%markets%–%spun%out%from%the% present% digital% revolu.on% –% is% a% growing% phenomenon% that% may% have% poten.al% to% facilitate% innova.on,% greater% par.cipa.on,% development% of% knowledge,% and% increased% diversity.% The% prolifera.on%of%interconnec.vity%of%diverse%and%geographically%dispersed%individuals%enabled% by%the%refinement%of%the%Internet%is%hypothesized%to%offer%opportuni.es%for%the%development% of%crea.ve%and%novel%ideas.%Due%to%the%embryonic%stage%of%the%idea%market%concept,%further% research%is%considered%relevant%for%both%prac..oners%and%scholars.%This%thesis%thus%aDempts% to%provide%empirical%evidence%of%the%implica.ons%of%diversity%for%the%development%of%ideas.% The%research%is%embedded%in%a%case%study%of%Novozymes%A/S%(NZ)%–%a%leading%biotechnology% company%in%the%industrial%enzyme%industry%–%and%an%idea%market%conducted%in%the%fall%of%2011.% For%the%analysis%in%this%thesis,%I%use%sta.s.cal%measures%of%quan.ta.ve%data%collected%from%(i)% the%external%consultancy%firm%NOSCO%that%specializes%in%idea%markets,%(ii)%the%HR%department% in%NZ,%and%(iii)%the%Screen%Team%in%NZ.%The%findings%from%the%analysis%support%the%hypothesis% that% the% quality% of% ideas% emerging% from% online% idea% markets% increase% with% the% diversity% of% inventors% involved% in% developing% the% ideas.% This% finding% may% support% NZ% and% other% organiza.ons%when%designing%forthcoming%idea%markets.%Furthermore,%to%support%the%no.on% of%combinatorial%innova.on,%one%could%argue%that%idea%markets%facilitate%new%connec.ons%of% skills%and%disciplines%by%engaging%a%diverse%crowd%of%par.cipants.% %By%implemen.ng%the%idea% market% tool% in% NZ,% R&D% Management% was% able% to% mobilize% and% connect% a% large% crowd% of% organiza.onal%members,%provide%a%channel%that%could%leverage%ideas,%and%increase%the%quality% of%go/kill%decisions%in%the%idea%screening%process.%The%fact%that%NZ%has%scheduled%nine%other% idea%markets%in%2012%is%considered%an%indicator%of%the%success%of%the%tool.%% % % % % %
  3. 3. Acknowledgements The author would like to thank the Three Wise Men for the contributions to this thesis. Professor Finn Valentin, CBS Thank you for immeasurable guidance and for enabling me to develop and broaden analytical skills. Frank Hatzack, Senior Innovation Manger at Novozymes Thank you for encouragement and inspiration. Your drive and passion for biotech innovation has been the building blocks for this thesis. Giancarlo Lauto, Research Fellow at CBS Thank you for showing me that statistics can be fun. It has been rewarding to work with you.
  4. 4. ! 1! Table of Contents List%of%Figures%and%Tables%............................................................................................................................%4% 1.%Introduction%........................................................%6! 1.1%Problem%Statement%............................................................................................................................%8! 1.2%Research%Relevance%...........................................................................................................................%8! 1.3%Disposition%.........................................................................................................................................%10! 2.%Literature%Review%..........................................%12! 2.1%What%is%Innovation?%........................................................................................................................%12! 2.2%Knowledge:%the%Source%of%Innovation%.......................................................................................%14! 2.3%The%Fuzzy%FrontLEnd%of%the%Innovation%Process%...................................................................%16! 2.3.1!Idea!Generation!and!Online!Opportunities!.....................................................................................!17! 2.3.2!Quality!of!Ideas!............................................................................................................................................!19! 2.4%Crowdsourcing%Ideas%......................................................................................................................%21! 2.4.1!Idea!Markets!.................................................................................................................................................!23! 2.5%The%Implications%of%Diversity%......................................................................................................%25! 2.5.1!Geographical!Diversity!.............................................................................................................................!28! Hypothesis!1!..........................................................................................................................................................................!28! 2.5.2!Functional!Diversity!..................................................................................................................................!29! Hypothesis!2!..........................................................................................................................................................................!29! 2.5.3!Hierarchical!Diversity!...............................................................................................................................!30! Hypothesis!3!..........................................................................................................................................................................!30! 2.5.4!Tenure!Diversity!.........................................................................................................................................!30! Hypothesis!4!..........................................................................................................................................................................!31! 2.5.5!Diversity!Aggregated!across!Multiple!Dimensions!......................................................................!31! Hypothesis!5!..........................................................................................................................................................................!31! 2.6%Research%Gap%.....................................................................................................................................%31! 3.%Company%and%Case%Profile%...........................%34! 3.1%Novozymes%in%Brief%.........................................................................................................................%34! 3.2%The%Innovation%Office%.....................................................................................................................%35!
  5. 5. ! 2! 3.3%Growth%Bets%2011%............................................................................................................................%36! 3.3.1!Rules!of!the!Game!.......................................................................................................................................!37! 3.3.1.1!Mobilize!People!.....................................................................................................................................................!38! 3.3.1.2!Conceive!Ideas!.......................................................................................................................................................!38! 3.3.1.3!Screen!Ideas!............................................................................................................................................................!40! 3.3.1.4!Mature!Ideas!...........................................................................................................................................................!41! 3.3.1.5!Pitch!and!feedback!from!R&D!Management!.............................................................................................!41! 3.3.1.6!Reflection!.................................................................................................................................................................!41! 4.%Methodology%....................................................%46! 4.1%Research%Philosophy%......................................................................................................................%46! 4.2%Research%Approach%and%Design%..................................................................................................%47! 4.3%Data%Collection%..................................................................................................................................%49! 4.3.1!Qualitative!data!...........................................................................................................................................!50! 4.3.2!Quantitative!data!........................................................................................................................................!50! 4.3.2.1!Dependent!variable!.............................................................................................................................................!51! 4.3.2.2!Independent!variables!.......................................................................................................................................!52! 4.3.2.3!A!twoSfold!examination!of!diversity!............................................................................................................!53! 4.4%Limitations%.........................................................................................................................................%53! 5.%Analysis%.............................................................%56! 5.1%Analysis%Part%I:%Patterns%of%Performance%and%Participation%.............................................%56! 5.1.1!The!Output!From!GB11!............................................................................................................................!57! 5.1.2!Idea!Characteristics!...................................................................................................................................!58! 5.1.3!Comment!Characteristics!........................................................................................................................!61! 5.1.4!Participant!Characteristics!.....................................................................................................................!62! 5.1.5!Conclusion!to!Analysis!Part!I!.................................................................................................................!66! 5.2%Analysis%Part%II:%The%Implications%of%Diversity%......................................................................%68! 5.2.1!Idea!Inventors!..............................................................................................................................................!68! 5.2.1.1!Geographical!diversity!of!inventors!.............................................................................................................!70! 5.2.1.2!Functional!diversity!of!inventors!..................................................................................................................!70! 5.2.1.3!Hierarchical!diversity!of!inventors!...............................................................................................................!71! 5.2.1.4!Tenure!diversity!of!inventors!.........................................................................................................................!72! 5.2.1.5!Conclusion!to!diversity!of!inventors!............................................................................................................!73! 5.2.2!Commentators!.............................................................................................................................................!74!
  6. 6. ! 3! 5.2.2.1!Geographical!diversity!of!commentators!...................................................................................................!75! 5.2.2.2!Functional!diversity!of!commentators!........................................................................................................!76! 5.2.2.3!Hierarchical!diversity!of!commentators!....................................................................................................!77! 5.2.2.4!Tenure!diversity!of!commentators!...............................................................................................................!78! 5.2.2.5!Conclusion!to!diversity!of!commentators!..................................................................................................!79! 5.2.3!Diversity!Aggregated!across!Multiple!Dimensions!......................................................................!79! 5.2.3.1!Idea!inventors!........................................................................................................................................................!80! 5.2.3.2!Commentators!.......................................................................................................................................................!82! 5.2.4!Conclusion!to!Analysis!Part!II!...............................................................................................................!83! 6.%Discussion%.........................................................%86! 6.1%Igniting%the%Sparks%in%the%Crowd%................................................................................................%86! 6.2%New%Combinations%..........................................................................................................................%90! 6.3%The%Strength%of%Diversity%..............................................................................................................%91! 7.%Connecting%the%Dots%......................................%97! 7.1%Conclusion%..........................................................................................................................................%97! 7.2%Further%Perspectives%......................................................................................................................%98! Bibliography%.......................................................%100! Articles%and%Books%...............................................................................................................................%100! TED%Talks%...............................................................................................................................................%104! Appendices%.........................................................%105! Appendix%I:%Survey%..............................................................................................................................%105! Appendix%II:%Distribution%of%No.%of%inventors%.............................................................................%112! ! ! !
  7. 7. ! 4! List of Figures and Tables ! FIGURE!1:!DISPOSITION!OF!THESIS!....................................................................................................................................!10! FIGURE!2:!GB11!PROCESS!..................................................................................................................................................!37! FIGURE!3:!IDEAS!WITH!MULTIPLE!VS.!SINGLE!INVENTORS!............................................................................................!69! FIGURE!4:!IDEAS!WITHOUT!VS.!WITH!COMMENTS!..........................................................................................................!74! FIGURE!5:!DIVERSITY!SCALE!...............................................................................................................................................!80! FIGURE!6:!DIVERSITY!SCORES!OF!IDEA!INVENTORS!........................................................................................................!81! FIGURE!7:!DIVERSITY!SCORES!OF!COMMENTATORS!.......................................................................................................!82! ! TABLE!1!S!DESIGN!OF!GB11!...............................................................................................................................................!43! TABLE!2!–!PARTICIPANTS,!IDEAS,!AND!COMMENTS!IN!THE!DATASET!.........................................................................!57! TABLE!3!–!DESCRIPTIVE!STATISTICS!OF!OUTPUT!FROM!PARTICIPANTS!.....................................................................!57! TABLE!4!–!DISTRIBUTION!OF!CATEGORIES!OF!IDEAS!.....................................................................................................!59! TABLE!5!–!DEPTH!OF!IDEAS!................................................................................................................................................!60! TABLE!6!S!COMMENT!CATEGORIZATION!...........................................................................................................................!61! TABLE!7!S!DISTRIBUTION!OF!GENDER!OF!PARTICIPANTS!..............................................................................................!63! TABLE!8!S!DISTRIBUTION!OF!SITES!OF!PARTICIPANTS!I!.................................................................................................!64! TABLE!9!S!DISTRIBUTION!OF!SITES!OF!PARTICIPANTS!II!...............................................................................................!64! TABLE!10!–!DISTRIBUTION!OF!RANKS!OF!PARTICIPANTS!.............................................................................................!65! TABLE!11!–!DISTRIBUTION!OF!SENIORITY!OF!PARTICIPANTS!......................................................................................!66! TABLE!12!–!DISTRIBUTION!OF!IDEAS!WITH!SINGLE!VS.!MULTIPLE!INVENTORS!........................................................!69! TABLE!13!–!DIVERSITY!OF!INVENTORS:!SITE!..................................................................................................................!70! TABLE!14!–!DIVERSITY!OF!INVENTORS:!DEPARTMENTS!...............................................................................................!71! TABLE!15!–!DIVERSITY!OF!INVENTORS:!RANK!................................................................................................................!72! TABLE!16!–!DIVERSITY!OF!INVENTORS:!SENIORITY!.......................................................................................................!73! TABLE!17!–!IDEAS!WITH!VS.!WITHOUT!COMMENTS!.......................................................................................................!75! TABLE!18!–!DIVERSITY!OF!COMMENTATORS:!SITE!........................................................................................................!76! TABLE!19!–!DIVERSITY!OF!COMMENTATORS:!DEPARTMENTS!.....................................................................................!76! TABLE!20!–!DIVERSITY!OF!COMMENTATORS:!RANK!......................................................................................................!77! TABLE!21!–!DIVERSITY!OF!COMMENTATORS:!SENIORITY!.............................................................................................!78! TABLE!22!–!DIVERSITY!SCORES!OF!IDEA!INVENTORS!....................................................................................................!81! TABLE!23!–!DIVERSITY!SCORES!OF!COMMENTATORS!....................................................................................................!82! !
  8. 8. ! 5! ! ! ! ! ! ! ! ! ! “Innovation is all about making new connections. Most breakthrough innovation is about combining known knowledge in new ways or bringing an idea from one domain to another”. – Mike Addison, New Business Development Manager, Procter & Gamble ! ! ! ! ! ! ! ! ! ! ! ! Chapter 1 Introduction
  9. 9. ! 6! 1. Introduction The!digital!revolution!is!opening!the!world!making!knowledge!widely!accessible.!It!is! only!a!few!hundred!years!ago!that!society!was!revolutionized!by!the!printing!press!that! gave! us! access! to! new! knowledge.! Today,! the! Internet! has! revolutionized! society! enabling!us!to!not!only!get!access!to!knowledge!but!to!be!the!producer!of!knowledge.! Moreover,!“The!Internet!of!yesterday!was!a!platform!for!the!presentation!of!content.!The! Internet!of!today!is!a!platform!for!computation”! (TED! Talk:! Don! Tapscott,! 2012).! The! connectivity!of!people!in!the!online!sphere!enables!heterogeneous!groups!to!share!and! collectively! develop! ideas! through! virtual! communities! of! interaction.! The! world! has! indeed! become! smaller! and! the! business! environment! more! complex! and! ambiguous.! The!vast!technological!advancements!and!developments!in!communication!technology! have!caused!organizational!boundaries!to!become!more!porous!and!fluid;!giving!rise!to! concepts!such!as!open!innovation!and!crowdsourcing.!! ! The!notion!of!combinatorial!innovation!derived!from!Schumpeter!(1939)!refers!to!the! acknowledgement!that!innovation!is!in!essence!‘new!combinations’.!As!argued!by!Mike! Addison,!“Innovation!is!all!about!making!new!connections.!Most!breakthrough!innovation! is!about!combining!known!knowledge!in!new!ways!or!bringing!an!idea!from!one!domain!to! another.”!(Dodgson,!et!al.,!2006:337).!Innovation!is!increasingly!being!recognized!as!the! primary! source! from! which! organizations! gain! and! maintain! competitiveness.! Making! the!‘right’!go/kill!decisions!early!on!in!the!‘fuzzy!frontSend’!of!the!innovation!process!is! rewarding!albeit!challenging.!Practitioners!continue!to!emphasize!the!need!for!creativity! and! innovation! however! as! argued! by! McAdam! and! McClelland! (2002:86),! “[…]! the! literature!and!organizational!practice![…]!remain!somewhat!lacking!in!regard!to!the!front! end! of! creativity! and! innovation,! namely! idea! generation.”! It! is! therefore! necessary! to! draw! attention! to! the! conditions! under! which! ideas! are! developed! and! look! at! the! reflective! people! who! take! part! in! their! development.! I! thus! wish! to! provide! further! insights! of! the! idea! generation! process! and! the! opportunities! offered! by! the! digital! revolution.!! !
  10. 10. ! 7! An!effort!to!support!idea!generation!by!means!of!an!online!tool!was!recently!explored!in! the!Research!&!Development!organization!(R&D)!in!Novozymes!A/S!(NZ).!NZ,!being!the! world!leader!in!industrial!enzymes,!found!resting!on!the!laurels!highly!unfeasible.!To! boost! the! enzyme! business! in! NZ,! the! Innovation! Office! experimented! with! an! idea! market.!An!idea!market!is!an!online!competition!used!for!idea!brainstorming!and!idea! ranking.! R&D! employees! from! around! the! world! were! invited! to! participate! in! a! 17S daysSlong!idea!market!in!which!it!was!possible!to!submit!ideas,!mature!each!other’s!idea! by!commenting!on!them,!and!rank!ideas!by!trading!virtual!shares!in!them.!The!outcome! from!the!idea!market,!which!was!given!the!name!Growth!Bets!2011,!was!222!ideas!with! 636!comments!submitted!by!a!crowd!of!145!participants.!As!a!result,!25!highSquality! ideas!were!identified!from!which!one!idea!was!crowned!the!winner.!The!winning!idea! has!subsequently!received!research!funding!and!two!patent!applications!have!been!filed.!! ! The!growing!phenomenon!of!online!idea!markets!is!considered!to!facilitate!innovation,! greater! participation,! production! and! dissemination! of! knowledge,! and! increased! diversity!(Bothos!et!al.,!2012).!In!this!thesis,!I!shall!thus!examine!the!case!of!NZ’s!idea! market!and!explore!the!conditions!under!which!ideas!emerge.!Moreover,!I!shall!examine! the!diversity!of!people!involved!in!developing!the!ideas!as!theory!suggests!that!diversity! is!positively!associated!with!creativity!and!innovation!(BassettSJones,!2005).!I!therefore! hypothesize!that!the!connectivity!of!diverse!people!in!idea!markets!contributes!to!the! development!of!creative!and!innovative!ideas.!! ! !
  11. 11. ! 8! 1.1 Problem Statement The!present!thesis!studies!the!abilities!of!idea!markets!as!a!tool!for!idea!generation!and! filtering.!As!argued!by!a!number!of!scholars,!the!body!of!literature!on!the!fuzzy!frontSend! of!the!innovation!process!is!far!from!exhaustive.!!The!purpose!of!this!thesis!is!therefore! to! contribute! to! the! existing! literature! with! empirical! evidence! from! the! case! of! NZ’s! Growth!Bets!2011.!The!exploratory!nature!of!the!research!has!led!to!an!investigation!of! the!effects!of!inventor!diversity!on!the!development!of!ideas.!The!question!examined!is! thus:! ! Does%the%quality1%of%ideas%emerging%from%online%idea%markets%increase%with%the% diversity%of%inventors%involved%in%developing%the%ideas?% ! 1.2 Research Relevance As!I!stumbled!upon!a!quote!by!Poul!R.!Rasmussen!(Chairman!of!the!Board,!LEO!Pharma),! I!recognize!the!unique!opportunity!I!had!been!given!as!a!researcher.!The!quote!read,! “The!strength!of!today!is!diversity.”!(Dansk!Biotek,!2012:50).!The!Eureka!moment!was! obtained!by!the!recognition!that!I!had!been!provided!an!opportunity!to!‘measure’!the! strength!of!diversity.!The!opportunity!was!given!to!me!by!NZ!who!searched!for!further! enlightenment!on!the!strengths!and!weaknesses!of!using!idea!markets!to!support!the! idea!generation!process.!When!reviewing!the!literature!on!idea!markets,!it!became!clear! that!it!was!an!understudied!phenomenon.!Given!these!insights,!I!set!out!to!connect!the! dots!in!idea!markets!and!thereby!attempt!to!contribute!to!existing!theory!with!empirical! evidence! from! NZ’s! Growth! Bets! 2011.! The! relevance! of! the! research! is! therefore! considered!abundant.!Firstly,!the!research!is!relevant!for!NZ!in!their!forthcoming!idea! markets!so!that!they!are!able!to!customize!and!design!the!basis!for!the!desired!outcome.!!! Secondly,! the! research! is! relevant! to! existing! innovation! theory! that! emphasizes! the! combinatorial!nature!of!the!concept;!however!fails!to!provide!details!as!to!how!these! new!combinations!emerge!and!develop!in!the!fuzzy!frontSend!of!the!innovation!process.! Lastly,!this!thesis!is!the!culmination!of!five!years!of!studying!at!Copenhagen!Business! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1!The!concept!of!quality!will!be!defined!in!the!Literature!Review.!
  12. 12. ! 9! School.!During!these!years,!I!have!obtained!knowledge!of!and!interest!in!organizations! and! their! pursuit! and! management! of! innovation.! Moreover,! by! studying! the! SOL! (Strategy,!Organization,!&!Leadership)!programme!as!well!as!the!BBIP!(BioBusiness!and! Innovation!programme),!I!am!convinced!that!I!am!well!equipped!for!the!task!at!hand! and!I!shall!therefore!attempt!to!provide!a!dissertation!that!not!only!fulfills!the!formal! requirements,!but!also!provides!valuable!insights!to!the!dynamic!and!innovationSdriven! company,!Novozymes.!
  13. 13. ! 10! 1.3 Disposition The!disposition!of!this!thesis!is!illustrated!in!Figure!1!below:!! ! Figure!1:!Disposition!of!thesis! !
  14. 14. ! 11! ! ! ! ! ! ! ! ! ! “Although ideas are formed in the minds of individuals, interaction between individuals typically plays a critical role in developing these ideas. That is to say, ‘communities of interaction’ contribute to the amplification and development of new knowledge.” – Ikujiro Nonaka, 1994 ! ! ! ! ! ! ! ! ! ! ! Chapter 2 Literature Review
  15. 15. ! 12! 2. Literature Review In!this!chapter,!I!shall!review!the!literature!relevant!to!the!study!of!idea!markets.!I!set! out!to!discuss!innovation!and!knowledge!theories!to!elucidate!some!underlying!concepts! to!the!embryonic!phenomenon!idea!markets.!The!objective!of!this!chapter!is!to!identify!a! research!gap!in!current!theory!in!which!the!present!thesis!aims!to!make!a!contribution.! In! this! effort,! I! review! literature! on! the! topics! of! the! idea! generation! phase,! online! opportunities,!crowdsourcing,!idea!markets,!and!diversity.!By!combining!these!research! fields,!it!is!attempted!to!shed!some!light!on!the!phenomenon!under!scrutiny.!The!reS organizing!of!prevailing!theories!and!claims!from!extant!literature!offers!opportunity!for! new! interpretations! and! thereby! contributions! to! current! theory.! The! notion! of! combinatorial! innovation! is! firstly! discussed! to! present! the! motivating! argument! throughout! the! discussions.! The! thesis! is! then! positioned! in! the! social! constructivist! school!of!thought!by!drawing!on!theory!of!complex!processes!of!knowledge!creation.!The! clarification!of!the!fuzzy!frontFend!of!the!innovation!process!then!leads!to!a!discussion!of! the!opportunities!offered!by!the!growth!of!the!Internet.!In!light!of!this,!discussions!of! crowdsourcing! and! idea! markets! are! provided.! Finally,! the! concept! of! diversity! is! elucidated!and!thereby!five!hypotheses!are!developed.!! 2.1 What is Innovation? Innovation!in!its!widest!sense!is!considered!to!be!anything!that!is!new!to!a!business! (Abernathy!&!Utterback,!1978;!in!Hine!&!Kapeleris,!2006).!The!term!originates!from!the! Latin!innovare,!which!means!‘to!make!something!new’!(Flynn!et!al.,!2003).!To!provide!a! more! narrow! definition! of! innovation,! a! distinction! must! be! drawn! between! an! innovation!and!the!process!of!innovation.!Van!de!Ven!(1986:591)!provides!a!definition!to! the! former! as! “A! new! idea,! which! may! be! a! recombination! of! old! ideas,! a! scheme! that! challenges!the!present!order,!a!formula,!or!a!unique!approach!which!is!perceived!as!new!by! the! individuals! involved”.! The! latter! is! defined! as! “[…]! the! development! and! implementation!of!new!ideas!by!people!who!over!time!engage!in!transactions!with!others! within! an! institutional! context”! (Ibid.:591).! The! definitions! provided! by! Van! de! Ven! (1986)! include! both! technical! (products,! services,! and! processes)! and! nonStechnical!
  16. 16. ! 13! (organizational! processes,! and! administration! systems)! innovations! (in! Hine! &! Kapeleris,! 2006).! According! to! Rothwell! and! Gardiner! (1985)! innovation! does! not! necessarily!imply!the!implementation!of!only!major!advance!in!the!technological!state!of! the! art! (a! radical! innovation);! it! includes! the! utilization! of! even! small! changes! in! technological!‘knowShow’!(an!improvement!or!incremental!innovation)!(in!Flynn!et!al.,! 2003).! This! assertion! is! also! supported! by! Abernathy! &! Clark! (1985:4)! who! state! “Innovation! is! not! a! unified! phenomenon:! some! innovations! disrupt,! destroy! and! make! obsolete!established!competence;!others!refine!and!improve.”! Furthermore,! it! is! argued! that! organizations! must! bestow! a! balanced! attention! to! both! incremental! and! radical! innovation! in! order! to! gain! and! maintain! competitiveness.! That! is! to! say,! they! must! divide!resources!between!exploitation!and!exploration!activities!(March,!1991).!! A!distinction!must!also!be!drawn!between!an!innovation!and!an!invention.!As!the!above! definitions!suggest,!innovation!is!the!successful!implementation!of!inventions.!Hence,!an! invention! is! not! an! innovation! until! it! is! commercialized.! Invention! refers! to! the! development! of! a! new! idea! or! act! of! creation! (Ahuja! &! Lampert,! 2001).! Schumpeter! (1939)! offers! an! interesting! analog! to! the! distinction! between! an! innovation! and! an! invention.!In!his!work!‘Business!Cycles’,!he!compares!the!concept!on!an!invention!with! Columbus’!discovery!of!America.!He!states,!“![…]!both!create!new!possibilities!and!are!no! doubt!among!the!most!important!causes!of!economic!and!social!change.!However!they!are! external!factors!in!a!sense.![…]!They!acquired!relevance!only!when!the!new!possibilities!are! turned!into!commercial!and!industrial!reality,!and!then!the!individual!acts!of!realization,! and!not!the!possibilities!themselves,!are!what!concern!us.”! (Schumpeter,! 1939:15).! The! Schumpeterian! perspective! of! innovation,! from! which! the! concept! of! combinatorial! innovation! has! its! roots,! commonly! inspires! innovation! scholars.! Schumpeter! (1939)! argued! that! innovation! is! in! essence! ‘new! combinations’.! His! definition! is! thus,! “Innovation! combines! factors! in! a! new! way,! or! it! consists! in! carrying! out! New! Combinations.”!(Ibid.:84).!These!combinations!refer!to!the!introduction!of!a!new!product! or!new!quality!of!a!product,!a!new!method!of!production,!a!new!market,!a!new!source!of! supply! of! raw! materials,! or! the! implementing! of! a! new! organization! in! any! industry! (Ibid.:84S85).!His!definition!has!been!criticized!of!being!restricted!to!only!include!the! introduction! of! innovations! –! lacking! the! subsequent! and! consequent! steps! that!
  17. 17. ! 14! constitute! innovations.! According! to! Hagedoorn! (1996),! Schumpeter! did! not! demonstrate! a! great! interest! in! the! early! phases! of! technical! change,! the! inventive! activities! of! economic! actors,! the! preSmarket! developments! of! technology,! or! the! diffusion! of! technological! knowledge.! However,! “[…]! there! seems! to! be! a! number! of! similarities! between! Schumpeter’s! discussion! of! innovation! and! modern! ‘heterodox! theories! of! innovation.’”! (Ibid.:892).! In! line! with! the! Schumpeterian! perspective,! Flemming! and! Sorensen! (2004)! argue! that! invention! is! a! recombinant! search.! An! invention!comes!either!from!combining!technological!components!in!a!novel!manner!or! through!reconfiguring!existing!combinations.!These!technological!components!refer!to! the! “[…]! fundamental! bits! of! knowledge! or! matter! that! inventors! might! use! to! build! inventions.”! (Ibid:.910).! Furthermore,! they! argue! that! even! though! complex! physical! systems!clearly!combine!multiple!elements,!many!inventions!intuitively!seem!like!one! component.!However!by!deeper!examination,!these!inventions!reveal!a!recombination!of! discrete!components!and!processes!(ibid.).! ! The! discussion! of! the! innovation! concept! has! led! to! the! assertion! that! innovation! is! based!on!new!combinations!of!knowledge.!Invention!thus!refers!to!the!search!for!new! combinations!or!the!reconfiguring!of!existing!combinations.!It!then!becomes!pertinent! to!take!a!step!back!and!discuss!how!knowledge!is!created!and!how!the!connectivity!of! individuals!enables!the!development!of!new!combinations!of!knowledge.! ! 2.2 Knowledge: the Source of Innovation It! is! difficult! to! discuss! the! development! of! ideas! without! first! addressing! how! knowledge! is! created! and! developed.! The! knowledge! phenomenon! has! been! widely! researched! among! organization! and! strategy! scholars.! From! the! traditional! resourceS based!perspective,!knowledge!has!been!recognized!as!a!principal!source!for!competitive! advantage! because! knowledge! is! idiosyncratic! and! difficultStoSimitate! (Teece,! et! al.,! 1997;! Winter,! 1987).! In! line! with! this,! Kogut! and! Zander! (1992:384)! argue,! “[…]! the! central! competitive! dimension! of! what! firms! know! how! to! do! is! to! create! and! transfer! knowledge! efficiently! within! an! organizational! context.”! ! The! resourceSbased! view! of!
  18. 18. ! 15! knowledge! triggered! a! vast! amount! of! subsequent! research,! which! built! upon! the! arguments!of!knowledge!creation,!the!notion!of!dynamic!processes.!!!! ! In! the! early! work! by! Hayek! (1945),! organizational! knowledge! is! seen! as! fragmented! units!held!in!individuals.!He!argued,!“[…]!the!knowledge!of!the!circumstances,!of!which!we! must!make!use,!never!exists!in!concentrated!or!integrated!form,!but!solely!as!the!dispersed! bits!of!incomplete!and!frequently!contradictory!knowledge,!which!all!separate!individuals! possess.”!(Hayek,!1945:519).!This!notion!of!fragmented!knowledge!is!further!developed! by!Kogut!and!Zander!(1992:383)!who!assert,!“[…]!knowledge!is!held!by!individuals,!but!is! also! expressed! in! regularities! by! which! members! cooperate! in! a! social! community.”!! Central! to! Kogut! and! Zander’s! (1992:385)! argument! is! that! knowledge! is! socially! constructed!and!“rests!in!the!organizing!of!human!resources”.!! ! In! Nonaka’s! (1994)! organizational! knowledge! creation! theory,! dynamic! processes! are! emphasized.! Nonaka! (1994:15)! argue,! “[…]! although!ideas!are!formed!in!the!minds!of! individuals,! interaction! between! individuals! typically! plays! a! critical! role! in! developing! these!ideas.!That!is!to!say,!‘communities!of!interaction’!contribute!to!the!amplification!and! development!of!new!knowledge.”! ! Nonaka’s! argument! provides! a! further! dimension! to! knowledge! creation! that! involves! the! creation! of! knowledge! by! social! interaction! between! individuals! in! communities! –! communities! that! might! span! departmental! or! organizational!boundaries!(ibid).!In!the!famous!work!‘The!Knowledge!Creating!Company’! by! Nonaka! and! Takeuchi! (1995),!the! essential! contribution! to! theory! is! the! notion! of! knowledge! conversion! that! explains! how! two! diverse! concepts! –! tacit! and! explicit! knowledge!–!interact!along!a!continuum!(Nonaka!&!von!Krogh,!2009).!Their!notions!of! tacit! and! explicit! knowledge! were! inspired! by! Michael! Polanyi! (1966)! who! described! tacit!knowledge!as!subjective!knowledge,!which!is!hard!to!formulate!and!communicate!–! as! he! put! it:! “we! can! know! more! than! we! can! tell.”! ! (Nonaka,! 1994:16).! ! Contrarily,! Polanyi! described! explicit! knowledge! as! objective! codified! knowledge! that! is! transmittable! in! informal! systematic! language! (ibid).! ! Nonaka! and! Takeuchi! (1995)! added! to! Polanyi’s! descriptions,! the! element! of! a! dialectic! process! between! tacit! and! explicit!knowledge.!In!the!dialectic!process!it!is!possible!to!transform!the!subjective!tacit! knowledge!into!objective!explicit!and!thereby!practical!knowledge.!The!transformation!
  19. 19. ! 16! occurs! through! language,! which! renders! it! possible! for! tacit! knowledge,! held! in! the! individual,!to!become!available!to!others!trough!its!transformation.!Stacey!(2001)!built! upon! Nonaka! and! Takeuchi’s! (1995)! notion! of! knowledge! transformation! with! the! concept!of!Complex!Responsive!Processes.!According!to!Stacey,!knowledge!is!not!stored!in! individuals! but! is! continually! in! flux.! He! states,! “Complex! Responsive! Processes! perpetually!construct!human!futures,!particularly![…]!they!perpetually!construct!human! knowledge! in! organizations.! Relating! between! diverse! people! in! their! local! situation! is! understood!as!the!process!in!which!knowledge!is!reproduced!and!potentially!transformed.”! (Stacey,! 2001:6).! The! complexity! perspective! of! knowledge! promoted! by! Nonaka! and! Takeuchi! (1995)! and! Stacey! (2001),! claims! that! social! interaction! of! individuals! reproduces! and! creates! new! knowledge.! The! dynamic! processes! thus! allow! for! the! combination! or! recombination! of! knowledge,! which! is! transformed! from! tacit! into! explicit!knowledge!through!social!communities!of!interaction.!! ! What!are!the!implications!for!idea!markets?!It!is!held!that!idea!markets!offer!a!tool!for! knowledge!conversion.!That!is!to!say,!the!virtual!community!of!interaction!enables!the! articulation! of! tacit! knowledge! and! thereby! transforms! it! into! practical! knowledge.! Moreover,! the! dynamic! processes! of! social! interaction! facilitate! the! amplification! and! development! of! new! knowledge.! This! is! because! idea! market! participants! not! only! submit! ideas;! they! collectively! develop! each! other’s! ideas! through! the! feature! of! commenting.! It! is! thereby! possible! to! transform! and! increase! the! quality! of! ideas! through!a!dialectic!process!of!tacit!and!explicit!knowledge!conversion.!Having!discussed! the!concept!of!knowledge!and!its!implications!for!idea!markets,!the!subsequent!sections! shall!discuss!how!ideas!are!generated,!developed!and!filtered!in!the!preliminary!stages! of!the!innovation!process.!!! ! 2.3 The Fuzzy Front-End of the Innovation Process A! vast! amount! of! innovation! theory! and! practical! tools! are! concerned! with! the! later! stages!of!the!innovation!process.!The!StageSGate!system!(Cooper,!1990)!has!become!the! most! used! innovation! management! tool! in! organizations! worldwide.! While! the! stageS gate! model! of! innovation! does! include! the! idea! generation! phase,! it! fails! to! provide!
  20. 20. ! 17! details! of! how! ideas! are! generated,! developed! and! filtered.! This! argument! is! also! supported!by!Poetz!and!Schreier!(2012:245)!who!state,!“Despite!its!obvious!importance! to!the!ultimate!success!of!a!firm,!the!idea!generation!process!is!an!area!where!scholars! generally!still!have!limited!insights!with!regard!to!the!‘ideal’!process.”! ! The! uncertainty! concerning! the! preliminary! activities! of! idea! generation! has! provided! the! phase! with! fuzzy! connotations.! This! phase,! however,! is! critical! to! any! subsequent! phase! in! the! innovation!process.!As!argued!by!Flynn!et!al.!(2003:418),!“It!is!logical!to!maximize!the! output! of! the! idea! generation! phase,! as! it! is! relatively! less! costly! than! the! later! development! stages! of! the! innovation! process.”! ! It! is! therefore! important! to! ‘fail! fast’! rather!than!‘late’!in!order!to!optimize!the!use!of!resources.!In!the!following!section,!a! brief! description! of! the! idea! generation! phase! will! be! provided! and! followed! by! a! discussion!of!the!opportunities!offered!by!the!refinement!of!the!Internet.!! ! 2.3.1 Idea Generation and Online Opportunities The! idea! generation! phase! involves! not! only! generating! ideas! but! also! filtering! and! maturing.!The!first!step!in!this!process!is!typically!to!host!brainstorming!sessions!for! small!groups!of!organizational!members.!The!brainstorming!sessions!(also!referred!to!as! ideations)! involve! bringing! colleagues! together! in! groups! to! discuss! and! develop! solutions!to!a!predefined!problem!or!opportunity.!!Ideations!can!vary!in!scope!and!size! however!the!objective!is!to!have!as!many!contributions!as!possible!as!this!increases!the! likelihood! of! arriving! at! a! viable! solution! (Flynn! et! al.,! 2003).! Various! creative! techniques! can! be! implemented! to! facilitate! the! generation! of! ideas! including! groupS work!and!high!levels!of!social!interaction.!The!subsequent!step!in!the!idea!generation! phase!is!filtering!the!generated!ideas.!The!ideas!may!be!ranked!in!order!of!priority!or! importance! to! the! organization! (ibid.).! Usually,! the! managers! are! the! judges! however! some! ideations! may! take! a! more! collectivist! approach! where! ideas! are! scored! by! the! participants!and!subsequently!filtered!based!on!the!average!scores!(ibid.).!The!filtering! of!ideas!is!an!important!step!as!it!involves!making!go/kill!decisions!of!which!ideas!to! accept! or! reject.! The! generated! ideas! may! not! only! bring! about! solutions! to! the! prevailing!problems,!they!may!indeed!offer!solutions!to!problems!not!yet!identified.!The! challenging!yet!rewarding!task!of!managers!is!thus!to!effectively!evaluate!ideas.!The!last! step! in! the! idea! generation! phase! is! to! mature! the! ideas! that! have! passed! the! first!
  21. 21. ! 18! screening.! Maturation! typically! involves! further! elucidation! of! technical! feasibility,! IP,! and!customer!need!assessment.!In!practice,!the!first!two!steps!–!generating!and!filtering! –! are! often! interconnected! activities.! This! is! because! the! social! interaction! of! participants! in! ideations! effects! how! and! what! is! articulated.! By! discussing! possible! solutions!in!the!group,!the!initial!reactions!to!proposals!from!other!group!members!will! arguably!steer!the!direction!of!proposals.!In!the!creation!of!new!solutions!there!is!thus! an! important! relationship! between! formulating! something! new! and! at! the! same! time! being! subject! to! a! screening! process! S! acceptance! or! rejection.! The! two! processes! however! touch! upon! two! different! performances;! we! might! be! able! to! think! of! something!new!but!our!screening!abilities!involve!entirely!different!capabilities.!These! capabilities!primarily!rely!on!whether!organizational!members!are!informed!about!how! ideas!fit!into!a!particular!context.!Physical!proximity!and!social!interaction!and!control! in! traditional! ideations! thus! have! implications!on!idea!generation.! These!implications! can! arguably! both! have! positive! and! negative! effects! on! idea! development.! On! the! positive! side,! mutual! understanding! and! familiarity! breed! trust,! which! facilitates! successful! collaboration! (Nooteboom,! 2007).! On! the! negative! side,! mutual! understanding! and! familiarity! can! kill! creativity! (ibid.).! Furthermore,! the! pursuit! of! social! acceptance! in! groups! with! high! social! interaction! and! control! can! have! detrimental!effects!on!novelty!because!the!costs!of!articulating!a!‘wild’!or!‘unpolished’! idea!may!be!too!high.!! ! The!idea!generation!phase!in!organizations!is!increasingly!being!transformed!by!means! of! online! tools.! The! Internet! has! provided! opportunity! to! not! only! share! information! with! a! global! community,! but! also! to! develop! information! by! means! of! computation.! Meaning!that!the!web!–!the!grand!network!of!networks!–!facilitate!idea!exchange!both!in! real!time!and!asynchronously!which!renders!it!possible!to!aggregate!disparate!flows!of! ideas!in!one!stream!(Brabham,!2008).!Furthermore,!“The!nature!of!the!web!mimics!the! very!way!we!think!as!humans![therefore]!humans!should!see!themselves!in!the!medium!as! actors,!creators,!innovators,!as!implicated!in!the!information!flow!rather!than!witnesses!to! it.”!(Ibid.:81).!Increasingly,!ideations!are!being!held!by!means!of!online!tools,!which!offer! opportunity!to!brainstorm!ideas!in!groups!of!geographically!dispersed!individuals.!The! decrease! of! social! interaction! and! control! arguably! offers! the! opportunity! for! the!
  22. 22. ! 19! articulation!of!more!novel!solutions!by!participants.!An!idea!market!arguably!legitimizes! the!presentation!of!‘wild’!or!‘unpolished’!ideas.!Furthermore,!it!is!held!that!using!idea! markets!for!idea!generation!enables!a!separation!of!the!activities!of!idea!generation!and! filtering.!The!screening!of!ideas!is!done!at!a!later!stage!rather!than!simultaneously!with! idea! proposals.! This! allows! for! the! development! of! ideas! before! they! are! subject! to! filtering!activities.!That!is!to!say,!online!ideations!offer!the!opportunity!to!increase!the! quantity! and! quality! of! ideas! at! an! earlier! stage! than! in! traditional! ideations.! The! importance!of!identifying!the!quality!of!ideas!is!considered!paramount!in!order!to!make! the!right!go/kill!decisions.!Due!to!the!scope!of!this!thesis,!a!definition!of!quality!will!be! provided!in!the!following!section.!! ! 2.3.2 Quality of Ideas In!order!to!derive!at!a!definition!of!quality,!the!concepts!of!creativity!and!novelty!shall! be! discussed.! Creativity! and! novelty! are! believed! to! be! key! characteristics! of! ideas;! however!the!degree!to!which!they!contribute!to!the!quality!of!an!idea!is!arguably!a!very! difficult!and!subjective!measure.!!In!this!thesis,!I!shall!thus!rely!on!the!judgments!from! ‘experts’!in!the!idea!market!to!be!able!to!identify!ideas!with!high!quality.!! ! An!idea!is!commonly!understood!to!be!a!concept!or!a!plan!to!be!implemented!that!offers! a!solution!to!a!problem.!Ideas!and!creativity!is!often!argued!to!be!two!sides!of!the!same! coin!–!one!does!not!exist!without!the!other.!In!line!with!the!Schumpeterian!perspective,! creativity! is! that! which! “results! in! the! generation! of! new! and! useful! ideas! or! the! combination!of!existing!ideas!into!new!and!useful!concepts!to!satisfy!a!need”!(FaridSFoad! et!al.,!1993;!in!Flynn!et!al.,!2003:419).!However,!Vandenbosch!et!al.!(2003:260)!argue! that!ideas!are!not!necessarily!creative!to!be!useful;!there!exists!‘ordinary’!ideas,!that!is,! “managers!often!rely!on!old,!ordinary!ideas!or!new!but!imperfect!ones!to!cope!with!the! challenges!they!face.”!!In!line!with!this,!Ward!(2000)!argues!that!initial!ideas!may!not!be! creative!solutions!in!themselves.!Rather!they!represent!candidate!ideas!or!preventive! forms! that! may! or! may! not! lead! to! a! creative! solution! once! they! are! explored,! transformed,! modified,! and! extended.! Similarly,! Amabile! (1983:126)! asserts! that,! “Creativity!is!the!production!of!novel!and!useful!ideas!by!an!individual!or!small!group!of! individuals!working!together”.!I!suggest!that!the!degree!of!creativity!in!ideas!may!vary!
  23. 23. ! 20! from! idea! to! idea! and! is! arguably! a! subjective! measure! bound! to! the! nature! of! the! problem.!It!is!therefore!held!that!there!exists!creativity!even!in!incremental!solutions! and!the!importance!of!fostering!creative!thinking!in!organizations!is!thus!paramount.!!!! ! Novelty! of! ideas! refers! to! the! degree! in! which! they! offer! new! solutions! to! problems.! According!to!Abernathy!and!Clark!(1985),!novelty!refers!to!the!application!of!a!known! technology! to! a! new! purpose.! Arguably,! technological! novelty! is! the! pursuit! of! all! scientists.! It! is! the! novelty! of! an! invention! that! provides! scientific! merit! and! peer! recognition.!In!order!for!a!technology!to!be!patented,!it!needs!to!exhibit!a!certain!degree! of!novelty.!The!degree!of!novelty!is!thereby!measured!by!the!hitherto!scientific!frontier.! However,!what!can!be!regarded!as!relatively!mundane!changes!in!technology!can!have! major!ramifications!in!the!market!(Abernathy!&!Clark,!1985).!Contrarily,!“what!may!be!a! startling!breakthrough!to!the!engineer!may!be!completely!unremarkable!as!far!as!the!user! of!the!product!is!concerned.”!!(Ibid.:6).!! ! How! is! quality! defined! in! this! thesis?! As! discussed,! creativity! and! novelty! are! two! important! characteristics! of! ideas.! It! is! therefore! held! that! the! ideas’! quality! initially! refers! to! the! degree! in! which! they! offer! creative! and! novel! solutions! to! problems! subjectively!recognized!by!management!who!are!the!ultimate!judges.!The!definition!of! quality!adopted!in!this!thesis!is!thus:!ideas!with!high!quality!are!those!that!are!perceived! by!organizational!members!to!exhibit!creative!and!novel!solutions!to!problems!recognized! by!an!organization.!In!this!thesis,!the!identification!of!ideas!with!high!quality!is!based!on! the! judgments! from! ‘experts’! within! the! organization! examined.! By! drawing! on! their! expertise! and! knowledge! of! what! constitute! high! quality! ideas,! the! research! can! be! focused!on!the!dynamics!shaping!high!quality!ideas!rather!than!attempting!to!identify! them.!! ! What!are!the!implications!for!idea!markets?!The!above!discussions!on!the!fuzzy!frontS end!of!the!innovation!process!have!elucidated!the!processes!of!generating,!filtering!and! maturing!ideas.!It!was!argued!that!traditional!ideations!might!have!negative!effects!on! the!formulation!of!something!radically!new.!This!is!because!close!social!interaction!and! control!facilitate!internal!filtering!of!ideas!by!participants.!The!cost!of!articulating!‘wild’!
  24. 24. ! 21! or! ‘unpolished’! ideas! in! idea! markets! is! argued! to! be! low! because! of! the! reduced! familiarity! and! social! control.! Furthermore,! the! simultaneous! activities! of! generating! and! filtering! ideas! in! traditional! ideations! render! it! impossible! for! the! further! development! of! an! idea! before! its! evaluation.! In! idea! markets,! the! ideas! have! the! opportunity!to!be!developed!with!additional!information!provided!by!other!participants.!! Idea!markets!are!thus!argued!to!enable!increased!quality!of!go/kill!decisions!because! the!decisions!are!based!on!more!mature!ideas.!In!the!subsequent!section,!I!will!discuss! the!concept!of!crowdsourcing!as!a!means!of!tapping!into!a!wider!selection!of!ideas.! ! 2.4 Crowdsourcing Ideas The! concept! of! crowdsourcing! relies! on! the! notion! of! the! wisdom! of! the! crowd.! The! wisdom!of!the!crowd!refers!to!“[…]!the!discovery!that!the!aggregate!of!a!set!of!proposed! solutions! from! a! group! of! individuals! performs! better! than! the! majority! of! individual! solutions.”! (Yi! et! al.,! 2012:452).! The! effect! has! been! demonstrated! through! various! experiments;! for! example! counting! the! number! of! jellybeans! in! a! jaw;! guessing! the! weight! of! the! ox;! and! finding! the! position! of! the! missing! submarine! (Williams! &! Williams,! 2012).! By! calculating! the! mean! of! the! suggestions! from! the! crowd,! nearly! perfect! estimates! were! found.! The! wisdom! of! the! crowd! phenomenon! is! also! used! to! predict!future!events!in!prediction!markets!or!information!markets.!It!is!thereby!held!that! information!about!the!likelihood!of!future!events!is!better!predicted!by!many!people!i.e.! the!crowd!than!by!few!individuals.!This!is!because!(i)!informants!seldom!have!access!to! all!relevant!information!and!(ii)!using!multiple!informants!lowers!the!error!component! of!the!group's!forecast!(Van!Bruggen!et!al.,!2010).!Furthermore!Stasser!and!Titus!(1985)! claim,! “Groups! can! benefit! from! pooling! members'! information,! particularly! when! members!individually!have!partial!and!biased!information!but!collectively!can!compose!a! less! biased! characterization! of! the! decision! alternatives.”! (in! Van! Bruggen! et! al.,! 2010:404).! The! central! finding! in! the! wisdom! of! the! crowd! research! is! that! when! judgments!are!made!by!a!group!of!people,!the!judgment!obtained!by!aggregating!their! judgments!is!often!as!good!as,!or!might!even!be!better!than,!the!best!person!in!the!group.! Therefore! the! wisdom! of! the! crowd! phenomenon! relies! on! being! able! to! remove! the! noise! in! individual! judgment! to! get! closer! to! the! truth! (Surowiecki,! 2004;! in!Yi! et! al.,!
  25. 25. ! 22! 2012).! However,! there! are! limits! to! the! applicability! of! the! wisdom! of! the! crowd! technique!for!knowledge!retrieval!because!many!forms!of!practical!knowledge!cannot! be!represented!with!single!continuous!or!discrete!answers!(Yi!et!al.,!2012).!That!is,!for! combinatorial!problems!it!is!not!feasible!to!take!the!mean!or!mode!of!individual!answers! to!obtain!a!group!answer!(ibid.).!This!leads!to!the!question!of!how!can!the!wisdom!of!the! crowd!technique!be!applied!to!idea!generation!in!organizations?!! ! The!case!for!crowdsourcing!ideas!externally!is!built!on!the!assertion!that,!“no!matter! who!you!are,!most!of!the!smartest!people!work!for!someone!else”.! (Lakhani! &! Panetta,! 2007:97)!The!rather!bold!statement!emphasizes!that!“[…]!in!any!given!sphere!of!activity! most! of! the! pertinent! knowledge! will! reside! outside! the! boundaries! of! any! one! organization,!and!the!central!challenge!for!those!charged!with!innovation!mission!is!to! find!ways!to!access!that!knowledge.”!(Ibid.)!!The!concept!of!open!innovation!deals!with! this! challenge! by! inviting! externally! sourced! ideas! to! solve! internal! problems! in! an! organization.! Chesbrough! (2011:69)! defines! open! innovation! as! “the! use! of! purposive! inflows! and! outflows! of! knowledge! to! accelerate! internal! innovation! and! expand! the! markets! for! external! use! of! innovation,! respectively”.! Arguably,! the! impediment! to! the! concept!is!the!high!risks!involved!concerning!the!protection!of!knowledge.!Nevertheless,! the!concept!has!gained!increased!attention!in!organizations.!Crowdsourcing!draws!on! users!or!external!experts!to!contribute!with!ideas!for!either!a!monetary!compensation! or!other!kinds!of!incentives!in!a!widely!broadcast!idea!generation!competition!(Poetz!&! Schreier,!2012).!An!example!of!crowdsourcing!ideas!is!provided!by!Don!Tapscott!(TED! Talk,!2012)!who!describes!the!successful!use!of!crowdsourcing!by!a!mining!company.! The!geologists!in!the!mining!company!could!not!locate!any!gold!in!the!mine!but!instead! of!giving!up,!they!published!the!geographical!data!on!the!Internet!and!held!a!contest! called!the!Gold!Corp!Challenge.!There!was!a!prize!of!500.000!USD!for!the!idea!that!could! tell! them! where! the! gold! was.! Some! of! the! best! submissions! did! not! come! from! geologists!but!from!computer!scientists!and!engineers.!In!fact,!the!winning!idea!came! from!a!computer!graphics!company.!The!winning!idea!helped!locate!3.5!billion!dollars’! worth!of!gold,!which!consequently!led!the!market!value!of!the!company!to!go!from!90! million!to!10!billion!USD.!Needless!to!emphasize!that!in!this!case,!the!smartest!people! did!work!for!someone!else.!!
  26. 26. ! 23! A! recent! study! by! Poetz! and! Schreier! (2012)! found! that! crowdsourcing! might! complement! the! work! of! a! firm’s! professionals! in! the! idea! generation! phase.! The! scholars!compared!ideas!created!by!both!selfSselected!users!and!professionals!in!an!idea! contest!in!the!consumer!goods!market!for!baby!products.!Their!findings!indicated!that! the!user!ideas!scored!higher!on!average!in!terms!of!novelty!and!customer!benefit!than! the! ones! generated! by! the! firm’s! professionals.! The! study! also! revealed! that! the! best! ideas!tended!to!be!more!heavily!concentrated!among!users!(ibid.).!Why!the!conclusion! can!be!drawn!that,!“firms!who!rely!too!heavily!on!their!internal!expertise!might!be!blocked! from!finding!alternative,!potentially!more!successful!solutions.”!(Ibid.:248).!! ! What!are!the!implications!for!idea!markets?!The!examples!of!crowdsourcing!ideas!have! shown!promising!results.!The!research,!however,!is!more!concentrated!on!businessStoS consumer!firms!than!on!businessStoSbusiness!firms.!What!is!more,!advanced!scientific! knowledge! held! in! highStechnology! firms! is! more! difficult! to! aggregate! and! more! unlikely!to!be!found!among!external!individuals.!The!crowdsourcing!technique!thus!has! its! limits! of! applicability! when! concerned! with! businessStoSbusiness! firms! whose! operations!involve!complicated!scientific!research.!As!argued!by!Bos!et!al.!(2007:653),! “Scientists!generally!work!with!ideas!that!are!on!the!cutting!edge!of!what!is!understood.! This!knowledge!often!requires!specialized!expertise,!is!difficult!to!represent,!may!be!tacit,! and!changes!rapidly.”!!!They!find!that!advanced!scientific!knowledge!is!the!most!difficult! to! manage! over! distances! or! disseminate! over! large! groups! (ibid.).! Furthermore,! the! protection!of!IP!and!the!requirement!of!advanced!equipment!render!it!problematic!for! highStechnology! firms! to! find! ideas! externally.! For! these! types! of! businesses,! internal! crowdsourcing!–!i.e.!idea!markets!–!can!perhaps!be!a!better!solution!for!idea!generation.!! ! 2.4.1 Idea Markets An!idea!market!is!an!online!ideaSgenerating!tool!relying!on!internal!crowdsourcing.!That! is!to!say,!an!idea!market!is!a!tool!comparable!to!external!crowdsourcing!but!involves!the! selection! of! promising! idea! contributors! from! among! the! firm’s! own! employees! (Soukhoroukova!et!al.,!2012).!As!theory!of!this!phenomenon!is!lacking!(ibid.),!this!thesis! will!investigate!the!case!of!NZ’s!Growth!Bets!2011.!The!design!and!process!of!NZ’s!idea!
  27. 27. ! 24! market! will! be! described! in! greater! detail! in! Chapter! 3;! this! section! will! thus! be! delimited!to!provide!an!overview!of!the!concept.! ! Idea!markets!serve!the!purpose!of!online!collaborative!brainstorming!and!idea!ranking.! The!purpose!of!collaborative!brainstorming!of!ideas!is!rooted!in!the!notion!that!there!is! a! large! dormant! reservoir! of! useful! ideas! in! many! companies,! however! there! is! a! shortage!of!effective!channels!to!communicate!these!ideas!(van!Dijk!&!van!den!Ende,! 2002).!The!idea!market!provides!opportunity!for!a!large!group!of!diverse!participants!to! submit!their!ideas,!develop!these!ideas!by!submitting!comments,!and!rank!ideas!through! virtual!transactions.!Ideas!are!thus!ranked!in!accordance!to!the!wisdom!of!the!crowd!as! participants!can!buy!and!sell!shares!in!all!ideas!with!play!money.!The!participants!in!the! market!have!an!opportunity!to!display!their!creativity!to!management!and!colleagues! from!all!over!the!world.!The!incentives!for!participation!can!thus!be!intrinsic!(e.g.!peer! recognition)!and!extrinsic!(e.g.!prizes!for!best!ideas!and!research!funding).!Regardless!of! the!design!of!incentives,!the!markets!provide!an!organized!and!structured!process!for! idea! extraction! and! followSup,! which! in! itself! is! a! motivational! factor! for! participants! (van! Dijk! &! van! den! Ende,! 2002).! As! argued! by! Chan! et! al.! (2002),! “[idea! markets]! improve! upon! traditional! […]! methods! by! encouraging! greater! honesty! from! the! participants,!providing!participants!with!valuable!feedback!from!other!participants,!and! offering! participants! the! ‘joy! of! competitive! play’.”! (in! Spears! et! al.,! 2009:18)! Furthermore,!Spears!et!al.!(2009)!argue!that!traditional!means!of!encouraging!new!ideas! within! businesses! such! as! suggestions! boxes! and! brainstorming! sessions! have! considerable! limitations.! This! is! because,! “suggestion! boxes! often! go! unused! because! contributors!receive!little!or!no!feedback!about!their!idea!or!visibility!into!others'!ideas.! Brainstorming! sessions! are! often! infeasible! for! soliciting! ideas! from! large,! globally! distributed!teams!with!potentially!thousands!of!contributors.”!(Spears!et!al.,!2009:19)!! ! As!previously!stated,!theory!and!research!on!idea!markets!is!far!from!exhaustive.!!Given! the!novelty!of!the!tool!and!the!vast!possibilities!for!its!further!development,!research!is! highly! relevant! for! both! practitioners! and! scholars.! Furthermore,! the! case! for! idea! markets!is!found!in!the!notion!of!combinatorial!innovation!and!that!the!biggest!‘sparks’! are!ignited!when!pieces!of!ideas!come!together!from!a!diverse!set!of!individuals.!In!the!
  28. 28. ! 25! following! section,! I! shall! therefore! draw! on! diversity! theory! to! gain! insights! of! the! implications!for!idea!development!by!the!connectivity!of!diverse!participants.!! ! 2.5%The%Implications%of%Diversity%% Diversity!in!its!widest!sense!means!‘variety’!or!‘point!or!respect!in!which!things!differ’! (Milliken!&!Martins,!1996).!The!implications!of!diversity!have!been!vastly!studied!in!a! wide!array!of!research!fields.!In!an!organizational!context,!diversity!has!been!positively! associated! with! creativity,! innovation,! and! competitive! advantage! where! it! has! been! recognized!as!a!catalyst!of!creativity!in!teams!(West!&!Anderson,!1996;!in!BassettSJones,! 2005).!Furthermore,!Milliken!and!Martins!(1996:402)!studied!the!body!of!literature!on! diversity! and! found! that! “Diversity! in! the! composition! of! organizational! groups! affects! outcomes! such! as! turnover! and! performance! through! its! impact! on! effective,! cognitive,! communication,! and! symbolic! processes”.! The! effects! of! diversity! on! organizational! or! team! performances! are! thus! paradoxical! in! nature.! On! the! one! hand,! a! high! level! of! diversity! can! lead! to! less! integrated! groups,! dissatisfaction! and! higher! turnover! (ibid.:403).! Similarly,! BassettSJones! (2005:171)! argues! that! diversity! damages! cohesiveness,! reduces! communication! and! produces! inSgroups! and! outSgroups.! “This! results! in! discord,! distrust,! poor! quality! and! lack! of! customer! focus! and! market! orientation.”!!On!a!more!positive!note,!research!also!suggests,!“More!diverse!groups!have! the!potential!to!consider!a!greater!range!of!perspectives!and!to!generate!more!highFquality! solutions! than! less! diverse! groups.”! (Milliken! and! Martins,! 1996:403).! Also,! “[…]! when! diversity!is!managed!well,!it!can!enhance!creativity,!resulting!in!increased!commitment,!job! satisfaction! and! a! better! interface! with! the! market! place.”! (BassettSJones,! 2005:171).! Furthermore,! teams! that! are! characterized! by! high! network! heterogeneity! whereby! relationships!in!the!team!cut!across!salient!demographic!boundaries,!enjoy!an!enhanced! learning!capability!(Reagans!&!Zuckerman,!2001).!McAdam!and!McClelland!(2002:90)! found!that!“While!diverse!teams!are!often!more!creative!than!homogeneous!teams,!they! are! also! more! likely! to! fail! if! their! diversity! is! not! positively! managed.”! Resource! heterogeneity! provides! the! potential! for! learning! and! innovation! especially! when! dealing! with! exploration! activities! (Nooteboom,! 2007).! The! doubleSedge! sword! of! diversity!is!thus!found!by!the!increased!opportunity!for!learning!and!creativity!along!
  29. 29. ! 26! with! a! higher! risk! of! dissatisfaction,! misunderstanding! and! lack! of! cohesiveness! (Milliken!&!Martins,!1996).!! A! distinction! must! be! drawn! between! types! of! diversity.! Inspired! by! Milliken! and! Martins! (1996),! the! first! type! is! observable! attributes! such! as! nationality,! ethnic! background,!gender,!and!age.!The!second!type!is!less!visible!skillFbased!attributes!such!as! education,! technical! abilities,! functional! background,! and! tenure! in! the! organization.! Leonard! and! Swapp! (1999)! argue! that! it! takes! more! than! ethnic! and! demographic! diversity!to!result!in!creativity!that!leads!companies!to!perform!better!(in!BassettSJones,! 2005).! Diversity! in! personalities,! values! and! beliefs! can! have! large! effects! on! collaboration!in!teams!(Schein,!1985).!As!the!research!in!this!thesis!is!concerned!with! idea! markets,! the! relevance! of! diversity! in! personalities! is! arguably! not! great.! This! is! because!the!online!connectivity!of!geographical!dispersed!individuals!in!idea!markets,! results! in! less! social! interaction! and! control! than! traditional! group! work.! The! consequences! of! diversity! such! as! dissatisfaction,! misunderstanding! and! lack! of! cohesiveness! shall! not! be! examined! in! this! thesis.! Rather,! the! impact! on! cognitive! outcomes!(i.e.!quality!of!ideas)!is!what!is!investigated.!It!is!therefore!hypothesized!that! lack! of! physical! proximity! and! familiarity! offers! an! opportunity! to! articulate! wild! or! unpolished! ideas! regardless! of! social! acceptance! and! cohesiveness.! The! diversity! attributes!that!are!particular!relevant!in!the!idea!market!context!is!arguably!diversity!in! organizational!affiliation.!More!specifically,!the!dimensions!examined!in!this!thesis!are! diversity!in;!geographical!location;!functional!background;!hierarchical!level!and!tenure! in!the!organization.!These!dimensions!thus!include!both!observable!attributes!and!skillS based!attributes.!! Nooteboom!et!al.!(2007)!studied!the!concept!of!cognitive!distance,!which!refers!to!the! extent! that! people! have! developed! along! different! life! paths! and! in! different! environments,!they!interpret,!understand!and!evaluate!the!world!differently.!They!argue! that!for!organizations!to!achieve!a!common!purpose,!organizational!members!need!not! agree! on! personal! goals! however! they! need! to! share! certain! basic! perceptions! and! values! to! sufficiently! align! their! competences! and! motives.! The! research! of! cognitive! distance!by!Nooteboom!et!al.!(2007)!focused!on!collaboration!between!technology!firms! and! its! relation! to! innovation! performance.! The! research! proposed! that! there! is! an!
  30. 30. ! 27! invertedSU!shaped!relationship!between!cognitive!distance!and!innovation!performance.! As! cognitive! distance! increases,! it! has! a! positive! effect! on! learning! by! interaction! because! it! yields! opportunities! for! novel! combinations! of! complementary! resources! (ibid.).! ! At! a! certain! point,! however,! “[…]! cognitive! distance! becomes! so! large! as! to! preclude!sufficient!mutual!understanding!needed!to!utilize!those!opportunities.”!(Ibid.:3).! The! challenge,! they! argue,! is! to! find! partners! at! sufficient! cognitive! distance! to! tell! something!new,!but!not!so!distant!as!to!preclude!mutual!understanding.!! In!the!case!of!idea!markets,!I!argue!that!the!invertedSU!shaped!relationship!is!discarded! on!behalf!of!a!continuous!upward!sloping!line.!My!argument!is!twoSfold.!Firstly,!because! idea!markets!rely!on!participants!selected!internally!from!the!same!organization.!It!is! therefore!argued!that!the!mutual!understanding!of!the!firm’s!purpose!and!goals!is!great,! which!result!in!less!cognitive!distance!between!individuals.!Furthermore,!the!multiple! firmSlevel! study! by! Nooteboom! et! al.! (2007)! involves! large! and! more! heterogeneous! groups! than! in! the! present! case! of! idea! markets,! which! only! involves! small! inventor! teams.!The!research!in!this!thesis!is!therefore!only!concerned!with!the!upwardSsloping! effect.! Secondly,! the! variety! of! perspectives! involved! in! developing! ideas! through! the! feature!of!commenting!does!not!have!a!detrimental!effect!on!cognitive!outcomes.!That!is! to!say,!diversity!of!commentators!can!only!contribute!to!the!quality!of!ideas!by!adding! additional!information!to!the!previously!articulated!information.!Because!comments!are! added!over!time!instead!of!immediately!through!inSgroup!discussion,!the!comments!will! not!result!in!a!downward!sloping!effect.!Rather,!if!an!added!comment!is!out!of!context! (e.g.! a! sign! of! misunderstanding),! the! comment! can! be! disregarded.! The! cognitive! outcomes! from! added! comments! can! thus! only! have! an! upwardSsloping! effect.! Misunderstandings!and!lack!of!cohesiveness!do!thereby!not!decrease!the!value!of!ideas! but!rather!provide!opportunity!to!combine!and!build!new!knowledge.!The!decrease!in! social! interaction! and! control! thus! allow! for! more! creative! and! novel! solutions! to! be! articulated! by! a! diverse! set! of! participants.! I! therefore! argue! that! diversity! of! participants! can! increase! the! quality! of! ideas.! The! diversity! parameters! and! the! hypotheses!examined!in!this!thesis!shall!be!presented!in!the!following!sections.!! ! !
  31. 31. ! 28! 2.5.1 Geographical Diversity Multinational!organizations!depend!on!people!throughout!the!world!to!carry!out!their! operations!and!it!is!therefore!held!that!the!distinctiveness!of!workforce!competencies! derived!from!different!nationalities!contribute!with!organizational!diversity!(Caliguiri,! 2010).!Hofstede!!(1983)!argue!that!nationalities!of!employees!play!an!important!role!in! organizational! management! for! at! least! three! reasons.! The! first! reason! is! political! because!nations!are!political!units,!rooted!in!history,!with!their!own!institutions:!form!of! government,! legal! systems,! educational! systems,! labor! and! employer’s! association! systems! (ibid).! The! second! reason! is! sociological! because! nationality! has! a! symbolic! value!to!citizens.!It!is!held!that!we!all!derive!part!of!our!identity!from!it!(ibid).!The!third! reason! why! nationality! is! important! is! psychological! because! our! thinking! is! partly! conditioned! by! national! cultural! factors! (ibid).! Hofstede! (1983)! refers! to! ‘mental! programming’!as!a!consequence!of!past!experiences,!which!effects!our!interpretation!of! new! experiences.! He! argues! that! we! become! mentally! programmed! when! we! share! experiences! with! other! members! of! our! nation! (ibid.).! Hofstede’s! (1983)! longitudinal! study!of!50!nations!and!regions!indicated!clear!differences!in!cultural!dimensions!such! as! individualism! vs.! collectivism,! power! distance,! uncertainty! avoidance,! and! masculinity!vs.!femininity.!In!this!thesis,!geographical!diversity!refers!to!the!countries!in! which! employees! carry! out! their! operations.! Milliken! and! Martins! (1996)! draw! on! a! study! by! Watson! et! al.! (1993)! who! found! that! diversity! in! nationality! have! different! impacts!on!group!performance.!In!the!initial!stages!of!group!interaction,!homogenous! groups!performed!better.!However!in!later!stages!of!group!interaction,!diverse!groups! (in! terms! of! nationality)! scored! higher! on! two! aspects! of! performance:! range! of! perspectives! and! alternatives! generated! (Milliken! &! Martins,! 1996).! The! range! of! perspectives! and! alternatives! generated! are! elements! that! are! consistent! with! the! benefits!of!diversity!investigated!in!this!thesis.!I!thus!posit!the!following!hypothesis:! Hypothesis 1 H1:% Geographical!diversity!will!increase!the!quality!of!ideas!presented!and! developed!in!idea!markets! !
  32. 32. ! 29! 2.5.2 Functional Diversity Functional!diversity!refers!to!the!differences!in!skills!and!competences!acquired!from! working!in!specific!functional!areas!in!an!organization.!In!line!with!the!combinatorial! view!of!innovation,!it!is!held!that!radical!innovations!often!happen!at!the!intersection!of! disciplines! (Lakhani! &! Jeppesen,! 2007).! Furthermore,! “The!more!diverse!the!problemF solving!population,!the!more!likely!a!problem!is!to!be!solved.!People!tend!to!link!problems! that!are!distant!from!their!fields!with!solutions!they’ve!encountered!in!their!own!work”.! (Ibid.:1).!It!is!therefore!key!to!bring!people!together!from!upstream!and!downstream! functional!areas!so!that!they!can!communicate!and!bring!coordinated!knowledge!to!bear! on!a!project!(Keller,!2001).!Milliken!and!Martins!(1996)!found!that!diversity!along!skillS! or! knowledgeSbased! dimensions! have! some! positive! cognitive! outcomes! for! project! teams.!This!is!because!diversity!translates!into!a!greater!variety!of!perspectives!being! brought! to! bear! on! decisions! and,! thereby,! increases! the! likelihood! of! creative! and! innovative!solutions!to!problems!(ibid.).!Ancona!and!Caldwell!(1992)!found!conflicting! outcomes! of! functional! diversity.! Although! their! study! indicated! a! negative! effect! on! teamSrated!performance,!an!indirect!positive!effect!was!found!on!innovation!through!its! association! with! an! increased! frequency! of! communication! with! those! outside! the! project!group.!The!positive!effect,!they!argue,!may!lie!in!the!creation!of!linkages!to!those! not!in!the!team!(ibid).!Furthermore,!Simons!(1995)!argue!“Functional!diversity!will!only! be! positively! associated! with! organizational! performance! when! the! team! uses! decision! processes!that!allow!debate”! (in!Milliken! &! Martins,! 1996:410).! The! positive! effects! of! functional!diversity!are!thus!consistent!with!the!idea!market!concept,!which!allow!for! debate!by!the!feature!of!commenting.!The!benefits!of!functional!diversity!are!advocated! by!Hansen!and!Birkinshaw!(2007:3)!who!found!that,!“the!biggest!sparks![…]!are!ignited! when! fragments! of! ideas! come! together! –! specifically! when! individuals! across! units! brainstorm![…]”.!I!thus!posit!the!following!hypothesis:! Hypothesis 2 H2:! ! Functional! diversity! will! increase! the! quality! of! ideas! presented! and! developed!in!idea!markets! !
  33. 33. ! 30! 2.5.3 Hierarchical Diversity Hierarchical! diversity! refers! to! employees’! job! classifications! and! ranks! in! the! organization.! Although! organizational! tenure! (discussed! in! the! following! section)! is! sometimes! argued! to! include! the! hierarchical! level! of! employees,! for! the! sake! of! this! thesis,!hierarchical!diversity!is!separated!from!tenure.!Hierarchical!diversity!is!relevant! to! consider! as! it! is! held! that! the! higher! one! climbs! the! hierarchical! ladder,! the! less! scientific! and! specialized! becomes! one’s! daily! tasks.! Scientists! who! are! lower! in! the! hierarchy! are! expected! to! work! with! highly! specialized! and! technical! tasks! that! can! provide! solutions! to! highStechnological! and! complicated! problems.! Managers,! on! the! other!hand,!are!expected!to!effectively!manage!these!scientists!and!furthermore!focus!on! the! organization’s! overall! strategy.! It! is! therefore! managers’! task! to! secure! that! resources!are!spent!on!activities!that!fit!into!the!organization’s!strategy.!Theory!on!the! effects!of!hierarchical!diversity!is!scarce,!however,!it!is!only!logical!to!assume!that!by! hierarchical! diversity! comes! more! diverse! perspectives! and! more! critical! evaluation.! This!is!because!the!synergy!between!specialized!and!nonSspecialized!tasks!provide!both! highStechnological!knowledge!and!knowledge!on!the!overall!organizational!context!in! which!it!has!to!fit.!I!thus!posit!the!following!hypothesis:! Hypothesis 3 H3:!!Hierarchical!diversity!will!increase!the!quality!of!ideas!presented!and! developed!in!idea!markets! 2.5.4 Tenure Diversity Tenure!diversity!refers!to!the!difference!in!seniority!of!organizational!members.!More! specifically,! tenure! refers! to! the! amount! of! time! members! have! worked! in! the! organization.! Research! suggests! that! individuals! identify! with! others! who! enters! an! organization! or! department! at! the! same! time! and! that! this! identification,! in! turn,! influences! behavior! (Milliken! &! Martins,! 1996).! ! According! to! Ancona! and! Caldwell! (1992),! teams! that! draw! their! members! from! different! cohorts! achieve! higher! performance! because! members! who! have! entered! the! organization! at! different! times! know!different!set!of!people,!have!different!technical!skills,!and!different!perspectives! on! the! organization’s! history.! Homogeneous! groups! in! terms! of! tenure! may! be! more!
  34. 34. ! 31! harmonious,! however! the! performance! of! such! teams! is! limited! by! the! relative! redundancy! of! members’! perspectives,! information,! and! resources! (Reagans! &! Zuckerman,!2001).!Milliken!and!Martins!(1996:414)!state,!“Arguments!for!the!impact!of! team! tenure! heterogeneity! on! organizational! actions! are! based! on! the! idea! that! tenure! heterogeneity! reduces! groupthink! and! increases! creativity.”! I! thus! posit! the! following! hypothesis:! Hypothesis 4 H4:! ! Tenure! diversity! will! increase! the! quality! of! ideas! presented! and! developed!in!idea!markets! ! 2.5.5 Diversity Aggregated across Multiple Dimensions As! discussed! above,! research! suggests! that! diversity! in! observable! attributes! (i.e.! nationality)! affect! the! cognitive! outcomes! (e.g.! quality! of! ideas)! in! groups! in! positive! ways! (Milliken! &! Martins,! 1996).! Similarly,! diversity! on! skillSbased! dimensions! (i.e.! functional!background,!hierarchical!level,!and!tenure)!also!generally!has!been!found!to! be!associated!with!cognitive!benefits!(ibid.).!The!final!hypothesis!in!this!thesis!is!thereby! concerned! with! diversity! aggregated! across! these! dimensions.! I! thus! posit! the! final! hypothesis:!!! Hypothesis 5 H5:! ! Diversity! aggregated! across! multiple! dimensions! will! increase! the! quality!of!ideas!presented!and!developed!in!idea!markets! ! The!five!hypotheses!presented!above!shall!be!tested!in!the!Analysis!and!thereby!lead!to! the!conclusions!answering!the!research!question.!The!subsequent!section!shall!briefly! summarize!the!discussions!provided!in!this!Literature!Review!and!further!elucidate!the! research!gap!that!is!sought!filled!in!this!thesis.!! 2.6 Research Gap The! review! of! literature! and! theoretical! discussions! provided! in! this! chapter,! have! elucidated!concepts!relevant!to!the!phenomenon!under!scrutiny!–!a!phenomenon!that!
  35. 35. ! 32! may!have!potential!to!support!organizations!with!activities!in!the!fuzzy!frontSend!of!the! innovation!process.!It!has!been!argued!that!an!idea!market!is!a!tool!for!the!conversion!of! knowledge!from!tacit!into!explicit!through!interaction!of!participants.!The!tool!provides! a!channel!for!the!articulation!of!dormant!ideas!and!improving!these!by!amplified!and! new!knowledge!facilitated!by!the!virtual!community!of!interaction.!Furthermore,!idea! markets!enable!the!separation!of!two!activities!most!often!interconnected!in!the!idea! generation!phase:!idea!generation!and!filtering.!The!separation!of!these!activities,!it!is! argued,! results! in! the! development! of! higher! quality! ideas! by! allowing! ‘wild’! or! ‘unpolished’! ideas! to! flourish! and! develop! before! they! are! subject! to! evaluation! –! acceptance!or!rejection.!This!in!turn!enables!managers!who!ultimately!make!the!go/kill! decisions! to! base! their! decisions! on! a! more! informed! foundation.! Furthermore,! the! wisdom!of!the!crowd!technique!used!in!idea!markets,!ads!quality!to!the!go/kill!decisions! of!ideas.!This!is!because!when!judgments!are!made!by!a!group!of!people,!the!judgment! obtained!by!aggregating!their!judgments!is!often!as!good!as,!or!might!even!be!better! than,!the!best!person!in!the!group.!The!research!gap!identified!in!this!thesis!concerns!the! implications!of!diversity!in!idea!markets.!By!examining!diversity!theory,!it!was!found! that! diversity! in! groups! of! individuals! have! positive! effects! on! problemSsolving! and! innovation!capabilities.!This!is!because!diversity!leads!to!a!greater!range!of!perspective! and!more!critical!evaluation.!!The!notion!of!an!inverted!USshaped!relationship!between! cognitive!distance!and!innovation!capabilities!provided!by!Nooteboom!et!al.!(2007)!was! discarded!in!the!case!of!idea!markets!on!behalf!of!an!upward!sloping!relationship.!The! hypotheses!developed!thus!assert!that!in!the!case!of!idea!markets,!diversity!will!lead!to! increased!quality!of!ideas.!The!gap!that!the!research!attempts!to!fill!is!thus!concerned! with!the!empirical!findings!from!an!investigation!of!the!implications!of!diversity!for!the! development!of!ideas.!!! ! !
  36. 36. ! 33! ! ! ! ! ! ! ! ! ! “[GB11] is a much more efficient way for idea generation than traditional ideations where you are ‘forced’ to create ideas. In GB11 it was possible to look into other aspects of ideas because of the longer period of time in comparison to traditional ideations.” – GB11 participant ! ! ! ! ! ! ! Chapter 3 Company and Case Profile
  37. 37. ! 34! 3. Company and Case Profile In!this!chapter,!I!shall!provide!a!short!description!of!the!case!company!Novozymes!and! the! department:! the! Innovation! Office.! Furthermore,! I! shall! provide! a! detailed! description!of!NZ’s!idea!market:!Growth!Bets!2011.! ! 3.1 Novozymes in Brief Novozymes!A/S!is!a!Danish!biotech!company!spun!out!from!Novo!Nordisk!A/S!in!2000.!! With! 47%! market! share! in! the! enzyme! industry,! NZ! has! become! the! world! leader! in! industrial!enzymes!and!microorganisms2.!NZ!is!a!businessStoSbusiness!company!selling! over! 700! products! in! 130! different! countries! and! in! 40! different! industries.! NZ! is! a! highly! international! company! with! 50%! of! the! 5,400! employees! working! outside! Denmark.! NZ’! solutions! are! used! in! the! production! of! numerous! products! such! as! biofuel,! detergents,! feed! and! food.! By! having! such! a! diverse! product! portfolio,! NZ’s! vision!is!to!provide!their!customers!with!sustainable!and!green!products!that!will!lead!to! a!complete!bioFbased!society.!!Enzymes!are!efficient!biological!catalysts!known!from!any! living!organism.!They!are!used!in!production!to!increase!efficiency!and!yield!of!a!wide! range!of!processes!in!our!society.!With!enzymes!‘we!can!produce!more!with!less’!and! contribute!to!the!decoupling!of!economic!growth!and!use!of!natural!resources.!! The!key!element!to!NZ’s!success!is!innovation.!NZ!is!a!highly!innovationSdriven!company! with!over!7,000!pending!and!issued!patents!and!164!new!patent!families!filed!in!2011.! Furthermore,!NZ!is!spending!14%!of!annual!turnover!in!R&D.!As!a!result,!NZ!is!able!to! launch!many!new!products!every!year!(8!new!products!scheduled!for!2012)!and!new! products!accounts!for!25%!of!the!annual!turnover.!The!R&D!organization!in!NZ!consists! of!1,024!employees!of!which!40%!are!working!outside!Denmark.!!NZ’s!Enzyme!Business! operates!in!five!main!areas:! 1. Household!Care!enzymes!–!used!in!household!and!industrial!laundry!and! dishwashing!detergents.! 2. Other!Technical!enzymes!–!used,!among!other!things,!in!the!transformation!of! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2!Information!about!the!company!is!gathered!from!an!internal!presentation!from!March!2012.!
  38. 38. ! 35! starch!into!different!kinds!of!sugars.!This!also!includes!enzymes!for!the!textile! industry.! 3. Food!enzymes!–!enhance!quality!and/or!efficiency!in!the!manufacture!of!food! products!such!as!bread,!wine,!juice,!beer,!noodles,!pasta,!and!alcohol.! 4. Feed!enzymes!–!when!added!to!animal!feed!increases!the!nutritional!value!of!the! feed.! 5. Bioenergy!–!enzymes!used!for!the!production!of!biodiesel,!biogas!and!other! biofuels.! As!competition!grows!worldwide,!the!continued!success!of!NZ!depends!on!its!ability!to! innovate! in! all! parts! of! the! organization.! Providing! an! enabling! environment! for! the! organization’s!highly!skilled!workforce!is!therefore!paramount.!!! ! 3.2 The Innovation Office The!case!examined!in!this!thesis!was!determined!in!collaboration!with!the!Innovation! Office! (IO)! where! I! have! held! a! student! position! since! September! 2011.! IO! is! a! department!in!NZ’!R&D!organization!composed!of!a!small!team!of!Managers,!Directors,! and!a!Vice!President.!The!raison!d’être!of!the!office!is!ensuring!that!NZ!maintains!its! leadership!position!as!the!most!innovating!biotech!company!in!the!world.!The!office’s! efforts! are! focused! on! developing! and! administering! projects! and! tools! that! facilitate! idea! generation! and! maturation.! Furthermore,! The! office! is! also! involved! in! political! debate! in! the! EU! and! OECD! with! the! goal! of! promoting! more! favorable! laws! and! subsidies!for!a!bioSbased!society.!The!goal!of!IO!is!catalyzing!innovation!throughout!the! entire! R&D! organization! by! means! of! implementing! and! administrating! a! variety! of! tools,!which!include!ideations!(brainstorming!sessions),!the!Idea!Web!(suggestion!box! on!the!Intraweb),!and!RIC!projects!(maturation!of!ideas).!! ! Ideations!are!administered!by!the!IO!and!involve!bringing!together!a!team!of!scientists! to! brainstorm! ideas! relating! to! specific! challenges! or! opportunities.! They! typically! unfold! in! a! very! organized! workshop! setting! during! one! or! two! days.! As! the! R&D!
  39. 39. ! 36! workforce!is!spread!throughout!the!world,!much!time!and!resources!are!being!spent!on! travelling.!! ! A!second!idea!generation!tool!administered!by!the!IO!is!the!Idea!Web,!which!is!an!online! suggestion!box.!The!Idea!Web!is!open!to!all!in!the!R&D!organization!all!year!round!and!it! only!takes!a!couple!of!clicks!on!the!Intraweb!to!post!an!idea.!It!is!the!IO’s!responsibility! to! screen! the! ideas! and! pass! them! on! to! relevant! idea! champions.! In! practice,! the! screening!of!ideas!is!done!by!a!single!member!of!the!office!who!checks!the!Idea!Web!a! couple! of! times! a! week! and! then! either! disregards! or! forwards! by! eSmail! the! idea! to! relevant!people!in!the!organization.!!This!screening!process!is!arguably!suboptimal!and! often!leaves!very!little!feedback!to!the!idea!contributor.!! ! A!third!initiative!steered!by!the!IO!is!the!Radical!Innovation!Catalysts!(RIC).!RIC!involve! maturing!ideas!from!Ideations!and!developing!them!into!New!Lead!projects.!RIC!is!built! of!a!volunteering!community!of!employees!called!the!RIC!Community!who!are!allocated! projects!with!the!purpose!of!maturing!them.!! ! With!increasing!growth!ambitions!for!2011,!R&D!Management!recognized!the!need!to! kick! off! more! large! growth! initiatives.! The! strategy! was! therefore! to! implement! new! processes!that!could!help!identify!and!mature!at!least!two!new!DKK!500!million!bets.!It! was!IO’s!responsibility!to!develop!and!steer!the!new!processes!that!would!help!boost!the! enzyme!Business.!The!IO!therefore!experimented!with!the!idea!market!tool!in!the!fall!of! 2011.!! ! 3.3 Growth Bets 2011 The! overall! goal! of! GB11! was! to! identify! at! least! two! new! ideas! that! had! substantial! growth!potential!to!expand!Novozymes’!product!pipeline.!By!applying!the!untraditional! idea!generation!tool,!it!was!possible!to!combine!and!build!upon!the!traditional!methods! used!for!idea!generation!and!maturation!in!a!novel!and!entertaining!manner.!The!GB11! tool!combined!two!key!aspects!of!the!traditional!tools!by!involving!a!pool!of!selected! employees!and!having!an!online!setup.!Furthermore,!GB11!offered!a!setting!of!a!global!
  40. 40. ! 37! ideation!uniting!employees!who!nonShabitually!work!together!to!share!ideas,!developed! each!other’s!ideas,!and!additionally!rank!ideas!by!buying!and!selling!shares.!Inspiration! to!the!setup!of!GB11!and!the!online!platform!were!provided!by!an!external!consultancy! firm!called!NOSCO!that!specializes!in!idea!markets.!NOSCO,!besides!administrating!the! global! online! ideation,! organized! workshops! for! the! GB11! Taskforce! (organizing! committee)!where!the!specific!setSup!and!features!of!the!idea!market!were!designed.! The!following!sections!will!account!for!the!process!and!design!of!GB11.! ! 3.3.1 Rules of the Game The!course!of!GB11!ran!from!September!2011!to!January!2012!and!was!steered!by!an! organizing! committee! referred! to! as! the! GB11! Taskforce.! The! Taskforce! consisted! of! eight!people!(three!form!Denmark,!three!from!the!US,!and!two!from!China)!who!were! invited! by! the! Innovation! Office.! The! Taskforce! together! with! the! consultant! from! NOSCO!held!two!workshops!(three!hours!each).!At!the!two!workshops,!the!process!and! design!of!GB11!were!discussed!and!determined!based!on!NOSCO’s!recommendations.! The!process!of!GB11!can!be!divided!into!six!phases!as!illustrated!in!Figure!2!below.! ! Figure!2:!GB11!Process% ! !
  41. 41. ! 38! 3.3.1.1 Mobilize People The!first!phase!involved!recruiting!people!to!participate!in!the!game.!Two!teams!were! formed:!(i)!a!Screen!Team!and!(ii)!a!Maturation!Champions!team.!The!Screen!Team!was! formed!of!seven!R&D!managers!and!directors!who!had!the!responsibility!to!screen!TopS 25!best!ideas!and!select!TopS5!ideas!from!these.!The!Maturation!Champions!were!a!team! of!five!R&D!managers!who!committed!to!spend!30%!of!their!work!time!for!three!to!four! weeks!to!work!on!maturing!the!TopS5!ideas.!The!Maturation!Champions!were!selected! by!the!Screen!Team.!The!Screen!Team!and!the!Taskforce!could!invite!five!to!ten!people! each!to!participate!in!the!idea!market.!The!invited!participants!were!selected!based!on!a! recognized!ability!to!problemSsolve!and!generate!ideas!by!the!inviters.!Participants!in! GB11! were! thus! ‘handpicked’! rather! than! randomly! selected.! Additionally,! R&D! Management!(Senior!Directors,!Vice!Presidents!and!the!Executive!Vice!President)!was! invited!to!participate!as!‘observers’!in!the!market.!The!Screen!Team!and!Taskforce!were! also!participants,!which!resulted!in!a!total!of!145!invited!participants.!!!!! ! 3.3.1.2 Conceive Ideas The! second! phase! involved! the! 17SdaysSlong! online! ideation! where! the! 145! invited! participants!could!submit!an!unlimited!amount!of!ideas!and!comments.!The!idea!market! was!commenced!with!an!online!meeting!where!NOSCO’s!consultant!briefed!participants! on!the!practicalities!and!features!of!the!game.!All!participants!had!an!online!profile!with! name!and!picture!(if!they!wished)!similar!to!a!Facebook!profile!where!they!could!see!a! summary! of! recent! activity! on! the! site.! R&D! Management! had! the! option! to! be! anonymous! in! the! market.! They! were! therefore! able! to! comment! on! and! trade! ideas! anonymously.!Participants!were!encouraged!to!submit!ideas!by!writing!a!brief!summary! and!attach!documents!and!links!to!support!their!idea.!There!were!three!predetermined! categories!for!ideas!determined!by!the!Taskforce!and!Screen!Team.!The!ideas’!scope!was! thus!delimited!to!fit!into!one!of!the!following!three!categories:! ! 1) Entirely% new% enzymeLusing% industries:% refers! to! ideas! that! involve! enzymes! and!applications!in!industries%that!are!currently!not!using!enzymes.!This!category! is!arguably!the!most!radical!because!of!the!difficulty!involved!with!penetrating!an!
  42. 42. ! 39! entirely!new!industry.!It!can!therefore!be!argued!that!this!category!is!the!farthest! away!from!the!core!business!in!NZ.% 2) New%industrial%applications%for%existing%enzymes:%refers!to!ideas!that!involve! new!applications!of!enzymes!that!NZ!currently!have!on!the!‘shelf’!in!industries! that! NZ! currently! supply! with! enzymes.! This! category! is! semiSradical! as! it! is! arguably!more!difficult!to!develop!new!applications!than!new!enzymes!in!NZ.% 3) Industrial%applications%for%new%enzymes%/%new%enzyme%classes:%refers!to!the! development! of! new! enzymes! /! enzyme! classes! for! existing! industries.! This! category!is!arguably!the!least!radical!as!enzyme!discovery!is!the!expertise!of!NZ! and!is!thus!the!closest!to!the!core!business.% ! From! the! point! of! view! of! R&D! scientists,! the! three! categories! are! very! broad! and! thereby!leave!room!for!a!wide!array!of!ideas.!An!additional!feature!of!the!market!was!to! comment!on!the!submitted!ideas!to!support!the!idea!with!additional!information,!raise! questions!to!the!idea!submitter,!and/or!show!appreciation!or!concerns!of!the!idea.!This! feature! enabled! participants! to! build! on! each! other’s! ideas! and! concepts! with! their! knowledge.!The!comments!were!visible!for!all!participants!and!it!was!possible!to!attach! documents! and! links! in! the! comment! threads! as! well.! If! multiple! colleagues! had! discussed!an!idea!that!they!wished!to!share!in!the!game!(whether!it!was!participants!or! employees!not!participating!in!GB11),!it!was!possible!to!include!coSinventors!in!the!idea! description.!A!third!distinct!feature!of!GB11!was!the!trading!of!ideas,!which!enabled!the! crowd!of!participants!to!rank!ideas.!All!participants!were!allocated!100.000!$!of!fictive! money.!They!could!then!buy!shares!in!their!favorite!ideas!(except!in!their!own!ideas)! and! sell! the! shares! again! if! the! idea! in! which! they! had! bought! shares! became! less! attractive!by!either!the!comments!or!because!other!ideas!became!more!attractive.!The! trading!feature!was!open!during!the!entire!online!ideation!and!the!transactions!were! made!between!the!participant!and!the!system,!hence!not!with!other!participants.!The! value! of! the! invested! shares! increased! by! the! amount! of! shares! bought! by! other! participant! in! the! same! ideas.! Likewise,! the! value! of! invested! shares! decreased! when! participants!sold!their!shares!in!the!idea.!At!the!closing!of!the!market!on!November!9th! 2011,!the!ideas!where!ranked!by!the!value!of!their!shares!bought!by!participants.!The!
  43. 43. ! 40! value!of!the!ideas!where!based!on!the!value!of!the!shares!bought!and!not!on!the!amount! of!investors.!! ! 3.3.1.3 Screen Ideas The! third! phase! was! to! screen! ideas! in! order! to! identify! the! best! ideas! with! a! large! growth!potential.!GB11!had!generated!222!ideas!submitted!by!the!participants.!The!first! selection!process!was!to!identify!TopS25!ideas,!which!would!move!on!to!an!additional! review!and!screening!by!the!Screen!Team.!The!pool!of!TopS25!ideas!consisted!of:!(i)!the! 10!ideas!with!the!highest!market!value!by!the!virtual!stock!trading;!and!(ii)!15!ideas! selected! as! ‘wildcards’! by! R&D! Management! immediately! after! closing! of! the! game.! These! 25! ideas! where! then! reviewed! by! the! Screen! Team! and! scored! on! seven! parameters!by!each!member!of!the!Screen!Team.!The!parameters!on!which!they!were! scored!with!a!fiveSpoint!scale!(1!lowest,!5!highest)!were:!! ! 1) Technical%feasibility:!The!idea!had!a!strong!feasibility!rationale,!based!on! proven!scientific/technical!facts!from!published!articles!or!inShouse!unpublished! knowledge.! 2) Customer%Need:!The!idea!related!to!a!proved!customer!need.! 3) Resources:!NZ!had!the!necessary!resources!(i.e.!knowledge,!competencies!and! assets)!or!could!source/acquire!them.! 4) Sales%potential:!The!idea!held!the!potential!of!DKK!500!million!turnover!in!the! long!term.! 5) Competitive%advantage:!The!concept!gave!NZ!a!unique!competitive!advantage! over!competitor’s!enzyme!or!nonSenzyme!solutions.! 6) Gut%feel:!One’s!gut!feeling!says!“go!with!it”!OR!“this!will!never!fly!in!the! organization”.! 7) XLfactor:!The!idea!was!something!really!surprising,!something!NZ!had!not! realized!before.! ! Once!the!members!of!the!Screen!Team!had!scored!the!TopS25!ideas,!the!ideas’!average! scores!were!calculated!and!the!Screen!Team!held!a!twoShour!meeting!to!collectively!pick!
  44. 44. ! 41! the!TopS5!ideas!for!further!maturation!and!pitch!for!R&D!Management!eight!weeks!later.! According! to! one! of! the! members! of! the! Screen! Team,! the! ranking! based! on! average! scores!of!the!ideas!produced!the!day!before!the!meeting!was!almost!completely!turned! around! during! the! discussion.! Hardly! any! parameter! seemed! predictive! to! the! final! selection!of!Top!5!ideas!–!except!the!scoring!by!‘XSfactor’.! ! 3.3.1.4 Mature Ideas The! next! phase! was! to! mature! the! TopS5! ideas! and! to! prepare! a! pitch! for! R&D! Management! in! January! 2012.! Each! TopS5! idea! was! appointed! a! maturation! team! consisting!of;!a!maturation!champion,!the!inventor(s)!of!the!idea;!two!or!three!selected! experts!who!was!solicited!from!the!GB11!Taskforce!or!from!GB11!participants;!and!one! coach!from!the!Screen!Team.!! ! 3.3.1.5 Pitch and feedback from R&D Management The!next!phase!involved!pitching!the!TopS5!ideas!for!R&D!Management!in!January!2012.! The! ideas! competed! on! becoming! one! of! the! new! large! growth! bets,! which! would! consequently!receive!research!funding.!The!goal!was!to!identify!two!ideas!that!had!large! growth!potential,!however,!the!jury!(R&D!Management)!crowned!only!one!winner!as!the! other!ideas!proved!unfeasible!for!immediate!attention!in!regards!to!incubating!scarce! resources.!The!winning!idea!has!consequently!received!research!funding!and!two!patent! applications! have! been! filed.! Due! to! the! novelty! of! the! idea! and! the! pending! patents,! specific!details!of!the!idea!cannot!be!provided.!!! ! 3.3.1.6 Reflection The! final! phase! was! to! evaluate! the! GB11! pilot! project! to! decide! whether! this! untraditional!idea!generation!tool!should!be!used!going!forward!as!support!in!the!idea! generation!phase.!I!(in!collaboration!with!NOSCO)!conducted!an!evaluation!survey!of!the! participants!in!GB11,!which!showed!predominantly!positive!attitudes!towards!the!tool! (see!appendix!1).!!The!vast!majority!of!participants!would!like!to!participate!in!a!similar! idea!market!in!the!future!and!thought!that!the!game!was!entertaining!and!easy!to!use.!

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