The world is moving so much faster than it ever has before and the pace of innovation is leading this. The problems that brands in all aspects of their business face are many when they are faced with the charge of innovate or die. Organizational inertia is one of them. Another is insular thinking. One of the advantages, though is knowing where all the landmines are. If you can overcome the formers with that latter, you can really break out.
Adi Gaskell, this morning, posed a question about crowdsourcing being just for show. He makes some really good points. I look at the statistics he posts and analyze them a little differently. If you aren’t reading Adi’s blog, you should be. He has some nuggets in this article that I think you really need to comprehend because it laid out for me a path forward to success.
Internal Crowdsourcing Works … to remove pain
Your employees are absolutely fabulous at telling you how to make your business run better. Why? Because every obstacle you put in front of them to get their job done is pain to them. Nobody likes pain. We want it gone. Companies move providers when the pain of staying exceeds the pain of leaving. Employees want their pain gone.
Pain is all about process. It’s all about the little things. These little things add up. Adi talks about Toyota. I toured a Toyota plant a few years ago. Employees regularly submit ideas to remove pain in their process. Not incredible pain points. Not suggestions like we should build the bumper out of bio-engineered plastic and just grow them in the back forty. No. Suggestions like if you move that tray of parts five feet closer to me I save 10 seconds with every bumper I install. 10 seconds over 150,000 trucks a year (source- Toyota) is 416 hours of labor saved every year.
This is what internal innovation is generally all about. Process improvement. The problem lies in what your employees can’t see. They can’t see the disruption coming down the highway. They are too insular in their thinking to get truly outside the box.
External Crowdsourcing Works … to truly see outside the box
External innovation is great for breaking out. It’s great for the disruption. When you involve your consumers you also find out what things consumers may want that you never even saw. It eliminates your blind spots. The problem with external crowdsourcing is yield. As Adi points out, Dell has only implemented about 3% of the ideas received from their Idea Storm community (2011 statistics) and My Starbucks only implements 0.5% (2012 statistics). These are fantastic stats and they are scary. If you are dead set against your company engaging consumers this way, those statistics are your first slide. If you think that these efforts work, you need to look beyond the numbers.
There is a lot of distracting noise in that signal. The first is what I call the “we want more coke in the soda machines” problem. Even if you focus your idea submission, you will always get ideas that are clearly non-starters. The second is something that Adi points out. External submitters do not know the insides of your organization. They may submit something that was discarded two years ago. Depending on how you structure this community, their efforts may be an unfocussed shotgun as well.
The other thing that focusing on yield misses is the ROI on implemented ideas. I know in the patent space it is very hard to identify which of your applied for ideas will return the investment of filing and getting something granted ($30-$50,000). Most companies that play the patent game play it in volume and that is because the yield is low. However, one of the generally accepted axioms is 1 in 50 (2% yield) makes money, and pays for the investment in the other 49. Without clear figures on what the investment in these communities are and what the expected return was, those yield figures may actually be considered a success by those organizations.
Stop being one-dimensional
If you are focusing on just one of these two areas for your innovation, you are getting it wrong. You need external innovation to see the future. I don’t just mean consumer crowdsourcing. I mean partnerships, research studies, and other things that get you outside your walls. In the recent movie Jobs, the character extolls a design team to design something else outside computers for a day.
However you still need internal innovation. First, there will be a few people inside that can get outside the walls. That really think disruptively. The larger portion of internal innovation is incremental improvement. These process improvements will actually pay the bills for other projects. Saving 416 man-hours may foot the bill for two or three disruptive innovation pilots, for example.
The other reason for internal innovation is focus and slip-fall prevention. Your internal audience knows what the focus of the company is, or they should. If your employees are not focused on your mission, you have a culture problem. Slip-fall prevention identifies the places where something can go off the rails. Sometimes it’s legal hurdles, sometimes it’s implementation hurdles like systems issues. Whatever it is, your internal audience knows what the challenges are. Don’t let no stand in your way too much, but you ignore it at your peril.
You can’t just do one of these ways to innovate and crowd-source. You need to do both. They need to be balanced. And they need to feed each other.
It’s not just two-dimensions, it’s a blending
Internal crowdsourcing without external insights will doom you to nothing more than incremental improvement. If your market is so stable that your competitive advantage is in making your widget slightly faster than your competitor, you can live here. You won’t live here long, though.
External crowdsourcing without internal insights will doom you to insignificant yields. Your yield must at least keep the lights on. I wonder if 0.5% keeps the lights on for Starbucks, actually. They may not look at it in those terms as a fully consumer-facing company, but I bet it is a source of stress for some there. The other problem is that if you don’t have the internal insight as to the downstream challenges you may spend money on things that will never succeed. Another way to look at the fail fast.
Bring these two things together and I think you will see a force multiplier. I think it will accelerate for you. You need to crack the nut of bringing them together.