2017 CROWDSOURCED INNOVATION REPORT IDEASCALE WHITE PAPER

Transcription

1 2017 CROWDSOURCED INNOVATION REPORT IDEASCALE WHITE PAPER

2 2 The Crowdsourced Innovation Report In 2016, a survey was sent to 735 board members and executives worldwide. Executives were asked to rate 30 issues from 1 to 10 based on how much impact they expect them to have on their companies in the coming year. And after the more routine concerns about economic fluctuation and regulatory changes and the growing risk of cyberthreats, the number one concern that those executives were worried about was the rapid speed of disruptive innovation 1. This isn t surprising. It s hard to conceive of the new accelerated pace of change. More than 50% of the Fortune 500 are gone in under a decade. It took the telephone 75 years to reach 50 million users while Angry Birds was able to do it in less than two months 2. It used to take a company 3 years to bring a new product to market, now we re seeing companies do it in a matter of months. So how are companies managing to keep up in spite of all this change? To answer that question, IdeaScale began exploring innovation trends in their own system data as well as through primary research with their clients and in doing so developed some answers to the following questions: 1. What is the profile for an organization s innovation program? 2. What sorts of problems are organizations solving with the help of the crowd? 3. What are the biggest challenges in the innovation space today? 4. What sorts of results can one expect from an innovation program? The hope is that our findings might help enhance your programs or help you develop new best practices days-but-what-does-that-mean/

3 3 Profile: Innovation within an Organization Since IdeaScale first launched in 2009, we ve seen a shift in priorities at large organizations. Whether they re in government or at the forefront of technology, more and more companies have embedded innovation initiatives at their organization. In fact, in a 2015 interview with Yusof Seedat, Head of Accenture Research, South Africa, he stated Among the most important findings this year there is a gratifying increase in the number of innovation departments formalized within company structures. 3 It s a trend that we re seeing as well since most innovation programs are at least one year old and many are over three years old. But what do these programs look like? The majority of these programs are focused internally, with organizations looking to leverage the collective wisdom of their employee base (almost 53%). Although Gartner estimates that only 22% of innovation engagements across all innovation management platforms are externally-focused 4, IdeaScale s customer base does show a greater share of public engagement initiatives (47% shared between partners, customers, and the general public)

4 4 Over 60% of innovation programs utilize some sort of incentive structure to engage the crowd to participate and although they use a variety of types of incentives, recognition is by far the most common incentive used to increase engagement. Nearly half of these programs have a team dedicated to implementation and just about half of those teams have budget for implementation. Here s a profile of an IdeaScale community by the averages. Number of Ideas Number of Members Number of Admins Number of Stages Number of Campaigns/Year 1,100 6, We also found that there were a few features that innovators found to be crucial in developing their programs: Access to IdeaScale s Support Team: many customers noted the value of having access to a dedicated account manager, but they were also grateful that their community members also had access to the 24/7 chat so that they didn t have to worry about troubleshooting end user issues. Easy SSO: Many teams noted that SSO enabled a higher rate of participation, so they were pleased that they could set it up in less than a day. Ideation: The ideation stage was the most commonly utilized feature across all IdeaScale customers. Moderation: Most teams relied on moderation to scale the conversation and identify promising ideas. Security: None too surprisingly, most customers wanted a high level of confidence in their software s security for a variety of reasons (intellectual property, data integrity, system security, etc).

5 5 Profile: Types of Solutions Bain & Company developed a system for assessing an organization s innovation readiness 5. The ranking separated organizations into three tiers: Tier 1: In Tier One, an organization has prioritized a culture of innovation and is looking to engaging multiple stakeholders in the conversation around innovation and ideation. Tier 2: In Tier Two, an organization has developed a process for selecting and implementing ideas and is looking to do so continuously. Tier 3: In Tier Three, an organization has dedicated resources to the implementation of ideas and has defined metrics for the success of the ideas and the program. Based on this criteria, IdeaScale found that only 18% of companies are operating at this top tier, but that companies are slowly improving their innovation skill sets and becoming more sophisticated over time. Tier One Tier Two Tier Three 44% 38% 18% Most innovation consultancies or programs have some sort of framework for describing the type of solutions that they are seeking. Forrester Research wrote in 2013 that there are essentially four things that an organization can work on in their innovation management program 6. They are: 1. Products or Services 2. Processes or Operations 3. Markets or Business Models 4. Organization or Governance

6 6 The Global Innovation Management Institute identifies five main domains of innovation 7: 1. Business Model Innovation 2. Production Innovation 3. Innovation to an Offering 4. Delivery Innovation 5. Market Innovation But we asked our customers how they are currently innovating and this is the range of projects that innovators are currently solving with innovation management software (the most commonly sought solutions appear at the top): Finding process improvement opportunities Improving existing offerings Improving employee satisfaction Identifying cost savings opportunities Sourcing new offerings Improving customer experience Enacting social change Identifying new markets or business models Market research Sourcing sustainability solutions 7

7 7 In 2012, the Harvard Business Review conducted a study of companies across a variety of sectors to find out the balance of their innovation portfolio 8. What they found was that Companies that allocated about 70% of their innovation activity to core initiatives, 20% to adjacent ones, and 10% to transformational ones outperformed their peers, typically realizing a P/E premium of 10% to 20%. In our survey of innovators, we found a very similar ratio with 53% of all activities focusing on core innovation, 26% focusing on adjacent innovation initiatives and 21% are working on transformative innovation. I m glad to see that there is a higher allocation of time to transformational efforts, however, than the amount found by the Harvard Business Review analysis, because the same article also finds though that the returns from innovation generally come from transformational change as opposed to core improvements: We re finding consistently that the return ratio is roughly the inverse of that ideal allocation described above: Core innovation efforts typically contribute 10% of the long-term, cumulative return on innovation investment; adjacent initiatives contribute 20%; and transformational efforts contribute 70%. Something to keep in mind as administrators optimize their innovation efforts. 8

8 8 Innovation Obstacles Any innovator knows that there are a variety of challenges associated with running a continuous innovation initiative: challenges in assigning and harnessing resources, challenges in ongoing collaboration and communication, and more. The best innovation managers are masters at anticipating these roadblocks and even better at removing them before team members hit them. But we asked what sorts of challenges held innovation managers back the most and we found that the biggest barrier towards implementing new ideas was actually lack of time. Here s a review of the most common challenges and some potential solutions: Lack of Time: this is a resource that it is hard to do without. All good ideas require a certain amount of human time in order to make them a reality. However, if you re using crowdsourcing innovation efforts, you can also crowdsource people s time to dedicate a little of their effort to your project. Remember Google s 20% time (Google employees are encouraged to dedicate 20% of their work time to a project outside of their regular duties)? That s the same idea here.

9 9 Lack of Funding: this is one of the most common symptoms of companies that only give lip service to innovation as a value. If it s truly a company priority, leadership will dedicate some budget for new ideas, as well. One of our recommendations to new innovators is to take the 10% return on core improvements (see previous section) and re-invest them in the adjacent and transformational ideas. Lack of Formal Process: Without a process (even a flexible one), innovation is not sustainable. Most organizations have some format that works for them that has the same basic buckets (creative ideation, refinement, selection, and implementation and testing). Find out how your goals will be best be served by a process. Innovation Culture Challenges: Culture is fundamental to the success of innovation programs. But how do you know if your culture is innovative? Well, is creative thinking and criticism is encouraged? Are projects allowed to fail? Do teams celebrate the successes and learning opportunities around new ideas? But, perhaps most importantly, is leadership assigning some resources and expectations to an innovation or improvement program? If you re not meeting these criteria, then there s still some work to be done. The good news is that it really is possible to influence and develop an organization-wide practice of innovation. Lack of Collaboration: Most good ideas will require cooperation between a number of different partners. Teaching team-building and collaboration skills is a one of the basic team investments that innovation programs should make. This is especially important if you re encouraging the crowd to come together and deliver the solutions as well. We also asked where innovators are going to be focusing their efforts in 2017 and culture topped the list (it was even more important than gathering ideas or implementation), which makes sense since the success of so many programs begins with a cultural norm of innovation. This is in keeping with other research that we ve seen including The Invisible Advantage which writes According to research from PwC and The Conference Board, innovation is now ranked as a top 5 business priority of CEO s globally, and creating a culture of innovation is the top priority of CEO s when it comes to innovation strategy

10 10 Here are the other innovation priorities for 2017 (in order of importance): 1. Building a culture of innovation 2. Improve employee engagement 3. Gather more ideas 4. Implement breakthrough ideas 5. Improve innovation leadership 6. Scale innovation programs Innovation Results Finally, how are these innovation programs performing and how are the explaining their value? With so many of these programs still in the proof-of-concept phase, there is still a lot of variety in results and metrics, but we are beginning to see some standardization across these programs.

11 11 To begin with, there s a strong trend for collaboration on idea implementation. In fact, 40% respondents stated that ideas are implemented based on the nature of the idea unique teams for each idea. The most common implementation after that is the dedicated innovation group who stewards numerous ideas through to completion. Another discovery is that innovation management isn t like other practices, the value of an innovation program doesn t usually happen on day one, but after some initial ideas have been implemented and some initial results. The majority of respondents stated that value happens between one and six months of the launch of a new innovation program. Finally, innovators measure value in a number of different ways (from employee satisfaction to top-line revenue growth), but the number one metric for overall program success was the number of ideas implemented. Most were hoping for an implementation rate of about 10% but, of course, that rate depends a great deal on the nature of the program or challenge. Here are the other metrics for success (in order of most common usage): 1. # of implemented ideas 2. Employee Satisfaction 3. Customer Satisfaction 4. Time Saved 5. Money Saved 6. Revenue Generated

12 12 12 Recommendations There are a lot of lessons learned and best practices and opportunities for growth packed into the research here, but IdeaScale has identified the five most impactful changes that you can start doing today that will help you level up your program. Develop a portfolio of positive change. People use innovation management programs for a variety of goals (from sustainability ideas to process improvement opportunities). Try and develop a few campaigns across a range of services and goals to maximize the value of your innovation program. Invest in innovation as a value. That means not just saying that you care about innovation, but showing that you care about it. Make sure that the best ideas get some funding for implementation and that those who contributed are recognized for their role. This is going to help you build a culture where people want to get involved and will pledge their own time to make positive change a reality. As Gartner stated in the Innovation Management software market report, a successful innovation management program seldom depends on technology for its success. It requires clear goals to focus and inspire innovation, a culture that encourages people to bring new ideas to the table, and a process that can see those ideas through to prototype and implementation, repeatedly. 10 Plan for success by doing prep-work before launching a new campaign. Use that time to establish success criteria, senior level buy-in as well as resource allocation, and develop a process that makes sense based on your goals. Even if you ve already launched a community, you can still do prep work before each new campaign. Doing this up-front strategy will remove some of the most common roadblocks for innovation later on. As Gartner stated in the Innovation Management software market report, the nuances of setting up an innovation management program, especially those that aim to transform products, services and processes, or even culture, require much more than software. Start with some easy wins and re-invest in transformative innovation. The level of faith and value attributed to the program will grow as you demonstrate efficacy. Don t dismiss the value of core improvements as you plan for long-term strategic changes. It doesn t take a whole lot of budget to get started on those just-do-it ideas. Be patient & measure. Results take time (generally around six months), but don t forget to be tracking and reporting those results when they come in. How much money did you save? How many new initiatives did you launch (but failed and successful) and who have you told about it? Think you re ready to innovate? Start your own free community at ideascale.com. 10