65% of the Australian economy faces significant disruption according to a recent report from Deloitte.There has been much said and written about how companies can disrupt, rather than be disrupted. A key component underpinning a company’s ability to become more disruptive is its ability to capture and harness the unique and diverse opinions, insights and perspectives of its workforce. Companies that have tens of thousands of employees are usually at the greatest risk of disruption because of their legacy infrastructure, a culture of avoiding failure at all costs and processes implemented to sustain, rather than create.
Should we not just leave innovation to the innovators?
Innovation is as much about connecting the dots as it is about having a Steve Jobs moment.
In fact, Steve Jobs himself was all about connecting the dots and many of Apple’s most iconic innovations weren’t the result of a lightbulb moment, but were an evolution of previous innovations and Steve’s own personal experiences.
Case in point, the original Macintosh typeface was the result of Jobs dropping in on calligraphy classes at Stanford, the minimalism of Apple’s hardware is a testament to Steve dabbling in Zen Buddhism, the Graphical User Interface (GUI) of the original Macintosh was in fact ‘borrowed’ from Xerox after Steve had visited the company’s research centre.Jobs famously said “You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.”
Every employee is capable of contributing dots.
Every Workforce Offers a Wealth Of Untapped Knowledge
Whether a company has a hundred, a thousand or one hundred thousand employees, it has access to an untapped resource of unique, diverse and broad perspectives and insights that employees of these companies don’t share effectively.
Any company with client facing staff has employees who each and every day make hundreds of observations and generate new learnings, either consciously or subconsciously. These insights aren’t being captured anywhere that's visible to or useable by the rest of the organisation and as such, aren't being capitalised on.
The ‘dots’ and insights that underpin innovation are driven by the questions we ask, the observations we make and the people we meet. For client facing companies in particular, these are plentiful and golden.
For example, a large consultancy such as McKinsey has a distributed workforce who all have access to different companies where consultants establish an intimate understanding of the inner workings of the client companies and are well placed to identify problems or challenges faced.
What if that one employee doesn’t have a solution to a problem they’re seeing but somebody else in the organisation does?
What if one employee has a solution that others in the company also see value in because their clients face similar problems?
What if that employee has a half-baked idea that with input from others across the organisation can evolve into something seriously compelling?
Knowledge is Power
If we aren’t capturing knowledge effectively then we are essentially shooting blanks.
Failing to capture the knowledge of our workforce is nothing short of tragic, particularly in an ultra competitive landscape where companies need to be doing everything they can in order to just stay relevant and maintain market share.
The Problem With Brainstorming
Traditionally, companies have run the occasional brainstorming session with client facing staff or performed infrequent interviews, trying to capture some of that knowledge.
This approach is flawed for a number of reasons.1 - It doesn’t capture everyday observations and only those that are fresh in the memory so we only capture a very small percentage of the employee’s experiences
2 - inspiration can strike at any given time (often while exercising, in meetings, upon waking up, or for many, in the shower) - it can not be forced upon us in brainstorming sessions, the mind simply does not work that way. Often the opposite is true and these sessions can be counterproductive, participants feel pressured to contribute during brainstorming sessions and come up with poor ideas at these sessions and do so for the sake of doing so, not because they are actually good ideas.
3 - the cost of interviewing staff individually or in groups over time is very expensive and again, it does not capture the insights collected throughout the year and only those that are fresh in the memory
How Can We Better Capture and Harness Knowledge?
Idea management platforms have emerged as a much more effective way to capture knowledge centrally so that visibility is ensured, dots can be connected and new opportunities for growth can be capitalised on.
How do idea management platforms work?
Essentially every member of your organisation can submit problems, challenges, ideas and so on, which can be accessed centrally by the entire organisation.Submissions can be tagged according to different areas of interest and can also be aligned to a particular question or challenge that the company sets. For example, the telco Three ran a four week campaign asking people to submit accounts of when they had gone the extra mile to make things right. In just four weeks 292 ideas were submitted and 5800 votes registered. The results of this campaign fed into a successful marketing campaign around how Three differentiates itself from competitors through its above and beyond customer service.
How To Run A Disruptive Innovation Idea Campaign
It’s important to first define your objectives and clearly understand what you are hoping to achieve by using an idea management platform.
Are you looking to capture general ideas, problems and challenges that employees observe or run a campaign around a particular theme or problem that the company is facing?
Where running a campaign, it’s important to ensure that questions are asked in a way that prompts smart answers and submissions so that the quality of submissions remains high in order to support effective review of submissions later on and avoid death by volume.
Where possible, we should also look to provide some guidance around submissions.
For example, if we are looking for ideas with the potential to disrupt then we need to provide people with guidance and context as to what a disruptive idea might look like.
Using the disruptive innovation litmus test, made famous in Clayton Christensen’s The Innovator’s Dilemma, we can give would be idea submitters a lens through which they can look at their idea to ensure it fits the criteria before submission.
Far too often companies that run idea management campaigns to spur disruptive innovation solicit hundreds or thousands of ideas and far too often only a very small percentage of these ideas actually meet the definition of an idea that has the potential to disrupt.
For example, if it’s disruption we’re after we should ask people to answer yes to these questions before proceeding.
For disruptive ideas that build entirely new markets:
- Is there a large population of people who historically have not had the money, equipment, or skill to do this thing for themselves, and as a result have gone without it altogether or have needed to pay someone with more expertise to do it for them?
- To use the product or service, do customers need to go to an inconvenient, centralized location?
For disruptive ideas that deliver cheaper disruptive solutions to over-served markets (a low end disruption).
- Are there customers at the low end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price?
- Can we create a business model that enables us to earn attractive profits at the discount prices required to win the business of these overserved customers at the low end?
It’s also a fine line between this approach supporting ideas and discouraging them, but essentially the value of idea management is in the outputs, not in the inputs and the added value of framing idea submission is that it will get people thinking about their ideas critically beforehand and in this case, begin to embed a culture of and knowledge of disruptive innovation throughout the company.
The Need To Build Upon Ideas
As indicated earlier, ideas are rarely great in isolation and we need to connect the dots between different insights and experiences. As such, idea management should let people from throughout the organisation comment on and build upon ideas. It is usually over a number of iterations and adaptations that ideas start to look compelling enough to be considered a commercial viability.
Votes Are Not Enough
Most idea management platforms provide you with the ability to vote on ideas and submissions. And that is absolutely imperative to helping make ideas more manageable and assessable.
But if we’re working for a large financial services company, how many of our staff are well positioned to be determining what good looks like? How many of them have built a startup? How many of them have experience commercialising new products?
As a result, it is recommended that votes too are wrapped around particular guidelines.
For example, if we’re looking for disruptive ideas we could consider asking people whether to ‘up vote’ or ‘down vote’ an idea on the following sample criteria:
- The disruptive innovation litmus tests are satisfied
- Analogs and antilogs (evidence where the idea has worked and hasn’t is favourable)
- Value to target customer appears high
Other potential criteria could include:
- Technical ability to deliver on the idea
- Cost to deliver prototypes to test ideas is not prohibitive
Companies should steer clear of using the following criteria as it often doesn’t apply to disruptive innovation:
- the technology is good enough for our existing customers
- the market is big enough to help us meet our growth targets
It takes time to grow a new market and for the quality of disruptive innovations to become good enough for the mainstream - just look at Netflix and Airbnb.
Selection of Winning Ideas
Often times, companies will run a campaign and select the most popular ideas for either subsequent exploration or commercialization.
However, it’s important that people selecting ideas have experience with innovation and are well placed to select ideas. Ideas should be selected based on the voting criteria above as well as innovation metrics (i.e. are customer interactions with our product moving on a positive trajectory) as opposed to traditional accounting metrics around ROI.
Often times, companies will allocate resources to ideas are ready for their market, where the market is big enough and so on however this only opens us up to small, safe, incremental innovation.
Disruptive innovation, by its very nature, is uncertain, the market is usually unknown and the technology is usually not good enough for the mainstream. As a result of this, these ideas don’t get selected by executives who are from a traditional school of management and of avoiding failure at all costs. These same executives have short term incentives and shareholders they are accountable to so they are perhaps not best placed to be selecting ideas based on professional judgment because of an apparent conflict of interest.
Finally, if we do select potentially disruptive ideas for further exploration post an idea submission campaign, we need to understand that they will not generate a ROI within 6 months or help us reach our growth targets.
Ideas take time to ferment. It can take years for ideas to become commercially viable. Airbnb made $200 a week in its first year of operations. It’s now worth US$25B.
However, if we run milestones say every 4 to 12 weeks and define and measure the right innovation metrics, we can see whether ideas are on track and are slowly improving towards mainstream viability. If not, we can move on to other ideas if our key metrics are not tracking in the right direction after numerous adjustments to our business model and if the key assumptions underlying our business model appear flawed.
Outcomes Drive Engagement Drives Outcomes
Ensuring that tangible outcomes are delivered will also ensure that the innovators in the organisation, the intrapreneurs, will support campaigns the next time they are run as they become more than just theatre and are visibly being used to drive the company’s growth strategy. In the absence of this, the most innovative employees will join equally innovative companies, leave to start their own companies or simply become disgruntled and unproductive.
Done right with tangible outcomes, harnessing the knowledge of a large, distributed workforce can be a goldmine for companies.
It will help capture new growth opportunities and limit the duplication of effort and cost through lack of sharing knowledge but it will also result in a more engaged and fulfilled workforce with more control and ownership over the company they work for.
- Companies are sitting on endless amounts of untapped employee knowledge
- Traditional approaches to capturing knowledge such as brainstorming are flawed as they focus on a point in time as opposed to all the time and are expensive exercises with questionable returns
- Idea management platforms are an easy and effective way to the capture and harness the untapped knowledge of a large, distributed workforce
- Wrap your campaigns around good questions and get good answers
- Ensure there is guidance provided around why people should up-vote or down-vote an idea
- Ensure that when ideas are selected for further exploration, that they are done so for the right reasons and in the case of disruptive innovation not based on existing market size or capacity to serve existing clients
- A strong idea management campaign can not only drive growth and cut costs but it can improve employee engagement and retention through a sense of greater control and ownership of company direction