Author Archives: Stephen Shapiro

About Stephen Shapiro

Stephen Shapiro is the author of five books including “Best Practices Are Stupid” and “Personality Poker” (both published by Penguin). He is also a popular innovation speaker and business advisor.

Which is Heavier? – Car or Soft Drink Shipments?

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GUEST POST from Stephen Shapiro

Last week I had a fantastic meeting with the CEO of a mid-sized energy company. We had a number of fascinating conversations ranging from Personality Poker, Open Innovation, and alternative energy.

In the meeting, I was drinking my “caffeine in a can” – a diet cola.

The CEO pointed at my soft drink and said that it was one of the worst energy hogs.

He pointed out that years ago, Coke was sold as syrup (in fact, it was originally sold for medicinal purposes). The carbonated water was added at the point of sale (e.g., the pharmacy or soda shop). Less energy was expended in the packaging process. Less material was used for the packaging itself. But more importantly, less energy was used in shipping.

After doing some digging, I found that, according to one website, 500ml of syrup makes the equivalent of 12 liters. That means that a can of cola contains <5% syrup and over 95% carbonated water. According to one study, nearly 300 billion liters of soft drinks are sold a year. Hoovers research shows that only 35% of that is from fountain sales. Ok, so let’s do some math. A liter of soft drink weights approximately 1 kilogram. This means that a liter is over 2.1 pounds of water, and .1 pounds of syrup. At 65% bottle/cans (excluding the 35% fountain sales), this is over 400 billion pounds of carbonated water needlessly shipped with the syrup. Let’s not forget the weight of the cans/bottles. To put this in context, this is the weight of 100 million cars. In 2007, 16 million cars, SUVs and trucks were sold in the US. Every car sold in the United States over the past 6 years weighs less than the weight of the excess water shipped EVERY year with bottled soft drinks. Enough of the math. I could attempt to calculate the average distance the bottles travel and the amount of fuel required for transportation, but I just don’t have the time. And I suspect you get the idea. What do you do about it?

Of course advocates are trying to reduce the amount of soft drinks we consume. But so far nothing points to that being a successful strategy.

Encourage people to buy and use soda machines. There are several companies that provide this type of product. You buy the machine, the syrup and the gas cartridges.

Another option might be to find a solution similar to Crystal Light “On-the Go.” The challenge is adding carbonation to a powder. While eating Pop Rocks Candy the other day, I realized that there must be a way of addressing this.

Of course there are many more possible solutions. But the solution is not the point of this article.

Innovation is about asking better question. It is about surfacing the hidden assumptions. When looking at issues (environmental, business, or personal), sometimes you need to question everything…even the can of soda in your hand.

P.S. Soft drinks account for the largest percentage of the “liquid refreshment beverage” market. This article did not even include the oft-maligned bottled water industry, which is smaller in size. Do you want to know how far your bottled water traveled to go to you? Check out this article.

P.P.S. I am not suggesting we eliminate soft drinks. My consumption of diet cola – especially first thing in the morning – is one of my guilty pleasures!

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Innovation, Jazz, and Improvisation

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GUEST POST from Stephen Shapiro

What do jazz and innovation have in common?

Quite a bit.

Many years ago, in 24/7 Innovation, I wrote…

“Most businesses are run like classical symphonies – long, with elaborate compositions (detailed workflows) that leave little room for interpretation. Employees are expected to follow these compositions rote.

Unfortunately, by the time they learn the score, the music would have to be changed. This organizational symphony no longer works in today’s age of change.

Instead we need jazz-like organizations. Innovation is not random. In fact, it emerges best when there is a structure to nurture it, much like jazz in the world of music. Jazz is heavy on innovation (‘improvisation’ in musical terms). Just as innovation is not random, neither is improvisation. Jazz has a simple structure, like 12-bar, B-flat blues. It has a rhythm, chord progression, and tempo.

Businesses need much the same to succeed: Simple structures that allow innovation to emerge, in the moment, when it is needed most.”

A little while ago, I attended a session at Harvard’s Kennedy School led by Frank Barrett. The title of his presentation was “Cultivating a Culture of Creativity and Innovation: Learning from Jazz Improvisation.”

He focused much more on music and jazz than on practical application to business. Regardless, there were some interesting points. He has seven ‘tips’ for improvisation:

1. Unlearn habits

Be suspicious of patterns. He quoted Miles Davis, “If it sounds clean and slick, I’ve been doing it too long.”

2. Say ‘yes’ to the mess

No matter what happens, don’t go into problem solving mode. There are no do-overs. Appreciate the screw-ups and figure out how to leverage them. He quoted Peter Drucker, “A leader’s role is to maximize strengths so that weaknesses become irrelevant.”

3. Have minimal structures that maximize autonomy

See my quote from 24/7 Innovation

4. Embrace errors as a source of learning

Builds on point #2. He quoted Miles Davis again, “If you aren’t making a mistake, it’s a mistake.” I like that one.

5. Provocative competence

This is my favorite. I wrote about this last year in an article entitled, “Relearning What You Know.” His point is to add just enough ‘provocation’ to disrupt habits just enough to force creativity. His example was a jazz standard which is always played in the key of F. On stage, in front of a live audience, the leader counted off and said, “Play it in E flat.” Although 99% of the song was the same, it was down one note causing band members to pay extra attention. Instead of playing rote, they were fully present.

6. Alternate between soloing and support

On high performing teams, everyone leads some times, and follows on other occasions. Both are needed.

7. Strike a groove

This is when the musicians are ‘in the zone’.

These are great rules for any form of improvisation whether it be music or improv comedy.

After the presentation, someone asked, “What is the business equivalent of chord progressions?” For jazz to work, musicians need to know which chords to play when. This builds ‘trust’ that everyone will know what to do and when to do it. But there are few similar, unambiguous structures in business.

In a future blog entry, I will discuss my thoughts on the business equivalent of jazz and chord structures. In the meantime, I welcome any thoughts you might have…

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Is Your Organization Anorexic?

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GUEST POST from Stephen Shapiro

The President of a $1 billion company once asked me to describe his organization in one word. My response?

“Anorexic.”

The Vice Presidents who sat around the table nodded in agreement. They assumed that I meant there was no fat left to cut. That is not what I meant.

Anorexics often have relatively “high” body fat percentages because their lean body mass erodes along with the fat.

This is what many organizations have done. An an effort to cut costs, in addition to cutting fat, they also cut large amounts of lean body mass.

Are you thinking of further cost cutting? If so, what are you eliminating? Fat? Bone? Muscle? Vital organs? No company in history has ever “cut” its way to long-term success.

Exercise grows muscle while burning fat.

Innovation is exercise for businesses. It helps grows the organization while also enabling cost efficiencies.

During the depression, Henry Ford said, “A man who stops advertising to save money is like a man who stops a clock to save time.”

The same is true for innovation. Although cost cutting may be a necessary short-term tactic, it is NEVER a strategy. If you are in cost-cutting mode, make sure that your cuts target fat and not lean body mass. In addition, be sure to exercise your organization. Invest in innovation now and you will be prepared for long-term growth and success.

P.S. I like this photo. It nicely depicts the obsession that many companies have with measuring everything in sight, yet in the end not measuring anything of value.

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Building Innovation Networks

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GUEST POST from Stephen Shapiro

According to David Strom, a web/tech expert…

“Burger King ran a promotion not too long ago where they asked people to defriend 10 Facebook friends in order to get a coupon for a free burger. They were swamped with thousands of requests, thereby establishing the value of a friend at somewhere around a quarter. That is pretty depressing. I always thought a friend was worth at least a couple of bucks, if not more.”

This got me thinking. How do we value friends? And are all friends valued the same way? I have nearly 400 Facebook friends. I try to only befriend people I really know. But admittedly, some are friends of friends and I don’t know them at all. In reality, there are only a handful of people that truly interest me.

My experience mimics that suggested in this fascinating article on how the virtual Facebook world mimics the physical world. Although we may have hundreds of friends on Facebook, there are indeed only a handful that we maintain intimate relationships with.

Dr Robin Dunbar once suggested that humans can only have a stable network of about 150 people, also known as “the Dunbar number.”

The article shares some interesting statistics…

The average person has 120 Facebook friends. This is interestingly quite close to the Dunbar number.

Men generally respond to postings of only 7 of those friends by leaving comments on photos, status messages or “the wall.” Woman respond to 10 friends.

With two-way communication, men only chat/email with 4 people, while women communicate with 6.

Among those Facebook users with 500 friends, these numbers are only slightly higher (but not proportionally higher). Men leave comments for 17 friends, women for 26. Men communicate with ten, women with 16.

I find this quite interesting. And it has interesting implications for building innovation networks and communities.

When working with an organization, I often put in place innovation “Centers of Excellence” and “Communities of Practice.” We find these are very helpful in spreading the innovation gospel into smaller, more manageable sized groups. The research above demonstrates to me why it works so well.

While at Accenture (then Andersen Consulting), we used a similar model to build the skills of the consultants. My area was called “Process Excellence” and involved the building of innovation skills.

We created a Process Excellence Center of Excellence with 100 people. These uber-experts were dedicated 100% to our team. We had responsibility for their professional development and the P&L of the group. We even split these into smaller groups based on geography and specific competencies. This created even smaller, more cohesive groups.

We then developed a “Community of Practice Leadership Group.” This group was comprised of 30 people. These individuals were dedicated to other parts of the business (mainly industry programs). We were only responsible for giving them to tools necessary to lead their communities. Leaders were selected based on their existing Process Excellence skills and their geography.

Each leader had about 50 people on average, giving us about 1,500 people in the Process Excellence Community of Practice.

At the lowest level, we had 20,000 consultants that were recipients of the training that was developed by the Center of Excellence and delivered by 150 experts hand-selected from the Community of Practice. These sessions were delivered in small group settings with a dedicated point of contact available for post-training follow-up and mentoring.

Using this approach, we developed a powerful 20,000 person practice in only a matter of months. Although this group accounted for almost 40% of the consultants in the company, it was one of the most active and sought after communities.

Instead of trying to create huge, faceless groups, look for opportunities to build smaller, more active communities. Find ways to create intimate relationships between employees, customers, and vendors.

Look at your networks. Is there an abundance of activity and dialogue? If not, you may want to look at the sizes of your teams. Yes, size does matter.

If you have not yet read my article published in the European Business Forum, be sure to read it now. It gives more insights into this “community” concept.

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What's Your Lifeline for Innovation?

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GUEST POST from Stephen Shapiro

During dinner the other night, I compared crowdsourcing to the lifelines on “Who Wants to be a Millionaire?”

Imagine you are sitting in the hot seat. The show’s host asks you a question. You are nervous and can’t think straight. You believe you know the answer to the question, but $64,000 is on the line. You are no longer that sure of yourself. You have all of your lifelines. What do you do?

A. Answer the question on your own.
B. Phone a Friend
C. Use the Fifty-Fifty
D. Ask the Audience

Let’s explore each option…

You could of course answer the question on your own (A). You answered the previous 10 questions correctly doing it this way. But the stakes are higher now. Maybe it’s time to get some help.

You could “Phone-A-Friend” (B). Based on the few times I watched the show (admittedly the last time I watched WWTBAM was back in 2001 when was living in England), this option rarely proved reliable. Of course, if your friend has access to Google and can search quickly, then it might be the best option. But if relying solely on brain power, this option is typically a dud. One extra brain helps little.

You could go for the “Fifty-Fifty” (C). Here, two incorrect answers are eliminated, leaving you only two choices. This is a great option. Unfortunately, according to the all-knowing Wikipedia, “the answers eliminated were not random but were pre-selected as the ones the contestant was least likely to pick.” Well, that makes things a bit harder.

You could “Ask the Audience” (D). According to Wikipedia, “This is a popular lifeline, known for its near-perfect accuracy. (Regis) Philbin once said that the audience’s answer is statistically 95% of the time correct.” However, my research shows that for more difficult questions, the audience is often clueless. The problem is, everyone answers rather than only those who know the answer. This creates a lot of invalid noise.

In the current version of the show, there are other lifelines, including “Ask the Expert.” You can guess what this is.

Ok, now, imagine you are in the hot seat at work. You are working on a pressing challenge. You think you know the answer. Or maybe you haven’t a clue how to solve it. Regardless, how do you want to bet the company’s money?

Lifelines in Business

You could Phone-A-Friend. That is, you could ask the people around your desk at work. This would most likely improve your chances. (and no, your friend can’t use Google to solve real world problems)

You could do the equivalent of Asking the Audience by requesting, for example, customer feedback. MyStarbucksIdea simulates this concept. Unfortunately, as with the WWTBAM audience, you get a lot of “noise” in the responses because everyone wants to be heard.

You could Ask the Expert. To do this you might partner with a University or hire a consultant. Or maybe you outsource the challenge to a 3rd party who takes responsibility for solving the challenge.

Or maybe there is a hybrid solution. Call it the “Ask the Audience of Experts.” This involves posting a challenge to a group of highly skilled experts; people who have a higher likelihood of solving your problems. You get the viewpoint of many people (much better than Phone-A-Friend), but you also eliminate the “noise” associated with a generic audience. This gives you the added bonus of using a “Fifty-Fifty” lifeline because you end up with fewer “wrong” answers.

Solving challenging problems requires a wide variety of techniques. No one technique is universally correct.

As far as I know, no one has ever won the million dollars on the TV show without using their lifelines. Why should your organization try to win its millions without using the best lifelines available to you?

So, what’s the correct answer? E – All of the above. And yes, that is my final answer.

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Why Edison Was Wrong

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GUEST POST from Stephen Shapiro

The other night I had an enlightening conversation with Alph Bingham, the co-founder of InnoCentive from Eli Lilly. This guy is fascinating!

Alph suggested that many people do not like open innovation (external crowd sourcing) because it runs counter to a widely held belief of the R&D community. Researchers often throw around the Edison quote, “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.”

Researchers use this quote because it “validates” the iterative development innovation process; the cornerstone of most R&D departments. They have convinced themselves that they learn as much from their failures as they do from their successes. Call it what you want, the 700 attempts were failures.

When some R&D people look at open innovation, they see it as linear rather than iterative: post a challenge and get a solution. This seems inconsistent with their belief in learning from failures.

Alph made the point that in the R&D world, the value of iterative development is overrated.

What if Edison found a solution to the light bulb challenge on the first try? Would that be bad? Would he have continued to find the 700 ways that did not work? Did the 700 failures really add that much value? Can R&D organizations afford to fail 700 times? Not in today’s competitive environment.

Alph suggested that open innovation is a massively parallel process where failures and successes happen at the same time. You post a challenge and you get dozens or hundreds of solutions. Some won’t work. But all you need is one solution that does work. And with open innovation, you only pay only for the solutions that do work. Failures cost you nothing in terms of time and money. With internal iterative development, you pay for the successes and the failures. Do you really learn enough from your failures to justify the extra cost and time involved?

Alph’s perspective is fascinating and I fully agree with him for analytical/deterministic challenges. Creative challenges and their solutions, on the other hand, often can’t be proven correct until they are tried out in the real world. Iterative development – via small and scaling experiments – may still be the best approach for solving less deterministic problems. I call this approach the “build it, try it, fix it” model. Having said that, the iterations could potentially be staged as a series of open innovation challenges that continue to refine concepts until they are market ready. This would be a massively parallel iterative creative development. Very cool.

This got me thinking about a conversation I had with an executive from Chrysler many years ago while I was working at Accenture. I asked him who he felt his biggest competition would be in the future. He pointed at me and said, “You.” Although he was half-joking, it’s true that the role of car manufacturers these days is less about manufacturing and more about integration. The Accentures of the world are masterful at integration.

And maybe this integration skill is the MOST important skill for your organization to have.

As platforms like InnoCentive continue to grow, problem solving of all types – creative and analytical – will be outsourced in a massive parallel way to a huge network for solvers. If we take this to an extreme where all challenges are outsourced via crowdsourcing, the role of a company would only be to integrate these solutions together into a seamless offering.

Although this is easier said than done, this one skill may be critical for the survival of your business…and maybe even the US economy.

China and India have a growing base of highly educated engineers and experts. Eastern European countries and parts of Asia have large creative bases. The world is truly flat. And all of these countries have people who are willing to work for pennies on the dollar.

If we try to beat these countries at their game, we will lose. We could never educate enough people. And even if we could, our workforce would probably not be willing to labor for lower wages.

Integration is the key. Yes it is difficult. And that is good news. While the rest of the world is focused on the trees (the point solutions to specific challenges), we need to become masterful at defining the forest (the strategy, architecture, and integration of the point solutions). This is where value is created. And this is much harder to outsource.

It reminds me of something from my “24/7 Innovation” book I wrote back in 2001…

“(As innovators,) we are architects of companies and industries. An architect is not a ‘reengineer.’ To illustrate this point, I often ask clients what is the difference between an optimist, a pessimist, a reengineering consultant, and an architect. The optimist looks at a half filled glass of water and sees it as half-full. The pessimist looks at the same glass and sees it as half-empty. The reengineering consultant sees too much glass. Cut off the top. Downsize. An architect looks at the same glass and asks questions such as ‘Who’s thirsty?’ ‘Why water?’ Or ‘Is there another way to satisfy the thirst?’ It is this questioning, challenging and rethinking that differentiates architects from those who rearrange the deck chairs on The Titanic.”

Find solutions everywhere. Embrace open innovation. And think like an architect. Ask the difficult questions. Assess what matters most. And build a core competency around integrating point solutions.

Remember, we are no longer in the tree business…we are in the forest business.

Bonus: An interview with Alph Bingham and Dwayne Spradlin of Innocentive.

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Discovering Innovation Around the House

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GUEST POST from Stephen Shapiro

Last night I was hungry and decided to make some tuna fish. I opened my refrigerator and found an 18 ounce squeeze bottle of mayonnaise. As I started to make my meal, I realized that the mayo had expired 6 months ago. I guess I don’t use it very often because the bottle was still 90% full.

After throwing out my expired food, I realized that there is a lot to learn from things we take for granted around the house. Here are just three thoughts I had this morning:

Fail Cheaply – Although Costco is one of my favorite stores, I rarely buy perishable items there because I can’t predict how much I will use. Sometimes, as is the case with my mayo, buying the smallest size and paying a premium is better than saving money on larger quantities. Smaller quantities result in less space used, less waste when things don’t work out, and lower costs all around. In business, your best bet is to become masterful at creating small, inexpensive and scalable experiments that give you insights into the real world… not just backroom-based predictions. As you gain new insights and become more confident that a new idea will work (i.e., there is greater predictability), then you can ramp up and go for efficiency.

Sell One, Make One – I debated using a different example for this… One situation no one ever wants to be in is sitting on the toilet and running out of toilet paper. The best solution is to always have a spare roll within reach. When the main roll is finished, the spare role is put into the dispenser, and the backup roll is replaced. This is an example of a simple manufacturing technique called “sell one, make one.” To avoid running out of product, companies often produce large quantities of inventory. But as we saw in the “fail cheaply” example above, this can lead to waste. Items that don’t sell need to be liquidated at significant discounts. In the meantime, the inventory takes up space and hurts your cash flow. Instead, if you get your manufacturing process (or your innovation implementation process) efficient enough, you can make one immediately after you sell one – that is, when you sell one, you make one. You will never run out if demand never exceeds your ability to manufacture.

Lather Rinse But Don’t Repeat – Shampoo bottles are famous for telling you to lather, rinse, and repeat. I have been doing it every morning without thinking. As an experiment, I tried skipping the repeat step. No difference. I even experimented with using less than one pump of shampoo. Same result. Sometimes we take on wasteful activities because we never through to step back and question them. I reduced shampoo usage by 75% without any impact on my hair. From my experience, most companies can reduce wasteful activities simply by questioning what has always been done in the past.

Here’s something to try. Every day, find something interesting around the house:

It could be the upside-down ketchup bottle (what took them so long to come up with that idea?).

It could be the laundry detergent that is super concentrated so you use 75% less liquid, meaning less packaging and easier carrying.

Or maybe it is the Clorox Disinfecting Wipes that impregnate paper towels with cleaning solution to simplify cleaning.

After selecting your innovation, see how that concept could be applied to your business. Do not look for ways to apply that specific product. Instead you want to apply the thought process that was used in developing the product. For example, with the Clorox wipes, where in your business can you combine two distinct items (products or processes) to create something that is simpler and more efficient.

The purpose is not necessarily to find new ideas (although that would be nice). Rather it is a great way to exercise your creativity muscle.

Steve Jobs, CEO of Apple Inc, once said, “Creativity is just having enough dots to connect… connect experiences and synthesize new things. The reason creative people are able to do that is that they’ve had more experiences or have thought more about their experiences than other people.”

Or, in my words, creativity is about “collecting and connecting” dots.

This daily exercise will help you become more observant (collecting dots). And it will help you become masterful at connecting dots. All of this will help you become more creative every day.

For more on my perspective on creativity, read my article on “Dot Versus Line” thinking.

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Creating a Culture of Innovation

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GUEST POST from Stephen Shapiro

I define innovation as an “organization’s ability to adapt and evolve repeatedly and rapidly to stay one step ahead of the competition.” A culture of innovation, when done right, gives you a competitive edge because it makes you more nimble with an increased ability to sense and respond to change.

A culture of innovation has less to do specifically with new products, new processes, or new ideas. There are of course discrete innovations such as the iPhone or a battery that is powered by viruses (MIT has developed this). These are valuable and necessary in order to create a culture of innovation.

But a culture of innovation is more than new ideas. It needs to be repeatable, predictable, and sustainable. This only happens when you treat innovation like you treat all other capabilities in your business. This means having, amongst other things, a defined process.

An organization’s innovation process must achieve three things. It must:

focus on the “right” challenges

find appropriate solutions to those challenges, and

implement the best solutions.

These translate into three “portfolios” an organization must create:

A portfolio of challenges

A portfolio of solutions

A portfolio of projects

Let’s take each one at a time.

A Portfolio of Challenges

All companies have challenges. They can be technical challenges on how to create a particular chemical compound. They can be marketing challenges on how to best describe your product to increase market share. They can be HR challenges around improving employee engagement.

An organization’s ability to change (i.e., innovate) hinges on its ability to identify and solve challenges. Challenges are sometimes referred to as problems, issues, or opportunities. But at the end of the day, they are all just various forms of challenges. I will use these terms interchangeably here.

Where do you find these challenges? You can find them anywhere – from customers, employees, shareholders, consultants, vendors, competitors, and the list goes on.

Let’s face it, companies have no shortage of challenges.

And guess what, some of the most important challenges to solve are hidden due to organizational blind spots and assumption-making.

The “meta-challenge” for all organizations is to find which challenges, if solved and implemented, will create the greatest value. Given that organizations have limited resources and money, prioritization is critical.

My favorite quote (used many times in this blog) comes from Albert Einstein – “If I had an hour to save the world, I would spend 59 minutes defining the problem and one minute finding solutions.” Most companies spend 60 minutes of their time finding solutions to problems that just don’t matter.

Therefore, the first step in creating a culture of innovation is to surface, identify, and codify challenges. And then you must become masterful at valuing, prioritizing, and framing these challenges.

Think of your innovation portfolio much like you would handle a financial investment portfolio. You want some safe bets (incremental innovation) and some riskier investments (radical innovation). You also want a variety of innovations ranging from technical challenges to marketing challenges, and service challanges to performance improvement challenges.

Once you have the right challenges to solve, the next step is to find solutions.

A Portfolio of Solutions

Every challenge has multiple potential solutions. And there are multiple ways in which to find these solutions.

Some challenges are solved in the moment by the person who thinks them up. Most challenges in fact are solved this way. These challenges tend to be “unarticulated” in that they are not presented to the organization as a problem to solve.

Other challenges are more complex and require specialized expertise. You need to find the right person(s) with the right knowledge.

Others require less technical expertise and are solved through creative thinking.

For each challenge, you need to first determine which mechanism would best yield a viable solution. Approaches include, but are not limited to…

Internal Individual/Team: This is the most common way challenges are typically solved. This is when you use internal resources whose job is to solve these types of challenges. For example, this would be the development team members assigned to a particular product. They are paid to solve their product development challenges. Brainstorming is often the tool of choice.

Internal Crowdsourcing: Sometimes the best solutions are found by people who typically do not work on this problem. It might be a customer service representative finding a great new branding idea. Or maybe it is tapping into R&D people who are in different parts of the organization. Sometimes this can be achieved through company-wide competitions. Read my article on how reality TV show type competitions can be used to stimulate creativity.

Outsourced (External Single Source): Some challenges can be solved (and potentially implemented) by a third party who takes ownership for delivering the result. Typically, outsource partners are found through some type of RFP process. eLance.com is a well-known example of a platform that matches specific challenges with bidders who are able to solve specific types of problems.

External Crowdsourcing: Some challenges are best solved by a diverse group of external solvers who can independently work on a solution to your problem. In some circles, this is referred to as Open Innovation. InnoCentive and 99Designs.com are two good examples of this. A challenge is posted and solutions are provided by a wide variety of solvers.

These are only a few of the many approaches. If one technique (e.g., internal team) does not yield a workable solution), try a different approach (e.g., external crowdsourcing).

Regardless of which technique(s) you use, the result will be a portfolio of solutions for the given challenge. Depending on the technique you use, you may end up with a low signal to noise ratio. This is the ratio of a signal (what you want – that is, good ideas) to the noise (what you don’t want – the duds). Your success is often based on your ability to separate the wheat from the chaff.

The next step is to strengthen and select the best ideas, combining them into a comprehensive solution. If you find a solution that works, the next step is to implement.

A Portfolio of Projects

The final attribute of a culture of innovation is the ability to take all of the selected solutions and turn them into programs/projects so that they can be converted from ideas into rea
lity.

Elsewhere on my blog, I discuss many different ways of making this happen. Some of them include “Build It, Try It, Fix It” – an iterative development process where you learn by doing rather than analyzing. Other more “waterfall” type development approaches are more linear and rely heavily on analysis and testing (analyze, design, build, test, deploy).

Regardless of how you implement, without this step, you end up with lots of ideas on the cutting room floor, none of which create value.

During implementation, it is critical that you keep track of the value proposition for each project, having the courage to change direction, or, in some cases, killing ideas altogether.

Bottom Line

A culture based on surfacing, solving, and implementing valuable challenges can make innovation repeatable and predictable. This requires more than just a process, it requires an entire innovation capability [read my perspectives on the innovation capability].

My mantra is, “When the pace of change outside your organization is faster than the pace within, you will be out of business.” And as we all know, today’s pace of change is crazier than ever. A culture of innovation, when done right, can give you a leg up in a highly evolving marketplace.

P.S. There are many different “techniques” that can be used at each stage of the process. Communities, social networks, customer-feedback systems, etc. These will be addressed more fully in future articles.

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