Sources, Rules, and Creation of an Innovation Guide
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The_5_Myths_of_Innovation.pdf
The 5 Myths of Innovation
W I N T E R 2 0 1 1 V O L . 5 2 N O . 2
R E P R I N T N U M B E R 5 2 2 1 0
By Julian Birkinshaw, Cyril Bouquet and J.-L. Barsoux
Please note that gray areas reflect artwork that has been intentionally removed. The substantive content of the ar- ticle appears as originally published.
Myth # 2: Build It and They Will Come … The U.K.-based soc- cer club Ebbsfleet United was bought and run in 2007 by a Web community of 30,000. But by 2010 its paying membership had dwindled to just 800.
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I N N O VA T I O N
HISTORICALLY, MOST MANAGERS equated innovation primarily with the development of new products and new technologies. But increasingly, innovation is seen as applying to the devel-
opment of new service offerings, business models, pricing plans and routes to market, as well as new
management practices. There is now a greater recognition that novel ideas can transform any part of
the value chain — and that products and services represent just the tip of the innovation iceberg.1
This shift of focus has implications for who “owns” innovation. It used to be the preserve of a
select band of employees — be they designers, engineers or scientists — whose responsibility it was
to generate and pursue new ideas, often in a separate location. But increasingly, innovation has
come to be seen as the responsibility of the entire organization. For many large companies, in fact,
the new imperative is to view innovation as an “all the time, everywhere” capability that harnesses
the skills and imagination of employees at all levels.2
Making innovation everyone’s job is intuitively appealing but very hard to achieve. Many compa-
nies have put in place suggestions, schemes, ideation programs, venturing units and online forums.
(See “A Glossary of Established Drivers of Innovation,” p. 45.) However, the success rate of such ap-
The 5 Myths of Innovation Nowadays, goes the theory, innovation is supposed to be done constantly, by everyone in the company, improving everything the company is about — and new Web-based tools are here to help it happen. Is the theory right? Or do the experiences of companies reveal something different? BY JULIAN BIRKINSHAW, CYRIL BOUQUET AND J.-L. BARSOUX
THE LEADING QUESTION What conven- tional wisdom about innova- tion no longer applies?
FINDINGS Online forums are not a panacea for innovation.
Innovation shouldn’t always be “open.” Internal and external experts should be used for very differ- ent problems.
Innovation must be bottom-up and top-down — in an approach that’s balanced.
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proaches is mixed. Employees face capacity, time and
motivation issues around their participation. There
is often a lack of follow-through in well-intentioned
schemes. And there is typically some level of discon-
nect between the priorities of those at the top and
the efforts of those lower down in the organization.
Moreover, Web-based tools for capturing and
developing ideas have not yet delivered on their
promise: A recent McKinsey survey revealed that
the number of respondents who are satisfied over-
all w ith the Web 2.0 tools (21%) is slig htly
outweighed by the number who voice clear dissat-
isfaction (22%).3
To understand these challenges, and to identify
the innovation practices that work, we spent three
years studying the process of innovation in 13
global companies. (See “About the Research.”) All
of these companies embarked on often-lengthy
journeys aimed at making themselves more consis-
tently and sustainably innovative. All sought to
engage their employees in the process, and all made
use of online tools to facilitate and improve the
quality and quantity of ideas. Our research allowed
us to confirm many of the standard arguments for
how to encourage innovation in large organiza-
tions, but we also uncovered some surprising
findings. (See “Questions That Work — and Don’t
— in Online Innovation Forums, ” p. 47 for a sum-
mary.) In this article we focus on the key insights
that emerged from our research, organized around
five persistent “myths” that continue to haunt the
innovation efforts of many companies.
Myth # 1. The Eureka Moment For many people, it is still the sudden flash of insight
— think Archimedes in his bath or Newton below
the apple tree — that defines the process of innova-
tion. According to this view, companies need to hire
a bunch of insightful and contrarian thinkers, and
provide them with a fertile environment, and lots of
time and space, to come up with bright ideas.
Alas, the truth is far more prosaic. It is often said
that innovation is 5% inspiration and 95% perspi-
ration, and our research bears this out. If you think
of innovation as a chain of linked activities — from
generating new ideas through to commercializing
them successfully — it is the latter stages of the pro-
cess where ideas are being worked up and developed
in detail that are the most time consuming.4 More-
over, it is also the latter stages where problems occur.
We recently conducted a survey in 123 companies,
asking managers to evaluate how effective they were
at each stage in the innovation value chain. On aver-
age, they indicated that they were relatively good at
generating new ideas (either from inside or outside
the boundaries of the company), but their perfor-
mance dropped for every successive stage of the
chain. (See “Which Parts of the Innovation Value
Chain Are Companies Good At?” p. 48) We are not
suggesting that generating ideas is unimportant. But
that is not where most companies struggle. Most
companies are sufficiently good at generating ideas;
the “bottleneck” in the innovation process actually
occurs a lot further down the pipeline.
The eureka myth helps explains why so many
companies are drawn to big brainstorming events,
with names such as ideation workshops and inno-
vation jams.5 In the course of our research we saw
many different types of brainstorming events, and
indeed we helped several of the sample companies
to put them on. Such events are always valuable:
They help to focus the efforts of a large number of
people, they generate excitement and interest and
they generate some useful ideas.
But even with all these benefits, it’s not clear that
ideation workshops are the right way to build com-
panywide innovation capability. As an analogy,
think of the role that big musical festivals like Live
Aid play in the alleviation of poverty. These big
events are terrific for raising awareness and money
on a one-time basis, but the process of poverty al-
leviation takes years of hard effort on the part of aid
organizations, and the outcomes are achieved long
after the memory of the big event has faded. The
involvement of the general public in aid work usu-
ally ends with the check we write to Live Aid; but
for the aid organization receiving the money, that is
where the real work starts.
Our research showed that most companies fail to
think through the consequences of putting on ide-
ation workshops. The first problem is that they
underestimate the amount of work that is needed after
the workshop is completed. IBM’s 2006 online Inno-
vation Jam, described in more detail below, required a
team of 60 researchers to sort through the 30,000 posts
received over a 72-hour period. UBS Investment
ABOUT THE RESEARCH Our research was con- ducted over a three-year period in cooperation with a group of leading compa- nies. The participants came from various sectors: con- sumer products (Mars, Sara Lee, Best Buy, Whirl- pool), pharmaceuticals (Roche Diagnostics, GSK), broadcasting (BBC), energy (BP), information and com- munication technology (BT, IBM), business information (ThomsonReuters) — as well as two banks that were at the center of the recent financial crisis (UBS and RBS). We could have excluded them from the study, but they faced dis- tinctive challenges that significantly enriched the study. We interviewed a total of 54 people, some of them several times, in these companies, and we wrote up detailed case studies about six of the companies (Mars, Roche, GSK, IBM, BT and UBS).
Apart from tracking and reporting on their innova- tion efforts, some of the participant companies also came together for a roundtable conference at London Business School in December 2008. This provided a fascinating window on the challenges of implementing an inno- vation strategy in large organizations, and it al- lowed us to test out some of our provisional ideas.
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Bank’s Idea Exchange, while conducted on a smaller
scale, also involved a great deal of post-event work. As
one UBS manager observed: “Preliminary sorting,
then scoring and giving feedback on such a large
number of ideas took a huge amount of time and ef-
fort by category owners and subject matter experts.
The ideas coming through were good, but if we are to
do it again we need a repeatable, dashboard-style re-
porting system for quantifying results and keeping
the momentum going.”
The second, and more insidious, problem with
ideation workshops is that they can actually be dis-
empowering if the organization lacks the capacity to
act on the ideas generated. We heard quite a few
grumbles during the research from individuals who
had put forward their bright ideas through a work-
shop or online forum, but received no response — not
even an acknowledgment. If the “funnel” is con-
stricted further down, at the point where ideas get
assessed and developed, stuffing new ideas at the top
is simply going to exacerbate the problem.
So what should you do? First, be very clear what
problem you are trying to solve, and put on an ide-
ation workshop only if you believe that it is a lack of
ideas that is holding you back. Second, if you believe
that an ideation workshop is the right approach, be
prepared to invest a lot of time and effort into the
follow-up work. It is sobering to note that successful
innovation programs typically take many years to
bear fruit: Procter & Gamble’s Connect + Develop
initiative was piloted and developed over a 10-year
period, while Royal Dutch Shell’s Gamechanger ini-
tiative took more than five years to yield benefits. Alas,
many companies lack the continuity in leadership
needed to make this type of long-term commitment.
Takeaway: Most innovation efforts fail not because
of a lack of bright ideas, but because of a lack of
careful and thoughtful follow-up. Smart companies
know where the weakest links in their entire inno-
vation value chain are, and they invest time in
correcting those weaknesses rather than further re-
inforcing their strengths.
Myth # 2. Build It and They Will Come The emergence of second-generation Internet
technologies (“Web 2.0”) has had a dramatic im-
pact on how we share, aggregate and interpret
information. The proliferation and growth of on-
line communities such as Facebook and LinkedIn
seduce us into assuming that these new means of
social interaction will also transform the way we
get things done at work.
But for every online community that succeeds,
many others fail. Some make a good start but then
enthusiasm wanes. For example, MyFootballClub is
a U.K.-based website whose 30,000 members bought
a soccer club, Ebbsfleet United, in 2007. However, by
2010 its paying membership had dwindled to just
800 people, leading to severe financial difficulties
for Ebbsfleet United. Other online community ini-
tiatives fail to live up to their founders’ hopes. For
example, during the transition period before he
came into office, President Obama endorsed the
idea of an online “Citizen’s Briefing Book” for peo-
ple to submit ideas to him. Some 44,000 proposals
and 1.4 million votes were received, but as the Inter-
national Herald Tribune reported, “the results were
A GLOSSARY OF ESTABLISHED DRIVERS OF INNOVATION There is a growing body of work on the leading-edge practices in innovation management. Consultants and scholars concur on a number of proven condi- tions that contribute to sustained innovation.i These include:
Shared understanding: Sustained innovation is a collective endeavor built on a shared sense of what the company is becoming — and what it is not becom- ing. It is also about creating a culture to support innovation — for example, by destigmatizing failure and celebrating successes.
Alignment: Besides promoting values that support innovation, organizations also have to address structural impediments (such as silos) and realign contra- dictory systems and processes. As the group head of innovation in one company told us, “We needed to create an environment where it was ‘safe to experiment’; where it was possible to ‘pilot’ and ‘test’ ideas before they were subjected to our stringent performance metrics.”
Tools: Employees need the training, concepts and techniques to innovate. In the memorable words of a decision support manager at 3M, “It doesn’t work to urge people to think outside the box without giving them the tools to climb out.”ii
Diversity: Innovation requires a degree of friction. Bringing in outsiders — new hires, experts, suppliers or customers — and mixing people across business units, functions and geographies helps spark new ideas.
Interaction: Organizations need to establish forums, platforms and events to help employees build networks and to provide opportunities for exchange and serendipity to happen.
Slack: Employees need some access to slack resources, not least in terms of timeout from their regular activities to experiment and develop new ideas. This also requires focus — both personal and organizational — on eliminating non- value-adding activities.
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quietly published, but they were embarrassing.”6
The most popular ideas — in the middle of an eco-
nomic meltdown — included legalizing marijuana
and online poker, and revoking the Church of Sci-
entology’s tax-exempt status.
How does this affect the process of innovation?
Unsurprisingly, all the companies we studied had
figured out that the tools of Web 2.0 could poten-
tially be very valuable in helping large numbers of
people get involved in an innovation process. Most
had built some sort of online forum in which em-
ployees could post their ideas, comment and build
on the ideas of others and evaluate proposals. For
example, IBM used space on its corporate Intranet
to launch a 72-hour Innovation Jam in 2006, the
purpose being to get IBM employees, clients and
partners involved in an online debate about new
business opportunities. The Innovation Jam at-
tracted 57,000 visitors and 30,000 posts. A rather
different example is Royal Bank of Scotland’s devel-
opment of a virtual innovation center in Second
Life, which allowed the bank to prototype potential
new banking environments and get direct and rapid
feedback from employees around the world.
In these and other cases, the implicit logic was:
Build it, and they will come. Both IBM and RBS
had considerable success in attracting interest, but
the overall story was much more mixed. Some on-
line for ums really helped to galvanize their
company’s innovation efforts. Others ended up
underused and unloved.
What are the biggest problems with developing
online innovation forums? The first is that the
forum doesn’t take off. It’s usually quite straight-
forward to get people to check out a new site once
or twice, but they need a reason to keep coming
back. As MyFootballClub found, the risk is that the
novelty of an innovation forum will wear out pretty
quickly and participation will dwindle. A manager
at Roche Diagnostics observed: “Our hope that our
internal technology-oriented people would gravi-
tate to using this type of tool was completely
unfounded. We really had to push people (via an
electronic marketing campaign) to involve them in
suggesting solutions to the six problems we identi-
fied.” Equally, managers at Mars and UBS found
their innovation efforts stalling after promising
starts. One said: “We probably underestimated the
communications needed. We were good up-front,
but learned that continuous communications is
vital. We had to counter some skepticism, to create
the belief that something would happen.”
The second risk is that, like Obama’s Citizen’s
Briefing Book, the ideas that get posted are off-
topic, half-baked or irrelevant. All the managers we
spoke to acknowledged that they had to work hard
to “separate the wheat from the chaff.” Many of the
ideas put forward were parochial or ill-informed,
and few people took the trouble to build on the
ideas of others. The notion that the good ideas
would be picked up by others and rise to the top
rarely worked out.
So what should you do to avoid these problems?
The most important point is to understand the types
of interaction that occur in online forums, so that
you use them in the right way. If you are looking for
creative, never-heard-before ideas, and if you want
people to take responsibility for building on one an-
other’s ideas, then a face-to-face workshop is your
best bet. But if you are looking for a specific answer
to a question, or if you want to generate a wide vari-
ety of views about some existing ideas, then an online
forum can be highly efficient. (See “Questions That
Work — and Don’t — in Online Innovation Fo-
rums” for examples.)
Takeaway: Online forums are not a panacea for dis-
tributed innovation. Online forums are good for
capturing and filtering large numbers of existing
ideas; in-person forums are good for generating and
building on new ideas. Smart companies are selec-
tive in their use of online forums for innovation.
Myth # 3. Open Innovation Is the Future Any discussion of innovation in large companies
sooner or later turns to the issue of “open” innova-
tion — the idea that companies should look for
ways of tapping into and harnessing the ideas that
lie beyond their formal boundaries. Many compa-
nies are now embracing open innovation in its
many guises. For example, the Danish toymaker
LEGO has been leveraging customer ideas as a
source of innovation for years, and some new
products are even labeled “created by LEGO fans.”7
And one of P&G’s first experiments with online
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advertising invited people to make spoof movies
of P&G’s “Talking Stain” TV ad and post them on
YouTube — resulting in over 200 submissions,
some of which proved good enough to air on TV.8
Our research confirmed that most large com-
panies believe a more open approach to innovation
is necessary, but it also underlined that there is no
free lunch on offer. The benefits of open innova-
tion, in terms of providing a company with access
to a vastly greater pool of ideas, are obvious. But
the costs are also considerable, including practical
challenges in resolving intellectual property own-
ership issues, lack of trust on both sides of the fence
and the operational costs involved in building an
open innovation capability. Open innovation is
not the future, but it is certainly part of the future,
and the smart approach is to use the tools of open
innovation selectively.
Roche Diagnostics was a company that got a lot
of value out of open innovation. In 2009 it put in
place an experimental initiative to overcome spe-
cific technological problems that were preventing
certain R&D programs from moving forward. The
company identified six technology challenges that
needed solving, and it opened the challenges up to
the internal R&D community and to the external
technology community through Innocentive and
UTEK (now Innovaro), two well-known technol-
ogy marketplaces. The manager in charge of the
initiative described the outcome thus:
Internally, the number of responses to these six
challenges was very low. But one very thoughtful
response to one of the challenges was brilliant,
and paid for the entire experiment. Externally,
we used Innocentive and UTEK, and both had a
far higher response rate than our internal exper-
iment — more than 10 times the volume of
responses, in fact. We offered a $1,500 reward, so
this could have been an influencing factor. We
received one novel solution, which really made
the entire experiment worthwhile, but more
than that was our very positive experience of in-
volving external collaborators.
Roche’s experience was the closest thing we saw to
a proper experiment that compared the merits of tap-
ping into internal and external communities — and
it really highlighted the value of tapping into the ex-
ternal group. But note that the potential respondents
were being asked a very narrow, technology-specific
question. Clearly, the external community would
have been far less useful for tackling company-spe-
cific or situation-specific problems.
What are the downsides or limitations of open
innovation? One set of concerns relates to how you
handle intellectual property issues. At the time of
writing, Roche Diagnostics was still working
through the details of the licensing agreement with
the person who solved its technological problem,
and the transaction and licensing costs were far
from trivial. A related issue is that without the
strong IP protection that a market-maker like In-
nocentive provides, external parties are careful with
what they will share. IBM discovered this in its In-
novation Jam. As one manager recalled, “This Jam
was established as an open forum, so anyone can
take these ideas and use them. So we felt we were
taking a few risks doing this, and perhaps it meant
that our clients were quieter in the discussions than
QUESTIONS THAT WORK — AND DON’T — IN ONLINE INNOVATION FORUMS
WHAT WORKS ■ Option-based questions where you want to know the distribution of current views, for example:
• Which of the following sources of information do you use most frequently in the workplace? (print media, digital media, experts, colleagues)
• How would you rate our speed of customer responsiveness on a one-10 scale?
■ Narrow, often technical, questions for which there is one (or more) factually correct answer, for example:
• Can anyone tell me what to do when I am faced with this error code? Syntax Loop unspecified Ref 56663.
WHAT DOESN’T ■ Questions that ask for a big conceptual leap forward without providing any raw material for people to latch onto, for example:
• We are looking for radical new approaches to customer service in our retail bank — any ideas?
Advice: Provide some unusual stimuli to encourage people to think differently, for example: How could we make the retail bank more like your favorite restaurant?
■ Questions that ask people to build one another’s ideas in a constructive manner, for example:
• Let’s start a discussion thread about new approaches to working more closely with our customers.
Advice: Use a mix of online and in-person brainstorming sessions; or actively manage the thread to create some coherence.
48 MIT SLOAN MANAGEMENT REVIEW WINTER 2011 SLOANREVIEW.MIT.EDU
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we would have liked. But it was important to make
this open in every sense of the word.”
A second set of concerns was around how the
companies we studied actually used the insights
provided by external sources. One European tele-
com company had a “scouting” unit in Silicon
Valley to keep an eye on exciting new startups and
emerging technologies, but the scouting team dis-
covered that the only technologies the folks back in
Europe were interested in were those that would
help them accelerate their current development
road map. The really radical ideas, the ones that the
scouting unit was putatively looking for, were sim-
ply too dissonant for the European development
teams to get their heads around.
A final concern is simply the time it takes to do
open innovation properly. Companies such as
Procter & Gamble, Intel and LEGO have put an
enormous amount of investment into building
their own external networks, and they are begin-
ning to see a return, but you shouldn’t underestimate
the time and effort involved.
Takeaway: External innovation forums have access
to a broad range of expertise that makes them effec-
tive for solving narrow technological problems;
internal innovation forums have less breadth but
more understanding of context. Smart companies
use their external and internal experts for very dif-
ferent types of problems.
Myth # 4. Pay Is Paramount A dominant concern when organizations set out to
grow their innovation capabilities is how to structure
rewards for ideas. A common refrain is that innovation
involves discretionary effort on top of existing respon-
sibilities, so we have to offer incentives so people to put
in that extra effort. The example of the venture capital
industry was mentioned as a setting in which people
coming up with ideas, and those backing them, all
have the opportunity to become rich.
But both academic theory and our discussions
with chief innovation officers indicate that this is a
red herring.
Let’s briefly look at the theory. People are moti-
vated by many factors, but extrinsic rewards such as
money are usually secondary, hygiene-type factors.
The more powerful motivators are typically “social”
factors, such as the recognition and status that is
conferred on those who do well, and “personal” fac-
tors, such as the intrinsic pleasure that some work
affords. More specifically, there is evidence from
psychology research that individuals view the offer
of reward for an enjoyable task as an attempt to
control their behavior, which hence undermines
their intrinsic task interest and creative perfor-
mance.9 Parallel research in behavioral economics
suggests that intrinsic motivation is especially likely
to suffer when the incentives are large.10
All of which suggests that you don’t need mone-
t a r y re w a rd s f o r i n n ov a t i o n . In n ov a t i o n i s
intrinsically enjoyable, and it’s easy to recognize
and confer status on those who put their discre-
tionary effort into it. Our research interviews
provided plentiful evidence that this is the case.
Take the experience of UBS. With considerable
upheaval at senior levels of the bank, the innovation
movement was very much a grassroots effort —
built around “UBS Idea Exchange,” an online tool.
The executive in charge of that effort commented:
“We found that employees having an opportunity
to put forward their ideas brought huge personal
rewards. We learned very clearly (through our ex-
periments) that financial rewards would not have
made any difference. People reported that recogni-
tion of their ideas was a reward in itself. They
wanted to be engaged and to participate. We there-
fore involved people in presenting their ideas to
senior management.”
WHICH PARTS OF THE INNOVATION VALUE CHAIN ARE COMPANIES GOOD AT? Originating ideas usually isn’t the hardest part of innovating. Most companies are sufficiently good at generating ideas, the “bottleneck” in the innovation pro- cess actually occurs a lot further down the pipeline.
1
Generating ideas inside
Generating ideas outside
Cross-pollinating ideas inside
Selecting promising ideas
Developing ideas into products/services
Diffusing proven ideas across the company
2 3
How good is your company at the following activities, on a scale of one to five?
How good is your company at the following activities, on a scale of one to five?
SLOANREVIEW.MIT.EDU WINTER 2011 MIT SLOAN MANAGEMENT REVIEW 49
The sentiment was echoed by the head of inno-
vation at Mars Central Europe: “We try to recognize
people rather than offer material rewards. We hold
a corporate event, biannually, called Make The Dif-
ference, where ideas and success stor ies are
celebrated. The Central Europe team is very proud
of the fact that we won more awards at this event
last year than any other region.”
Takeaway: Rewarding people for their innovation ef-
forts misses the point. The process of innovating —
of taking the initiative to come up w ith new
solutions — is its own reward. Smart companies em-
p h a s i ze t h e s o c i a l a n d p e r s o n a l d r ive r s o f
discretionary effort, rather than the material drivers.11
Myth # 5. Bottom-Up Innovation Is Best There is a lot of enthusiasm among those writing
about innovation, and among those working in
R&D settings, for bottom-up activism or “intrapre-
neurship.” The reasoning here is straightforward:
Top executives are not close enough to the action to
be able to come up with or implement new ideas, so
they need to push responsibility for innovation
down into the organization. “Let 1,000 flowers
bloom” has long been the mantra of big successful
innovators like 3M, Google and W.L. Gore.
We wanted to believe this, and we sought out
companies that had allowed, or even encouraged,
bottom-up processes. We wanted to find cases where
dramatic changes had emerged through bottom-up
initiatives. But we came back emptyhanded.
Don’t misunderstand. There are plenty of ex-
amples of successful innovations that started out as
below-the-radar initiatives, or as proposals that got
rejected by top executives several times. Examples
that spring to mind include Ericsson’s mobile
handset business, Sony’s PlayStation and HP’s
printer business. But, the point is, at some point all
these innovation were picked up and then priori-
tized by top management. Successful innovations,
in other words, need both bottom-up and top-
down effort, and very often the link is not made.
During the research, we followed several cases of
bottom-up innovation in considerable detail: UBS’s
Idea Exchange, Best Buy’s resilience initiative and
GlaxoSmithKline’s Spark program. These initia-
tives were neither great successes nor outright
failures. They were able to demonstrate all sorts of
modest successes, but they didn’t have the impact
that their proponents would have liked either.
We discussed this issue in a workshop in late
2008, and the story that emerged was interesting.
An executive working for RBS described the ten-
sion he had experienced between a top-down and
a bottom-up approach. The company had put in
place a range of tools: “Some of these are top-
down tools that are owned by senior executives;
others are bottom-up tools that we put in place to
get involvement from large numbers of people.
Top-down we have a group innovation board with
senior decision makers and then 12 innovation
boards. On a bottom-up basis, each division has
its own pipeline, and makes the initial seed invest-
ment. Then as costs increase, the idea goes to the
innovation board, and if it is approved the board
will fund a pilot project, which in turn helps the
development of the business plan.”
The underlying point, he observed, is that suc-
cessful innovation requires close attention to both
facets: “We’ve learned that you only get the top-
down working if you get the bottom-up right too.”
This interplay between direction and empower-
ment is evident even in a declared bottom-up
innovator like Best Buy. The success of the U.S. re-
tailer is strongly tied to the cumulative effect of
continuous experimentation and small bets at the
level of individual stores.12 Yet top management
plays a significant role in channeling the collective
creative energy toward desired areas by framing the
innovation challenge in terms of finding new and
better ways to service customers (dubbed the “cus-
tomer centric-cycle”) — hence removing the risks
of random or ill-focused innovation.
One final aspect of the bottom-up process is
how to deal with those whose ideas are turned
down. Broad-based innovation actually implies
saying no to a lot of people, sometimes repeatedly.
How their contributions are acknowledged, the
transparency of the decision-making process and
how the news is communicated are crucial factors
in keeping the ideas coming. Even when their own
ideas are rejected, employees also note what hap-
pens to the successful ideas of colleagues — and
companies should not underestimate the stimulus
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of seeing front-line innovators sometimes given the
opportunity to implement the ideas they generated.
Indeed, Whirlpool, an exemplar in democratic in-
novation, goes one step further: It has established
an Innovation E-Space that allows all employees to
keep abreast of innovation activities and even to
volunteer to work one another’s projects.13 Once
again, the interaction between bottom-up and top-
down initiatives proves decisive.
Takeaway: Bottom-up innovation efforts benefit
from high levels of employee engagement; top-
dow n innovation effor ts benefit from direct
alignment with the company’s goals. Smart compa-
nies use both approaches, and are adept at helping
bottom-up innovation projects get the sponsorship
they need to survive.
Conclusion Innovation is the lifeblood of any large organiza-
tion, and many invest enormous amounts of time
and effort in fostering distributed innovation pro-
grams. Web 2.0 technologies have made it possible
to democratize the process even further, and offer
ways of consolidating and evaluating radically
new ideas.
But there are no quick fixes, panaceas or one-
size-fits-all solutions — not surprisingly, since by
definition not everyone can be a successful leader
in innovation.
In this article we have taken an experience-led
approach. Forget what the theory says: What are the
experiences of companies putting these new tools
for distributed innovation into practice? And the
truth proves sobering. Online tools, open innova-
tion communities and big collaborative forums all
have their limitations. None is always right or al-
ways wrong. The best approach involves careful
judgment and a deep understanding of the particu-
lar challenges a company is facing. By thinking
through the pros and cons of each element, compa-
nies can manage their processes better.
Julian Birkinshaw is a professor of strategic and international management at London Business School. Cyril Bouquet is a professor of strategy at IMD in Lausanne, Switzerland. Jean-Louis Barsoux is a senior research fellow at IMD. Comment on this article at http://sloanreview.mit.edu/52210/, or contact the authors at [email protected].
REFERENCES
1. For a taxonomy of different types of innovation, see S. Conway and F. Steward, “Managing and Shaping Innova- tion” (Oxford: Oxford University Press, 2009), 13-14.
2. See P. Skarzynski and R. Gibson, “Innovation to the Core: A Blueprint for Transforming the Way Your Company Innovates” (Boston: Harvard Business Press, 2008).
3. See “Building the Web 2.0 Enterprise: McKinsey Global Survey Results,” July 2008, https://www.mckinseyquar- terly.com/Business_Technology/BT_Strategy/Building_ the_Web_20_Enterprise_McKinsey_Global_Survey_2174.
4. See M. Hansen and J. Birkinshaw, “The Innovation Value Chain,” Harvard Business Review 85, no. 6 (June 2007): 121-130; and A. Hargadon, “How Breakthroughs Happen: The Surprising Truth About How Companies In- novate” (Boston: Harvard Business Press, 2003).
5. See, for example, J.H. Dyer, H.B. Gregersen and C.M. Christensen, “The Innovator’s DNA,” Harvard Business Review 87, no. 12 (December 2009): 60-67; and Skarzin- ski, “Innovation to the Core.”
6. A. Giridharadas, “Democracy 2.0 Awaits an Upgrade,” International Herald Tribune, Saturday-Sunday, Sept. 12- 13, 2009, Currents, sec. A, p. 1.
7. M. Witzel, “Managers Who Use a Little Imagination for Big Rewards,” Financial Times, May 6, 2008, 18.
8. E. Byron, “A New Odd Couple: Google, P&G Swap Workers to Spur Innovation,” Wall Street Journal, Nov. 19, 2008, sec. A, p. 1.
9. See, for example, E.L. Deci, R. Koestner and R.M. Ryan. “A Meta-Analytic Review of Experiments Examin- ing the Effects of Extrinsic Rewards on Intrinsic Motivation,” Psychological Bulletin 125, no. 6 (1999): 627–668.
10. H.S. James “Why Did You Do That? An Economic Examination of the Effect of Extrinsic Compensation on Intrinsic Motivation and Performance,” Journal of Eco- nomic Psychology 26, no. 4 (August 2005): 549-566.
11. K.J. Boudreau and K.R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review 50, no. 4 (summer 2009): 69-76.
12. E. Kahn, citing Eric Mankin, “Innovate or Perish: Man- aging the Enduring Technology Company in the Global Market” (Hoboken, New Jersey: John Wiley & Sons, 2007), 19.
13. J.W. Rivkin, D. Leonard and G. Hamel, “Change at Whirlpool Corporation (B),” Harvard Business School case no. 9-705-463 (Boston: Harvard Business Publishing, 2006).
i. For more details see Skarzynski, “Innovation to the Core”; and T. Davila, M.J. Epstein and R. Shelton, “Mak- ing Innovation Work: How to Manage It, Measure It, and Profit From It” (Upper Saddle River, New Jersey: Wharton School Publishing, 2006).
ii. L. Dunnavant, cited by A. Muoio, “They Have a Better Idea ... Do You?” Fast Company, (August 31, 1997), 2. i.
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