Webinar with InnoCentive

September 11, 2013

innocentive logoFor those of you interested in making internal collaboration a reality within your organization, I am conducting a free webinar in conjunction with InnoCentive, the premier open innovation platform.

Although some of the content will be similar to what I have presented in the past, there will be some new content specific to internal cultural issues. Here’s a brief description:

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Live Webinar: Innovate Your Internal Collaboration

Featuring Innovation Speaker and Author – Stephen Shapiro

September 24, 2013 11:00 AM Eastern | 8:00 AM Pacific | 4:00 PM London

Although many organizations have become enamored with idea management systems, this approach may in fact be killing your innovation efforts. With over twenty years of experience, Stephen Shapiro has discovered that the key to accelerating innovation is to “ask the right challenge, the right way, to the right people.” This three-step process reduces the noise in your innovation systems and helps you focus on what matters most.

In this webinar, you will learn specific strategies for improving your internal collaboration and problem solving capability to generate meaningful results for your organization. Key concepts will include:

  • Innovate where you differentiate . Although it is valuable to have all of your employees involved in the innovation process, it is critical that they be focused on the challenges that provide the greatest opportunity for growth
  • Asking for ideas is a bad idea. Unstructured ideas and suggestions don’t have a “home” and create noise. On the other hand, well-articulated questions, structured as innovation challenges, start with ownership, sponsorship, and necessary resources.
  • Don’t think outside the box; find a better box . Instead of giving your employees a blank slate, provide them with “positive constraints,” proven methods, and incentives that increase creative output and relevance.

Register here

Do Not Develop Breakthrough Innovation

June 11, 2013

A client recently asked me why large companies never develop “breakthrough” innovations, and instead rely on buying small companies or licensing their technologies.

He felt that the game changing innovations were always the result of someone “tinkering in a garage,” like Michael Dell or Mark Zuckerberg.

He wondered how his organization could replicate the innovation style of start-ups as a way of developing these major innovations in-house.

I told him this was a bad idea.

For every Facebook, there are thousands of companies that invested millions of dollars, but were ultimately terrible failures.   But we don’t see those failures.  Why?

There is a concept (discussed here previously) called the under-sampling of failure. This theory states that we tend to focus on the successes produced, but rarely examine the failures. This occurs in part due to our limited exposure to those who have tried and failed.

As a result, we can’t predict which technologies or business models will be successful.

This presents a dilemma for large companies….

Because we can’t predict what will be successful, if you try to develop major breakthroughs in-house, you have to be prepared to fund all of the failures, as well as reap the rewards of the success.

Why is that?

A famous quote attributed to Thomas Edison, gives us a clue. “I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.”

Because Edison could not predict which of the 700 filaments, he needed to try 700 variations.

The same is true for any new technology. We cannot predict which will be successful.

As a result, if you attempt to develop a new technology in house, you need to be prepared for a potentially long line of failures before you discover the one that works. This process is serial, meaning you try one technology until it fails and then you try another, working until you are ultimately successful. This can be an extraordinarily time consuming process.

serial conventional innovation

This model is expensive. You pay for all fixed costs of payroll and facilities. In a nutshell, you are paying based on the time it takes, not the value of the result.

Remember, this is a serial process.  Let’s assume that while you, Big Innovation Company, are attempting to create this new technology, there are 1,000 small companies also working simultaneously on the same problem, each investing in a different version of the technology. Most of them will fail, but one will most likely succeed. Given this, the odds are that someone else will discover a workable technology before you, because the 1,000 companies are working in parallel. We just can’t predict who it will be.

Because we can’t predict what will be successful, perhaps a better model is to postpone our decision until the market (the 1,000 small companies) sorts out the winning technology.

If we look at how this “market” actually works, you will see a parallel process of successes and failures (see model below). Everyone is working on the same problem with a different solution at the same time. Most technologies will fail. Many of the small companies will go bankrupt. It is (almost) a winner-takes-all model.

parallel innovation

If you have 1,000 companies with 100 employees each working on this at the same time, you have 100,000 people working on the problem in parallel. The amount of time and money invested in this market is enormous.

Are you, Big Innovation Company, prepared to pay these kinds of costs to replicate this market?

If you postpone your technology decision and wait for the market to sort out the winner, you can save yourself a lot of time and money.

With this strategy, the failures are funded by the market, not you (i.e., investors in the start-ups take the risk). And, when a successful technology is found, you only pay for the value created, not the hours it took to create the innovation.

Although your organizations should be investing in innovation, it should avoid internally developing radical/breakthrough innovations that could better be developed by the market. These types of “inventions” should be done leveraging open innovation, crowdsourcing, partnerships, or even acquisitions.

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FOOTNOTE JULY 5: 

This post generated a fair amount of debate. That was my intention. I chose a provocative title for the article. It would be more appropriate to say “think twice before investing in breakthrough innovation.” I would never suggest that a company only invest in incremental innovation. But I also think that companies often underestimate the complexity associated with game changing innovation.

The undersampling of failure is a critical concept that is overlooked all too often.

If it costs a company $1M to successfully bring a new technology to market, you can be certain that the “market” invested at least $100M in failures. We know this to be true just by looking at a number of widely publicized open innovation competitions. The team that successfully developed the winning solution and won the $10M Ansari X Prize invested $100M in their developing their solution. We also know that many other teams invested a massive amount in developing unsuccessful solutions. The same is true with the Netflix Prize. Dozens of teams invested time and energy in ultimately unsuccessful solutions.

It is also important to discuss different types of innovations. There are two primary factors to consider: technical uncertainty and market uncertainty.

For market uncertainty, there are clearly things we can do in order to predict success. Having said that, often the winners in the market are not the best but rather the ones that somehow rose to the top. No one could have predicted that Facebook, for example, would end up dominating the social media market. Google has learned that even having the brightest minds (with a great product) does not guarantee market success. The market often decides; and the market is not always rational. But at least for innovations with market ambiguity, we can learn by conducting experiments (which, by the way, is very different than running pilots of proofs of concept).

For technical uncertainty, this can be more difficult. Many people are trying to develop new technologies (better batteries, new fuels, etc). Most attempts will fail, because it is impossible to predict which ones will give the best results. This is where you can leverage open innovation as a means of paying for success rather than time. This does not mean you can not attempt to put some of your energy into internal development efforts in these areas. However, don’t assume your internal efforts will be successful. Hedge your bets. If the technology is not in your sweetspot (your differentiator), then certainly consider looking externally for solutions so that you don’t divert your energies.

To be clear, I am not advocating M&A as an innovation strategy. That never works. However, I am a huge fan of various forms of open innovation, crowdsourcing, alliances, licensing and other techniques as a way of augmenting your internal innovation efforts.

I will be writing more about this concept in the near future. Stay tuned.

Types of Crowdsourcing

February 27, 2013

Today’s Wednesday Work Wisdom

Yesterday I spoke at an event called Crowdopolis. The topic was crowdsourcing. This has become one of the hot buzzwords in business. Companies of all sizes are dipping their toes into crowdsourcing.

But what is it really? Well, crowdsourcing is a lot of different things and can’t easily by lumped into one small bucket.

Here are a few of the crowdsourcing variations (and this is not a complete list):

  • Solution Finding: This is where you use a crowd to solve a complex problem. Are you looking to develop a glass for the next iPhone that won’t smudge? Ask a crowd to see if they have a solution. InnoCentive and BrightIdea are two platforms that help` companies solve these types of problems (the latter is the engine behind GE’s ecoimagination initiative).
  • Opinion Seeking - Crowds can be used, of course, to provide input and suggestions on how to improve your product. SurveyMonkey is a low-end version of this in action. MyStarbucksIdea.com is a more sophisticated version that runs on SalesForce.com’s “ideas” platform.
  • Content Creation – Want to create an advertisement for your company but don’t want to hire a single design agency? Why not hire the world? Companies like Doritos have done this for their Super Bowl commercials with great success. Platforms like Tongal help companies crowdsource the creation of videos. News broadcasters are also doing this to help collect videos from individuals who shoot newsworthy footage on their iPhone.
  • Design Competitions – Need a new logo? You don’t need to hire just one person from an agency or eLance.com (which is also a form of crowdsourcing, even though you only get one person doing the work, you get multiple people to bid on the work), you can use 99designs.com or logotournament.com to get hundreds of designs for the price of one. You select the one logo you like and pay only that one designer.
  • Data Collection - This is a growing area of crowdsourcing. Instead of sending your employees out to inspect buildings, shelves in super markets, or potentially even read meters, get anyone to do it. For example, when someone is in a supermarket, have them snap a picture of your product on the shelves. This gives you insights into stocking levels and product placement, and the GPS tracking will give you the location without the need for tagging. Think of this as more data for your big data.
  • Manual Tasks - This is outsourcing on steroids. Amazon.com’s Mechanical Turk is an example of this. Break up your work into bite-sized chunks and get people to do these activities for pennies. There are many platforms for doing this in all shapes and sizes. Although it is not technically a crowdsourcing platform, one of my favorites websites is fiverr.com; a site where people will do almost anything for $5.
  • Testing – Do you have something you want to test? uTest is a great platform for this. They can beat the heck out of your website looking for bugs, usability issues, or anything else. You can get hundreds of people banging on your system to stress it and test it.
  • Customer service – What if you could get your fans to be customer service employees? Platforms like CrowdEngineering.com allow your most knowledgable customers to provide help to your entire customer base. If your customers have a technical problem, instead of speaking to an employee, they can be routed to one of these knowledgable fans. Think of this is a virtual “geek squad” or “genius bar.”
  • Programming – One of my favorite crowdsourcing platforms is TopCoder. This is truly amazing. They have nearly a half million programmers, designers, testers and program managers who compete to create wireframes, designs, code, and algorithms, and then test everything for customers. This is one of the best end-to-end solutions out there.
  • Crowd funding – Need money for an initiative or cause? Crowdfunding may be the way. Platforms like kickstarter.com enable people to raise money for their projects. There are platforms for raising money for non-profits. And now there is the emerging version which can allow for micro-angel investing.

As you can tell, crowdsourcing can be leveraged in many ways.

It is important to note that crowdsourcing is not THE answer. It is only a tool. You need to make sure you understand what you want to achieve and then determine if this approach is appropriate. Too many organizations have tried crowdsourcing, thinking it was a silver bullet, only to be wildly disappointed. Having said that, when used properly, it can reduce costs, timeframes, and risk, while providing high quality solutions.

A 6 Step Blueprint for Creating a Culture of Innovation

February 6, 2013

Here is today’s Wednesday Work Wisdom

The question I get most often from my Fortune 500 clients: “How do we create a culture of innovation?”

Although there is no simple answer, here’s a blueprint I’ve found useful to get things started and build momentum.

  1. Ask employees for ideas – Most organizations start here with the corporate suggestion box.  Let’s call it idea-driven innovation.  This step is useful for getting people engaged. It also helps capture low hanging fruit and incremental innovations.  However, after a period of time, the ideas become less practical and less valuable.  The “noise” (low quality ideas) increases.  And sadly, even the good ideas often have a difficult time finding a home (sponsor, owner, funding, resources), so they wither on the vine.
  2. Ask top execs for their most pressing challenges – We now move from idea-driven innovation to a more useful approach: challenge-driven innovation.  Find the people with money, power and resources in your organization, and ask them for the  most important challenges that they need solved.  Don’t call it innovation. Think of it as problem solving. This step gets the executives engaged as they start seeing direct value.
  3. Ask employees to solve these challenges – Once you’ve identified the top executive challenges, it is now time to get the employees working on finding solutions. This is done via internal crowdsourcing. Instead of asking everyone for their  suggestions, ask them for solutions. This keeps them engaged, reduces the noise, and provides a much higher ROI.
  4. Ask employees to identify challenges - This step is designed to get everyone to realize that the mantra, “Don’t bring me problems, bring me solutions,” is wrong. Teach employees that if you bring bigger and better problems, there are many ways to find better solutions. Ask employees to submit good challenges. This steps requires proper education/guidance to avoid being inundated by poorly defined challenges.
  5. Go externally for solutions to challenges – Use alliances, outsourcing, and external crowdsourcing/open innovation as a means for discovering solutions to exceptionally pressing solutions. Or use “tech scouting” in order to find off-the-shelf solutions to meet needs of less strategic challenges. Some organizations do this earlier in the process, starting here before asking employees for solutions.
  6. Go externally for identifying challenges – Most organizations struggle to identify the right challenges. They are too close to the business and therefore have reduced peripheral vision. Therefore, it is useful to partner with trend monitoring organizations, universities, think tanks, and experts to help identify the challenges that might be in the organizational blind spot.

This process is not sequential. Some steps are done in parallel at times. And sometimes they are done in a different order.

If your objective is to accelerate the way you innovate, this model is extremely useful. You will find that less time is spent on innovation with better results.

Video: Speaking at Crowdopolis

June 22, 2012

On July 19th, I will be keynoting the inaugural Crowdopolis event in Los Angeles.  Want to know what I will discuss?  Check out this 2 minute video.  And if you want to attend, use this link to register and save $100.

How I Used Crowdsourcing The Wrong Way And What You Can Learn From It

August 27, 2011

We often hear the expression “Wisdom of crowds.” And if you have read my articles, it will be apparent that I am an ardent fan of crowdsourcing. Crowdsourcing makes the argument that the aggregation of information produced by groups, result in decisions that are often better than those that are made by a single individual. However, to get better results, it is critical to use the right crowds in the right way.

I decided to use crowdsourcing to help develop the title for my book that is being released next month. To better enable the group conversation, I first developed a large number of potential titles that I felt may be appropriate.

To provide some context, the book contains 40 counterintuitive and controversial strategies for making innovation a repeatable process in any organization.

One of the tips is titled “Hire People You Don’t Like.” Due to its seemingly counterintuitive perspective, the publisher thought this might make a good title. To test out their theory, they mocked up a cover design that was as provocative as the title itself (see the graphic). In large letters, they showcased the obvious viewpoint of “Fire People You Don’t Like,” but then crossed out the term “fire” and replaced it with the more surprising word-twist “hire.”

It was time to get input from the “crowd.” In this case, I turned to my 1,000 Facebook followers to solicit their opinions. I posted the above-mentioned cover along with my list containing a number of other potential titles and requested the feedback of my friends.

Despite the many options submitted for consideration, 95 percent of the people immediately gravitated toward “Hire People You Don’t Like,” quickly dismissing the rest.

In that moment, the title was determined. Or was it?

Upon further review, I noticed that the responding crowd was composed of long-time friends, fellow speakers, a few innovation experts and a broad range of other people.

Although the vast majority selected the “fire/hire” name, it was determined that a title containing those specific words would appeal to human resources professionals who focus on recruiting. The few responding innovation experts duly noted that most companies looking to innovate would likely pass on this title. It would not appeal to my target audience: innovation experts. While provocative, it doesn’t speak to their needs.

Had I asked a more specific and targeted crowd—innovation experts, book industry experts, book marketing experts—I might have gotten a very different answer. And perhaps a more useful one. However, at this point, that was not an option.

So we eliminated “Hire People You Don’t Like” from the list and went back to the crowd. Again, we asked them to vote for the titles that they liked best, but sadly there was little convergence. No one could agree on which title would work.

But based on comments, we started to see an interesting pattern: there was convergence on which titles did NOT work. Therefore, instead of using the crowd to identify the winning title, we used them to help eliminate the duds. They were extremely effective at this.

This allowed us to reduce our long list to a much shorter one that could then be reviewed by a small, yet select team of experts.

In the end, I enlisted the help of two individuals who had a solid understanding of book marketing, innovation and my objectives. Both independently agreed on one of the previously suggested titles: “Best Practices Are Stupid.” This still possessed the controversial edge we were seeking, but seemed to appeal more to my target market. The publisher agreed.

In this scenario, I had initially identified an inappropriate crowd for my needs. Although this particular group’s opinions proved to be less effective in determining the best title, they were in fact quite helpful in eliminating the bad ones. This insight could lead to some very beneficial practices for businesses to consider as many still succumb to crowdsourcing pitfalls similar to what I had experienced.

When companies use internal voting systems, they are, in essence, asking a generic crowd for their opinions. Yes, employees may have some background on the organization, but these individuals often see only small slices of the big picture and may not be best at determining what will be most effective…

Read the rest of this article on the American Express OPEN Forum

I Need Your Help: Personality Poker Book Subtitle

January 8, 2010

I need your help!

I am in the process of finishing the manuscript for my next book, “Personality Poker.”  The book will be published by Penguin’s Portfolio books and is expected in stores September 2010.

We have been working on a subtitle for the book – and I would love your input.

I realize that you don’t know the details of the book.  But in general, it is about creating high performing innovation teams through the use of my specially designed poker cards.  There are a few key concepts:

  1. Individuals should “play to their strong suit.”  In Personality Poker, the four suits correlate to the four primary innovation styles and the four steps of the innovation process.  Therefore, if you understand your innovation style/suit, you can maximize your contributions to your team.   [NOTE: "strong suit" is actually a term from bridge and not poker]
  2. Organizations must “play with a full deck.”  That is, companies must have all of the styles (and sub-styles) in order to truly be innovative.  Most organizations are out of balance and have too many of just one or two styles.  This inhibits innovation.
  3. Deal out the work.”  Once everyone is clear about their role in the innovation process, you want to divide and conquer.  Avoid having everyone do everything.  Give people specific tasks and roles.

That’s the 10,000 (maybe 30,000) foot view.  You can learn more – and watch a video – on the Personality Poker page.

So, the question is, what is a good subtitle? Here’s a list of some ideas we had…

  • “[How to] Play Your Best Hand to Win Big in Business”
  • “[How to] Play with a Full Deck to Win Big in Business”
  • “[How to] Play to Your Strong Suit to Win Big in Business”
  • “[How to] Play with a Full Deck to Create High Performing Teams”
  • “[How to] Play to Your Strong Suit to Create High Performing Teams”
  • “[How to] Play Your Best Hand to Create High Performing Teams”

Do you like any of these?  Note that the “How to” is optional as each subtitle can stand on its own without those words.

Better yet, I would love to get new ideas for a subtitle.

Please leave your suggestion (either a new idea or a vote for an existing idea) as a comment.  If we end up using your subtitle, we will send you the Personality Poker system (a $200 value).  Plus, when the new book is published, we will send you a signed copy (with an additional deck of the redesigned cards).

Thanks in advance for your help.