3 Cs of Innovation 2.0 - Crowdsourcing, Competition, Collaboration


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A look at three dynamics that determine the course and value of innovation efforts via communities. Describes areas including cognitive diversity, game mechanics and new bases for collaboration. Presented at the E2.0 Forum in Milan, Italy on 10 June 2010.

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  • Exciting time for innovation – new philosophies and tools are enabling previously unrealized sources of collective intelligence and innovation Highlight three key elements of what I’ll call Innovation 2.0: crowdsourcing, competition and collaboration
  • I’ve been working in the innovation space the past 15 months, and actually defining innovation can cause some hot debate I suspect for many of us, the definition of innovation is like that which U.S. Supreme Court Justice Potter Stewart used for pornography: “I know when I see it.”
  • In popular culture, and even the business press, innovation is somewhat mythical: the killer product that disrupts an industry This is certainly one of the objectives in an innovation program. But innovation is much richer and more complex than that For example, Wal-Mart improved the fuel efficiency of its entire fleet by over 25% in just a few years with a range of efforts — from new tires to aerodynamic improvements such as side 'wind skirts' to a larger investment in new auxiliary power systems that eliminate idling. (Note that all the improvements paid back in at most two years, the company's internal hurdle rate for investments.)During its first year (1951) at Toyota there were 789 suggestions and awards totaling $2638. Both the quantity and quality of the suggestions were rather low. One reason apparently was that the employees thought “creative ideas” must be something like “big inventions”. Consequently, Shoichi Saito, father of the creative idea suggestion system, started emphasizing quantity and efforts were made to increase the number of suggestions.
  • One thing I love about innovation is that it is grounded in clear ROI On the left, a top-down look at the impact of innovation on companies’ market value On the right is a bottom-up look at the ROI generated by employees’ ideas
  • Innovation 1.0 was about R&D, and the ideas of senior executives
  • -Innovation 2.0 retains these two sources, but brings in a vital voice that has been missing: employees
  • Key aspects:Soliciting => making a request, which is different from typical Enterprise 2.0 Diverse => value comes from blending different perspectives Solve a problem => heart of innovation is addressing an unfulfilled need
  • Two views of this: (i) an individual’s diversity of information inputs; (ii) diversity of perspectives brought to an individual idea Ron Burt => experiment with Raytheon’s supply chain group
  • Crowdsourcing taps ideas and knowledge from across the organization, even outside it Employees at the edge are hearing things early, and *feel* changes before those who are more “interior” do
  • - So how do you “do” crowdsourcing? Here are four models.
  • Without goal-setting, employee participation will follow this curve, which is essentially a representation of the 1:9:90 participation ratio Majority of employees will be on the left side, with a minority of peers posting ideas (or any E2.0 content, really)
  • When companies frame innovation in terms of goals, it has several effects: Elevates ideas related to Signals that ideas will get executive attention Creates an “event” aspect to crowdsourcing Creates an expectation of participation
  • - Fortunately, companies are excellent sources of real-world goals that benefit from tapping diverse ideas
  • - Competition can mean many things. Here are the two definitions I want to focus on.
  • - The types of interactions among people can be characterized along a spectrum.
  • - Think of competition as a marketplace for ideas. Here are some key qualities of that marketplace.
  • Given we’re in Italy, this concept seems especially appropriate: paragone. Paragone works well in modern organizations
  • On the left is a diagram created by MIT Professor and Enterprise 2.0 thought leader Andrew McAfee. On the right is a way to incorporate some of this thinking without turning it into an employee’s annual review Certainly the success of Foursquare is showing the value of such game mechanics
  • I want to stress one thing – game mechanics supplement the participation experience, they are not the primary activity of the experience Note the words used in these tweets: “dopamine” and “pavlovian”. Behavioral stimuli.
  • - Researchers from Stanford, Columbia, Kellogg
  • - What do I mean by “typical collaboration”?
  • Now I’m *NOT* saying we dispense with traditional collaboration or structured collaboration Structured collaboration comes to play after the emergence period. Why? Ideas turn into projects. Projects demand resources and time. Remember – you need to allocate finite resources among a set of alternatives.
  • Scott Berkun, author of The Myths of Innovation, puts his finger on an issue here: credit for an idea.- If you want collaboration, you need to recognize it as much as you do the person who originated the idea
  • - Here are three ways to make COLLABORATION sexy
  • - Thanks
  • 3 Cs of Innovation 2.0 - Crowdsourcing, Competition, Collaboration

    1. 1. 3 Cs of Innovation 2.0<br />Crowdsourcing, Competition, Collaboration<br />Hutch Carpenter<br />VP of Product<br />@bhc3<br />
    2. 2. 2<br />What is this “innovation” you speak of?<br />Innovation: A change in a product offering, service, business model or operations which meaningfully improves the experience of a large number of stakeholders<br />
    3. 3. 3<br />Multiple Forms of Innovation<br />create new market<br />Low risk, many competitors<br />High risk, high reward<br />radical technology change<br />minimal technology change<br />Customer experience; cost savings<br />High risk, defensive strategy<br />manage existing market<br />
    4. 4. 4<br />Innovation = ROI<br />Leading innovators generate 430 basis points more in shareholder return than do average companies<br />My entire year has been a quest to find quantifiable ROI… Finance agreed - it ain't easy.<br />Where we did quickly find quantifiable business value was during an ideation proof of concept. Ideas that are discovered and turned into action have produced dollarized return of business value.<br />Laurie Buczek<br />Social Computing Program Manager at Intel<br />All I Want For Christmas is my E2.0<br />
    5. 5. 5<br />Innovation 1.0: Two Centers of Innovation<br />
    6. 6. 6<br />Innovation 2.0: Employees Rule!<br />
    7. 7. Crowdsourcing<br />7<br />
    8. 8. 8<br />Crowdsourcing? What is that?<br />Crowdsourcing: Soliciting the ideas, knowledge, experiences and judgment of a large, diverse group of people to solve a problem<br />
    9. 9. 9<br />Diversity of Inputs Drives Idea Quality<br />Diversity Means Quality<br />Prof. Ron Burt, Structural Holes & Good Ideas<br />Crowds of people, each calling on their own incomplete and private information, are able to arrive at optimal solutions as well as, or better than,a small group of smart people.<br />Diversity in crowds expands a group’s set of possible solutions.<br />Idea Assessment<br />James Surowiecki, <br />The Wisdom of Crowds<br />high diversity of connections<br />low diversity of connections<br />
    10. 10. 10<br />Crowdsourcing Brings Edge Perspectives In<br />customers<br />customer service<br />customers<br />IT<br />marketing<br />R&D<br />account mgt<br />manufacturing<br />sales<br />product<br />finance<br />customers<br />customers<br />field operations<br />
    11. 11. 11<br />Three Models of Crowdsourcing<br />Crowdsourced Submissions<br />Crowdsourced Feedback<br />Selection by Experts<br />Crowd Sentiment, Expert Decision<br />Crowdsourced Submissions<br />Crowdsourced Selection<br />Crowd Decision<br />Selection by Experts<br />Crowdsourced Submissions<br />Expert Decision<br />
    12. 12. 12<br />Crowdsourcing Isn’t Immune from the 1:9:90 Participation Ratio<br />Estimated distribution of employees’ propensity to share ideas<br />Number of Employees<br />typical idea suggestion curve<br />Propensity to formulate & submit ideas<br />low<br />high<br />
    13. 13. 13<br />Goal-Setting Changes the Participation Ratio<br />Goals Stimulate Employee Idea Sharing<br />Number of Employees<br />goal-driven ideation curve<br />ideas increase due to goal-setting<br />typical idea suggestion curve<br />Propensity to formulate & submit ideas<br />low<br />high<br />
    14. 14. 14<br />Why Does Goal-Setting Work?<br />1. Signals increased management attention to ideas on a topic<br />2. Sets an expectation of participation<br />3. Establishes a target the community can rally around<br />4. It creates an event orientation<br />
    15. 15. 15<br />Goals Must Relate to Tangible Outcomes<br />Product Delivery Value Chain<br />Product Design<br />Procure-ment<br />Manu-facturing<br />Distribu-tion<br />Marketing<br />Customer Experience<br />What are the top emerging use cases of our product?<br />How do we increase throughput by 10%?<br />How do we increase fleet fuel efficiency by 10%?<br />How do we increase customer sat. scores 20%?<br />“Used in development of green technology”<br />“Reduce truck idling time during morning loading”<br />“Pre-build components for later install”<br />“Route service calls by component, not vertical”<br />
    16. 16. Competition<br />16<br />
    17. 17. 17<br />Two Senses of Competition<br />System Competition<br />Individual Competition<br />Competition: Process of determining how a finite resource will be allocated among a set of alternatives<br />Competition: Actions taken to advance in a given endeavor, satisfying one’s internal need to excel<br />
    18. 18. 18<br />Innovation Thrives on Soft Competition<br />
    19. 19. 19<br />Marketplace Competition for Best Ideas<br />Competition reduces innovation friction<br />
    20. 20. 20<br />Paragone Creates an Innovation Meritocracy<br />During the Renaissance, paragone implied the placing of two artists’ individual works side by side in order to judge them, weigh them, distinguish them, and critique them.<br />Sofia’s idea<br />Using rivalry to spur innovation<br />Bernard T. Ferrari and Jessica Goethals<br />McKinsey Quarterly<br />Wisdom of the crowd distinguishes among submitted ideas<br />Maximo’s idea<br />
    21. 21. 21<br />Paragone Creates Performance Curiosity<br />Greater freedom to innovate and decide which ideas are best leads naturally to a desire to better understand one’s own performance.<br />Feedback<br />benchmarking<br />recognition<br />
    22. 22. 22<br />Game Mechanics Are Performance Metrics<br />…Translates to<br />Activity…<br />Authoring<br />activity currency<br />Interacting<br />collaborator badge<br />Positive Feedback<br />reputation score<br />Professor Andrew McAfeeShould Knowledge Workers Have Enterprise 2.0 Ratings?<br />
    23. 23. 23<br />Game Mechanics Are Reinforcement<br />Behavior achieved is what you actually reward. Pavlovian but true. To achieve full value of 2.0 need tech + culture.<br />I would suggest that @ replies in twitter trigger a dopamine response. And thus the addiction. Who's with me? /via @cammybean /// I am :)<br />Laurie Buczek (tweet)<br />Social Computing Program Manager<br />Intel<br />Claire Flanagan (tweet)<br />Senior Manager, Enterprise Social Collaboration<br />CSC<br />Social incentives reward and reinforce the goals in innovation<br />
    24. 24. Collaboration<br />24<br />
    25. 25. 25<br />When I Say “Collaboration”, I Mean…<br />Collaboration: Building toward a defined outcome through the interactions and input of multiple people<br />
    26. 26. 26<br />Typical Collaboration Is Poorly Suited for Innovation<br />Standard collaboration group formation is…<br />…great for project execution…<br />…but limiting for innovation.<br />Group Composition and Decision Making: How Member Familiarity and Information Distribution Affect Process and Performance, 1996 (pdf)<br />
    27. 27. 27<br />Collaboration Based on Emergence<br />
    28. 28. 28<br />Innovation Requires Emergence and Structure<br />Emergent Collaboration<br />Structured Collaboration<br />crowdsourcing<br />competition<br />
    29. 29. 29<br />Reward Innovation Collaboration as Much as Idea Origination<br />What people focus on<br />Need to make collaboration as important as origination<br />The work that makes eureka possible<br />The Work of Innovation<br />Scott Berkun<br />Author, The Myths of Innovation (pdf)<br />
    30. 30. 30<br />Make Collaboration Sexy and Worthwhile<br />Purposeful Work<br /><ul><li>Stokes one’s passion
    31. 31. Part of project team
    32. 32. Solves a burning issue for me</li></ul>Social Incentives<br /><ul><li>Community feedback on your input
    33. 33. Milestone achievements
    34. 34. Reputation rating</li></ul>Recognition<br /><ul><li>Acknowledge team, not just originator
    35. 35. Publicize collaboration achievements</li></li></ul><li>31<br />Spigit: Innovation Driven by Enterprise 2.0<br />spigit.com<br />Hutch Carpenter<br />VP of Product<br />@bhc3<br />