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Innovation Insights by Stephen Shapiro

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The final section of Tip 11 from Best Practices are Stupid. Please read the first two sections before reading this. Remember, this book was written a dozen years ago, so some concepts have evolved. The first two posts talked about competition vs collaboration, and the three downsides of traditional brainstorming. Now we move to some examples.

Several years ago I wanted a new logo for my website and decided to crowdsource a design using 99 Designs. After posting a “brief” describing what I wanted, I had a choice: use a collaborative or competitive approach. With the collaborative model, every designer could see the submissions of the other contributors along with my comments on the designs. With the competitive approach, I could use blind submissions where the designers couldn’t see anyone else’s work. I chose the collaborative design approach. In the beginning, the designs trickled in slowly; many designers sat back and waited until there seemed to be a convergence around one idea. The variety of designs was relatively low.

I used a different approach when it came time to design the cards for my third book, Personality Poker. I first used the competitive model (i.e., blind submissions). What I found was a much greater variety of submissions right from the start, but there was no opportunity for people to build on the ideas of others. Therefore, after running the competition, I followed it up with a collaborative challenge. This process yielded a wide choice of initial designs followed by a high level of collaborative refinement. The final result was better than anything a single designer could have developed.

The most successful model, from this experience, was competition followed by collaboration.

Of course there are other factors that will influence when you should use a competitive versus collaborative approach. For example, if intellectual property issues are critical, blind competitions work better since they provide greater protection for the designers. Of course, even in that situation, you can have groups work together to submit a competitive solution. Or, when allocating prizes (monetary or other) competitions are easier to manage as submissions are clearly delineated. But even with collaborative solutions, there are creative ways of divvying up the winnings. It does not need to be winner-takes-all.

For social issues pertaining to the public good, collaboration often works well because you can take the pulse of a variety of people. Just don’t fall into the trap of believing that public opinion will lead you to the right solution (see the next tip).

Every situation is different, and it is up to you figure out which approach will work best for your particular challenge.

Here is the continuation of Tip 11 from Best Practices are Stupid. Please read yesterday’s post before reading this. In it, I talked about competitions vs collaboration. Now we go to three downsides of traditional brainstorming (there are actually MANY more).

There are several reasons traditional brainstorming sessions don’t work:

1. Serial Processing: If you have ten individuals in a group, only one can speak at any given time. This limits the “bandwidth” of ideas that can be processed. Ten people working individually could theoretically generate ten times more ideas in the same amount of time. However, using collaboration tools can eliminate this problem as people can work in unison, allowing everyone to “speak” at the same time.

2. Social Loafing: When groups work together, there is a tendency for individuals to put forth less effort. They assume that someone else will pick up the slack. Although this is true for group brainstorming sessions, when using other forms of innovation (such as open innovation), this factor tends to have a reduced impact.

3. Groupthink: Finally, it has been shown that if you start the process by working together, you end up with groupthink. That is, as soon as the first idea is thrown out, it tends to influence the thinking of the other contributors. This causes a convergence of solutions too early in the process and narrows the set of ideas that are typically generated.

It is this last reason why it is good to start the process – whether you are using face-to-face brainstorming or virtual crowdsourcing – through a “competitive” approach to problem solving. When conducting brainstorming sessions, it works best to have each person independently write down his or her own creative ideas. Only after everyone generates their own list does the group come together. When using a crowdsourcing approach, it is often useful to start with a competition to get the widest range of solutions, and then, only after selecting the best solutions, do you allow a collaborative community to flesh them out. This gives you get a much richer solution in the end.

Part 3 will be posted tomorrow.

TO COMPETE OR NOT TO COMPETE: THAT IS THE QUESTION (part 1 of 3)

Tip 11 from Best Practices are Stupid. This tip will be split into three posts. Remember, this book was written a dozen years ago, so some concepts have evolved.

Open-source software is a well-known collaborative community. Many developers participate solely in order to be part of the community, to contribute to the greater good, and to build on each other’s solutions. On the other hand, developers who work on creating apps for the iPhone operate in a competitive marketplace. Their contribution is largely, although not always, driven by a financial return, and they tend to work independently.

As we saw in the previous tip, innovation tournaments and bounties can be run either competitively or collaboratively. Cisco and LG Electronics ran competitive tournaments so that no one could see the rival submissions. GE, on the other hand, ran their ecomagination challenges collaboratively, allowing anyone to comment on or vote for any submission. The Netflix Prize and X Prize (both innovation bounties) were run as competitions, yet allowed for collaboration within each submission.

This raises an important question. Which approach yields better solutions: competition or collaboration?

Kevin Boudreau and Karim Lakhani wrote an article on this topic in the MIT Sloane Management Review that examined the merits of each form of open innovation. They found that collaboration is useful when problems require “cumulative knowledge” and involve “building on past advances.” On the other hand, competition is most effective when “an innovation problem is solved by broad experimentation.”

They also found that collaborative “communities often are more oriented toward the intrinsic motivations of external innovators, whereas (competitive) markets tend to reward extrinsic motivation.”

For your corporate innovation efforts, should you use competition or collaboration?

The answer is you should use both. In fact, you may want to use both approaches for a single challenge. However, it is important to go about it in the right sequence.

Let’s first address a few psychological issues related to creative thinking in humans.

Consider your typical group brainstorming session. Although this is a common way for organizations to innovate, is this approach effective? Interestingly, research suggests that individuals working on their own actually produce a higher quality and quantity of ideas than when they work collaboratively with others. There are three reasons for this:

[These 3 reasons will be shared tomorrow.]

Tip 10 from Best Practices are Stupid. Keep in mind that this was written 12 years ago.

American Idol remains a popular television shows. Why?  Partly because it is entertaining and partly because the show is able to uncover previously undiscovered talent.

It is this latter reason why many organizations are employing the American Idol approach to innovation. Their objective is to uncover some truly amazing ideas or solutions that were previously hidden.

Innovation Tournaments

In the innovation space, these events are sometimes referred to as “innovation tournaments,” a term coined by Christian Terwiesch and Karl Ulrich from Stanford University.

With a tournament there is ALWAYS a winner, although it is not necessarily winner-takes-all.

Cisco, LG Electronics, and GE have all used the “find a winner” model as a way to develop ideas.

The Cisco iPrize (2010) had a total of 2,900 participants who submitted 824 ideas who competed to get $250,000 to launch a new business idea.

LG Electronics (2009) was looking to “design their version of the next revolutionary LG mobile phone.” Their tournament had 835 submissions from 324 individuals. They shared with me the fact that about 75% of the ideas were things they had thought of in the past; only 25% had innovative elements.

GE ran their “ecomagination” challenges.

With tournaments, there is always a winner. But just because someone “wins” does not mean their idea is good or useful. I know from inside-information that the results are often less than stellar. Continue reading >>

Tip 9 from Best Practices are Stupid. We dig even deeper into open innovation.

While attempting to find a suitable filament to make the incandescent electric light a viable device, Edison is famous for saying, “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.”

Innovators embrace this quote because it seems to validate the iterative development process used by so many.

There is a widely held belief that you should keep on trying and failing until you find a solution that works, because you learn as much from failure as you do from success.

However, if Edison had found a solution to the light bulb challenge on the first try, would he have continued to seek out 700 other ways that did not work? Probably not.

Think about it this way…

Look at the first graphic. With the traditional model (left) you fail over and over again until you are finally successful. Because your employees are working and investing their time on each attempt, it costs the organization payroll and overhead. And because the failure process happens serially, it takes a long time.

Is there a better way to find solutions that minimizes your risk, cost, and time – especially for technical challenges?

Continue reading >>

Tip 8 from Best Practices are Stupid. This one further explores the needs for open innovation.

A well-known healthcare company, after launching an incredibly successful new product, turned their attention to creating new complementary offerings. Multiple failed attempts later, they came to realize they didn’t have the in-house expertise to crack the code. Not knowing what to do, they decided to try posting the challenge on an open innovation website. Their hope was that they could find someone outside their organization who could find a practical solution.

Unfortunately, some employees took this action as a slap in the face. Unfamiliar with the benefits of open innovation, they felt that someone within the organization could solve every challenge. To prove their point, several employees took it upon themselves to submit solutions to the posted challenge.

In the end, the solutions submitted by the employees weren’t chosen. The breakthrough answer came from someone not only outside of the company, but outside of the company’s industry. The successful conclusion of this challenge solidified the company’s decision to formally launch their open innovation efforts. Their conclusion?

No one person can solve every problem.

And it’s corollary: No one organization can solve every problem.

The late, great Will Rogers once said, “There is nothing so stupid as an educated man, if you get him off the thing that he was educated in.”

One of the challenges with driving innovation in organizations is that smart people are often more interested in being right than doing right.  That is, they want to believe that they can solve every problem under the sun.  This pervasive belief can circumvent your innovation efforts. Continue reading >>

Today is a small snippet from strategy number 7 in Best Practices are Stupid.

Goldilocks enters the house of three bears and decides to go to sleep. One bed was too hard, one was too soft, and the baby bear’s bed just right.

The same is true when defining challenges.

They can’t be too big (broad or abstract, e.g., asking for new ideas) or too small (overly specific, e.g., extremely technical that can only be solved by one discipline). They must be “just right” – framed in a way that maximizes the likelihood of finding a workable solution.

When framing challenges, you must adhere to the Goldilocks Principle.

It is quite common for a company to ask its employees to find ways to increase revenue. This is a lofty goal and posing this type of general challenge usually results in fluffy solutions. Instead of asking people to solve broad problems, ask specific questions that will likely result in an implementable solution. For example, are there specific markets that you have not yet penetrated? Are you missing out on customer segments that present a greater opportunity?

NASA ran an open innovation challenge designed to find a “micro gravity laundry system.” However, the solutions they received were not as useful as they had hoped. In hindsight, they recognized two important lessons. Continue reading >>

One day, I was having lunch with a pharmaceutical client who said, “The problem with our innovation pipeline is it is really a sewer.” Ouch. But it was the inspiration for this tip from Best Practices are Stupid. Here’s a short snippet from that chapter:

We hear the expression “innovation pipeline” tossed around a lot.  But if you aren’t careful, your pipeline may get clogged.

The biggest challenge companies face is to figure out which challenges to solve.  I call this their “meta-challenge.” Given that organizations have limited resources and money, prioritization is critical.

You want to manage your innovation pipeline the way you manage your personal investment portfolio.  Putting all of your money in a saving account making 1% interest may be safe, but your investment will never grow and you will most likely end up destitute.  Then again, putting all of your money in risky derivatives and speculative investments that have a large potential upside also have an equally large downside and will most likely land you in the gutter.  The buzzword in the finance world is diversification.

Your Innovation Portfolio

Equally, your innovation portfolio should be comprised of a diverse set of investments in various types of challenges.  Include some safe bets (incremental innovation) along with some riskier investments (radical innovation). It’s up to you to decide the correct proportion of each one. You want a variety of challenges ranging from service to product enhancement challenges, and performance improvement to business-model changing challenges.

Challenges tend to fall into two broad categories: technical challenges (e.g., how do we create a new chemical compound with specific properties?) and marketing challenges (e.g., how to we get women to drink more beer?).

When you map these two dimensions, you get the following chart with four broad categories of challenges: Continue reading >>

Today we move to tip 5 from the book. People who know me, know I am a fan of open innovation and crowdsourcing – when it is done correctly. Today’s post shares why I am such a strong proponent…

Expertise can be the enemy of breakthrough thinking. The more you know about a particular topic, the more difficult it is for you to think about it in a different way. Your solutions will most likely be “been there, done that” ideas that are limited to your area of expertise. If you want breakthroughs, you need to bring together people from a wide range of disciplines, backgrounds, and experiences.

This idea was confirmed by research completed by Lee Fleming, a business administration professor at Harvard Business School. After analyzing 17,000 patents, he discovered that the breakthroughs that arise from multidisciplinary work “are frequently of unusually high value—superior to the best innovations achieved by conventional approaches.”

His research highlighted the pros and cons of each method. He learned that teams composed of people with similar backgrounds have a great number of successes, yet yield fewer breakthroughs. On the other hand, cross-disciplinary teams had a higher failure rate yet their innovations were more radical and had the potential to create incredible value.

Is there is a way to get all of the benefits associated with diversity without any of the negative effects?

Yes. It is called “open innovation.” Continue reading >>

This is tip 4 from Best Practices are Stupid and is the basis of my Invisible Solutions® book. It is fundamental to all of my work with innovation: Start with a well-framed opportunity. Here is a snippet of the text for this chapter…

Leaders of organizations often use the expression, “think outside the box” while urging their employees to innovate.  The belief is that eliminating constraints and allowing people to think freely will increase creativity.

Although this Tabula Rasa or blank slate method to innovation is conventional wisdom, this unbounded approach actually reduces creativity and leads to abstract or impractical solutions.  A television script writer in Hollywood once told me that he liked the idea of “creativity within constraints” as it gave him a starting point and then he could “riff” from there.

Instead of telling your employees to think outside the box, give them a “better box” to innovate inside of.  These constraints will increase creativity and lead to useful solutions.

Albert Einstein is quotes as saying, “If I had an hour to save the world, I would spend 59 minutes defining the problem and one minute finding solutions.” In my experience, most companies spend the full sixty minutes finding solutions to problems that just don’t matter.

Well-defined challenges guide innovation efforts, provide useful constraints, and define that “better box.” Continue reading >>

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