In this webinar hosted by Innocentive I explore how organizations can utilize open innovation and crowdsourcing resources as an essential talent management strategy to drive their business.
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By now, if you’re in marketing you’re probably familiar with the concept of customer lifetime value. Put simply, it’s the idea that a customer is worth to the organization not just the value of a single transaction, but the collection of all of the transactions that they might make during their relationship with you. And when speaking of customer lifetime value, we generally don’t talk about any single customer, but speak about their value in aggregate, averaging out the high value (many, many purchases) and low value customers (one or a few purchases).
The concept is usually linked to discussions of how much you can afford to spend to acquire a customer and whether a particular advertising or marketing effort is worth undertaking.The concept has been even applied to non-profits (lifetime donor value) and even to social media ROI.
But what’s a good outside innovation partner worth?
As I was speaking with several of the innovation leaders at Intuit on their campus in Mountain View last year, it came to me that organizations should be seeking to build and strengthen relationships with their customers, suppliers, and other potential innovation partners in ways similar to their approach to traditional relationship marketing.
Having helped several clients with their relationship marketing strategies, it seems to me that there is no reason why the same principles can’t or shouldn’t be applied to your potential innovation partner community.
After all, as more and more companies begin to understand and engage in the practice of open innovation, then there will be an advantage accumulated by the organizations that do a good job of building strong and profitable relationships with the most passionate and prolific suppliers, customers, academics, etc. over those organizations that don’t.
What organization out there wouldn’t want to accumulate an innovation advantage, a growth advantage, a relationship advantage over their competitors?
But the real questions are of course:
So, do you? Are you?
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If you missed How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One, you can find it here.
So what do leading organizations do to encourage the successful use of external talent?
They build a solid foundation:
They get strategic:
They focus on communications and ownership:
They continuously reinforce their efforts:
In addition, successful organizations understand that it is about making and maintaining connections and community – you build it for when you need it, instead of building it when you need it. Successful organizations understand that attracting and managing external talent is as important as finding and hiring the best internal talent, and are changing their budget allocations to fit this new paradigm. The role of HR in the near future will not be just to recruit, develop, and manage staff, but also to build and curate talent pools. The HR profession will have to build new core competences in network orchestration and managing talent – no matter where the talent lives (inside or outside the organization). It is time to start preparing.
Before moving on to the final section, let us look at a few brief examples of different companies engaging external talent for business success and one case study of a leader pushing farther:
If you missed How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One, you can find it here.
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Although there are simple and cost effective ways to jumpstart your efforts – for example, leveraging a company like InnoCentive to host prize-based challenges in order to rapidly find solutions to your most pressing problems – leading organizations that wish to truly embrace open innovation and crowdsourcing do so through careful planning. When seeking to engage external talent, one of the first of many questions you must first ask yourself is: Why are we doing this? What do we hope that external talent can achieve for us that our internal talent cannot (or should not) achieve, and how do we integrate the two together?
The second question leading organizations in open innovation ask themselves is: Why will they care? And one good place to start in answering this difficult question is to ask: What kind of organization do you have? Do you have a product-driven organization like Microsoft that is very much organized around products? Do you have a customer-driven organization like Hallmark that is organized around customer moments instead of around products? Or do you have a purpose-driven organization? While it does not technically matter what kind of organization you have, the key is to find something that not just your employees will engage with, but that your customers and partners will engage with as well. This could be purpose, but it could also be love for a brand or a well-designed, emotionally-connected product.
Other questions to ask:
Note that one must be careful not to become too focused on ideas. Great ideas fail all the time – poor value translation, poor value access, poor timing, and so on. Rather, getting to creative solutions to problems and challenges is key to innovation success.
Another important questions is: What tool is best for this problem? We have all heard the saying that if you have a hammer every problem looks like a nail. Well, when it comes to open innovation and crowdsourcing, there are lots of tools that we can use, but only if we first understand the nature of the work we are trying to get done. Is it a creative piece of work that we can put out to a community like 99Designs? Or do we just need someone to help us temporarily through a place like PeoplePerHour? Or, perhaps we are trying to solve problems, both big and small, and want to leverage a company like InnoCentive to create and tap into both internal and external communities of problem solvers to accelerate our innovation efforts.
Smart organizations identify the different work and challenge scenarios they expect to face over time and then identify which resourcing option(s) make the most sense for each scenario. They then work to form the relationships and agreements necessary with firms like InnoCentive to make sure that they will have reliable resources in place for when they seek to utilize a particular type of resource to tackle the matching challenge or work scenario.
Successful organizations have a plan for how they are going to interface with external resources and how they are going to bring ideas and potential solutions in house for further development and launch. What will the cultural obstacles be? You must consider what the potential cultural obstacles might be to engaging external talent in your organization. P&G had to work very hard to change of its culture from ‘Not Invented Here’ to one where people embrace new things being ‘Proudly Found Elsewhere.’
Some of the reasons that you may face resistance in implementing an external talent strategy include beliefs that career advancement comes from increasing the number of headcount managed, a fear of failure, a lack of management support, and people not wanting to go outside their comfort zones (‘I get paid to manage and make things incrementally better’). But when people start to hear stories about some of the successes, see some proof of the benefits, and see other people get recognized for utilizing external talent, acceptance of an external talent strategy starts to spread. And when senior leadership or middle management start talking about what is being done with external talent, and people using external talent start training their peers on what they are doing, you know people are starting to fully embrace your external talent strategy.
If you want to read How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part Two, you can find it here or…
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Why Having an External Talent Strategy is Becoming Increasingly Important
The old way of winning the talent wars was to search for and hire the very best talent and keep them inside your own four walls by offering them competitive compensation, benefits, and perks. Your hope was that your talent is better than your competitors’ talent. But over the last couple of decades, companies have increasingly found that employees who pursue what they do with passion will outperform an employee with a gun to their head every time. Circuit City learned very publicly that people are not commodities and went out of business from treating them as if they were. At the same time, we know that diversity is very important and hard to foster internally. And so it is to get to this diversity of thought in order to accelerate product launch and innovation timelines that companies must open up – it is a global economy with a global talent pool.
The question becomes: what is happening at the micro level with this global talent pool? Well, the world continues to move away from being a place where employees expect to have jobs for life, and fight against any change to this paradigm, to a world where portfolios, personal branding, and project-based work will become more common in an increasing number of industries. The evolving world of work is becoming a world in which individuals will need to be really good at collaborating and playing well with others, while also honing their skills at standing out from the crowd. At the same time, the external perception of your network value will expand from a focus on internal connections to also include the talented minds you might know outside the organization that can be brought in on different projects or challenges.
At the macro level, we are also confronted by an economy right now that is characterized by high unemployment – especially for the young. And for those that have jobs, many are underemployed. Meanwhile, at the other end of the age spectrum, many baby boomers will continue to look to make money and stay involved in the workplace in significant numbers. And for those not retiring who still have jobs, many employees now are doing more work but feeling less engaged. When you combine the macro and micro pictures, you can see that there is an army of talent out there looking to build their resumes or their balance sheets by working on interesting challenges and projects.
As your organization opens up and crafts a formal external talent strategy, there are several ways external talent can help benefit your organization.
Consider scale for a moment. A person delivering a ton of value does not need a ton of headcount anymore if they are employing an effective external talent strategy. In an era where organizations are focused on increasing productivity and output without changing the number of headcount (focusing on revenue or profit-per-head), smart employees and business units will increasingly focus on being a force multiplier – getting more work done with the same number or even less headcount.
Two of the most important job skills in this new world of work will be the ability of the individual and the organization to deconstruct the work into portable units that can be executed by a mix of internal and external talent, and construct a project plan for distributing, aggregating, integrating, and executing the component parts to achieve the overall project goal.
But to maximize the efficiency and effectiveness of your work with outsiders – as well the output – you need to be strategic in your approach because the speed of adaptation (your ability to adapt and integrate work from outside into the inside) will become more important. And the flexibility you show as an organization and the ability of your employees to execute under immense market and customer pressures will become increasingly important as well. You must be strategic because ultimately you want to design scalable external talent strategies, policies, and processes.
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How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts
Although there are simple and cost effective ways to jumpstart your efforts – for example, leveraging a company like InnoCentive to host prize-based challenges in order to rapidly find solutions to your most pressing problems – leading organizations that wish to truly embrace open innovation and crowdsourcing do so through careful planning. When seeking to engage external talent, one of the first of many questions you must first ask yourself is: Why are we doing this? What do we hope that external talent can achieve for us that our internal talent cannot (or should not) achieve, and how do we integrate the two together?
The second question leading organizations in open innovation ask themselves is: Why will they care? And one good place to start in answering this difficult question is to ask: What kind of organization do you have? Do you have a product-driven organization like Microsoft that is very much organized around products? Do you have a customer-driven organization like Hallmark that is organized around customer moments instead of around products? Or do you have a purpose-driven organization? While it does not technically matter what kind of organization you have, the key is to find something that not just your employees will engage with, but that your customers and partners will engage with as well. This could be purpose, but it could also be love for a brand or a well-designed, emotionally-connected product.
Other questions to ask:
1. In our organization, where does open innovation fit in our overall innovation efforts?
2. How are we looking to connect?
3. Do we want to build our own proprietary global sensing network that allows us to pull together insights and ideas from lots of different types of sources in different locations?
4. Or, do we want to utilize external service providers like InnoCentive to get up and running faster or go wider than our own proprietary networks can go?
5. Are we looking for crowd labor or creativity, or are we looking to engage in open innovation or civic engagement in creating innovative solutions?
6. Are we looking for possible solutions to problems that we have already identified?
7. Are we looking with current and potential suppliers at the intersection of what is needed and what is possible?
8. Or, are we looking more broadly to identify new insights through which we can drive our innovation efforts?
Note that one must be careful not to become too focused on ideas. Great ideas fail all the time – poor value translation, poor value access, poor timing, and so on. Rather, getting to creative solutions to problems and challenges is key to innovation success.
Another important questions is: What tool is best for this problem? We have all heard the saying that if you have a hammer every problem looks like a nail. Well, when it comes to open innovation and crowdsourcing, there are lots of tools that we can use, but only if we first understand the nature of the work we are trying to get done. Is it a creative piece of work that we can put out to a community like 99Designs? Or do we just need someone to help us temporarily through a place like PeoplePerHour? Or, perhaps we are trying to solve problems, both big and small, and want to leverage a company like InnoCentive to create and tap into both internal and external communities of problem solvers to accelerate our innovation efforts.
Smart organizations identify the different work and challenge scenarios they expect to face over time and then identify which resourcing option(s) make the most sense for each scenario. They then work to form the relationships and agreements necessary with firms like InnoCentive to make sure that they will have reliable resources in place for when they seek to utilize a particular type of resource to tackle the matching challenge or work scenario.
Successful organizations have a plan for how they are going to interface with external resources and how they are going to bring ideas and potential solutions in house for further development and launch. What will the cultural obstacles be? You must consider what the potential cultural obstacles might be to engaging external talent in your organization. P&G had to work very hard to change of its culture from ‘Not Invented Here’ to one where people embrace new things being ‘Proudly Found Elsewhere’.
Some of the reasons that you may face resistance in implementing an external talent strategy include beliefs that career advancement comes from increasing the number of headcount managed, a fear of failure, a lack of management support, and people not wanting to go outside their comfort zones (‘I get paid to manage and make things incrementally better’). But when people start to hear stories about some of the successes, see some proof of the benefits, and see other people get recognized for utilizing external talent, acceptance of an external talent strategy starts to spread. And when senior leadership or middle management start talking about what is being done with external talent, and people using external talent start training their peers on what they are doing, you know people are starting to fully embrace your external talent strategy.
So what do leading organizations do to encourage the successful use of external talent?
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In our hyper-competitive, always-connected world, organizations are increasingly becoming focused on improving both their speed to market and their revenue per headcount. In this environment, more senior leaders every day are seeing innovation as the primary way to gain competitive advantage and to simultaneously increase revenue and cut costs. At the same time, organizations are struggling to find ways to accelerate their pace of innovation without escalating their costs faster than their budgets will allow.
The increasing demands for speed and efficiency are causing organizations to become ever more virtual and flexible, to utilize more variable resources, and to add and shed employees with greater regularity (often with both happening in the same organization at the same time). The progressively dynamic nature of the workforce inside organizations is making it more difficult for organizations to attract, develop, and retain the best talent while simultaneously meeting the fiscal realities of the business. This is causing many organizations to move from a talent ownership mindset to a talent attraction mindset. In a talent ownership world, recruitment and the hiring transaction are king. But in a talent attraction world, successful organizations are those that master the art of building and maintaining talent communities that keep talent connected to the organization even when they are not employed by it. Consciously creating an external talent strategy is therefore essential to success.
The talent market relationship changes are not just happening at the individual level. Change is also happening at the organizational level, as organizations themselves are moving from a fortress mentality, where all work is secret and kept inside the organization’s four walls, to an integrated, global economy with an interconnected web of suppliers and distribution channels – where being the partner of choice in your industry will be increasingly important.
Silicon Valley icon Bill Joy once famously said, “There are always more smart people outside your company than within it.” In this new world of work, organizations must begin accepting that the most valuable employees will now be those that not only do good work, but who also serve as a force multiplier for their organizations by being good at organizing and orchestrating the innovation efforts of others who do not even work for the company. And ideally, you will want to evolve to a place where even those who do not work for you actually want to work with you. In this brave new world, you must have strategies in place for attracting both internal and external talent to your innovation efforts.
The old way of winning the talent wars was to search for and hire the very best talent and keep them inside your own four walls by offering them competitive compensation, benefits, and perks. Your hope was that your talent is better than your competitors’ talent. But over the last couple of decades, companies have increasingly found that employees who pursue what they do with passion will outperform an employee with a gun to their head every time. Circuit City learned very publicly that people are not commodities and went out of business from treating them as if they were. At the same time, we know that diversity is very important and hard to foster internally. And so it is to get to this diversity of thought in order to accelerate product launch and innovation timelines that companies must open up – it is a global economy with a global talent pool.
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Despite the fact that Twitter has been around since 2006 and Facebook has been around since 2004, social media is still the bright shiny object in the room (it’s still the current marketing fad). People still think they are being innovative if they use it, and unfortunately many people still approach it as something separate and scary instead of treating it as just one tool in the toolbox of anyone working in marketing or innovation. Yes, I linked social media to innovation in the last sentence and that’s because in the same way that social media is a tool that all marketers must learn how to use as part of an integrated marketing campaign, innovation managers must also learn how to use social media properly as part of their innovation efforts.
So let’s get to our latest case study of how not to do social media by taking a look at a poorly run Facebook contest.
Back in July I wrote an article about the effect of social media on contests called – Does Social Media Corrupt Contests?
This article was written from an outsider’s perspective looking in. Well, in December I decided to dive into the Facebook contesting world and enter a contest for an energy-efficient big screen television hosted by the NEEA in hopes of winning a 55″ Samsung LED TV. Here is a quote from their Energy Efficient Electronics micro-site about what they do:
The Northwest Energy Efficiency Alliance (NEEA) is a private non-profit organization funded by Northwest utilities, the Energy Trust of Oregon and the Bonneville Power Administration. NEEA works in collaboration with its stakeholders and strategic market partners to accelerate the sustained market adoption of energy-efficient products, technologies and practices. NEEA’s market transformation efforts address energy efficiency in homes, businesses and industry. Its mission is to mobilize the Northwest to become increasingly energy efficient for a sustainable future.
My local utility, Puget Sound Energy, is a member of this organization.
Now let’s get to why my experience with this contest makes this an example of how not to do social media.
Background: The contest organizers – MartketShift Strategies (on behalf of NEEA) – operated the contest on Facebook. It was only open to people living in a handful of states and involved submitting captions for up to five photos provided by the contest organizers for public voting and judging of the finalists. Five televisions were up for grabs as prizes. There were two example captioned pictures – one using humor, and one focused on energy-efficiency. I decided to focus on humor. The rules stated that the five entries for each picture receiving the most votes would then be considered the finalists and would be judged, and that nobody could win more than one prize.
Here is a quick chronology of my experience highlighting some of the strategic failure points:
The most important thing to learn from this example of how not to do social media is that when utilizing social media as a tool to help you achieve your innovation or marketing campaign goals, you must keep those goals front and center in everything you do and ask if each campaign component supports your goals and your strategy. This is also a great example of how lots of people will tell you they are social media experts, and not really know the first thing about how to utilize the tools properly to support innovation or marketing campaign goals.
You can also see from this example that contests can be a hornets nest and that more often than not people try to game the system. This is why some people who provide idea management software solutions have chosen not to have badges and other similar elements (or to allow for those components to be turned off). This is also why if you choose to have any kind of voting component, particularly where any kind of prize is involved, that you set very clear guidelines for voting and do so in a way that maximizes the chance that the voting ends up being about the quality of the submission and not about the size of the entrants’ network.
‘Viral’ doesn’t come for free. Social media experts will try and convince you to use the tool to go ‘viral’ and get the crowd involved, but when you choose get the crowd involved and let them vote, you need to be ready and willing to let their votes count, otherwise you’ll destroy trust (and even brand equity). If you choose to engage the crowd in a public way you need to use their input, otherwise you’ll suffer very public consequences. If you’re looking for a higher level of quality in your submissions from a large number of people, consider using a more expert crowd instead (Innocentive, Hypios, Idea Connection, Nine Sigma, 99 Designs, TopCoder, etc.).
And last, but probably most important in my mind is that you need to walk the experience and look for potholes. The Marketshift Strategies folks definitely fell down on the job here. There were far too many barriers to participation in this contest, very little strategic integration, they should have anticipated the gaming of the system and written the rules better, and they should have actually followed their rules and the spirit of the contest a little better so that the people who didn’t game the contest and instead legitimately gathered votes were rewarded. The good thing is that without examples to dissect of how not to do social media, we wouldn’t all be able to learn how to use this powerful but dangerous tool in our innovator’s and marketer’s toolbox.
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FREE Innocentive Webinar on December 13, 2011 at 2PM EST
As more industries become commoditized and innovation becomes more of a focus, organizations are being forced to move beyond a talent ownership mindset to a talent attraction and engagement mindset.
In this webinar, we will explore how organizations can utilize open innovation and crowdsourcing resources as an essential talent management strategy to harness the growing numbers of retired scientists, unemployed experts, and underemployed talent around the world to generate ideas, solve problems, and further the goals of the business. The webinar will also explore how individuals can bolster their incomes and credentials by participating in open competitive challenges.
Three things you’ll learn:
1. Why having an external talent network strategy is becoming increasingly important
2. How leading organization manage their open innovation and crowdsourcing efforts
3. Strategies for attracting and engaging talent to your organization’s innovation efforts
Register for this FREE Webinar
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I am currently doing research for a white paper and a webinar on harnessing the global talent pool to accelerate innovation, and I need your help to add to the case studies I’ve already gathered. Here is the premise:
As more industries become commoditized and innovation becomes more of a focus, organizations are being forced to move beyond a talent ownership mindset to a talent attraction and engagement mindset.
There are many reasons for this. In the United States this includes a growing percentage of researchers approaching retirement age and post 9/11 immigration policies that make it increasingly difficult for foreigners to come to this country to study and work. The intersection of an aging scientific workforce, tighter immigration policies, and a growing need for innovation to reinvigorate the economy is causing more organizations to make plans to engage talent outside their four walls. But this is not just an American problem…
Forward-thinking organizations are now seeking to harness the growing numbers of retired scientists, unemployed experts, and underemployed talent around the world to generate ideas, solve problems, and further the goals of the business.
This begs the question:
What is your organization’s external talent strategy?
Or, how does your organization plan to leverage the brains outside your four walls to achieve its goals?
Please leave a comment or contact me to share your story.
I’ll be sharing the results of my research and my thinking in a FREE webinar on December 13, 2011 and then later in a white paper in the new year.
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