Innovation Management in the Web Era January 2008
Presented by
http://www.pcxvs.com
Š Procullux Limited, 2008
Contents Innovation Management in the Connected Era ...........................................................3 The Old Way .................................................................................................................4 The New Way................................................................................................................5 Best Practice For Innovation Management .................................................................6 Secure Top-Down Support ........................................................................................6 Resource the Community ..........................................................................................6 Enthuse the Community ...........................................................................................7 Keep the Ideas Flowing.............................................................................................7 Publish and Analyze Metrics ......................................................................................8 Adapt to an Iterative Development Process .................................................................8 Generate Loyalty Through Shared Innovation ..............................................................8 Reinventing Innovation ..................................................................................................9
About the Author Phil Wainewright is one of the world's foremost authorities on emerging trends in business automation. He is a prolific writer with a ZDNet blog on Software as a Service, the Loosely Coupled website on enterprise adoption of services architecture, and a series of influential analyst reports to his name. He serves as CEO of Procullux Ventures, a London-based strategic consultancy to leading business automation vendors and their customers. Daily software as services weblog: http://blogs.zdnet.com/SAAS/ Procullux Ventures: www.pcxvs.com Detailed biography: www.philwainewright.com
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In today's emerging Web-connected era of business, the quest for new ideas that enhance competitive edge and deliver new sources of profitability is no longer a solitary, cloistered activity. The Web itself has become a source of breakthrough innovation in effective techniques for discovering, harnessing, and prioritizing new ideas, not only internally within an organization but also in collaboration with partners, customers, and other communities. Enterprises today no longer have to invest in expensive, specialist tools and skills to spark and manage innovation. The Web has opened up cost-effective new mechanisms for connecting to the barely discovered sources that often inspire the best ideas and then developing and testing those ideas by harnessing the “wisdom of crowds.” This paper is designed to serve as both a primer and a guide to action. It is divided into two sections: •
An introduction to innovation management in the Web era
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A practical guide, showing how businesses can best deploy these disruptive new techniques for competitive advantage and profit enhancement.
Innovation Management in the Connected Era It is a fundamental tenet of modern business thinking that innovation forms the basis for establishing and maintaining competitive edge and profitability. It has long been recognized that operational excellence – although an important objective – is not enough on its own to sustain a company’s market position and income. It is only through continued improvement of its offering that an enterprise can retain the loyalty of its customers and sustain its margins. It is only by offering something new that an enterprise can profitably expand into new markets and win over customers from established incumbents. It is no surprise, then, that in recent years enterprises have sought out methodologies and tools that allow them to harness and direct innovation within their organizations. Innovation is normally divided into two categories. The most common form of innovation consists of incremental or iterative improvements to an existing product or process. More exceptional are discontinuous innovations that break with established practice and introduce completely new products or processes. The second, disruptive form of innovation, although less common, tends to be associated with greater value creation and competitive impact.
Enhance Existing
Develop New
Products and Services
Add a higher-priced ‘premium economy’ to coach class
Launch ‘no-frills’ fares with an all-new cost structure
Operational Processes
Introduce mobile bar scanners in the warehouse
Shutter warehouse and adopt just-in-time stock delivery
Marketing
Have a brand makeover
Develop a brand to appeal to a new demographic
Sales Channels
Give field sales online access to real-time stock and order status
Use Web meetings to promote and sell instead of field sales people
Customer Service
Integrated screens in the call center
Self-service access to information and updates via the Web
Business Strategy
Invest in upgrading infrastructure
Outsource infrastructure and make sales and marketing your core competency
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Innovation is most commonly associated with the development and enhancement of products and services, but in reality innovation happens across all aspects of an enterprise, from operational processes and various aspects of go-to-market strategy to overall business strategy. The table (previous page) shows examples of the various forms of innovation. In recent years, growing interest in innovation has led to the development of methodologies for stimulating the creation of ideas and then managing the process of exploiting them to yield maximum value. Known collectively as innovation management, these methodologies – and the skills and tools associated with them – fall into two main categories. •
Ideation – generating new ideas. It’s not easy to think up valuable new enhancements to existing products, let alone those elusive breakthrough concepts that unleash entirely new market opportunities. A panoply of techniques and tools has emerged that aim to stimulate the creative process, ranging from simple brainstorming and visualization, through to highly sophisticated road mapping, benchmarking, market intelligence and analysis. Many of these approaches work best in a collaborative environment, using tools such as interactive whiteboards, Web meetings and other forms of telepresence, as well as offsite meetings and focus groups.
•
Idea Management – shepherding ideas from vision to reality. Once an idea has been recognized, it begins the long and arduous journey towards realization. It must be captured, shared, evaluated and prioritized for further development and testing. Enterprises will typically have hundreds of such ideas all competing for attention and resources, acquired either through deliberate ideation or as suggestions and feedback from employees, partners and customers. Sophisticated processes, typically supported by software packages, are needed to sort, filter and control the flow of ideas while maximizing collaboration among stakeholders.
There are clearly a large number of ingredients required to implement an end-to-end innovation management strategy, and until recently the more sophisticated processes were seen as the preserve of large enterprises with deep pockets for research and development. Many businesses have felt unable to make any investment at all in innovation management infrastructure. The advent of the Web has changed that perception. Using the Web, organizations can cut out much of the infrastructure cost and expense associated with team collaboration, while introducing entirely new, cost-effective mechanisms for tapping into disparate sources of inspiration and feedback in the communities they serve and interact with. At the same time, some of the disadvantages of the more established techniques and tools have been thrown into sharp relief.
The Old Way In the past, the high cost of traditional innovation management techniques has led to their being deployed only to those departments where they are seen as producing the most payback. Typically, this has meant they were confined to specialists in product development, only occasionally bringing in contributors from other parts of the organization. Confining innovation management to the single ‘silo’ of product development has a number of disadvantages that crimp the innovation potential of the organization as a whole: •
Contributors of ideas generated elsewhere in the organization – for example, employee suggestions or customer feedback – are cut off from the innovation management process. Many ideas are lost or ignored.
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Lack of real-time feedback means product developers are isolated from emerging trends in the market
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There’s no way to test and prioritize ideas without costly pilots or focus group exercises. Development teams often decide priorities without any direct customer validation at all.
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•
An ”ivory tower” effect develops that inhibits rather than encouraging creativity. To compensate, more money is spent on software tools and professional services, further reinforcing the perception of specialization.
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There’s no opportunity to extend innovation management beyond product development into other areas such as business strategy and operational processes.
The New Way The advent of the Web and a collection of new Web-based techniques collectively known as Web 2.0 (see table, right) have opened up completely new ways of harnessing and managing innovation. In effect, the Web has been a source of disruptive innovation for the process of innovation itself. Web 2.0 Techniques The Web removes many of the barriers of geography and time that prevent collaboration between people working in different parts of an organization, or across organizational boundaries. In the same way that it has allowed individuals to book travel, download music and share interests at the click of a mouse, the Web allows work colleagues, business partners and customers to access information, provide feedback and share ideas without leaving their desks.
Blogs Syndication (RSS and widgets) Tagging and rating Comments and forums
Web presence (IM, web meetings) By bringing people together so easily from such disparate locations, the Web provides much improved alternatives to Wikis some of the clunky old ways of sparking and sharing innovation. Instead of artificially stimulating brainstorming Social networks among a small group of product managers, the Web connects people with many different views and points of reference, allowing them to pool ideas and inspiration, and spark new thinking. Once ideas have been collected, Web technologies make it far easier and cost-effective to get feedback and test their value. Domain experts and customers alike can share their opinions and learn from each other. Web 2.0 techniques allow participants to share comments, vote on ideas, see how others are responding and provide further feedback. Product developers can monitor participation and gather market intelligence as it happens. Instead of being faced with hundreds or thousands of undifferentiated suggestions and ideas, development teams can collect and analyze metrics that help them prioritize the ones that will be most valued. Many of these benefits flow from the existing Web infrastructure and its disruptive ability to connect people and resources wherever they’re located. Since the infrastructure is already in place, there’s a low incremental cost to leverage those connections, not just throughout an organization but far beyond its boundaries. The Web can also serve as the delivery platform for the software that manages an enterprise’s innovation management processes. Instead of bearing the upfront costs and deployment delays of conventionally licensed software, businesses can access the application on-demand for a monthly subscription, from a provider that takes responsibility for operating and managing the software. Taking advantage of the existing Web infrastructure, the application can be made simply and easily available to employees, partners and customers as desired. In summary, the new Web-based approach to innovation management, using Web 2.0 techniques and on-demand application delivery, offers significant advantages compared to earlier generations of technology: •
Rapid implementation with pay-as-you-go subscription results in dramatically lower startup costs and much faster time to results
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On-demand delivery enables easy roll-out to communities of employees, partners and customers alike
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The Web’s real-time infrastructure allows the business to be more responsive and move faster than competitors
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•
Innovation ideas can be validated and prioritized using real-time feedback gathered during the product development process
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Participants feel more engaged in the innovation process, building a positive buzz around the company
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It’s easier to reach out to diverse communities of users and specialist pockets of interest, bringing new ideas into the innovation process and gathering more broadly-based feedback
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Instead of being confined to product development, it’s possible to extend innovation management to touch processes and strategy across all parts of the organization
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Shared innovation becomes visibly identified as part of the service your organization offers to partners and customers
Best Practice for Innovation Management As with any innovative new technique, there are do’s and don’ts that govern the success or otherwise of Web-based innovation management. It’s essential to foster a thriving, energetic community in order to ensure the feedback and validation being collected is broadly based and reflects the realities of the market. Based on the experiences of early adopters who have already pioneered the technique, this section sets out the seven most important factors to get right to ensure success.
Secure Top-Down Support As with any Web 2.0-style project, executive sponsorship is a critical success factor. For most organizations, it’s a step into the unknown to launch an online community where employees, partners or customers can openly publish information and opinions. A clear signal that the initiative has executive support helps in a number of ways: •
It ensures that the necessary funding and resources are made available.
•
It gives confidence that the initiative isn’t a ”flash in the pan” and will be sustained for the long term.
•
It puts management “clout” behind any guidelines established for community participation.
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It reassures employees that time and energy put into the community participation will be seen as part of their job role and will be positively recognized.
•
It sends a signal both internally and externally that the initiative is valued by the organization.
Resource the Community A successful community more than repays the investment required to establish and maintain it – but there is a minimum level of resource required, below which the chances of failure increase dramatically. A neglected community never thrives. The following resources need to be committed: •
A project manager to drive the project, responsible for setting goals and objectives, defining success metrics, planning and co-ordinating the community infrastructure and the associated communications strategy, and setting a budget.
•
A moderator to monitor contributions, enforce guidelines and – where appropriate – chase up responses from product managers or other company spokespersons.
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If the community is internally hosted, a website infrastructure has to be provisioned along with the technical resources to set up and maintain it. Important considerations include security, availability, performance and scalability.
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•
A review process to ensure that suitable ideas are followed up and actioned.
•
A communication strategy to promote the community, encourage participation, recognize users and provide feedback on progress and achievements.
One of the simplest ways to free up resources is to adopt an externally hosted solution. This removes many of the operational headaches associated with maintaining a successful community, particularly those related to security and ensuring the website remains accessible and functional at all times. Instead of spending time dealing with technology issues, the project manager and moderator can concentrate on activities designed to maximize participation and yield effective results.
Enthuse the Community The most successful communities get constant nurturing and stimulation to maintain the flow of ideas, commentary and debate. Although it’s important to launch a community and get participants involved right from the start, it’s a mistake to see this as a one-off event. The community won’t sustain itself indefinitely, nor will it continue to meet the organization’s goals without fresh infusions of content and direction. There needs to be a regular program of campaigns to keep bringing new participants in and to renew the enthusiasm and interest of existing contributors. Tips for a successful launch: •
Have a kick off event. For an externally focussed community, this could be a Webinar, an event at a user conference, or PR and marketing campaign. If the community is internal to the organization, the kick-off might be a company meeting or an executive webcast.
•
Use your communications channels. Put a link on the homepage of the company website and tell stakeholders about the community via email marketing, direct mail and your other usual communications channels. If it’s a public site, put a link in the corporate email signature and encourage sales people and customer service reps to tell customers about the community.
•
Get staff on board. Make sure product owners and experts are ready to be active participants. Offer training for those who want it and make tips and guidelines available to others.
Maintaining interest and rewarding enthusiasm: •
Plan regular ‘refresh’ campaigns. Plan a program of campaigns to spark fresh conversations in the community, timed around product launches, marketing campaigns by your company, or events and seasons in your industry’s calendar.
•
Maintain key employee participation. Drive home the message that the community has influence by ensuring that product managers, experts and decision makers are participating regularly and engaging in dialogue with community members.
•
Recognize top contributors. Reward your best contributors with recognition. Show them that they make a difference and let them know you value their input.
Keep the Ideas Flowing Numerous studies have shown that the most valuable innovations are often sparked by fresh thinking that comes from outside an established team, organization or community. Outsiders – such as recent recruits, external consultants or independent experts – spark new ideas by enquiring from a fresh perspective or by introducing concepts from different areas of knowledge and expertise. One of the benefits of the Web is that it makes it much easier to connect people with different perspectives. People you barely know at work are more likely to see things differently than the people you regularly collaborate with. People you’ve never met are even more likely to have expertise in fields you’ve never considered or come across before. A Web-based community makes it possible to pool all of these perspectives, but only if they are actively encouraged to
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join the conversation. It’s all too easy to allow an online community to become dominated by a small clique of participants who end up reinforcing each others’ views, crowding out contributions from those who can bring the fresh insights most likely to spark truly valuable innovative thinking. Ways of bringing in “fresh blood:” •
Regular campaigns to publicize new discussions
•
Proactive marketing to new employees and customers
•
Contributions or ”thought pieces” from independent experts
Publish and Analyze Metrics One of the Web’s most powerful attributes is its ability to surface what is known as ”the wisdom of crowds.” This is the notion that by collectively analyzing the separate choices of a large number of independent agents, it is possible to reach useful new insights that would otherwise be obscured. The wisdom of crowds can be harnessed to great effect to prioritize ideas, simply by asking participants in a community to vote for their favorites. This is immensely powerful in a customer-facing ideas community because it gives customers a say in prioritizing the ideas that get actioned by the organization. The results of voting can be fed back to the community, for example by giving more visibility to the ideas that receive the most votes. To keep the flow of ideas fresh, votes can be aged so that popularity declines over time, allowing new ideas to continuously rise to the top. Behind the scenes, voting statistics can be interrogated in more detail, for example to evaluate which ideas are most valued by the largest or most profitable customers. In an internal ideas community, it may be useful to see voting statistics by job role, or even to give different voting weights to participants according to roles, so that for example those who work most closely with products or who are most in touch with customers have a higher weighting than others.
Adapt to an Iterative Development Process The real-time nature of the Web helps organizations to ensure their innovation strategy keeps pace with emerging trends. In today’s fast-paced world, product managers and business strategists can no longer afford to make their plans years in advance and then sit back while they’re rolled out. Instead, organizations must be able to react rapidly and intelligently to changing demands, constantly refining and retuning their products, services and marketing. An online ideas community provides immensely valuable feedback on new and missing features and services. Organizations can test customer reactions during development of a new product or offering, and adopt a more iterative approach to product and strategy development. It allows them to test customer and partner reactions before deciding whether to continue in a particular direction. Such an approach has significant implications for product and strategy development processes. Traditional processes are organized in a ”batch” project cycle, in which development is completed as a single large project and a finished product or strategy is rolled out before the market response is evaluated and incorporated into the next development cycle. A more iterative approach demands processes that can accommodate a continuous cycle of change and constant re-evaluation of development objectives.
Generate Loyalty Through Shared Innovation Collaborating with customers on product innovation or involving employees in the process of developing a corporate strategy has enormous benefits in terms of cementing loyalty to an organization or its offerings. It underlines a sense of shared ownership, giving participants a stake in the final output.
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The effect on team spirit within the organization should not be underestimated. The ideas project brings marketing, sales and product management teams closer together and promotes communication and collaboration between these separate departments, enhancing the consistency of the customer experience.
Reinventing Innovation The Web has rewritten the rules of innovation management for the 21st-century enterprise. By taking advantage of its real-time infrastructure and harnessing the power of Web-based communities and social networks, businesses today can direct and prioritize innovation to respond to the emerging needs of their customers and seize market opportunities as they emerge. Effective ideation and innovation management is no longer the preserve of large, wellendowed corporations. All enterprises, large and small, can exploit the infrastructure of the Web to streamline their development and innovation processes and forge closer links with communities of employees, partners, customers and other stakeholders. Those who move now to learn and implement the skills and best practices of this new business tool will position themselves to compete effectively and profit handsomely in the new connected era of the Web.
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