In my humble opinion the television program ‘X-factor’ understands innovation better than the average company in the Netherlands. This may sound strange, but let me explain this by a simple example.
Do you think you could pick the eventual winner of the X-factor out of 14,000 contestants upfront? Do you think an expert like Gordon, one of the Dutch jury members, can pick the winner upfront? And lastly, would you put money on his ability to pick the winner upfront? Personally, I wouldn’t bet much money on his ability to pick the right one out of the more than 14,000 candidates. The funny thing is, that a lot of companies take these low-chance-of-success-bets in regards to their innovation processes. The X-factor program however, has a very efficient innovation process.
BCG did a survey on the way companies measure their innovation initiatives.
Their key findings:
Only 32 percent of executives are satisfied with their company’s innovation-measurement practices. And that percentage has been falling.
While most executives—73 percent of respondents—believe that innovation should be tracked as rigorously as other business operations, only 46 percent said that their company actually does so.
The majority of companies continue to rely on a handful of metrics to measure the full scope of their innovation activities. Fifty-two percent of respondents said their company uses five or fewer metrics. But that number is starting to rise.
A surprisingly small number of companies—27 percent of respondents—attempt to drive innovation by linking employee incentives to innovation metrics. But that number, too, is edging up.
The most widely tracked components of innovation are overall company profitability (79 percent of respondents said their company measures it), overall customer satisfaction (75 percent), and incremental revenue from innovation (73 percent).
The metrics that employees pay the most attention to—the ones that have the greatest impact on their behavior and attitudes toward the company’s innovation efforts—are incremental revenue from innovation and overall customer satisfaction.
Companies consider themselves most effective at measuring innovation outputs (such as revenue growth, shareholder returns, and brand impact). They consider themselves far less successful at tracking innovation inputs (for example, dedicated resources, such as people and funds invested) and the quality of their innovation processes.
An interesting line in the report says: “companies measure the wrong things—or fail to measure the right ones.”
To me this report doesn’t prove as much that measuring is the problem. Most companies just don’t know how to be innovative. This BCG report also takes a perspective from the management paradigm that just a few people in the company have a clue.
When I look at companies that are consistently innovative, I see companies that know how to utilize the collective wisdom of their employee base, and get these employees to collaborate and build upon each others knowledge, experience, and skills.
And yes, these companies measure what is going on and how successful their process is, but you need to have a running engine in order to measure its performance.
On the blog Elsua I ran into a film made by Best Buy on the way they use social media. What I found interesting about the 4 minute film is that Best Buy use a variety of media and are very clear about the reason why they use the media.
From our experience one of the most important success criteria of implementing social media is having clear vision and intention. Social media very often lead to changes in the way people work (together). The intention therefore needs to be changing patterns and empowering people, not successfully implementing software.
Best buy is using social patforms in 5 different ways:
Blueshirtnation: Their “Myspace” like network that allows workers to connect to each other. They have many stores throughout the country and they find that it improves job satisfaction if employees feel they are part of something larger than just their store.
Watercooler: This online discussion forum is used widely by teams or in stores to spread information quickly and discuss it.
wiki’s empower people to all contribute.
Loop marketplace: is a space employees can post ideas. Other employees discuss and enrich them.
Prediction markets: By trading stocks employees predict future business outcomes. Examples of the outcomes can be sales figures or the completion of projects. This system harnesses the collective knowledge of all employees to help make the best decisions.
This article describes the main reason idea management projects tend to underperfom. It then provides an insight into a proven 4 step methodology for successfully implementing idea management.
Why Idea Management systems underperform
Although idea management systems are seen as a crucial driver for large organisations to become more innovative, they have to be seen as a tool supporting ‘a more widespread organisational change. These systems need to support a process and an organisation, not the other way around. There are scores of cases of companies that buy and deploy a system without the required consideration given to what needs to be in place for such a system to deliver its full value.
In our practice we most often see idea management systems being deployed with a lack of focus. The organisation has not scoped the problem(s) they want to be solved and identified the people that should participate in solving them. If you open up the system to a large group of people without a clear question many employees will enter the ideas they have been walking around with and couldn’t sell. This creates a tsunami of poor ideas overwhelming management that cannot evaluate properly because they do not have the capacity to do so. Because the quality of the ideas is low management will not increase resources to evaluate the ideas. This results in neither being able to evaluate ideas properly, give feedback to employees, nor find the good ideas. The lack of feedback leads to disgruntled employees who feel the organisation is not taking them and their ideas seriously. The lack of good ideas lead to disgruntled senior management that feels they are wasting budget. On average such implementations do not last very long.
This wouldn’t be such an issue if you could stop, rethink and try again. However, you have just lost your employees trust. The organisation will need years to forget that, in their eyes, their ideas have gone to waste.
Gary Hamel wrote the following analogy to playing Golf in an article called Innovation Hacker:
