How to Solve 7 Challenges in Employee Driven Innovation

By: Jesper Müller-Krogstrup

The collective wisdom of your co-workers is a huge asset in the fuzzy front end. But which challenges do you need to address and solve in order to create a structured and effective employee driven innovation process? Read more about a method using idea markets as a powerful incentive. And it has already proven its worth in a number of large Scandinavian companies.

My father-in-law, a young 70 year old rural dean of the Danish church, whom I still struggle to follow when it come to physical challenges – recently told me a story about his time in the military. “We knew that our good ideas were most welcome. They had developed a scheme were the best ideas were rewarded with cash, because improving safety could be a matter of saving lives and cost cutting was in constant focus. Everybody knew who they should share their idea with and everybody knew what would happen if the idea was considered to be valuable.” This was fifty years ago.

Employee Driven Innovation can be taught, improved and managed.

 

Two years ago I was involved in a project in one of the biggest financial corporations in Scandinavia. The task was to create continuous Employee Driven Innovation. At the beginning of the project I was at a meeting where a large group of employees were gathered. I asked them the simple question: can anyone tell me what the procedure is if you come up with a good idea? The group of employees looked at each other confused  until a woman in the back answered: “two years ago we had a suggestion box in the canteen – however it’s gone now, so I actually don’t know.”

You might ask yourself why the employees in one of the biggest financial corporations in Scandinavia did not have a process for sharing and collecting ideas from the employees. OK, maybe a good idea will not save lives, however ideas for cutting costs could mean the difference between failure and success.

Employee Driven Innovation – not a new concept

The story told by my father-in-law reminds us that Employee Driven Innovation is not a new discipline. I look at the established term as a proof of the fact that the most successful ‘war stories’ are being located and meaningful processes are developed based on best practice. Like other valuable change management disciplines, take Lean as an example, Employee Driven Innovation can be taught, improved and managed. The first step is to define a process, decide who is in charge and allocate a budget that matches the company’s ambitions within the field.

Employee Driven Innovation can be defined as: A structured collection and usage of ideas and experience from most of the employees to create radical and incremental changes in behaviour, products, processes, services and business models that are valuable to customers, users and the company.

I work with some of the leading companies in Europe to help them to achieve this. My work consists of helping these companies optimise the collection, screening and selection of ideas. The output is a continuous process that provides more and better ideas in a shorter amount of time, i.e. the direct link to the development process and actual development and implementation of ideas. Our foremost task is to provide the highest possible return on innovation by solving the challenges that companies face when Employee Driven Innovation becomes part of the company’s strategic focus.

Over the course of the many projects we carried out over the last couple of years, we have identified seven major universal challenges that companies face in regard to the fuzzy front end and Employee Driven Innovation.

Seven major challenges in Employee Driven Innovation

1. Create a structured and continuous idea collection, enrichment and selection process.
2. Motivate employees to participate.
3. Handle thousands of ideas.
4. Obtain high quality ideas.
5. Find the right people to evaluate ideas.
6. Select the best ideas.
7. Measure the performance at the fuzzy front end of innovation.

I strongly believe that no company, nor people within companies, are alike. However I see generic patterns across projects, companies and industries.

Below I provide my suggestions  to solve seven major challenges in Employee Driven Innovation. My suggestions are based on hands-on experience.

Solution

When a large number of employees are invited to generate (and develop) ideas, the innovation manager ideally asks the employees for ideas concerning a specific topic, subject to the company’s current strategy and the types of innovation the company is striving to extract from the initiative. An idea campaign. Talking about the type of innovation, the innovation manager can use Bessant’s 4 P’s of innovation (paradigm, product, position and process innovation) as inspiration when he considers the content of his current idea portfolio and when he plans the future content of this idea portfolio.

Prepare your Idea Campaign

Before each Idea Campaign the innovation manager should decide on a range of important details and communicate the content of his decisions to the employees:

• Criteria for success (when is the current Idea Campaign a success?)
• Topic (what do we need ideas for? – Choose topics of current strategic relevance.)
• Participants (which employees do we assume to hold important knowledge about the topics?)
• Duration of the campaign (for how long should employees work on this topic?)
• Communication (how should the employees understand the initiative?)
• Further involvement (what is the employee’s further involvement in developing the ideas?)
• Feedback (how, by whom and when will the employees be informed about the result?)
• Incentives (how do we motivate employees to participate; extrinsic and/or intrinsic motivation?)

Always keep your promises

When building continuous Employee Driven Innovation, it is very important that promises about what happens after the Idea Campaign, and how employees will be involved in further development, are articulated and then kept. Even though this might sound obvious, in my experience this is where prior initiatives have gone wrong. And not without reason. It can be difficult to close the gap between generating ideas and actually initiating projects from this effort. Be realistic with regard to the commitments you are able to make. If your Idea Campaign is not linked directly to your company’s existing development processes, you have to adjust your commitment accordingly.

When promises are not kept by the company, an employee simply sees this as a broken contract.

A lack of articulation and follow-up on what was committed to is the number one reason why employees refrain from participating in successive innovation initiatives. When innovation initiatives and promises about follow-up, etc. are made, this corresponds to a (mental) contract between the company and the employee. When promises are not kept by the company, an employee simply sees this as a broken contract. As a result the employee does not feel the need to fulfil his side of the contract and will refrain from participating in future initiatives.

Solution

People are motivated by different things. To some, the most important motivation is the opportunity to work with what they love, to present their idea to the management team, or win their colleagues’ acknowledgement. To others it is all about money.

When initiating a new Idea Campaign it is important to built the right incentive model. Five hundred engineers will most likely be motivated by something different than 500 employees from the sales department.

Design the right incentive model for you

Building continuous Employee Driven Innovation also means making idea generation, enrichment and evaluation a part of the employees’ habitual work. Prizes and incentive models should support this. Therefore, it is important to built the incentive model upon the existing culture. If prizes have never been offered before, a flat-screen TV for the best idea risks damaging the participation rate instead of supporting it. In such instances something other than a monetary reward is necessary. Getting your name on the challenge trophy could be the biggest motivator.

Solution

When an Idea Campaign is prepared correctly, we experience that each employee can suggest 1.4 ideas within 14 days. If you have invited 1,000 employees, you collect more than 1,000 ideas. Handling this number of ideas is a challenge in more than one respect. First, the innovation manager, and the employees, need an overview of all the ideas. Second, idea authors expect some sort of response, and third the best ideas among the thousand should be selected and moved forward according to the company’s process for handling new ideas.

Feedback to participants becomes much easier when using the employees’ collective intelligence to screen and rank the ideas.

Idea management systems exploits the many benefits attained from web 2.0 to create the best possible usability. As an example, such systems use different assorted list functions and provide the employee with the possibility of seeing which ideas other employees invest in. Feedback to participants becomes much easier when using the employees’ collective intelligence to screen and rank the ideas. The employee receives immediate feedback from his colleagues when they rank or comment on his idea. Additional feedback is not needed if the idea does not end up at the top of the list. The innovation manager on the other hand can spend his time providing the in-depth feedback according to the resources he has available.

Solution

We experience that the quality of the ideas increases substantially when the Innovation Manager spends time locating the right business areas to which ideas and solutions are needed. Initially it came as a surprise that most companies never thought about aligning ideas from the employees with the current strategy. This “simple” manoeuvre, where employees are asked only for ideas which are needed, automatically heightens the quality of the ideas. Perhaps maybe more importantly, it makes the process of selecting and using ideas much easier.

In addition to this, we have tested different incentive models to increase the number of valuable comments. Our experience is that we are able to increase the number of comments by 200% when using the appropriate incentive model.

When employees are only asked for ideas which are needed, it automatically heightens the quality of the ideas.

The importance of collecting not only ideas but also comments became evident in a project where participants were located in several countries around the globe. One of the top ideas (many employees were very keen on this idea), received much attention and was perceived as a possible solution to a complex product development problem. Then an employee, who was located in another country and had no prior relation to the idea author, wrote a comment explaining that a small research project looking into exactly the suggested solution had been conducted and proven that it the suggested solution did not work. The person who wrote the comment even linked to the report showing the results.

As a result very important information was shared throughout a large relevant group of employees and this new information was taken into account in the assessment of the ideas. Locally held knowledge is extremely important and we should not expect employees to look into databases for information and answers. They ask around, meaning they talk to their nearest colleagues. When using an online Idea Management system, asking around all of a sudden means asking everyone who logs in. In this case 350 people participated and it really paid off.

Solution

We often find  that companies urge thousands of employees to come up with ideas, and then assign the responsibility of finding the best ideas from those suggested to 1-5 people, regardless of the subject of the ideas. You might ask, do those 1-5 people have all the necessary knowledge and qualifications to make this kind of evaluation? Somewhere in the process, a very large number of ideas will fall into the the hands of a small group of decision-makers who will give either the thumbs-up or the thumb-down. It is therefore very important that this group should be assembled based on the topic of the idea campaign. Therefore, strive for expert knowledge about the topic and someone who will challenge your company’s standard approach, as well as a person who can recite the company’s overall strategy in his sleep. This group of people will be able to ‘screen’ ideas and identify the most promising ones for further maturation.

Solution

In my experience, the following is an ideal way of selecting the best ideas:

1. Employees submit and rank ideas and provide important feedback via comments.
2. A ’screen team’ (as mentioned above) reads through all the ideas and comments, and chooses which ideas – perhaps 10 of them – should be selected for further maturation. Their choice is based on clearly defined screening parameters. The employees’ rankings of the ideas can be included as a screening parameter, fut feeling and strategic fit are other possibilities.
3. The ideas chosen by the screen team are matured. This maturation depends, among other things, on the topic, the scope and the resources available. The important question here is: ”What information do I need at this stage to select the best ideas?”
4. The matured ideas are presented to a ’selection board’. People within this group should have the decision-making power to initiate an early stage (innovation) project within the area of the topic on which ideas were submitted.

Solution

As Innovation Manager, you will be asked:: ”What value have you created for the company?” This is why performance in the fuzzy front-end has to be measured. Some examples of important things to measure are: the alignment of idea portfolio and innovation strategy; projects originated from your ideation efforts; the net present value of such projects (what could we potentially earn if the products, process, etc. were realised?); and how many of our employees participate with ideas and comments. You can also include ’softer’ issues such as increase in employee satisfaction due to higher engagement.

By Jesper Müller-Krogstrup

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References

Virgil Storr, The Market as a Social Space,The Review of Austrian Economics, 21 (2 & 3) 2008.

Friedrich Hayek, The Use of Knowledge in Society, The Economic Review, No 4 1945.