How to innovate (and how not to), part 7: Work the crowd

Where does innovation come from? And which method works best? Jihee Junn continues her look at the many and varied approaches to innovation in the seventh part of a series.

No innovator is an island. Countless business manifestos and TED Talks will tell you that collaboration is key, and that diversity of ideas leads to better innovation, so it’s nothing new to state its importance. But the idea of collaboration itself has gone well beyond the limits of business-to-business transactions and familiar partnership deals.

When it comes to crowdsourcing, there’s natural cautiousness among managers about opening up to outsiders. But it’s increasingly becoming a method of choice for companies looking to innovate.

A well-functioning crowd is loose and decentralised, and exposes a problem to a widely diverse set of individuals faster and more cost-effectively. In 1998, IBM announced that it was abandoning its internal development efforts on web server infrastructure and teaming up with Apache, a nascent online community of webmasters and technologists. With each individual tackling their own particular problem, every solution integrated into a steadily improving piece of software that was better than anything IBM could accomplish on its own.

There’s plenty of research showing internal forces are often the biggest barrier to innovation (for example, when electricity was first introduced into steam powered factories, it took 30 years for the productivity improvements to kick in, because that’s how long it took for the older generation of managers to retire). So Christoph Drefers, one of the brains behind Pass The Idea (a cloud-based innovation and collaboration platform that uses the wisdom of a global crowd to produce solutions around a specific challenge), recently brought together some of the country’s most successful companies for a, wait for it, creative cross-industry collaboration co-operative called the Innovation Collective. The first company to participate as a challenger was Coca Cola Amatil New Zealand, which posed the question: “How can we get better at innovation?”

Coming on board to offer their take on that question were New Zealand heavy-hitters BNZ, 2Degrees, Fisher & Paykel, Icebreaker, Kellogg, Goodman Fielder, McDonald’s, Aecom and McCormick. The ideas produced were then refined, revised and built upon by the group and presented to Coca-Cola Amatil to use. Think of it as the crowdsourcing of big thinking from successful companies in a non-competitive, open-source way.

As Coca Cola Amatil’s Wendy Rayner said: “Part of the magic for me is the inclusiveness of the platform. It’s not just that it’s a great tool and it’s fun and easy. It’s the fact that you know you’re participating with a bunch of random people – which I mean in the nicest possible way. As the ideas that came through for judging, I didn’t know where they came from and what that person does for a job, and it just didn’t matter. It was just completely inclusive and diverse. And there’s not that many things in business that are like that. That anonymity allows for this wonderful level playing field … I think any strong personality, because of hierarchy or anything else, can really bias a group, and people who are quieter may have fantastic ideas but not the confidence to speak up.”

For ideas that are further down the path to existence, the rise of crowdfunding in recent years has also changed the way products are launched and capital is raised. Kickstarter, Indiegogo, PledgeMe, AlphaCrowd, and many others have popped up to help fund projects perhaps too radical or weird to attract conventional means of support – and to test demand before fully committing. Famously, Oculus Rift, the first truly immersive virtual reality headset for video games, was purchased by Facebook for $2 billion in 2014, but not before raising $2.4 million from a highly successful Kickstarter campaign. Oculus had literally become an overnight success, reaching its initial $250,000 goal in just a single day.

The principles of crowdfunding can also work within the walls of established corporations. The IBM initiative, one of the world’s first enterprise crowdfunding projects, differs from the one used by Oculus Rift in that IBM’s month-long project was sponsored and funded by the enterprise itself. However, the decision of where and how to allocate the funds was left to the employees themselves. They could use the funds to support their co-workers’ projects, although they weren’t allowed to support their own. In the end, IBM found that enterprise crowdfunding worked, improving not just the rate and quality of innovation, but morale as well.

Idealog’s official rating: 7 / 10 – Nice work if you can get (someone else to do) it.

Method 1: Wait for the eureka moment

Method 2: Follow the word of God

Method 3: Try, try and try again

Method 4; Fail fast, act small, embrace big

Method 5: Become the centre of an ecosystem

Method 6: Refine your process