3 Cs of Innovation 2.0Crowdsourcing, Competition, Collaboration

Hutch CarpenterVP of Product@bhc3

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What is this “innovation” you speak of?

Innovation: A change in a product offering, service, business model or operations which meaningfully improves the experience of a large number of stakeholders

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Multiple Forms of Innovation

minimal technology

change

create new market

radical technology change

manage existing market

Low risk, many

competitors

High risk, high reward

Customer experience; cost savings

High risk, defensive strategy

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Innovation = ROI

Leading innovators generate 430 basis points more in shareholder return than do average companies

Market CapAnnual Increase in Shareholder Return Per Day

€ 500 million € 21,500,000 € 58,904 € 1 billion € 43,000,000 € 117,808

€ 1.5 billion € 64,500,000 € 176,712 € 2 billion € 86,000,000 € 235,616

My entire year has been a quest to find quantifiable ROI… Finance agreed - it ain't easy.

Where we did quickly find quantifiable business value was during an ideation proof of concept. Ideas that are discovered and turned into action have produced dollarized return of business value.

Laurie Buczek Social Computing Program Manager at Intel

All I Want For Christmas is my E2.0

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Innovation 1.0: Two Centers of Innovation

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Innovation 2.0: Employees Rule!

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Crowdsourcing

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Crowdsourcing? What is that?

Crowdsourcing: Soliciting the ideas, knowledge, experiences and judgment of a large, diverse group of people to solve a problem

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Diversity of Inputs Drives Idea QualityId

ea A

sses

smen

t

high diversity of connections

low diversity of connections

Diversity Means QualityProf. Ron Burt, Structural Holes & Good Ideas

Crowds of people, each calling on their own incomplete and private information, are able to arrive at optimal solutions as well as, or better than, a small group of smart people.

Diversity in crowds expands a group’s set of possible solutions.

James Surowiecki, The Wisdom of Crowds

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Crowdsourcing Brings Edge Perspectives In

ITmarketing

manufacturingR&D

productfinance

customer service

field operations

acco

unt m

gtsales

customers

customers

custo

mers

custo

mers

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Three Models of Crowdsourcing

Crowdsourced Submissions

Crowdsourced Feedback

Selection by Experts

Crowd Sentiment, Expert Decision

Crowdsourced Submissions

Crowdsourced SelectionCrowd Decision

Selection by Experts

Crowdsourced SubmissionsExpert Decision

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Crowdsourcing Isn’t Immune from the 1:9:90 Participation Ratio

Propensity to formulate & submit ideas

Num

ber o

f Em

ploy

ees

low high

typical idea suggestion curve

Estimated distribution of employees’ propensity to share ideas

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Goal-Setting Changes the Participation Ratio

Propensity to formulate & submit ideas

Num

ber o

f Em

ploy

ees

low high

typical idea suggestion curve

goal-driven ideation curve

ideas increase due to goal-setting

Goals Stimulate Employee Idea Sharing

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Why Does Goal-Setting Work?

1. Signals increased management attention to ideas on a topic

2. Sets an expectation of participation

3. Establishes a target the community can rally around

4. It creates an event orientation

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Goals Must Relate to Tangible Outcomes

Product Design

Procure-ment

Manu-facturing

Distribu-tion Marketing Customer

Experience

What are the top emerging use cases of our product?

How do we increase

throughput by 10%?

How do we increase fleet fuel efficiency

by 10%?

“Reduce truck idling time during morning loading”

“Pre-build components for

later install”

“Used in development of

green technology”

How do we increase

customer sat. scores 20%?

“Route service calls by component, not

vertical”

Product Delivery Value Chain

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Competition

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Two Senses of Competition

Competition: Process of determining how a finite resource will be allocated among a set of alternatives

Competition: Actions taken to advance in a given endeavor, satisfying one’s internal need to excel

System Competition Individual Competition

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Innovation Thrives on Soft Competition

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Marketplace Competition for Best Ideas

Innovation 1.0

Political connections

Selling skills

Completeness of idea

Heroic persistence

Innovation 2.0

Idea’s key benefits

Long tail interests

Iterative development

Idea incubation

Competition reduces innovation friction

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Paragone Creates an Innovation MeritocracyDuring the Renaissance, paragone implied the placing of two artists’ individual works side by side in order to judge them, weigh them, distinguish them, and critique them.Using rivalry to spur innovationBernard T. Ferrari and Jessica GoethalsMcKinsey Quarterly

Sofia’s idea

Maximo’s idea

Wisdom of the crowd

distinguishes among

submitted ideas

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Paragone Creates Performance Curiosity

Greater freedom to innovate and decide which ideas are best leads naturally to a desire to better understand one’s own performance.

Feedback

benchmarkingrecognition

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Game Mechanics Are Performance Metrics

Authoring

…Translates to

Interacting

Positive Feedback

activity currency

collaborator badge

reputation score

Activity…

Professor Andrew McAfeeShould Knowledge Workers Have Enterprise 2.0 Ratings?

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Game Mechanics Are Reinforcement

I would suggest that @ replies in twitter trigger a dopamine response. And thus the addiction. Who's with me? /via @cammybean /// I am :)

Behavior achieved is what you actually reward. Pavlovian but true. To achieve full value of 2.0 need tech + culture.

Laurie Buczek (tweet)Social Computing Program Manager

Intel

Claire Flanagan (tweet)Senior Manager, Enterprise Social CollaborationCSC

Social incentives reward and reinforce the goals in innovation

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Collaboration

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When I Say “Collaboration”, I Mean…

Collaboration: Building toward a defined outcome through the interactions and input of multiple people

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Typical Collaboration Is Poorly Suited for Innovation

Group Composition and Decision Making: How Member Familiarity and Information Distribution Affect Process and Performance, 1996 (pdf)

Standard collaboration group formation is…

…great for project execution…

…but limiting for innovation.

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Collaboration Based on Emergence

Traditional Collaboration

Dedicated teams beforehand

Team formation in response to some authority

Participation is a requirement

Known go-to people on team

Executive’s project

Structured interaction

Crowdsourcing Collaboration

Virtual, on-the-fly teams

Teams form on a common interest

Internally motivated participation

Contributions from anyone

Response to anyone’s idea

Emergent interaction

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Innovation Requires Emergence and Structure

crowdsourcing

competition

Emergent Collaboration Structured Collaboration

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Reward Innovation Collaboration as Much as Idea Origination

Scott BerkunAuthor, The Myths of Innovation (pdf)

The Work of Innovation

What people focus on

The work that makes eureka possible

Need to make collaboration as important as origination

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Make Collaboration Sexy and Worthwhile

Purposeful Work

• Stokes one’s passion

• Part of project team

• Solves a burning issue for me

Social Incentives

• Community feedback on your input

• Milestone achievements

• Reputation rating

Recognition

• Acknowledge team, not just originator

• Publicize collaboration achievements

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Spigit: Innovation Driven by Enterprise 2.0

spigit.com Hutch CarpenterVP of Product

@bhc3