By: Doug Collins
In this episode, the leaders of the Idea Mill Program for Collaborative Innovation engage Dirty Maple CEO Harry Lundstrom to secure funding for the long term. How might the organization fund a collaborative innovation program—and justify doing so? What space—physical and conceptual—does this funding open for people?
Last fall our columnist the innovation architect Doug Collins began the tale of how the Dirty Maple Flooring Company came to embrace the Digital Age through the practice of collaborative innovation. The latest episode appears below. Readers may navigate the full series here.
How might you make space for pursuing ideas that, at times, threaten the status quo of the very stakeholders who would otherwise serve as their sponsors?
No Margin, No Mission: Funding an Innovation Management Program
“Talk to me about cash flow,” Harry Lundstrom probed Charlie and Frankie. “Can we afford this now? And, how do we keep paying for this?”
Charlie and Frankie sat caddy-corner to one another on the teal leather sectional in Harry’s office at the Dirty Maple Flooring Company. The sun hit the blond, lacquered hardwood that Harry himself had installed as crown molding. The reflected light made for a cheery space.
Together, Charlie and Frankie made to Harry the case for formalizing the governance structure for the Idea Mill Program for Collaborative Innovation and for dedicating physical space for the program. Harry had the gift of allowing himself to get progressively excited about pursuing new ideas while, at the same time, allowing himself to get progressively nervous about the costs of doing so.
What if something went wrong?
Dirty Maple had outgrown its early days as a sole proprietorship, when Harry’s grandparents pursued residential flooring jobs from their garage. Harry, however, held a strong sense of stewardship that he felt the legacy of Dirty Maple placed upon him. Charlie and Frankie respected Harry’s sense of responsibility, even when the burden seemed to, to their minds, make him unduly cautious.
Opportunity costs are the dark matter of the business world: largely unobservable, yet very real when felt indirectly through disruption.
“We see two means of funding, Harry, one more concrete than the other,” Frankie said. “The first innovation challenge, as you know, has already started to yield benefits—cost savings—as we improve the accuracy of our sales forecasts. Charlie, I, and the millers have been putting our heads together—we’ve identified a half dozen more challenges tied to realizing greater efficiency that, if they yield similar results, will provide the cash flow that will more than pay for giving the program a home where people can pursue their ideas. I estimate in year one we would want to reserve 20% of the 50% of identified savings that is not going to the employee stock ownership plan.”
“Okay, okay,” Harry said. “That looks to be a couple hundred thousand dollars—maybe a quarter million.”
“Right,” Charlie said. “And, beyond this core source of funding around applying some of the money earned back through cost savings, we can also consider the upside tied to pursuing challenges that lead us to new—or emerging—business opportunities. Re-engaging the enterprise on the cabinetry business, for example, has come up a lot.”
“Hmmm… ,” Harry mused. Frankie and Charlie kept a respectful silence. Extending into cabinetry had been Harry’s baby: his contribution to the legacy that family business represented to him. The results had been spotty to date. Frankie and Charlie knew to tread lightly.
“In other words,” Charlie continued, “we always envisioned the program helping the organization explore the three horizons that define our strategy: core, emerging, and new ventures. We should hold ourselves accountable to identifying the benefits we gain from each.”
“Right,” Harry said. “Let’s assume for now that profits that fund the program come from cost savings—at least to start. So tell me more about this space.”
Crowdsourcing Sources Leaders
“Well,” said Charlie, “the first challenge—which we knew was going to serve as a test for us, yielded some interesting results. We learned a lot.”
“First, we found that the people who contributed the most compelling ideas—and who took the time to evolve their ideas based on feedback from the community—fully expected to have an opportunity to pursue those ideas. Martha on the Idea Concept Team Delta, who you met, is a good case in point.”
“We thought, maybe, that some people would ‘throw their ideas over the wall’: contribute them and then distance themselves from them if they happened to resonate. That didn’t happen. I guess we shouldn’t be surprised: in the real world, people who phone in their ideas don’t get very far. The same holds true in the challenge environment. We have to have a good back-end process in place to catch the ideas flowing from the challenges.”
“At the same time, we found that many of our most effective contributors were either junior or specialized in a way that they needed help from people in other functions and regions to more fully realize the potential for their ideas. Martha, for example, works in marketing communications. She has a fine mind and is a strong creative thinker. However, she’s never done a workflow analysis in her life or tied that analysis to a financial model. That’s where her team members such as Carlos support her.”
“This space that we’re talking about serves this purpose—it gives the cross-functional groups a ‘safe space’ for them to go to concept and implementation, together.”
Making Room for Blue Sky Ideas
“The second thing that we learned was that the most compelling ideas—the ones that promise the biggest payoff—transcend functions. Omar’s idea, as you know, from Concept Team Beta has us revisiting the role of the country managers. Up until now, we’ve always treated them as chef, cook, and bottle washer for their territory. Omar has us looking at the world in terms of customer segment. He’s observed that demand, inventory terms, and forecast accuracy varies widely by the segments he’s identified. Where do we pursue that idea? Not within the functional groups.”
“The implications of his thinking threatens some of the functions. They would kill the idea like the white blood cells in our bodies kill a virus—something foreign and unwelcome. That may ultimately be the right call, but we need to give some of the more disruptive ideas a safe space, believing that sometimes an idea that threatens the status quo of one function may benefit the organization as a whole in some bigger way.”
“Lastly,” Frankie continued, “we see value in giving the Idea Millers a space where they can engage on the transformative ideas and guide the charter for the program, overall.”
An Unsolicited Idea Is Like an Unwelcome Houseguest
“I get it,” Harry said. His focus for a moment moved up from the couch to the crown molding to inspect his handiwork for the thousandth time.
“And, what about the open ideas? You know, I wake up one morning, I’m taking a shower, and inspiration hits. I have a great idea. What do we do there?”
Charlie and Frankie looked at one another. “We’re wrestling with that one,” Frankie replied.
“A couple of people contributed some off-topic ideas during the challenge,” Charlie continued. “Frankie and I thought a couple were pretty good, to the point where we approached the people who we thought might be interested in them—the logical sponsors.”
“What we found,” Frankie said, “was that an unsolicited idea is like an unexpected guest at the house: you, as host, will grin and bear it, but any halfway astute observer will see your discomfort. There’s a reason why the suggestion box system went by the wayside in the 1940s after the war.”
Harry laughed. Last fall friends from college had the idea to visit his family in their classic Airstream for what became a three-day weekend. Ms. Lundstrom was not amused.
“Okay, okay—so, can you live with $200,000 to create this space this year?”
“That should do it,” Charlie said.
“Alright. Frankie, you have the checkbook. Keep me up to date on plans. And, I want to host a christening ceremony for this space when you’re ready this summer.”
“Thanks, Harry,” Frankie said, as Charlie and she left his office, the roll of building schematics under her arm.
About the author
Doug Collins serves as an innovation architect. He helps organizations such as The Estee Lauder Companies, Jarden Corporation, Johnson & Johnson, The Procter & Gamble Company, and Ryder System navigate the fuzzy front end of innovation. Doug develops approaches, creates forums, and structures engagements whereby people can convene to explore the critical questions facing the enterprise. He helps people assign economic value to the ideas and to the collaboration that result.
As an author, Doug explores ways in which people can apply the practice of collaborative innovation in his series Innovation Architecture: A New Blueprint for Engaging People through Collaborative Innovation. His bi-weekly column appears in the publication Innovation Management. Doug serves on the board of advisors for Frost & Sullivan’s Global community of Growth, Innovation and Leadership (GIL). Today, Doug works as senior practice leader at social innovation company Mindjet, where he consults with a range of clients. He focuses on helping them realize their potential for leadership by applying the practice of collaborative innovation.