It seems that with every new business shift, some pundit comes out with a statement meant to re-define the era. These are unprecedented times. Well they are right to a large extent, because with every major business trend, we have seen a couple of constants:

• Fantastic selection of new products
• Faster cycle times
• Greater end-user demands
• Price hyper-sensitivity
• More players in to a crowded field

The more things change, the more they stay the same.

But because of the recent growth intensity of these constants, the phenomenon has pushed once lackadaisical organizations to understand the need for a structured innovation approach; urgently. However, many among them seem to have a hard time letting go of an entrenched dogma: one that dictates that the workflows around innovation activities can remain standardized. Much like old-school marketing executives who once dismissed the power and value of online community engagement, managers who still believe that a cookie-cutter workflow will obtain across the channels, whether internal and/or external, are fooling themselves into rapid obsolescence.

Is it the inability to see this or the fear of the unknown?

Traditional models called for a fairly rigid and compliant set of stops along an idea’s path – informal stage gates if you will – if one part of the routing and task-set didn’t jive with a particular department or individual (process role player), they would have to adapt, re-route, escalate, wait or eventually disengage out of frustration. Not only is this approach ineffective and unproductive, it sends some of an organization’s best and brightest away with a negative experience; not many returned for repeat engagements – would you?. After all, seeing the progress of the idea one is engaged with is a huge part of the intrinsic reward of participation. There are many factors that can affect routing: type of idea, department affected, response capability, complexity…the list can be extensive.

There are three workflows that a company with an innovation process ideally should have:

1. Challenge workflow
2. Open workflow
3. Sequential workflow

These all must have a degree of malleability, adaptability and configurability – after all, could we expect the same forms, templates, participants (read SMEs) and turn-around times for idea that affects engineering than one that affects HR…or accounting…or production?

The most underdeveloped (speaking on a human dynamics level – not a technological one) and under-utilized of these three models is the Open workflow approach – not coincidentally, the newest of the three. It is by far the most significant in its capacity to engage, accelerate and deliver – with the most exciting aspect of this nascent practice lying in its potential to produce the much-lauded break-out innovations that we all yearn for.

If ideas are the lifeblood of innovation, then workflows are the cardio-vascular system.

Every exciting new business trend, whether temporary on enduring, always seems to be accompanied with a hair in the soup called Culture Change; the latest being the need to engender a culture of Innovation. The particular twist here is that it Innovation must be done well and according to our needs, which the entity may not have real definition for (at least not yet), it must be done to align with your organization’s current DNA (operational and cultural) and it must be done quickly. No small feat.

Understandably, many organizations are tentative in their response, looking for a hand to hold that will guide them down the right path. Others are making noise about it but are more or less at a standstill, suffering from the much maligned syndrome of “paralysis by analysis”.

There's a fair chance that your organization will find it difficult to transform its culture overnight - either for lack of will, courage, resources or a combination of all three.

No matter what the case, the transformation of a culture doesn't happen because someone declares that it will - an organization needs to practice its way to change. Much like an athlete progresses through the repetition and increased pace of their work-out, so does the coordination and results of a changing corporate culture through new processes, tasks and participants – and visible results.

For the majority of people I speak to regarding innovation, regardless of their rank or responsibility, the feeling is that despite running ever faster, they are not gaining the ground they had expected; or hoped for. Organizations today are faced with unprecedented pace, scale and complexity – exponentially growing demands that are made to be addressed with the added challenge of ever constraining resources. We all want the goods, but do we have enough in our tanks to get there; and if not…how do we do it?

The good news is that companies no longer have to do it on their own - the fact is, by just opening the door and allowing motivated stakeholders “in” starts the process for you. And depending on how your organization engages and responds, they will do a significant part the heavy lifting around innovation for you; and in the process, help transform the culture through these successful interactions. As with all change, the first step is the hardest – it requires courage and commitment. Lowering your boundaries to accommodate this method does not equate to outsourcing innovation – it does not mean handing your innovation initiatives off to outsiders for a surrogate upbringing. Like anything else, balance is the key. The core strengths that make your organization tick should remain where they are – inside. The passion of interested stakeholders can yield a bounty of innovation, tasking, executables and deliverables. The extent and depth of this involvement can be limited at first; and its progression always up to you.

Converse – engage – participate – involve – collaborate - responsibilize – measure -reward

Being in the business of developing Innovation Management software and observing how companies cope with long-entrenched operating models gives us a somewhat unique bird-cat seat as to how change and transformation occurs; and also how it doesn’t. You see, for all the hoopla that innovation initiatives generate, the inertia of complacency is well fed by fear of change. It is not for a lack of genuine desire that these programs meet resistance – it is a result of work models that are no longer well-suited for the times.

Today we are asking our internal people to do more than ever, better, faster…but much like with anything in life, there are limitations; and many organizations are close to reaching these limits on a human/tasking level. To use a metaphor, if someone is juggling chainsaws while balancing on one leg, it’s usually a bad idea to ask them to start hopping – small missteps can cascade to disastrous outcomes. Yet more is exactly what we insist on when we demand innovation delivered now – creativity, development, collaboration, validation, testing, cost justification, implementation, execution and ROI – breakthrough ideas with unlimited upside. Oh…and do this while hitting next quarter’s regular growth targets at the same time!!

This need-for-speed mania has also created a collateral and unintended consequence: people have little discretionary time to think far beyond the immediacy of their current emergency; which has stalled the development of new workflow and tasking models intended to accelerate innovation execution while alleviating task congestion. For those of you who have read my past blogs, you know where I’m going next. There is a huge lever out there called distributed labor and the kicker is that you can get subject-matter expertise and speed-of-execution as part of the package – if you dare. There are legions of people who are ready to pick-up innovation tasks and deliver the goods on a pay-for-performance basis. One that only rewards the various constituents when the value of an idea turns into the results of an implemented innovation; yes Virginia, you can dictate the rules of the game.

I’ve heard the arguments of the business-as-usual naysayers who profess that all is well and we just need to press-on; albeit a little harder. But if you look at the overall innovation effort expended and measure real success against it, the answer in many cases is a steady average of diminishing returns verses resources spent. Beyond the obvious, the beauty of this new (dare we call it management innovation) approach is that the risk mitigation card remains firmly in your hand - because you can control the “openness” of these work models and how information is generated, exchanged and managed. That means you can be cautious and start small; once you have a proof of concept, you can ramp-up the roles along with the responsibilities and responsiveness targets. Imagine increasing the equivalent of your top 10% FTEs output without so much as one hire. If that little voice inside your head is telling you this sounds right, maybe it’s time to trust that instinct instead of enduring the Status Quo, and try leading change with the most powerful tool there is: management innovation leadership.

There is an old television commercial that sums up the innovation process in its most basic form; it goes something like this:

- a man is walking down a city block eating from a jar of peanut butter
- a woman is walking kitty-corner down the same block eating a chocolate bar
- they collide and exclaim in turn: "you put chocolate in my peanut butter!" and "you put peanut butter on my chocolate!"
- and with that, the venerable Reese’s Peanut Butter Cup™ was born*

Many an organization have been trying to “formulize” the innovation process; which is fine at the execution level because by that point we usually know what we are doing and what we are going after. But at the fuzzy front-end, where value inception occurs, the only formula that has proven to obtain is that of serendipity – which can’t be created; it can only occur. For those concerned with the philosophical aspect of creativity, it could be argued that nothing is really new; only a re-org of certain knowns or existing things that have been put together in a new way – a re-shuffling to fit a new order; whether product or service.

In any case, how do we do that in a financially-profitable manner on a consistent basis? The answer from my humble point of view is in encouraging serendipity. According to The Merriam-Webster Dictionary, the definition of serendipity is “the faculty or phenomenon of finding valuable or agreeable things not sought for; an instance of this”.

Providing stakeholders and constituents with an environment that helps foster organic conversations and that leverages the products of their associated serendipity is a highly desirable model to engender winning innovation outcomes.

But we see it going far beyond this in value, especially at the idea generation and idea development stage. The Eureka moments that accentuate the genesis of a good idea rarely embody the entire execution; in fact, it is the exception that proves the rule. Most ideas come to life from one individual as a kernel and then get shaped, augmented and matured with the help of others. The diversity that other participants bring to this alchemy is the secret ingredient – experiences, expertise and different perspectives (be they, social, professional, cultural – or all) are the “differentiators that make an idea unique! These steps are the necessary elements that convert an inert idea into an actionable innovation.

Open Innovation affords a new management approach that not only takes advantage of diversity, perspective, experience and expertise to create value; it can also leverage participants from far and wide to deliver it; so that accidental discoveries of serendipity can evolve from idea to innovation and power your next big market success.

*Reese’s® and Peanut Butter Cup™ are property of The Hershey Company

Over the past couple of years, I have been keeping notes regarding products and services that I was once loyal to and longer purchase. It’s a bit of an odd activity really…that is until one gets the opportunity to synthesize an otherwise banal diversion into something that has deeper implications.

The increase in pace and scale has created corporate cultures of indifference – sure senior management proselytizes quality, customer service and innovation – after all, isn’t that what Mission Statements are all about? But at street level, where customers are won and lost, the ability to capture, understand, improve and deliver seem to be mythical pro-actions of an age long past.

The common wisdom today is that price is King. Common sense would beg to differ – value is King. In certain cases, corporate myopia has guided the best down a path of cost-cutting to the point where products no longer stand for what they once stood for, and brand erosion is insidiously setting-in; the ship is taking on water faster than the ability to bail it out. We live examples of this everyday - and the feelings that we retain from these experiences dictate the future fate of those relationships. Three personal examples come to mind:

1. Being a long-time customer of a particular sport-shirt brand, I recently bought a button-down sport shirt – as I stood in the mirror to examine how it looked, I immediately noticed much of my torso (all the bits that are usually concealed by fabric) in plain sight. So in the quest for profit-maximization, the weight of the cotton had been reduced to such an extent that, the quality component of the value proposition (aside from style and price) had been removed from a once successful equation.
2. I remember when cellular telephone service was introduced. The scrappy upstarts really went out of their way to win customers, with good response times, customer service representatives that cared (it showed) and innovative services that spoke to the needs of a jaded wired clientele. Today, as network saturation and swelling customer bases are now the domain of these carriers, the upstarts are acting very much like the incumbents they once challenged – when companies start airing ads promoting how good their service “actually” is, you know there’s a problem – where there’s smoke, there’s fire. Despite having a corporate account, getting customer service from our cellular carrier today requires us to do all the work – and still the response times and care for service are extremely poor.
3. Our family owns an American car and a European car – both are advertised as reliable products backed by outstanding service networks. Both cars are current model year, yet between them, they have been in for non-scheduled service a combined 13 times!! And on eight of those occasions for the same problem. I know what the problem with their system is and so do they; why then do they persist in pushing my loyalty to the point of no return? I suspect to the where we will no longer be repeat customers.

To boot, one service manager told me to write a letter of complaint to the factory – well if that’s the case, what is he there for? And imagine if you had a problem with a store-bought vegetable and the super-market manager told you to call the grower – the apathy in some industries has taken on endemic proportions and is now considered the norm. No wonder companies are loosing business despite herculean efforts – they may be working on the wrong parts.

At today’s cost of client acquisition, it seems insane to run a business in this fashion; but the truth is, it’s the rule rather than the exception. One certainly asks oneself…why?

The answer lies in resources – people, time, money and focus. Now the aforementioned profit-maximization in itself in not a bad thing – that is what companies are meant to do; but not at the cost of the brand and/or customer loyalty. The latter has gained a particularly important role, as one now has to consider the risk of experience-sharing; poor word-of-mouth has immediate repercussions and can have a profound bite in this customer-empowered age of Web 2.0.

After 20+ years of efficiency programs, Kaizen, downsizing, right-sizing, re-engineering, M&As and outsourcing, most companies today are running lean…very lean. New opportunities for increased efficiency pop-up everyday and should still be capitalized on, however the real big opportunities lie in product and top-line growth. Many organizations have already started conversations and collaborations with constituents far and wide. But involving the customer and other people external to the company for new product and other improvement ideas is only part of the solution. Getting them beyond conversation is the key: inspiring, co-creating, collaborating, informing, sourcing, validating, voting, cost justifying, providing expertise, idea tasking and building these ideas up to a point where it makes sense for your resources to jump in is where the bulk of your new leverage resides. And not just in the division and augmentation of labor, but in the self-organizing, diverse and immediate responsiveness that are the drivers of innovation deliverables for any corporate imperative. An un-implemented idea has no value – in fact, if proper measures are in place, one could successfully argue that it has negative value.

Companies are being called upon to innovate at all levels, including in the way they manage; philosophically, that sounds great. But bringing about a wholesale change in real-world operations requires an adaptive approach – a revolutionary tack may either not gain traction or can overwhelm the successful part of an existing model and kill it.

Establishing a process that engages your stakeholders into participative innovation delivers the best of both worlds: a rich, motivated and available talent pool that is more responsive than your organization has the ability to be on it's own; along with execution expertise to rapidly leverage opportunities from a much more diverse group of collaborators. Implementing profitable ideas is the result we’re after. The icing on the cake is that you can select the participants and set the boundaries of your networks to suit your needs and comfort levels. That’s the win-win innovation model that is geared to help your products reappear in the eyes of customers, who yearn to remain loyal or return to their once trusted brands; or better yet, discover entirely new ones.

The world is changing at an unprecedented rate – cycle times for everything keep plummeting in quest of instant gratification and a rabid global demand. However, as exciting of an opportunity as this is, it represents an ever growing problem for companies: how to innovate while keeping pace.

There are many great organizations that have developed great products and services over the years, and continue to do so. However the nucleus of people required to imagine, collaborate and produce these gems is traditionally small, insular and getting harder to keep together; yet alone get together. Moreover, the diversity needed to differentiate one’s offering, combined with the sheer volume and frenetic speed of the times, is increasingly requiring us to re-think our approach; and fast.

With the emerging markets having figured-out manufacturing and services, it behooves us to plan for the day in the not-so-distant future where they master innovation as well. With their social and cultural norms being more collaborative by nature, they’re already ahead of the curve. With their work ethic, they can pull away mighty fast. Instead of bucking this trend, how about embracing it?

Our own research shows that traditional innovation processes are slipping and are now working in the 37% efficiency range (down from a peak of 51% aggregate in 2003). Increased volumes, scarcer resources, longer turn-around times and accelerated response requirements have conspired to outmode the current linear approach. Even so, if the objective is to maximize the effort, and if 51% represents the best we could do across the board, then there was a process problem right from the start. Another trend that is influencing this shift and influencing response times is the target of innovation initiatives. What was formerly an activity heavily-focused on operational efficiencies is today heavily emphasizing top-line growth in its many permutations. The differences are stark: efficiency-focused ideas are predominantly focused on cost savings, take less time to process and implement, and yield net dollar results. Revenue generating ideas on the other hand require more planning, analysis, investment and time; their risk profile is much higher and they only yield gross dollar benefits after a longer gestation period; and have a lower approval rate. The pay-off for those revenue-generating ideas that make it is disproportionally huge. However, the current process to get there is difficult and is often taxing to everyday operations. But it need not continue this way.

The advent of Web 2.0 has engendered transformational change to the way we communicate, create, exchange information and buy goods & services. Blogs, Wikis, mash-ups and communities have transformed the user into the creator. Why not tap into this? If one looks at communities like FaceBook, MySpace, Flickr, Wikipedia or LinkedIn, people are searching for more to do. They are self-organizing, democratic and motivated. With their diversity of experience, skill set, expertise, social attitude and cultural backgrounds, they represent more than new source of conversation – they are a rich source for collaboration and represent a conduit for the future of management innovation.

But innovation collaboration means more than just ideas and conversation. Many attempts have been made over the years to formulate innovation; much to the disappointment of their proponents. These visions failed for a simple reason – they weren’t organic.

The goal here is to go beyond conversation and into participation. A truly open innovation environment creates opportunities to co-create and delegate idea-building related tasks in order to make ideas evaluation-ready for internal company operatives. To that end, configurable stage-gate templates can provide idea development rigor commensurate to client organization standards and ensure that ideas are developed enough to warrant company’s precious time. These templates can be configured to have select criteria and weightings that align favorably with the organization’s goals, resources and corporate strategy. These weighting of these stage-gate components also can enable the sum of certain ideas to rank higher than others in the Innovation Portfolio; adding a useful if not critical metric to facilitate the decision of which ideas to go after first.

With these internal and external operatives (or communities) engaged in your innovation activities, one can quickly understand the value generated when the convergence of varied inputs creates accidental discoveries that can be quickly leveraged into robust opportunities. The ascension of an idea is both quantitative (through voting) and qualitative (through co-creation); the focus is to make each idea a collaborative best-of-breed. The self-organizing and broad base of potential collaborators can create an immediacy impossible to match by the resources of any one organization.

There are new roles and responsibilities that need to be considered.

External Idea Champion

The position of External Idea Champion is one that has the charge of shepherding an idea through the various stages that the organization feels are necessary before dedicating resources to its pursuit. By configuring idea development standards to pre-determined acceptance levels, ideas are developed to an extent that becomes useful for internal folks to start spending time on. The External Idea Champion is a vital link in reaching-out the vast and immediate pool of expertise available on the web to get to the crux of an innovation quickly. Rewards for approved ideas can vary, and should include all Task Collaborators and the Innovation Ideas Vetter. The External Champion is also the liaison between internal operatives (Product, Brand, Operations and other Managers).

Internal Idea Vetter

The Idea Vetter role is one who insures that all incoming ideas are devoid of foul or defamatory content prior to community publication. The Vetter should also determine whether an idea is good enough to be Fast Tracked immediately (without being shared with any community – internal or external, and by-pass any established routing); because not all ideas warrant or require sharing. In fact, some may be so great in their “now & wow” potential that they deserve to be shot-to-the top right away.

Task Collaborators

These participants add direct value to the idea by providing solutions to the Stage Gate components. Whether it represents a Benefits Analysis, Market Intelligence, ROI Calculations, Engineering Drawings or Implementation Plans, these External Community users all bring value to the table – and are rewarded only if/when the idea is approved – that is explained and understood from the start.

The beauty of this approach is its simplicity, efficiency, immediacy, speed and access to a broad pool of expertise, opinion and motivation; for best-of-class creation through top-mind collaboration, the leveraging of motivated talent and global diversity of inputs.

Best of all, management can adjust the barriers to this garden to suit their cultural and competitive comfort levels, while maintaining full system control at all times.

Besides offering a rich mosaic of cultural and professional experiences, as well as diversity of know-how and best practices coupled with the dynamics of these interactions, there is one overriding benefit to this type Open Innovation that trumps them all: time-to-market immediacy. And it’s not just that economies and organizations around the world are competing for ever shrinking and fragmented markets. Ask any operational manager how many projects they’ve had to shelve in the last quarter for lack of time and you’ll get a unanimous “too many to count”. So why not get better ideas that are developed to the point where traditional front-end risks have been mitigated? And only pay for the performing ones.

The pay issue brings me to my final point. Social networks are growing in users and type. But even on this cutting edge, the winds of change are blowing. Members are looking for ever more rewarding experiences and they’re not going to keep doing stuff for free. Now think of the viral buzz when users come to your company’s Innovation Portal, are invited to participate and contribute, get recognized for their achievement in a forum open to all users and get rewarded in some equitable fashion. That is opportunity of Open Innovation.

The idea isn’t to replace – it is to enhance, augment, refine and accelerate.