Originally published at the IBM Center for Applied Insights blog.
Susanne Hupfer, IBM Center for Applied Insights, June 30, 2015
If you look at history, innovation doesn’t come just from giving people incentives; it comes from creating environments where their ideas can connect.
The recent IBM Institute for Business Value (IBV) global study on innovation points out that innovation correlates strongly with enterprise value creation: The 25 most innovative companies are outpacing the broader market in terms of aggregate market capitalization. Indeed, not just prosperity, but even enterprise survival, may be at stake. IBM CEO Ginni Rometty has said, “The only way you survive is you continuously transform into something else. It’s this idea of continuous transformation that makes you an innovation company.”
So, how exactly does an organization excel at continual innovation? How do you create an environment where ideas can connect? While there may be no one-size-fits-all solution, you can pick up some valuable techniques from recent studies and experiments.
1. Build innovation teams
The IBV study reports that outperforming organizations (those that achieved both high revenue growth and high profitability) build organizations that encourage innovation. These outperformers are 79 percent more likely to establish dedicated innovation teams.
Samsung, for instance, has recently assembled strategists, technical personnel and product managers into a new, autonomous product innovation team to focus on emerging technologies and hunt for the company’s “next big thing.” For several years, Merck has had a dedicated innovation group, Merck Medical Information and Innovation (M2i2), that has been exploring new approaches to digital health and access to data and analytics.
2. Draw upon the expertise of partners
Notably, rather than undertaking projects alone, the Merck innovation group has been “building an ecosystem of strategic collaborations” – establishing research partnerships with healthcare providers and startups. For example, M2i2 partnered with PatientsLikeMe to find new insights about insomnia: PatientsLikeMe analyzed over five years’ worth of data on its community members’ sleep experiences, and Merck brought in-house expertise and additional analytics to the table. Together, they discovered that chronically ill patients have a high rate of undiagnosed, little understood sleep issues.
The recent IBM Business Tech Trends study backs up the significance of strategic partnering. We investigated how Pacesetter enterprises — those that view big data and analytics, cloud, mobile and social technologies as critical to their success and adopt them ahead of rivals — maintain their lead, even as these technologies become mainstream.
We found that these leading companies partner more, and more creatively. They collaborate with less-traditional partners — such as citizen developers, clients, start-ups and academia — to help drive innovation. These leading companies are 70 percent more likely to engage start-ups for project execution and twice as likely to use academia for help with product development. Based on what they’ve reported, the creative partnering strategy appears to be paying off: Pacesetters are more than five times as likely to significantly accelerate innovation of products and services with cloud, analytics, mobile technology and social business.
3. Harness the wisdom of the crowd
Expertise doesn’t stop at the company walls or even within partner boundaries. The IBV study finds that 37 percent more outperforming organizations use “open” innovation processes than underperformers.
Unilever, for example, runs an open innovation program that solicits contributions from individuals, suppliers, academics, designers, start-ups — anyone with ideas that may help them meet stated challenges such as “improving health and hygiene” and “reducing our environmental impact.”
Crowdsourcing can be a powerful technique for tackling some kinds of innovation problems. One striking example of success comes from Foldit, an online game for crowdsourcing protein folding. For over a decade, a global team of scientists had been stumped trying to solve a molecular mystery: deciphering the detailed molecular structure of an enzyme from an AIDS- like monkey virus. There were limitations to the algorithms used to predict protein folding. Then, in desperation, the scientists submitted the puzzle to Foldit to see what its player teams could do. The Foldit user community solved the mystery in less than ten days!
4. Learn from your customers
The IBM Business Tech Trends study found that Pacesetter enterprises are six times more likely to use analytics to mine social data, for example, to better understand markets and customer needs. And over 80 percent of these leading organizations also plan to increase their investments in social media analytics and mobile analytics over the next two years.
In some cases, consumers are participating directly in innovation processes with enterprises, such as co-designing, co-creating, co-marketing and even co-funding. The IBV study found that 71 percent of respondents agree that customers are a critical part of the innovation process and 67 percent agree that customers help develop products that have greater value.
In one notable example of co-creation, Fedex collaborated with medical device suppliers, surgical staff, surgeons and patients to create a new package technology that senses temperature, pressure, humidity and location — suitable for transporting live tissues for organ donation.
5. Mix-and-match your experts
If your company has multiple, discrete teams of experts, unexpected innovation may come from giving them ways to cross-pollinate ideas and expertise.
A case in point comes from Yamaha, which carried out an experiment swapping its musical instrument and motorcycle design teams, asking the motorcycle experts to design musical instruments and vice-versa. The experiment resulted in a dramatic new drum kit that surrounds the drummer’s entire body.
Looking at your own enterprise, are you making use of these five techniques? Or could you adopt a couple more to start firing innovation on all cylinders?
